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, 2016

OR

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

OR

[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

Date of the event requiering this Shell Company Report ___

For the transition period from ____ to ____

Commission file number 000-30982

IRSA Propiedades Comerciales S.A.

(Exact name of Registrant as specified in its charter)

IRSA Commercial Properties Inc.

(Translation of registrant´s name into English)

Republic of Argentina

(Jurisdiction of incorporation or organization)

Moreno 877, 22 Floor

Ciudad Autónoma de Buenos Aires, Argentina

(Address of principal executive offices)

Matías Ivan Gaivironsky – Chief Financial and Administrative Officer

Tel (+ 54 11) 4323 7449 – ir@irsacp.com.ar

Moreno 877 24 Floor (C1091AAQ) Ciudad Autónoma de Buenos Aires

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

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

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, 2016 was 1,260,140,508

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☐ Yes xNo

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 basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards as issued x by the International Accounting Standards Board Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ 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

IRSA Propiedades Comerciales S.A.

		Page
	Disclosure Regarding Forward-Looking Information	iii
	Certain Measurements and Terms	iii
	Presentation of Financial and Certin Other Information	iv
	Market Data	iv
	Part I	1
Item 1	Identity of Directors, Senior Management and Advisers	1
Item 2	Offer Statistics and Expected Timetable	1
Item 3	Key Information	1
	(a) Selected Financial Data	1
	(b) Capitalization and Indebtedness	4
	(c) Reasons for the Offer and Use of Proceeds	4
	(d) Risk Factors	5
Item 4	Information on the Company	21
	(a) History and Development of the Company	21
	(b) Business Overview	24
	(c) Organizational Structure	60
	(d) Property, Plant and Equipment	60
Item 4 A	Unresolved Staff Comments	61
Item 5	Operating and Financial Review and Prospects	61
	(a) Operating Results	61
	(b) Liquidity and Capital Resources	83
	(c) Research and Development, Patents and Licenses, etc.	87
	(d) Trend Information	87
	(e) Off-Balance Sheet Arrangements	88
	(f) Tabular Disclosure of Contractual Obligations	88
	(g) Safe Harbor	88
Item 6	Directors, Senior Management and Employees	88
	(a) Directors and Senior Management	88
	(b) Compensation	92
	(c) Board Practices	93
	(d) Employees	94
	(e) Share Ownership	94
Item 7	Major Shareholders and Related Party Transactions	95
	(a) Major Shareholders	95
	(b) Related Party Transactions	96
	(c) Interests of Experts and Counsel	97
Item 8	Financial Information	98
	(a) Consolidated Statements and Other Financial Information	98
	(b) Significant Changes	99
Item 9	The Offer and Listing	99
	(a) Offer and Listing Details	99
	(b) Plan of Distribution	99
	(c) Markets	99
	(d) Selling Shareholders	100
	(e) Dilution	100
	(f) Expenses of the Issue	100
Item 10	Additional Information	100
	(a) Share Capital	100
	(b) Memorandum and Articles of Association	100
	(c) Material Contracts	104

i

	(d) Exchange Controls	104
	(e) Taxation	107
	(f) Dividends and Paying Agents	111
	(g) Statement by Experts	111
	(h) Documents on Display	111
	(i) Subsidiary Information	111
Item 11	Quantitative and Qualitative Disclosures About Market Risk	111
Item 12	Description of Securities Other than Equity Securities	112
	(a) Debt Securities	112
	(b) Warrant and Rights	112
	(c) Other Securities	112
	(d) American Depositary Shares	112
	Part II	113
Item 13	Defaults, Dividend Arrearages and Delinquencies	113
Item 14	Material Modifications to the Rights of Security Holders and Use of Proceeds	113
Item 15	Controls and Procedures	113
	(a) Disclosure Controls and Procedures	113
	(b) Management’s Annual Report on Internal Control over Financial Reporting	113
	(c)Attestation Report of the Registered Public Accounting Firm	113
	(d) Changes in Internal Control over Financial Reporting	113
Item 16	Reserved	113
Item 16 A	Audit Committee Financial Expert	113
Item 16 B	Code of Ethics	113
Item 16 C	Principal Accountant Fees and Services	113
Item 16 D	Exemptions from the Listing Standards for Audit Committees	113
Item 16 E	Purchase of Equity Securities by the Issuer and Affiliated Purchasers	113
Item 16 F	Change in Registrant’s Certifying Accountant	113
Item 16 G	Corporate Governance	114
Item 16 H	Mine Safety Disclosures	114
	Part III	115
Item 17	Financial Statements	115
Item 18	Financial Statements	115
Item 19	Exhibits	115

ii

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

The U.S. 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 “Item 3 (d). Risk Factors”, “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects”. 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, legal, social or other conditions in Argentina or elsewhere in Latin America or changes in either developed or emerging markets;

●

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

●

inflation;

●

fluctuations in prevailing interest rates;

●

current and future government regulation (including amendments to the Argentine Civil and Commercial Code);

●

adverse legal or regulatory disputes or proceedings;

●

fluctuations and declines in the value of Argentine public debt;

●

government intervention in the private sector, including through nationalization, expropriation, regulation or other actions;

●

restrictions on transfer of foreign currencies and other exchange controls;

●

competition in the shopping center sector, office or other commercial properties and related industries;

●

potential loss of significant tenants at our shopping centers and other commercial properties;

●

our ability to take advantage of opportunities in the Argentine real estate market on a timely basis;

●

restrictions on energy supply fluctuations in or prices in the Argentine market;

●

our ability to meet our debt obligations;

●

shifts in consumer purchasing habits and trends;

●

technological changes and our potential inability to implement new technologies;

●

deterioration in regional and national business and economic conditions in Argentina;

●

fluctuations and declines in the exchange rate of the Peso against other currencies; and

●

the risk factors discussed under “Risk Factors” beginning on page 5.

The words “believe”, “may”, “will”, “aim”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “forecast”, “foresee”, “understand”, and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this annual report because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this annual report might not occur and are not guarantees of future performance.

You should not place undue reliance on such statements which speak only as of the date that they were made. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we might issue in the future.

CERTAIN MEASUREMENTS AND TERMS

As used throughout this annual report, the terms “IRSA Propiedades Comerciales”, “IRSA Commercial Properties”, “IRSA CP”, the “Company”, “we”, “us”, and “our” refer to IRSA Propiedades Comerciales S.A., formerly known as Alto Palermo S.A. (APSA), which name was modified by the decision of the Extraordinary General Shareholder meeting held on February 5, 2015, 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) (“sqm”), 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

iii

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. One hectare is equal to approximately 10,000 square meters and approximately 2.47 acres.

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 accommodations and space occupied by supermarkets, hypermarkets, gas stations and co-owners, except where specifically stated).

PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION

Financial Statements

This annual report contains our audited consolidated financial statements as of June 30, 2016 and 2015 for our fiscal years ended June 30, 2016, 2015 and 2014 (our “Audited Consolidated Financial Statements”). Our Audited Consolidated Financial Statements included elsewhere herein have been audited by Price Waterhouse & Co. S.R.L., Ciudad Autónoma de Buenos Aires, Argentina, a member firm of PricewaterhouseCoopers International Limited, an independent registered public accounting firm whose report is included herein.

Pursuant to Resolution No. 562/09 issued by the Comisión Nacional de Valores (“CNV”), as subsequently amended by Resolution No. 576/10, and further amended and restated by resolution No. 622/13 (The “CNV Rules”), all listed companies in Argentina with certain exceptions (i.e., financial institutions and insurance entities) were required to present their consolidated financial statements for accounting periods beginning on or after January 1, 2012 in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Therefore, we have prepared our Audited Consolidated Financial Statements in accordance with IFRS for the first time for our financial year ended June 30, 2013, which included comparative financial information for the year ended June 30, 2012. All IFRS regulations issued by the IASB effective at the time of preparing the Audited Consolidated Financial Statements have been applied. The opening IFRS statement of financial position was prepared as of our transition date of July 1, 2011.

MARKET DATA

Market data used throughout this annual report was derived from reports prepared by unaffiliated independent 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 amounts which appear in this annual report (including percentage amounts) may not sum due to rounding.

In this annual report where we refer to “Peso”, “Pesos”, “ARS” or “Ps.” we mean Argentine Pesos, the lawful currency in Argentina; when we refer to “U.S. dollars,”, “USD” or “US$” we mean United States dollars, the lawful currency of the United States of America; and when we refer to “Central Bank” we mean the Banco Central de la República Argentina (Argentine Central Bank).

Solely for the convenience of the reader, we have translated certain Peso amounts into U.S. dollars at the offer exchange rate quoted by Banco de la Nación Argentina for June 30, 2016, which was Ps. 15.04 = US$1.00. We make no representation that the Peso or U.S. dollar amounts actually represent or could have been or could be converted into U.S. dollars at the rates indicated, at any particular rate or at all.

iv

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 consolidated financial data

The following selected consolidated financial data has been derived from our consolidated financial statements as of the dates and for each of the periods indicated below. This information should also be read in conjunction with our Audited Consolidated Financial Statements included under Item 8. Financial Information and the discussion in Item 5. Operating and Financial Review and Prospects. The selected Consolidated Statement of Comprehensive Income data for the years ended June 30, 2016, 2015 and 2014 and the selected consolidated financial data as of June 30, 2016 and 2015 have been derived from our Audited Consolidated Financial Statements included in this annual report which have been audited by Price Waterhouse & Co. S.R.L., City of Buenos Aires, Argentina, a member firm of PricewaterhouseCoopers International Limited, an independent registered public accounting firm.

	For the fiscal year ended June 30,
	2016	2016	2015	2014	2013	2012
	(US$) (2)	Ps. (1)	Ps. (1)	Ps. (1)	Ps. (1)	Ps. (1)
	(In thousands, except ratios and share and per share data) (1)
Consolidated statement of comprehensive income
Income from sales, rents and services	177,851	2,674,873	1,924,176	1,445,190	1,111,762	937,062
Income from expenses and collective promotion fund	78,699	1,183,627	833,905	667,824	525,649	430,375
Costs	(111,715)	(1,680,192)	(1,183,068)	(956,238)	(749,865)	(619,278)
Gross profit	144,834	2,178,308	1,575,013	1,156,776	887,546	748,159
Gain from disposal of investment properties	11,700	175,963	126,686	308	236	-
General and administrative expenses	(14,504)	(218,142)	(138,599)	(101,445)	(67,720)	(58,183)
Selling expenses	(10,786)	(162,221)	(117,683)	(76,854)	(60,826)	(43,376)
Other operating results, net	(2,614)	(39,319)	(97,042)	(27,387)	(37,578)	(20,816)
Profit from operations	128,630	1,934.589	1,348,375	951,398	721,658	625,784
Share of profit / (loss) of associates and joint ventures	(1,153)	(17,334)	14,585	(13,535)	(602)	3,758
Profit from operations before financing and taxation	127,477	1,917,255	1,362,960	937,863	721,056	629,542
Finance income	34,079	512,555	105,138	124,495	55,029	49,561
Finance cost	(195,377)	(2,938,476)	(603,883)	(499,901)	(234,264)	(156,361)
Other financial results	114,009	1,714,702	47,215	74,730	(12,092)	2,318
Financial results, net	(47,288)	(711,219)	(451,530)	(300,676)	(191,327)	(104,482
Profit before income tax	80,189	1,206,036	911,430	637,187	529,729	525,060
Income tax expense	(19,570)	(294,336)	(290,815)	(226,700)	(178,698)	(179,416)
Total profit for the year	60,618	911,700	620,615	410,487	351,031	345,644
Total comprehensive income	60,618	911,700	620,615	410,487	351,031	345,644

1

Attributable to:
Equity holders of the parent	54,295	816,598	581,269	377,003	330,098	332,047
Non-controlling interest	6,323	95,102	39,346	33,484	20,933	13,597
Profit per common share attributable to equity holders of the parent:
Basic	0.04	0.65	0.46	0.30	0.26	0.26
Diluted	0.04	0.65	0.46	0.30	0.26	0.14
CASH FLOW DATA
Net cash generated from operating activities	67,379	1,013,373	1,257,577	921,464	654,706	613,905
Net cash used in investing activities	(123,973)	(1,864,555)	(414,231)	(517,852)	(447,164)	(259,529)
Net cash generated, used in, financing activities	38,542	579,670	(660,943)	(516,906)	(90,789)	(400,192)
Net decrease (increase) in cash and cash equivalents	(18,053)	(271,512)	182,403	(113,294)	116,753	(45,816)

	As of the fiscal year ended June 30,					As of July 1,
	2016	2016	2015	2014	2013	2012
	(US$) (1)(2)	Ps. (1)	Ps. (1)	Ps. (1)	Ps. (1)	Ps. (1)
	(In thousands) (1)
Consolidated Statements of Financial Position
ASSETS
Non-current assets
Investment properties	259,852	3,908,178	4,156,025	1,753,492	1,621,636	1,544,530
Property, plant and equipment	7,720	116,111	109,394	23,552	20,169	17,485
Trading properties	943	14,189	8,567	8,325	653	4,375
Intangible assets	4,464	67,139	69,015	65,754	62,661	62,724
Investment in associates and joint ventures	15,272	229,695	181,918	171,903	171,117	114,455
Deferred income tax assets	3,975	59,781	51,631	40,326	37,404	23,467
Income tax credit	17	249	249	578	5,083	4,002
Trade and other receivables	32,460	488,198	90,431	85,914	75,910	78,886
Investments in financial assets	20,773	312,425	253,546	63,455	99,963	104,993
Total non-current assets	345,476	5,195,965	4,920,776	2,213,299	2,094,596	1,954,917
Current assets
Trading properties	-	-	3,154	1,214	6,991	4,012
Inventories	1,210	18,202	15,347	10,368	9,896	10,394
Derivative financial instruments	-	-	-	1,234	-	-
Income tax credit	22,993	345,815	1,635	123	-	-
Trade and other receivables	128,599	1,934,134	808,016	937,204	550,762	386,773
Investments in financial assets	117,841	1,772,323	292,320	216,071	169,174	45,072
Cash and cash equivalents	2,197	33,049	303,499	116,706	223,385	102,698
Total current assets	272,841	4,103,523	1,423,971	1,282,920	960,208	548,949
TOTAL ASSETS	618,317	9,299,488	6,344,747	3,496,219	3,054,804	2,503,866
Shareholders’ equity attributable to IRSA Commercial Properties	99,158	1,491,331	958,313	813,487	848,923	823,876
Non-controlling interest	12,020	180,784	184,834	192,102	161,892	148,647
Shareholders’ equity	111,178	1,672,115	1,143,147	1,005,589	1,010,815	972,523
LIABILITIES
Non-current liabilities
Trade and other payables	21,680	326,069	247,812	195,673	190,170	160,208
Borrowings	350,171	5,266,576	3,322,488	1,046,102	834,814	680,550
Deferred income tax liabilities	12,391	186,368	107,102	107,778	101,942	120,968
Provisions	1,748	26,286	9,392	22,878	11,730	11,593
Total non-current liabilities	385,991	5,805,299	3,686,794	1,372,431	1,138,656	973,319

2

Current liabilities
Trade and other payables	64,091	963,931	802,151	489,811	437,750	361,880
Income tax liabilities	7,621	114,624	123,077	56,681	77,683	105,411
Payroll and social security liabilities	7,140	107,382	94,693	76,090	26,041	26,171
Derivative financial instruments	190	2,857	-	14,225	1,732	-
Borrowings	41,655	626,492	471,255	479,237	356,028	64,562
Provisions	451	6,788	23,630	2,155	6,099	-
Total current liabilities	121,149	1,822,074	1,514,806	1,118,199	905,333	558,024
TOTAL LIABILITIES	507,139	7,627,373	5,201,600	2,490,630	2,043,989	1,531,343
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES	618,317	9,299,488	6,344,747	3,496,219	3,054,804	2,503,866

	As of the fiscal year ended June 30,
	2016	2016	2015	2014	2013	2012
	(US$) (2)	Ps. (1)	Ps. (1)	Ps. (1)	Ps. (1)	Ps. (1)
Basic net income per common share	0.043	0.65	0.46	0.30	0.26	0.26
Diluted net income per common share	0.043	0.65	0.46	0.30	0.26	0.14
Basic net income per ADS	1.729	26.00	18.40	12.00	10.40	10.40
Diluted net income per ADS	1.729	26.00	18.40	12.00	10.40	5.60
Depreciation and amortization	15,924	239.494	180,410	121,014	129,806	108,849
Capital expenditures	12,501	188,009	2,927,468	285,749	222,907	116,411
Working capital	151,692	2,281,449	(90,835)	164,721	54,875	(9,075)
Ratio of current assets to current liabilities	2.25	2.25	0.94	1.15	1.06	0.98
Ratio of shareholders’ equity to total liabilities	0.22	0.22	0.22	0.40	0.49	0.64
Ratio of non-current assets to total assets	0.56	0.56	0.78	0.63	0.69	0.78
Dividends per share	0.01	0.23	0.35	0.32	0.24	0.23
Dividends per ADS	0.60	9.00	13.88	12.94	9.73	9.34
Number of shares outstanding	1,260,140,508	1,260,140,508	1,260,140,508	1,260,140,508	1,260,140,508	1,259,886,188
Capital stock	8,379	126,014	126,014	126,014	126,014	125,989

(1)

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 seller exchange rate quoted by Banco de la Nación Argentina as of June 30, 2016, which was Ps.15.04 per US$1.00. 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.

LOCAL EXCHANGE MARKET AND EXCHANGE RATES

During 2001 and 2015, Argentine government had established a series of exchange control measures that restricted the free disposition of funds and the transfer of funds abroad. To 2011, the Argentine government had significantly curtailed access to foreign exchange by individuals and private sector entities, making it necessary, among other things, to obtain prior approval from the Central Bank to enter into certain foreign exchange transactions such as payments relating to royalties, services or fees payable to related parties of Argentine companies outside Argentina.

With the change of government, and political color, in December 2015, one of the first measures taken by the Argentine government was to lift the principal restrictions that limited access to individuals to foreign exchange market. In this connection, Communication “A” 5850 of the Central Bank admitted again the possibility for individuals to have access to the local market, however, up to a certain amount of money. As local economy became stable in Argentina, and local markets reopened to foreign commerce, the Central Bank issued on August 2016 Communication “A” 6037 that lifted all remaining limitations. Nowadays, all individuals have unrestrictive access to the local exchange market, according to the conditions and procedures that are explained in this document.

The following table shows the maximum, minimum, average and closing exchange rates for each period applicable to purchases of U.S. dollars.

	Maximum(1)(2)	Minimum(1)(3)	Average(1)(4)	At closing(1)
Fiscal year ended June 30, 2012	4.5070	4.1250	4.3016	4.5070
Fiscal year ended June 30, 2013	5.3680	4.5650	4.9339	5.3680
Fiscal year ended June 30, 2014	8.0830	5.4850	6.9333	8.0830
Fiscal year ended June 30, 2015	9.0380	8.163	8.5748	9.0380
Fiscal year ended June 30, 2016	15.7500	9.1400	12.2769	14.9900
Month ended April 30, 2016	14.7400	14.0000	14.3367	14.2000

Month ended May 31, 2016	14.1900	13.8700	14.0720	13.9410
Month ended June 30, 2016	15.2500	13.6950	14.1343	14.9900
Month ended July 31, 2016	15.1000	14.5100	14.8410	14.9600
Month ended August 31, 2016	15.0500	14.6100	14.7899	14.8800
Month ended September 30, 2016	15.3400	14.8500	15.0666	15.2600
October 2016 (through October 13, 2016)	15.1600	15.0200	15.1153	15.0820

Source: Central Bank

(1)

Average between the offer exchange rate and the bid exchange rate according to Central Bank’s “foreign currency exchange rate.”

(2)

The maximum exchange rate appearing in the table was the highest end-of-month exchange rate in the year or shorter period, as indicated.

(3)

The minimum exchange rate appearing in the table was the lowest end-of-month exchange rate in the year or shorter period, as indicated.

(4)

Average exchange rates at the end of the month.

3

  Although exchange control regulations were lifted on August 2016, certain regulations regarding the registration, disbursement, payment of principal and interest and prepayments, among other exchange control measures related to foreign indebtedness, remain in place, and we cannot give you any assurance that additional exchange control regulations will not be adopted in the future. See “Risk Factors— Risks Relating to Argentina—Exchange controls and restrictions on transfers abroad and capital inflow restrictions have been limited in the past and may limit the availability of international credit.”

Exchange controls regulations currently in effect in Argentina include those described below.

Registration Requirements

A debtor must inform the Central Bank of any foreign indebtedness (financial and commercial) it incurs and must register and validate such indebtedness in accordance with Communication “A” 3602. Compliance with such information with the Central Bank is required in order to enable such debtor to purchase foreign currency in the Argentine foreign exchange market for the purpose of servicing such foreign indebtedness, among others.

In addition, all new foreign indebtedness of Argentine residents, as well as any refinancing of existing foreign debt, must provide that principal repayments thereunder are subject to a 120-day waiting period in which principal cannot be paid.

Disbursements

Pursuant to Communication “A” 5850, Argentine residents are no longer obliged to settle proceeds received from foreign indebtedness through the local exchange market. According to Communication “A” 6037, Argentine residents will have access to the local exchange money also at the time of repayment of principal and interests.

Principal and Interest Payments

Foreign currency necessary to pay principal and interest on foreign indebtedness, according to Communication “A” 5850 and Communication “A” 6037 can be purchased in the local exchange market.

Corporate Profits and Dividends

Pursuant to foreign exchange regulations, Argentine companies may freely access the MULC for remittances abroad to pay earnings and dividends in-so-far as they arise from closed and fully audited balance sheets and have satisfied applicable certification requirements.

Restrictions on Foreign Indebtedness

In June 2005, the Argentine government imposed certain additional restrictions on inflows and outflows of foreign currency to the Argentine foreign exchange market through Decree No. 616/2005 as amended and supplemented by Resolution 3/2015, such as:

Minimum Term of Indebtedness

Financial indebtedness incurred by Argentine residents with foreign creditors (including refinancing of existing indebtedness) must be agreed upon and cancelled within terms of no less than 120 calendar days (waiting period), whatever the form of repayment thereof. Additionally, no prepayment of such indebtedness may be made prior to the expiration of such term, irrespective of the payment method and whether or not termination entails the execution of a foreign exchange trade in the local market.

Local Bank Account

The results of inflows in the local exchange market required to be credited in an account opened by a local financial entity, which can be denominated in either local or foreign currency.

No Restrictions on Residents on the Purchase of Foreign Currency

Other Exchange Control Measures

Subject to certain conditions, Central Bank regulations allow the purchase of foreign currency in the Argentine foreign exchange market for purposes of making payments on account of financial derivatives.

B. Capitalization and Indebtedness

This section is not applicable.

C. Reasons for the Offer and Use of Proceeds

This section is not applicable.

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D. Risk Factors

You should carefully consider the risks described below, in addition to the other information contained in this annual report, before making an investment decision. We also may face additional risks and uncertainties not currently known to us, or which as of the date of this annual report we might not consider significant, which may adversely affect our business. In general, you take more risk when you invest in securities of issuers in emerging markets, such as Argentina, than when you invest in securities of issuers in the United States, and certain other markets. You should understand that an investment in our common shares and American Depository Shares (“ADSs”) involves a high degree of risk, including the possibility of loss of your entire investment.

Risks Relating to Argentina

We depend on macroeconomic and political conditions in Argentina.

We are exposed to economic conditions in Argentina, considering that as of the date of this annual report, substantially all of our assets were located in Argentina and all of our activities are conducted in Argentina. The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high levels of inflation and currency devaluation, and may experience further volatility in the future.

During 2001 and 2002, Argentina experienced a period of severe political, economic and social crisis, which caused a significant economic contraction and led to radical changes in government policies. Among other consequences, the crisis resulted in Argentina defaulting on its foreign debt obligations, introducing emergency measures and numerous changes in economic policies that affected the utility companies and many other sectors of the economy, and suffering a significant devaluation of the Peso, which in turn caused numerous Argentine private sector debtors with foreign currency exposure to default on their outstanding debt. Although the economy has largely recovered from the crisis, during 2014, the Argentine economy showed signs of slowdown due to the increase in the applicable exchange rates and decreases in commodity prices. The Argentine economy is suffering high inflation and has an increasing need of capital investment, with many sectors, particularly the energy sector, operating near full capacity.

The ongoing economic slowdown suggests uncertainty as to whether the economic growth experienced in the past decade is sustainable. This is mainly because economic growth was initially dependent on a significant devaluation of the Peso, excess production capacity resulting from a long period of deep recession and high commodity prices. Furthermore, the economy has suffered from a sustained erosion of direct investment and capital investment. After the 2001 economic crisis, Argentina recovered with significant increases in gross domestic product (“GDP”) at an average of 8.5% on an annual basis between 2003 and 2008. As a result of the 2008 global financial crisis, Argentina GDP’s growth rate decreased to 0.9% in 2009, though growth rebounded to 9.2% in 2010 and 8.9% in 2011. During 2012, the Argentine economy experienced a slowdown, with GDP increasing at a rate of 1.9%. In March 2014, the Argentine government announced a new method of calculating GDP as requested by the International Monetary Fund (“IMF”) (using 2004 as the base year instead of 1993, which was the base reference year used in the prior method of GDP calculation). Following changes in the methodology used in calculating GDP, the National Institute of Statistics (Instituto Nacional de Estadisticas y Censos or “INDEC” as per its acronym in Spanish) reported that Argentina’s GDP’s growth rate for 2013 was 3%, 0.5% for 2014, this decrease was principally due to the deceleration of the global economy and prevailing macroeconomic conditions in Argentina during 2014, and 2.3% for 2015. As of July 31, 2016, the Monthly Economic Activity Estimator (Estimador Mensual de Actividad Económica, or the “EMAE”) decreased 5.9%, relative to the same period in the prior year, according to data published by the INDEC. Argentina’s relative stability since 2002 has been affected by increased social and political tension and government intervention in the economy.

Our business depends to a significant extent on macroeconomic and political conditions in Argentina. In early December 2015, Mr. Mauricio Macri, was elected president in Argentina. The President is expected, to continue promoting policies designed to reverse some of the policies adopted by prior administrations, especially economic policies and exchange control regulations. However, until any changes in laws and regulations are enacted, we are uncertain how any such changes may affect our business and results of operations. Deterioration of the country’s economy would likely have a significant adverse effect on our business, financial condition and results of operations.

There are concerns about the accuracy of Argentina’s official inflation statistics.

In January 2007, the INDEC began to calculate the CPI, based on the monthly average of a weighted basket of consumer goods and services to reflect the pattern of consumption of Argentine households. At the time that the INDEC adopted this change in methodology the Argentine government also replaced several key officers at the INDEC, prompting complaints of governmental interference from the technical staff at the INDEC. In addition, the IMF requested a number of times that INDEC clarify its methodology for measuring inflation rates.

On November 23, 2010, the Argentine government began consulting with the IMF for technical assistance in order to prepare a new national CPI data with the aim of modernizing the current statistical system. During the first quarter of 2011, a team from the IMF started collaborating with the INDEC in order to create such an index. Notwithstanding such efforts, reports published by the IMF stated that its staff also used alternative measures of inflation for macroeconomic surveillance, including data produced by private sources, and such measures have shown inflation rates that are considerably higher than those published by the INDEC since 2007. Consequently, the IMF called on Argentina to adopt measures to improve the quality of data used by the INDEC. At a meeting held on February 1, 2013, the Executive Board of the IMF emphasized that the progress in implementing remedial measures since September 2012 had been insufficient. As a result, the IMF has issued a declaration of censure against Argentina in connection with the breach of its related obligations to the IMF and called on Argentina to adopt remedial measures to address the inaccuracy of inflation and GDP data without further delay.

In order to address the quality of official data, a new consumer price index denominated Urban National Consumer’s Price Index (Indice de Precios al Consumidor Nacional urbano, or the “IPCNu”), was enacted on February 13, 2014. For the year ended December 31, 2014, the IPCNu was 23.9%. The IPCNu represents the first national indicator in Argentina to measure changes in prices of household goods for final consumption. While the previous price index only measured inflation in the Greater Buenos Aires area, the IPCNu is calculated by measuring prices of goods across the entire urban population of the 23 provinces of Argentina and the City of Buenos Aires.. In addition, in February 2014, the INDEC released a new GDP index for 2013, equal to 3.0%, which differs from the GDP index originally released by the INDEC for the same period which was 5.5%. On December 15, 2014, the IMF recognized the progress of Argentine authorities to remedy the inaccurate

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provision of data, but has delayed the definitive evaluation of the new index. If the IMF finds that the methodology of INDEC for calculating a new measure of CPI or GDP is inaccurate, or concludes that its methodology should be adjusted, that could result in financial and economic consequences for Argentina, including a lack of access to financing from IMF. If the IMF adopts any measures against Argentina, the Argentine economy could suffer adverse effects, either by limiting access to international financial markets or increasing the financing cost associated therewith, which in turn would adversely affect our financial condition and results of operations.

On January 8, 2016, as a result of the INDEC’s historical inability to produce reliable statistical data, the Macri administration issued an emergency decree and ceased publication of national statistics. The INDEC suspended all publications on statistical data until the technical reorganization process is completed and the administrative structure of the INDEC is recomposed.

After this process of reorganization and recovery, the INDEC began to gradually publish official data. In this regard, on June 15, 2016, July 13, 2016, August 12, 2016, September 13, 2016 and October 13, 2016 the INDEC published inflation data of the months of in May, June, July, August and September reflecting a monthly increase of 4.2%, 3.1%, 2.0%, 0.2% and 1.1%, respectively; however, at the date hereof, the CPI for the first four months of 2016 has not been published.

In addition, on June 29, 2016, the INDEC recalculated historical GDP data dating back to 2014, and GDP growth was estimated at 2.3% in 2013, a decrease of 2.6% in 2014, an increase of 2.4% in 2015 and an increase to 0.5% in the first six month of 2016. Uncertainty still remains regarding the reliability of the economic indicators which remains a factor that negatively affects the economy of Argentina and our business. However, on October 5, 2016, the first IMF audit of the Argentine public accounts was completed, concluding that the new government has achieved important progress in request of these statistical data. As of the date of this annual report, the Argentine government was waiting for the final report of the IMF, which will possibly include the lifting of the censure against Argentina.

Notwithstanding these measures to address appropriate inflation statistics, there are private reports implying significantly higher inflation rates than the official reports of the INDEC. Despite the changes adopted by the INDEC to the measurement procedure with the IPCNu, there are still some differences between the figures resulting from this indicator and those recorded by private consultants, the Argentine Congress and the provincial statistic agencies. If it is determined that it is necessary to unfavorably adjust the consumer price index and other INDEC indices, there could be a significant decrease in confidence in the Argentine economy, which could, in turn, have a material adverse effect on us.

Continuing high inflation may impact the Argentine economy and adversely affect our results of operations.

Inflation has, in the past, materially undermined the Argentine economy and the government’s ability to foster conditions that would permit stable growth. In recent years, Argentina has confronted inflationary pressures, evidenced by significantly higher fuel, energy and food prices, among other factors. According to data published by the INDEC, the rate of inflation reached 10.9% in 2010, 9.5% in 2011, 10.8% in 2012, 10.9% in 2013, 23.9% in 2014, 11.9% in the ten-month period ended October, 31 2015. In response, the prior Argentine administration implemented programs to control inflation and monitor prices for essential goods and services, including freezing the prices of key products and services, and price support arrangements agreed between the Argentine government and private sector companies in several industries and markets.

In November 2015, the INDEC suspended the publication of the CPI. According to the most recent publicly available information based on data from the Province of San Luis, the CPI grew by 31.6% in 2015 and the inflation rate was 6.5%, 4.2%, 2.7%, 3.0% and 3.4% in December 2015 and January, February, March and April 2016, respectively. According to the most recent publicly available information based on data from the City of Buenos Aires, the CPI grew by 26.9% in 2015 and the inflation rate was 3.9%, 4.1%, 4.0%, 3.3% and 6.5% in December 2015 and January, February, March and April 2016, respectively. After implementing certain methodological reforms and adjusting certain macroeconomic statistics on the basis of these reforms, in June 2016 the INDEC resumed its CPI publications. According to the INDEC, Argentina’s rate of inflation rate was 4.2%, 3.1%, 2.0%, 0.2% and 1.1% in May, June, July, August and September 2016, respectively.

A high inflationary environment would undermine Argentina’s competitiveness by diluting the effects of a peso devaluation, negatively impact the level of economic activity and employment and undermine confidence in Argentina’s banking system, which could further limit the availability of domestic and international credit to businesses. In turn, a portion of the Argentine debt is adjusted by the Stabilization Coefficient (“Coeficiente de Estabilización de Referencia”, or “CER”), a currency index, that is strongly related to inflation. Therefore, any significant increase in inflation would cause an increase in the Argentine external debt and consequently in Argentina’s financial obligations, which could exacerbate the stress on the Argentine economy. A high level of uncertainty and a general lack of stability in terms of inflation could also lead to shortened contractual terms and affect the ability to plan and make decisions.

Inflation rates could escalate in the future, and there is uncertainty regarding the effects that the measures adopted, or that may be adopted in the future, by the Argentine government to control inflation may have. If inflation remains high or continues to rise, Argentina’s economy may be negatively impacted and our results of operations could be materially affected.

Argentina’s ability to obtain financing from international markets may be limited, which may in turn impair its ability to implement reforms and public policies and foster economic growth and could impact the ability of Argentine companies to obtain financing.

Argentina’s 2001 sovereign default and its failure to fully restructure its sovereign debt and negotiate with the holdout creditors has limited Argentina’s ability to access international financing. As a result of debt exchanges in 2005 and 2010, Argentina restructured approximately 92% of its defaulted debt that was eligible for restructuring. Holdout bondholders that declined to participate in the restructurings, however, filed lawsuits against Argentina in several countries, including the United States. Since late 2012, rulings from courts in the United States favorable to holdout bondholders have exacerbated investors’ concerns about investing in the country.

Additionally, foreign shareholders of several Argentine companies have filed claims with the International Centre for Settlement of Investment Disputes (the “ICSID”) alleging that the emergency measures adopted by the Argentine government since the crisis of 2001 and 2002 differ from the just and equal treatment standards set forth in several bilateral investment treaties to which Argentina is a party. Many of these claims have been ruled against Argentina.

Holdout creditors litigation, as well as ICSID and other claims against the Argentine government, resulted in material judgments against the government, led to attachments of or injunctions relating to Argentina’s assets, and prevented Argentina from obtaining favorable terms or

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interest rates when accessing international capital markets or from accessing international financing at all. Moreover, between June 2009 and 2011, a greater number of Argentine companies gained access to the international capital markets, albeit on more onerous terms than other competitors in the region, but since 2012, with few exceptions, Argentine companies have had little access to such markets.

The new administration engaged in negotiations with holders of defaulted bonds in December 2015 with a view to bringing closure to fifteen years of litigation. In February 2016, the Argentine government entered into an agreement to settle with certain holders of defaulted debt and put forward a proposal to other holders of defaulted debt, including those with pending claims in U.S. courts, subject to two conditions: obtaining approval by the Argentine Congress and the lifting of the pari passu injunctions. On March 2, 2016, the U.S. district court agreed to vacate the pari passu injunctions, subject to two conditions: first, the repealing of all legislative obstacles to settlement with holders of defaulted debt securities, and second, the full payment to holders of pari passu injunctions with whom the Argentine Government had entered into an agreement in principle on or before February 29, 2016, in accordance with the specific terms of such agreements. The U.S. district court’s order was appealed and on April 13, 2016 was affirmed by the Second Circuit Court of Appeals. On March 31, 2016, the Argentine Congress ratified these settlement agreements through Law 27,249 and repealed Law No. 26,017 and Law No. 26,984. In recent months, the Argentine government has reached settlement agreements with holders of a significant portion of the defaulted bonds and has repaid the majority of the holdout creditors with the proceeds from a US$16.5 billion international offering of 3-year, 5-year, 10-year and 30-year bonds on April 22, 2016, through which Argentina regained access to the international capital markets. As of the date of this annual report, litigation initiated by bondholders that have not accepted Argentina’s settlement offer continues in several jurisdictions, although the size of the claims involved has decreased significantly.

Holdout creditors litigation, as well as ICSID and other claims against the Argentine government, have resulted and may result in new material judgments against the government, lead to attachments of or injunctions relating to Argentina’s assets, or could bring Argentina to default on its other obligations, which could prevent Argentina from obtaining favorable terms or interest rates when accessing international capital markets or from accessing international financing at all. Although Argentina recently regained access to the international markets, its ability to obtain international or multilateral private financing or direct foreign investment may be limited, which may in turn impair its ability to implement reforms and public policies to foster economic growth. In addition, Argentina’s ongoing litigation with the remaining holdout creditors as well as ICSID and other claims against the Argentine government, or any future defaults by Argentina with its financial obligations, may prevent Argentine companies, such as us, from accessing the international capital markets or cause the terms of any such transactions to be less favorable than those provided to companies in other countries in the region, potentially impacting our financial condition.

Foreign shareholders of companies operating in Argentina have initiated investment arbitration proceedings against Argentina that have resulted and could result in arbitral awards and/or injunctions against Argentina and its assets and, in turn, limit its financial resources.

In response to the emergency measures implemented by the Argentine government during the 2001-2002 economic crisis, a number of claims were filed before the International Centre for Settlement of Investment Disputes (the “ICSID”) against Argentina. Claimants allege that the emergency measures were inconsistent with the fair and equitable treatment standards set forth in various bilateral investment treaties by which Argentina was bound at the time.

As of the date of this annual report, there are four final awards issued by ICSID tribunals against Argentina for an aggregate total amount of US$470.66 million and Argentina is seeking the annulment of four additional awards for an aggregate total amount of US$831.73 million. There are six ongoing cases against Argentina before ICSID with claims totaling US$2.15 billion (including two cases with claims for amounts that are currently undetermined), and in three of these cases (with aggregate claims for US$2.08 billion) the ICSID tribunal has already ruled that it has jurisdiction. There are eight additional cases with claims totaling US$6.17 billion in which the parties agreed to suspend the proceedings pending settlement discussions (including the proceedings initiated by Task Force Argentina, an Italian bondholder association known as “TFA”). A successful completion of these negotiations could lead additional ICSID claimants to withdraw their claims, although Argentina can offer no assurance to this effect.

It is not certain that Argentina will prevail in having any or all of those cases dismissed, or that if awards in favor of the plaintiffs are granted, that it will succeed in having those awards annulled.

Claimants have also filed claims before arbitral tribunals under the rules of the United Nations Commission on International Trade Law (“UNCITRAL”) and under the rules of the International Chamber of Commerce (“ICC”). As of the date of this annual report, there are three final awards against Argentina for an aggregate total amount of US$246.27 million and Argentina is seeking the annulment of an additional award for US$96,509. There are three ongoing cases against Argentina before UNCITRAL and ICC tribunals with claims totaling US$625.08 million, including one case with a US$507.80 million claim in which the tribunal has already ruled that it has jurisdiction. There is one additional case with a claim of US$168.69 million in which the parties agreed to suspend the proceedings pending settlement discussions.

We cannot give any assurance that Argentina will prevail in having any or all of those cases dismissed, or that if awards in favor of the plaintiffs are granted, that it will succeed in having those awards annulled.  Ongoing claims before the ICSID tribunal and other arbitral tribunals could lead to new awards against Argentina, which could have a material adverse effect on our capacity to access to international credit.

The amendment of the Central Bank’s Charter and the Convertibility Law may adversely affect the Argentine economy.

On March 22, 2012, the Argentine Congress passed Law No. 26,739, which amended the charter of the Central Bank and Law No. 23,298 (the “Convertibility Law”). See “Argentina’s ability to obtain financing from international markets is limited, which may impair its ability to implement reforms and foster economic growth” above. This new law amends the objectives of the Central Bank (established in its charter) and removes certain provisions previously in force. Pursuant to the amendment, the Central Bank focuses on promoting monetary and financial stability as well as development with social equity.

A key component of the amendment of the Central Bank charter relates to the use of international reserves. Pursuant to this amendment, the Central Bank reserves may be made available to the government for the repayment of debt or to finance public expenses. During 2013, the currency reserves in U.S. dollars held by the Argentine government in the Central Bank decreased significantly, from US$43.3 billion in 2012 to US$30.6 billion in 2013, while during 2014 the reserves increased slightly to US$31.4 billion as of December 31, 2014. The Central Bank’s stock of foreign currency reserves was US$33.9 billion as of June 30, 2015 and after the payment of the sovereign bond, BODEN 15, on October 3, 2015, the stock of foreign currency reserves was US$27.7 billion, and rose to US$30.5 billion as of June 30, 2016. This use of the Central Bank reserves for expanded purposes by the Argentine government may result in Argentina being more vulnerable to inflation or external shocks, affecting the country’s capacity to overcome the effects of an external crisis.

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Significant fluctuation in the value of the Peso may adversely affect the Argentine economy as well as our financial performance.

Notwithstanding the positive effects of the depreciation of the Peso in 2002 in respect of the competitiveness of certain sectors of the Argentine economy, the depreciation has negatively impacted the Argentine economy and the financial condition of companies and individuals in Argentina. 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.

Since the strengthening of exchange controls began in late 2011, and upon the introduction of measures that have limited access to foreign currency by private companies and individuals (such as requiring an authorization of tax authorities to access the foreign currency exchange market), the implied exchange rate, as reflected in the quotations for Argentine securities that trade in foreign markets compared to the corresponding quotations in the local market, has increased significantly over the official exchange rate, such measures were lifted on December 16, 2015. However, any reenactment of these measures may prevent or limit us from offsetting the risk derived from our exposure to the U.S. dollar and, if so, we cannot predict the impact of these changes on our financial condition and results of operations.

If the Peso continues to devalue, all of the negative effects on the Argentine economy related to such devaluation could reappear, with adverse consequences on our business. Moreover, it would likely result in a material adverse effect in our business as a result of the exposure to financial commitments denominated in U.S. Dollar. While certain of our office space leases are denominated in U.S. dollars, we are only partially protected against Peso devaluation as payment is fixed in Pesos and there can be no assurance we will be able to maintain our U.S. Dollar-denominated leases.

On the other hand, 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.

Certain measures that may be taken by the Argentine government may adversely affect the Argentine economy and, as a result, our business and results of operations

In the past, the Argentine government has increased its direct intervention in the economy through the implementation or change of laws and regulations, such as, among other things, nationalizations, or expropriations; restrictions on production, imports and exports; exchange and/or transfer restrictions; direct and indirect price controls; tax increases, changes in the interpretation or application of tax laws and other retroactive tax claims or challenges; cancellation of contract rights; delays or denials of governmental approvals.

In November 2008, the Argentine government enacted Law No. 26,425 which provided for the nationalization of the Administradoras de Fondos de Jubilaciones y Pensiones. More recently, beginning in April 2012, the Argentine government provided for the nationalization of YPF S.A. and imposed major changes to the system under which oil companies operate, principally through the enactment of Law No. 26,741 and Decree No. 1277/2012. In February 2014, the Argentine government and Repsol S.A. (the former principal shareholder of YPF S.A.) announced that they had reached agreement on the terms of the compensation payable to Repsol for the expropriation of the YPF S.A. shares. Such compensation totaled US$5 billion, payable by delivery of Argentine sovereign bonds with various maturities. In April 23, 2014, the agreement with Repsol was approved by the Argentine Congress and accordingly, in May 8, 2014, Repsol, S.A. received the relevant Argentine government bonds.

Additionally, on December 19, 2012, the Argentine government issued Decree No. 2552/2012, which ordered the expropriation of the “Predio Rural de Palermo.” However, on January 4, 2013, the Federal Civil and Commercial Chamber granted an injunction that momentarily blocked the enforceability of Decree No. 2552/2012; notwithstanding the foregoing on June 1, 2015, the injunction was released. On June 2, 2015, this decision was appealed, and as a result the aforementioned injunction is still effective and the effects of the Decree No. 2552/2012 remain blocked as of the date hereof. The Argentine government filed a motion to revoke the injunction which was rejected by the Federal Civil and Commercial Chamber and as a consequence the Argentine government filed an extraordinary motion with the Supreme Court, which was rejected and therefore the injunction remains effective. As of the date of this annual report the Argentine government has answered the claim and requested the registration of the litis. The court granted the registration of the litis and ordered to notify the plaintiff of the answer of the claim filed by the Argentine Government however the notification has not been received by the plaintiff. The Decree No. 2552/2012 may indirectly affect our investment in Entertainment Holding S.A. (“EHSA”).

Furthermore, on May 18, 2015, we were notified that the Agencia de Administración de Bienes del Estado (“AABE”), revoked the concession agreement granted to our subsidiary Arcos del Gourmet S.A., through Resolution No. 170/2014. On June 2, 2015, we filed before the AABE a request to declare the notification void, as certain formal proceedings required under Argentine law have not been complied by the AABE. Furthermore, we filed an administrative appeal requesting the dismissal of the revocation of the agreement and a lawsuit seeking to declare the Resolution No. 170/2014 void. We also filed a lawsuit in order to judicially pay the monthly rental fees of the property. As of the date of this annual report, the “Distrito Arcos” shopping center continues to operate normally.

There are other recent examples of government intervention. In December 2012 and August 2013, the Argentine Congress established new regulations relating to domestic capital markets. The new regulations generally provide for increased intervention in the capital markets by the government, authorizing, for example, the CNV to appoint observers with the ability to veto the decisions of the board of directors of companies admitted to the public offering regime under certain circumstances and suspend the board of directors for a period of up to 180 days. Notwithstanding, the new government is working on an amendment to the Capital Markets Law, which will, among other things, take off the CNV the authorization to appoint observers mentioned before.

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We cannot assure you that these or other measures that may be adopted by the Argentine government, such as expropriation, nationalization, forced renegotiation or modification of existing contracts, new taxation policies, changes in laws, regulations and policies affecting foreign trade, investment, etc., will not have a material adverse effect on the Argentine economy and, as a consequence, adversely affect our financial condition, our results of operations and the market value of our securities.

The Argentine presidential, congressional and certain municipal and state government elections that were held in October and November 2015 generated political uncertainty as to whether the new Argentine government, which took office on December 10, 2015, would implement changes in policy or regulation that could adversely affect the Argentine economy. As of the date of this annual report, the Argentine government has adopted a series of economic actions and foreign exchange regulations whose effects will be seen in the coming months. The President of Argentina and its Congress each have considerable power to determine governmental policies and actions that relate to the Argentine economy and, consequently, may affect our results of operations or financial condition. We can offer no assurances that the policies that may be implemented by the new Argentine government will not adversely affect our business, results of operations or financial condition.

The Argentine government may order salary increases to be paid to employees in the private sector, which would increase our operating costs.

In the past, the Argentine government has passed laws, regulations and decrees requiring companies in the private sector to maintain minimum wage levels and provide specified benefits to employees and may do so again in the future. In the aftermath of the Argentine economic crisis, employers both in the public and private sectors experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. In August 2012, the Argentine government established a 25% increase in minimum monthly salary to Ps.2,875, effective as of February 2013. The Argentine government increased the minimum monthly salary to Ps.3,300 in August 2013, to Ps.3,600 in January 2014, to Ps.4,400 in September 2014, to Ps.4,716 in January 2015, to Ps.5,588 in August 2015 and to Ps.6,060 from January 2016. Due to ongoing high levels of inflation, employers in both the public and private sectors continue to experience significant pressure from unions and their employees to increase salaries. During the first months of the year 2016, various unions have agreed with employers’ associations on salary increases between 30% and 35%.

In the future, the government could take new measures requiring salary increases or additional benefits for workers, and the labor force and labor unions may apply pressure for such measures. As of the date of this annual report, the government and labor representatives were engaged in negotiations to set national guidelines for salary increases during 2016. Any such increase in wage or worker benefit could result in added costs and reduced results operations for Argentine companies, including us.

Property values in Argentina could decline significantly.

Property values are influenced by multiple factors that are beyond our control, such as a decrease in the demand for real estate properties due to a deterioration of macroeconomic conditions or an increase in supply of real estate properties that could adversely affect the value of real estate properties. We cannot assure you that property values will increase or that they will not be reduced. Most of the properties we own are located in Argentina. As a result, a reduction in the value of properties in Argentina could materially affect our business.

Restrictions on transfers of foreign currency and the repatriation of capital from Argentina may impair our ability to pay dividends and distributions.

According to current Argentine practices the Argentine government may impose restrictions on the exchange of Argentine currency into foreign currencies and on the remittance to foreign investors of proceeds from investments in Argentina in circumstances where a serious imbalance develops in Argentina’s balance of payments or where there are reasons to foresee such an imbalance. Beginning in December 2001, the Argentine government implemented a number of monetary and foreign exchange control measures that included restrictions on the free disposition of funds deposited with banks and on the transfer of funds abroad without prior approval by the Central Bank, some of which are still in effect. With the administration of President Macri, many of the ongoing restrictions were lifted.

On January 7, 2003, the Central Bank issued communication “A” 3859, which is still in force and pursuant to which there are no limitations on companies’ ability to purchase foreign currency and transfer it outside Argentina to pay dividends, provided that those dividends arise from net earnings corresponding to approved and audited financial statements. The transfer of funds abroad by local companies in order to pay annual dividends only to foreign shareholders, based on approved and fully audited financial statements, does not require formal approval by the Central Bank.

Notwithstanding the above, for many years, and as a consequence of a decrease in availability of U.S. dollars in Argentina, the prior administration imposed informal restrictions on certain local companies and individuals for purchasing foreign currency. These restrictions on foreign currency purchases started in October 2011 and tightened thereafter through the date of this annual report. As a result of these informal restrictions, local residents and companies may be prevented from purchasing foreign currency through the foreign exchange market (“Mercado Único y Libre de Cambios” or “MULC”) for the purpose of making payments abroad, such as dividends, capital reductions, and payment for importation of goods and services.

Together with the new Argentine administration, such restrictions and other foreign exchange control measures were lifted, towards opening Argentina’s foreign exchange market. In this sense, on December 17, 2015, Communication “A” 5850 of the Central Bank reestablished the possibility for non-Argentine residents to repatriate their investment capital and, recently, Communication “A” 6037 of the Central Bank defined the new regulations that apply to the acquisition of foreign currency and the elimination of all other restrictions that impair residents and non-residents to have access to the FX market. However, in the future, the Argentine government or the Central Bank may impose formal restrictions to the payment of dividends abroad and established additional requirements. Any restrictions on transferring funds abroad imposed by the government could undermine our ability to pay dividends on our ADSs in U.S. Dollars.

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Exchange controls and restrictions on transfers abroad and capital inflow restrictions have been limited in the past and may limit the availability of international credit.

Until December 2015, many foreign exchange restrictions and controls imposed by the Argentine government had limited the abilities of companies and individuals to access to the Exchange Market (Mercado Unico y Libre de Cambios). On December 16, 2015, the new authorities issued Communication “A” 5850 of the Central Bank, lifting most of the restrictions then in place. Among these measures, free access to the Mercado Unico y Libre de Cambios was granted for the purchase of foreign currency intended for general purposes, without the need for the Central Bank’s or AFIP’s consent, and eliminating the requirement to deposit 30% of certain capital inflows, subsequently extended by Communication "A" 5963 and 5964. Also, on August 8, 2016, the Central Bank issued Communication "A" 6037, in which the exchange regulations, requiring presentation of documentation to justify each exchange operation, and the daily and monthly caps an exchange transactions on internet banking were eliminated.

Although these recent changes in the foreign exchange regime tend to allow free access by companies and individuals to the local consumer foreign exchange market, certain limitations remain in effect including the following:

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The proceeds of foreign currency sales in the local exchange market exceeding the peso equivalent of US$2,500 per month must be credited in pesos in a checking or savings account with a local financial institution;

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It is no longer necessary that the proceeds of external indebtedness be entered or settled in the local foreign exchange market;

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Any external indebtedness incurred or renewed after December 17, 2015 must remain in Argentina for a period of at least 120 calendar days from the date the proceeds were transferred into Argentina; and

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Capital inflows into the local foreign exchange market must be credited in an account opened with a local financial institution.

Notwithstanding the measures adopted by the new administration, which lifted certain exchange and capital controls, in the future the Argentine government could impose further exchange controls or restrictions on the movement of capital and/or take other measures in response to capital flight or a significant depreciation of the peso, which could limit our ability to access the international capital markets. Such measures could lead to political and social tensions and undermine the Argentine government’s public finances, as has occurred in the past, which could adversely affect Argentina’s economy and prospects for economic growth. For more information, see “Exchange Rates and Exchange Controls.”

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

Argentina’s economy is vulnerable to external shocks that could be caused by adverse developments affecting its principal trading partners. A significant decline in the economic growth of any of Argentina’s major trading partners (including Brazil, the European Union, China and the United States) could have a material adverse impact on Argentina’s balance of trade and adversely affect Argentina’s economic growth. In 2015, there were declines in exports of 14% with Chile, 26% with MERCOSUR (Brazil) and 16% with NAFTA (the United States, Mexico and Canada), each as compared to 2014. Declining demand for Argentine exports could have a material adverse effect on Argentina’s economic growth. For example, the recent significant devaluation of the Brazilian and Chinese currencies and the current slowdown of their respective economies may negatively affect the Argentine economy. Moreover, the political and social instability in Brazil, which includes the recent removal of the President Dilma Rousseff from office following an impeachment vote in the Senate, may have an adversely impact on Argentine´s economy.

In addition, financial and securities markets in Argentina have been influenced by economic and market conditions in other markets worldwide. Such was the case in 2008, when the global economic crisis led to a sudden economic decline in Argentina in 2009, accompanied by inflationary pressures, depreciation of the peso and a drop in consumer and investor confidence. Although economic conditions vary from country to country, investors’ perception of the events occurring in one country may substantially affect capital flows into other countries. International investors’ reactions to events occurring in one market sometimes demonstrate a “contagion” effect in which an entire region or class of investment is disfavored by international investors. Argentina could be adversely affected by negative economic or financial developments in other countries, which in turn may have an adverse effect on our financial condition and results of operations. Lower capital inflows and declining securities prices negatively affect the real economy of a country through higher interest rates or currency volatility. Moreover, Argentina may also be affected by other countries that have influence over world economic cycles.

The international economy is showing contradictory signals of global growth, leading to significant financial uncertainty. There is growing concern about the deceleration of growth in China in particular as well as the significant decline in global commodity prices, particularly oil and gas. In addition, emerging market economies have been affected by the recent change in the U.S. monetary policy, resulting in the unwinding of investments and increased volatility in the value of their currencies. If interest rates rise significantly in developed economies, including the United States, emerging market economies, including Argentina, could find it more difficult and expensive to borrow capital and refinance existing debt, which would negatively affect their economic growth. There is also global uncertainty about the degree of economic recovery in the United States, with no substantial positive signals from other developed countries. Moreover, the recent challenges faced by the European Union to stabilize certain of its member economies, such as Greece, have had and may continue to have international implications affecting the stability of global financial markets, which has hindered economies worldwide.

The effects of the United Kingdom’s vote to exit from the European Union and its impact on economic conditions in Latin America and Argentina and, particularly, on our business, financial condition, results of operations, prospects and trading of our notes are uncertain.

On June 23, 2016, the United Kingdom voted in favor of the United Kingdom exiting the European Union. As of the date of this annual report, the actions that the United Kingdom will take to effectively exit from the European Union or the length of such process are uncertain. The results of the United Kingdom’s referendum have caused, and are anticipated to continue causing, volatility in the financial markets, which may in turn have a material adverse effect on our business, financial condition and results of operations.

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A decline in the international prices for Argentina’s main commodity exports could have an adverse effect on Argentina’s economic growth and on our business.

High commodity prices have contributed significantly to the increase in Argentine exports since the third quarter of 2002 as well as in governmental revenues from export taxes (withholdings). However, this reliance on the export of certain commodities, such as soy, has made the Argentine economy more vulnerable to fluctuations in their prices. In December 2015, the new Argentine administration announced a plan to gradually reduce the exports tax payable by soy growers from January 2018 to December 2019, and eliminated export taxes on wheat, corn, sorghum and sunflower, in an attempt to encourage exports.

If international commodity prices decline, the Argentine government’s revenues would decrease significantly affecting Argentina’s economic activity. Accordingly, a decline in international commodity prices could adversely affect Argentina’s economy, which in turn would produce a negative impact on our financial condition and results of operations.

In addition, adverse weather conditions can affect the production of commodities by the agricultural sector, which account for a significant portion of Argentina’s export revenues. These circumstances would have a negative impact on the levels of government revenues, availability of foreign exchange and the government’s ability to service its sovereign debt, and could either generate recessionary or inflationary pressures, depending on the government’s reaction. Either of these results would adversely impact Argentina’s economy growth and, therefore, our business, financial condition and results of operations.

Restrictions on the supply of energy could negatively affect Argentina’s economy.

As a result of prolonged recession, and the forced conversion into Pesos and subsequent freeze of natural gas and electricity tariffs in Argentina, there has been a lack of investment in natural gas and electricity supply and transport capacity in Argentina in recent years. At the same time, demand for natural gas and electricity has increased substantially, driven by a recovery in economic conditions and the implementation of price constraints, which has prompted the government to adopt a series of measures that have resulted in industry shortages and/or costs increase. In particular, Argentina has been importing natural gas in order to compensate for shortages in local production. In order to pay for natural gas imports, the Argentine government has frequently used the Central Bank reserves due to absence of incoming currencies from investment. If the government is unable to pay for the natural gas imported in order to produce electricity, business and industries may be affected.

The Argentine government has been taking a number of measures to alleviate the short-term impact of energy shortages on residential and industrial users. If these measures prove to be insufficient, or if the investment that is required to increase natural gas production, transportation capacity and energy generation over the medium-and long-term fails to materialize on a timely basis, economic activity in Argentina could be curtailed which may have a significant adverse effect on our business.

As a first step of these measures, subsidies on energy tariffs were withdrawn from industries and high income consumers. Additionally, since 2011, a series of rate increases and the reduction of subsidies mainly among industries and high-income consumers were implemented. In February 2016, the Argentine government revised the tariff schedule for electricity and gas rates and eliminated the subsidies for these utilities, (except for tariffs for certain economically vulnerable sectors). As a result, energy costsare expected to increase by 500% or more. By correcting tariffs, modifying the regulatory framework and reducing the federal government’s role as an active market participant, the new administration aims to correct distortions in the energy sector and stimulate investment. In July 2016, a federal court in the city of La Plata suspended the increase in gas tariffs across the Province of Buenos Aires. In addition, on August 3, 2016, a federal court in San Martin suspended the increase in gas tariffs across the country until a public hearing to discuss the electricity tariffs increase is set. The case was brought before the Supreme Court of Argentina, and on August 18, 2016, the Supreme Court of Argentina upheld the suspension of gas tariffs increase to residential customers, arguing that a tariffs increase could not be established without public hearings. A public hearing on the increase was held on September 16, 2016 and as result, the increase in gas tariffs will be increased by approximately 203% effective in October 2016, with semi-annual increases until 2019. In relation to other services (water, transport and electricity), the government announced that other public meetings will be held in mid-October.

High public expenditure could result in long-lasting adverse consequences for the Argentine economy.

Over the last several years, the Argentine government has substantially increased public expenditures. In 2014, public sector expenditures increased by 43% year over year and the government reported a primary fiscal deficit of 0.9%. During recent years, the Argentine government has resorted to the Central Bank and to the Administración Nacional de la Seguridad Social (Federal Social Security Agency, or “ANSES”, as per its acronym in Spanish) to source part of its funding requirements. In 2015, this trend continued as primary fiscal balance showed a deficit of 5.4% as of December 31, 2015.

Recently, the Argentine government has begun adjusting its subsidy policies, particularly those related to energy, electricity and gas, water and public transportation. Changes in these policies could materially and adversely impact consumer purchase capacity and economic activity and may lead to an increase in prices.

Moreover, the primary fiscal balance could be negatively affected in the future if public expenditures continue to increase at a rate higher than revenues as a result of subsidies to lower-income sectors, social security benefits, financial assistance to provinces with financial problems, increased spending on public works and subsidies to the energy and transportation sectors. A further deterioration in fiscal accounts could negatively affect the government’s ability to access the long-term financial markets and could in turn result in more limited access to such markets by Argentine companies.

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  Risks Relating to Our Business

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

Our shopping centers are subject to various factors that affect their development, administration and profitability, including:

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decline in our lease prices or increases in levels of default by our tenants due to economic conditions, increases in interest rates and other factors that we cannot control;

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

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the intrinsic attractiveness of the shopping center;

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

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increasing competition from internet sales;

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

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changes in consumer demand and availability of consumer credit (considering the limits impose by the Central Bank to interest rates charged by financial institutions), both of which are highly sensitive to general macroeconomic conditions; and

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fluctuations in occupancy levels in our shopping centers.

An increase in our operating costs, caused by inflation or by 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 by prevailing economic conditions that affect potential customers. All of our shopping centers and commercial properties are located in Argentina, and, as a consequence, their business could be seriously affected by a 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. Persistently poor economic conditions in Argentina will likely have a material adverse effect on the revenues from shopping center activity and thus on our business.

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 are subject to the risk that our properties may not be able to generate sufficient revenues to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to service our debt and to cover other expenses may be adversely affected.

Events or conditions beyond our control that may adversely affect our operations or the value of our properties include:

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downturns in the national, regional and local economic climate;

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volatility and decline in discretionary spending;

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competition from other shopping centers and office and commercial buildings;

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local real estate market conditions, such as oversupply or reduction in demand for retail, office, or other commercial space;

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decreases in consumption levels;

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changes in interest rates and availability of financing;

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

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

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

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

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significant expenditures associated with each investment, such as debt service payments, real estate taxes, insurance and maintenance costs;

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

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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;

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changes in law or governmental regulations (such as those governing usage, zoning and real property taxes) or government action such as expropriation, confiscation or revocation of concessions; and

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interpretation by judges of the New Civil and Commercial Code (in force from August 1, 2015) which may be adverse to our interests.

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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An adverse economic environment for real estate companies such as a credit crisis may adversely impact our results of operations and business prospects significantly.

The success of our business and profitability of our operations depend on continued investment in the real estate markets and access to capital and debt financing. A long term crisis of confidence in real estate investments and lack of credit for acquisitions may constrain our business growth. As part of our business goals, we intend to increase our properties portfolio though strategic acquisitions of core properties at advantageous prices, where we believe we can bring the necessary expertise to enhance property values. In order to pursue acquisitions, we may need access to equity capital and/or debt financing. Any disruptions in the financial markets, including the bankruptcy and restructuring of major financial institutions, may adversely impact our ability to refinance existing debt and the availability and cost of credit in the near future. Any consideration of sales of existing properties or portfolio interests may be tempered by decreasing property values. Our ability to make scheduled payments or to refinance our obligations with respect to indebtedness depends on our operating and financial performance, which in turn is subject to prevailing economic conditions. If a recurrence of the disruptions in financial markets remains or arises in the future, there can be no assurances that government responses to such disruptions will restore investor confidence, stabilize the markets or increase liquidity and the availability of credit.

The loss of key or anchor tenants could adversely affect both the operating revenues and value of our properties.

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 that generate shopping traffic at the mall. Further, certain tenants are also very important for our office buildings. A decision by such significant tenants to cease operations at our shopping centers or our office buildings, as applicable, 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 our operations. In addition, the closing of one or more significant tenants at our shopping centers may induce other major 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. Moreover, key tenants at one or more properties might terminate their leases as a result of mergers, acquisitions, consolidations, dispositions or bankruptcies. The bankruptcy and/or closure of one or more significant tenants, if we are not able to successfully re-lease the affected space, could have a material adverse effect on both the operating revenues and underlying value of the properties involved.

We may face risks associated with property acquisitions.

We have in the past acquired, and intend to acquire in the future, properties, including large properties that would increase our size and potentially alter our capital structure. Although we believe that the acquisitions that we have completed in the past and that we expect to undertake in the future have, and will, enhance our future financial performance, the success of such transactions is subject to a number of uncertainties, including the risk that:

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we may not be able to obtain financing for acquisitions on favorable terms;

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acquired properties may fail to perform as expected;

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the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates; and

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acquired properties may be located in new markets where we may have limited knowledge and understanding of the local economy, absence of business relationships in the area or unfamiliarity with local governmental and permitting procedures.

If we acquire new properties, we may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into our organization and to manage new properties in a way that allows us to realize cost savings and synergies, which could impair our results of operations.

Our future acquisitions may be unprofitable.

We intend to acquire additional properties to the extent that we manage to acquire them on advantageous terms and conditions and they meet our investment criteria. Acquisitions of commercial properties entail general investment risks associated with any real estate investment, including:

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

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

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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

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our investigation of a property or building prior to its 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 merge and integrate the operations, personnel, accounting and information systems of such 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.

Properties we acquire may subject us to unknown liabilities.

Properties that we acquire may be subject to unknown liabilities and we would have no recourse, or only limited recourse to the former owners of the properties. Thus, if a liability were asserted against us based upon ownership of an acquired property, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flow. Unknown liabilities relating to acquired properties could include:

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●            liabilities for clean-up of undisclosed environmental contamination;

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

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liabilities incurred in the ordinary course of business.

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

A substantial part 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):

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delay lease commencements;

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decline to extend or renew leases upon expiration;

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fail to make rental payments when due; or

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close stores or declare bankruptcy.

Any of these actions could result in the termination of leases and the loss of rental income attributable to the terminated leases. In addition, we cannot assure you that any tenant whose lease expires will renew that lease or that we will be able to re-lease space on economically advantageous terms or at all. 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.

It may be difficult to buy and sell real estate quickly and transfer restrictions may apply to part of our portfolio of properties.

Real estate investments are relatively illiquid and this tends to limit our ability to vary our portfolio in response to changes in the economy or other conditions. In addition, significant expenditures associated with each investment, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when circumstances cause a decrease in income from an investment. If income from a property declines while the related expenses do not decline, our business would be adversely affected. Further, if it becomes necessary or desirable for us to dispose of one or more of our mortgaged properties, we may not be able to obtain a release of the lien on the mortgaged property without payment of the associated debt. The foreclosure of a mortgage on a property or inability to sell a property could adversely affect our business.

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 several plots of land which are not zoned for the type of projects we intend to develop. In addition, we do not yet have the required land-use, building, occupancy and other required governmental permits and authorizations for these properties. 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 or rejected. Moreover, we may be affected by building moratorium 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.

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

We must maintain liquidity to fund our working capital, service our outstanding indebtedness and finance investment opportunities. Without sufficient liquidity, we could be forced to curtail our operations or we may not be able to pursue new business opportunities.

Our growth strategy is focused on the development and 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 these factors, we could experience delays or difficulties in implementing our growth strategy on satisfactory terms or at all.

The capital and credit markets have been experiencing extreme volatility and disruption since the last credit crisis. If our current resources do not satisfy our liquidity requirements, we may have to seek additional financing. The availability of financing will depend on a variety of factors, such as economic and market conditions, the availability of credit and our credit ratings, as well as the possibility that lenders could develop a negative perception of the prospects of our company or the industry generally. We may not be able to successfully obtain any necessary additional financing on favorable terms, or at all.

Serious illnesses and pandemics, such as the 2009 outbreak of Influenza A H1N1 virus (the “Swine Flu”) and the current Zika virus, have in the past adversely affected consumer and tourist activity, may do so in the future and may adversely affect our results of operations.

As a result of the outbreak of Swine Flu during the winter of 2009, consumers and tourists dramatically changed their spending and travel habits to avoid contact with crowds. Furthermore, several governments enacted regulations limiting the operation of schools, cinemas and shopping centers. Even though the Argentine government only issued public service recommendations to the population regarding the risks involved in visiting crowded places, such as shopping centers, and did not issue specific regulations limiting access to public places, a significant number of consumers nonetheless changed their habits vis-a-vis shopping centers and malls. Similarly, the current zika virus pandemic may result in similar courses and outcomes. We cannot assure you that a new disease outbreak or health hazard (such as the Ebola outbreak in recent years) will not occur in the future, or that such an outbreak or health hazard would not significantly affect consumer and/or tourist activity, and that such scenario would not adversely affect our businesses.

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Adverse incidents that occur in our shopping centers may result in damage to our image and a decrease in the number of customers.

Given that shopping centers are open to the public, with ample circulation of people, accidents, theft, robbery and other incidents may occur in our facilities, regardless of the preventative measures we adopt. In the event such an incident or series of incidents occurs, shopping center customers and visitors may choose to visit other shopping venues that they believe are safer and less violent, which may cause a reduction in the sales volume and operating income of our shopping centers.

Argentine Law governing leases imposes restrictions that limit our flexibility.

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

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

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the imposition of a two-year minimum lease term for all purposes, except in particular cases such as embassy, consulate or international organization venues, room with furniture for touristic purposes for less than three months, custody and bailment of goods, exhibition or offering of goods in fairs or in cases where due to the circumstances, the subject matter of the lease agreement requires a shorter term.

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. We cannot assure you that our tenants will not exercise such right, especially if rent values stabilize or decline in the future or if economic conditions deteriorate.

In addition, on October 1, 2014, the Argentine Congress adopted a new Civil and Commercial Code (the “Civil and Commercial Code”) which became effective on and June 30, 2015, is in force since August 1, 2015, requires that lease agreement provide for a minimum term of two years, and a maximum term of twenty years for residential leases and of fifty years for other purpose leases. Furthermore, the Civil and Commercial Code modifies the regime applicable to contractual provisions relating to foreign currency payment obligations by establishing that foreign currency payment obligations may be discharged in Pesos. This amends the legal framework currently in force, pursuant to which debtors may only discharge their foreign currency payment obligations by making payment in the specific foreign currency agreed upon in their agreements; provided however that the option to discharge in Pesos a foreign currency obligation may be waived by the debtor is still under discussion. Although certain judicial decisions have set forth that this regulation regarding foreign currency can be left aside by the parties to an agreement, it is still too early to determine whether or not this legal provision can be left aside in an agreement as a general rule. Moreover, and regarding the new provisions for leases, there are no judicial decisions on the scope of this amendment and, in particular, in connection with the ability of the parties to any contract to set aside the new provision and enforce such agreements before an Argentine court.

We may be liable for some defects in our buildings.

According to the former Argentine Civil Code, the builder of a real estate development was liable in case of property damage – meaning the damages compromises the structure and/or the defects render the building no longer useful – for a period of 10 years since the possession of the property; on the other hand, the builder was liable for the latent defects, even when those defects did not imply significant property damage. In addition, according to the former Argentine Civil Code, such liability was extended to the technical project manager and the designer of any given project. Furthermore, in certain cases, such as when consumer law was involved, the liability could be extended to the developer. The Civil and Commercial Code, which became effective on August 1, 2015, has similar provisions to those included in the former Argentine Civil Code and expressly extends the liability for such damage to real estate developers (i.e., any person who sells real estate built by either themselves or by a third party contractor), and any other person involved in the project, in addition to the liability of the builder, the technical project manager and the designer of any given project. According to the Civil and Commercial Code, the warranty period for latent defects expires after three years of the client taking possession of the real estate, and both the builder and the seller are liable for such defects.

In our real estate developments we usually act as developers and sellers and we build through third-party contractors. Absent a specific claim, we cannot quantify the potential cost of any obligation that may arise as a result of a future claim, and we have not recorded provisions associated with them in our financial statements. If we were required to remedy any defects on completed works, our financial condition and results of operations could be adversely affected.

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.

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, and in each such case they would likely have a material and adverse effect on our financial condition and results of operation.

We are subject to risks inherent to the operation of office buildings that may affect our profitability.

Office buildings are subject to various factors that affect their development, administration and profitability, including:

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a decrease in demand for office space;

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a deterioration in the financial condition of our tenants may result in defaults under leases due to bankruptcy, lack of liquidity or for other reasons;

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difficulties or delays renewing leases or re-leasing space;

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decreases in rents as a result of oversupply, particularly of newer buildings;

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competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from our tenants; and

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maintenance, repair and renovation costs incurred to maintain the competitiveness of our office buildings.

If we are unable to adequately address these factors, any one of them could adversely impact our business, which would have an adverse effect on our financial condition and results of operations.

Our investment in property development and management activities may be less profitable than we anticipate.

We are engaged in the development and management of shopping centers, office buildings and other rental properties, frequently through third-party contractors. Risks associated with our development and management activities include the following, among others:

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abandonment of development opportunities and renovation proposals;

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

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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;

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

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

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aggregate sale prices of residential units may be insufficient to cover development costs;

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

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failure or delays in obtaining necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, or building moratoria and anti-growth legislation;

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significant time lags between the commencement and completion of projects subjects us to greater risks due to fluctuation in the general economy;

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construction may not be completed on schedule because of a number of factors, including weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, or man-made or natural disasters (such as fires, hurricanes, earthquakes or floods), resulting in increased debt service expense and construction costs;

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general changes in our tenants’ demand for rental properties; and

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we may incur capital expenditures that could result in considerable time consuming efforts and which may never be completed due to government restrictions.

In addition, we may face contractors’ claims for the enforcement of labor laws in Argentina (sections 30, 31, 32 under Law No. 20,744), which provide for joint and several liability. Many companies in Argentina hire personnel from third-party companies that provide outsourced services, and sign indemnity agreements in the event of labor claims from employees of such third company that may affect the liability of such hiring company. However, in recent years several courts have denied the existence of independence in those labor relationships and declared joint and several liabilities for both companies.

While our policies with respect to expansion, renovation and development activities are intended to limit some of the risks otherwise associated with such activities, we are nevertheless subject to risks associated with the construction of properties, such as cost overruns, design changes and timing delays arising from a lack of availability of materials and labor, weather conditions and other factors outside of our control, as well as financing costs, may exceed original estimates, possibly making the associated investment unprofitable. Any substantial unanticipated delays or expenses could adversely affect the investment returns from these redevelopment projects and harm our operating results.

We are subject to great competitive pressure.

Our real estate activities (in particular due to the acquisition of the office buildings in December 2014) are highly concentrated in the Buenos Aires metropolitan area, where the real estate market is highly competitive due to a scarcity of properties in sought-after locations and the increasing number of local and international competitors. Furthermore, the Argentine real estate industry is generally highly competitive and fragmented and does not have high barriers to entry restricting new competitors from entering the market. The main competitive factors in the real estate development business include availability and location of land, price, funding, design, quality, reputation and partnerships with developers. A number of residential and commercial developers and real estate services companies compete with us in seeking land for acquisition, financial resources for development and prospective purchasers and tenants. Other companies, including joint ventures of foreign and local companies, have become increasingly active in the real estate business and shopping center business in Argentina, further increasing this competition. To the extent that one or more of our competitors are able to acquire and develop desirable properties, as a result of greater financial resources or otherwise, our business could be materially and adversely affected. If we are not able to respond to such pressures as promptly as our competitors, or the level of competition increases, our financial condition and results of our operations could be adversely affected.

All of our shopping center and commercial office 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. We cannot assure you that other shopping center operators, including international shopping center operators, will not invest in Argentina in the near future. 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.

Substantially all of our offices and other non-shopping center rental properties are located in developed urban areas. There are many office buildings, shopping malls, retail and residential premises in the areas where our properties are located. This is a highly fragmented market, and the abundance of comparable properties in our vicinity may adversely affect our ability to rent or sell office space and other real estate and may affect the sale and lease price of our premises. In the future, both national and foreign companies may participate in Argentina’s real estate development market, competing with us for business opportunities.

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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, 2016, 78% of our sales from leases and services were derived from shopping centers in the City of Buenos Aires and the Greater Buenos Aires. In addition, all of our office buildings are located in the City of Buenos Aires and a substantial portion of our revenues are now derived from such properties. Although we own properties and may acquire or develop additional properties outside of the City of Buenos Aires and the Greater Buenos Aires, 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 and results of operations. Our dependence on rental income may adversely affect our ability to meet our debt obligations

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

We currently carry insurance policies that cover potential risks such as civil liability, fire, loss profit, floods, including extended coverage and losses from leases 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, terrorism and acts of war that generally are not insured under the insurance policies offered in the national market. Should an insured 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. 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.

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 expensive.

An uninsured loss or a loss that exceeds 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. 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.

Demand for our premium properties may not be sufficient.

We have focused on development projects to cater affluent individuals and have entered into property barter agreements pursuant to which we contribute our undeveloped properties to ventures with developers who will deliver us units in premium locations. At the time the developers return these properties to us, demand for premium residential units could be significantly lower. In such case, we would be unable to sell these residential units at the estimated prices or time frame, which could have an 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 have, substantial liquidity and capital resource requirements to finance our business. As of June 30, 2016, our consolidated financial debt amounted to Ps.5,893 million (including accrued and unpaid interest and deferred financing costs). We cannot assure you that we will have sufficient cash flows and adequate financial capacity 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. In addition, the recent disruptions in the global financial markets, including the bankruptcy and restructuring of major financial institutions, may adversely impact our ability to refinance existing debt and the availability and cost of credit in the future. In such conditions, access to equity and debt financing options may be restricted and it may be uncertain how long these economic circumstances may last. 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 changes in market conditions, changes in 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 (including the notes) 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 lenders and/or 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 recurrence of a credit crisis could have a negative impact on our major customers, which in turn could materially adversely affect our results of operations and liquidity.

The global credit crisis that began in 2008 had a significant negative impact on businesses around the world. The impact of a crisis on our major tenants cannot be predicted and may be quite severe. A disruption in the ability of our significant tenants to access liquidity could cause serious disruptions or an overall deterioration of their businesses which could lead to a significant reduction in their future orders of their products and the inability or failure on their part to meet their payment obligations to us, any of which could have a material adverse effect on our results of operations and liquidity.

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The shift of consumers to purchasing goods over the Internet, where barriers to entry are low, may negatively affect sales at our shopping centers.

In recent years, internet retail sales have grown significantly in Argentina, even although the market share of such sales is still insignificant. 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.

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, antitrust and other requirements, all of which affect our ability to acquire land, buildings and shopping centers, 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, and cancellation of licenses and revocation of authorizations.

In addition, public authorities may issue new and stricter standards, or enforce or construe 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 in obtaining 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.

We are dependent on our chairman Eduardo Sergio Elsztain, our board of directors and our controlling shareholder IRSA.

Our success, to a significant extent, depends on the continued employment of Eduardo Sergio Elsztain and certain other members of our board of directors and senior management, who have significant expertise and knowledge of our business and industry. The loss or interruption of their services for any reason could have a material adverse effect on our business and results of operations. 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, or that any of our personnel will remain employed by us.

Further, we believe that our success also depends, to a significant extent, on the continued success of IRSA which owns 94.61% of our outstanding shares. IRSA is engaged in a range of real estate, investment and other business activities, many of which are different from our business, including IRSA’s significant investments in Banco Hipotecario, an Argentine bank, and IDB Development Corporation, a large conglomerate in Israel engaged in a range of businesses including real estate, telecommunications, supermarkets, agribusiness and insurance. As a result, IRSA is exposed to certain important risks, as described in its consolidated financial statements and its filings with the SEC, which under certain circumstances could have a material adverse effect on its financial condition, results of operations and business prospects. We cannot assure you that IRSA will not be adversely affected by the risks that it faces (including those relating to its investments in Banco Hipotecario or IDB Development Corporation), and we believe that if IRSA were to be so affected, the market perception of the group of companies controlled by Eduardo Sergio Elsztain, including us, could be adversely affected as well.

The interests of our controlling shareholder could conflict with your interests.

We are currently controlled by IRSA, which has a 94.61% ownership stake in us. Our controlling shareholder is in a position to direct our management and to determine the result of substantially all matters to be decided by majority vote of our shareholders, including the election of a majority of the members of our board of directors, determining the amount of dividends distributed by, adopting certain amendments to our by-laws, enforcing or waiving our rights under existing agreements, leases and contractual arrangements and entering into certain agreements with entities affiliated with us, subject to Argentine law. As a result, circumstances may occur in which our controlling shareholders’ interests in us could be in conflict with your interests as noteholders.

Labor relations may negatively impact us.

As of June 30, 2016, 47.8% of our worforce was represented by unions under two separate collective bargaining agreements. Although we currently enjoy good relations with our employees and their unions, we cannot assure you that labor relations will continue to be positive or that deterioration in labor relations will not materially and adversely affect us.

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

As of June 30, 2016, the majority of our liabilities, such as our Series II Notes are denominated in U.S. dollars while our revenues are denominated in Pesos. This currency gap exposes us to a risk of volatility in the rate of exchange between the Peso and the U.S. dollar, and our financial results are adversely affected when the U.S. dollar appreciates against the Peso. Any depreciation of the Peso against the U.S. dollar correspondingly increases the nominal 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 generate have Peso-denominated revenues.

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Property ownership through joint ventures or minority participation may limit our ability to act exclusively in our interest.

We develop and acquire properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures. For example, we currently own 80% of Panamerican Mall S.A. (“PAMSA”), while another 20% is owned by Centro Comercial Panamericano S.A., and we also own 50% of Quality Invest S.A. (“Quality Invest”), a joint venture that controls our investment in the Nobleza Piccardo plant.

We could engage in a dispute with one or more of our joint venture partners that might affect our ability to operate a jointly-owned property. Moreover, our joint venture partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives, including objectives that relate to the timing and terms of any sale or refinancing of a property. For example, the approval of certain of the other investors is required with respect to operating budgets and refinancing, encumbering, expanding or selling any of these properties. In some instances, our joint venture partners may have competing interests in our markets that could create conflicts of interest. If the objectives of our joint venture partners are inconsistent with our own objectives, we will not be able to act exclusively in our interests.

If one or more of the investors in any of our jointly owned properties were to experience financial difficulties, including bankruptcy, insolvency or a general downturn of business, there could be an adverse effect on the relevant property or properties and in turn, on our financial performance. Should a joint venture partner declare bankruptcy, we could be liable for our partner’s common share of joint venture liabilities.

Risks Relating to our ADSs and our Common Shares.

Common shares eligible for sale could adversely affect the price of our common shares and ADS

The market prices of our common shares and the ADSs could decline as a result of sales by our existing shareholders of common shares or ADSs 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.

IRSA Inversiones y Representaciones Sociedad Anonima (“IRSA”) which as of June 30, 2016 owned approximately 94.61% of our common shares (or approximately 1,192,218,935 common shares which may be exchanged for an aggregate of 29,805,473 ADSs), is free to dispose of any or all of its common shares or ADSs at any time, in its discretion. Sales of a large number of our common shares and/or ADSs would likely have an adverse effect on the market price of our common shares and the ADSs.

If we issue additional equity securities in the future, you may suffer dilution, and trading prices for our equity securities may decline.

We may issue additional shares of our common stock for financing future acquisitions or new projects or for other general corporate purposes, although there is no present intention to do so. Any such issuance could result in a dilution of your ownership stake and/or the perception of any such issuances could have an adverse impact on the market price of the ADSs.

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 (“Mercado de Valores de Buenos Aires” or “MVBA”) than is regularly published by or about domestic issuers of listed securities in the United States and certain other countries.

We are exempt from the rules under the Securities Exchange Act of 1934, as amended (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 our 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 us or them in United States court judgments obtained in such courts predicated upon the civil liability provisions of the United States federal securities laws. There is doubt whether the Argentine courts will enforce, 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.

If we are considered to be a passive foreign investment company for United States federal income tax purposes, U.S. Holders of our common shares or ADSs would suffer negative consequences.

Based on the current and projected composition of our income and valuation of our assets, including goodwill, we do not believe we were a passive foreign investment company (“PFIC”) for United States federal income tax purposes for the taxable year ending June 30, 2016, 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. In addition, this determination is based on the interpretation of certain U.S. Treasury regulations relating to rental income, which regulations are potentially subject to differing interpretation. If we become a PFIC, U.S. Holders (as defined in “Taxation—United States Taxation”) of our common shares or ADSs will be subject to certain United States federal income tax rules that have negative consequences for U.S. Holders such as additional tax and an interest charge upon certain distributions by us or upon a sale or other disposition of our common shares or ADSs at a gain, as well as reporting requirements. Please see ‘‘Taxation—United States Taxation—Passive Foreign Investment Company” 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.

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Changes in Argentine tax laws may affect the tax treatment of our common shares or ADSs.

On September 23, 2013, the Argentine income tax law was amended by the passage of Law No. 26,893. Under the amended law, the sale, exchange or other transfer of shares and other securities is subject to a capital gain tax at a rate of 15% for Argentine resident individuals and foreign beneficiaries. There is an exemption for Argentine resident individuals if certain requirements are met; however, there is no such exemption for non-Argentine residents. See “Taxation — Argentine Taxation.” However, as of the date hereof many aspects of the amended tax law remain unclear and, pursuant to certain announcements made by Argentine tax authorities, they are subject to further rulemaking and interpretation, which may adversely affect the tax treatment of our common shares and/or ADSs. Also, the amended law had established an income tax at a rate of 10% in the distribution of dividends; however, this has been recently derogated by Law 27,260.

The income tax treatment of income derived from the sale of ADSs or exchanges of shares from the ADS facility may not be uniform under the revised Argentine income tax law. The possibly varying treatment of source income could impact both Argentine resident holders as well as non-Argentine resident holders. In addition, should a sale of ADSs be deemed to give rise to Argentine source income, as of the date of this annual report no regulations have been issued regarding the mechanism for paying the Argentine capital gains tax when the sale exclusively involves non-Argentine parties. However, as of the date of this annual report, no administrative or judicial rulings have clarified the ambiguity in the law.

Therefore, holders of our common shares, including in the form of ADSs, are encouraged to consult their tax advisors as to the particular Argentine income tax consequences under their specific facts.

Holders of our ADSs may be unable to exercise voting rights with respect to the common shares underlying the ADSs at our shareholders’ meetings.

We will not treat the holders of our ADSs as one of our shareholders and the holders of our ADSs will not have shareholder rights. The ADS depositary will be the holder of the common shares underlying your ADSs and ADS holders may exercise voting rights with respect to the common shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. There are no provisions under Argentine law or under our by-laws that limit the exercise by ADS holders of their voting rights through the ADS depositary with respect to the underlying common shares. However, there are practical limitations on the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with these holders. For example, holders of our common shares will receive notice of shareholders’ meetings through publication of a notice in an Official Gazette in Argentina, an Argentine newspaper of general circulation and the bulletin of the Buenos Aires Stock Exchange, and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. ADS holders, by comparison, will not receive notice directly from us. Instead, in accordance with the deposit agreement, we will provide the notice to the ADS depositary. If requested by us, the ADS depositary will mail to holders of ADSs the notice of the meeting and a statement as to the manner in which instructions may be given by holders. To exercise their voting rights, ADS holders must then instruct the ADS depositary as to voting the common shares represented by their ADSs. Due to these procedural steps involving the ADS depositary, the process for exercising voting rights may take longer for ADS holders than for holders of common shares and common shares represented by ADSs may not be voted as ADS holders desire.

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 U.S. 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 U.S. company.

The majority of our shareholders may determine to not 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 IFRS. 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.

Our controlling shareholder will continue to have significant influence over us, and their interests could conflict with yours.

IRSA, our principal shareholder, beneficially owns approximately 94.6% of our common shares outstanding and consequently, may influence our business policies, including, among others, determinations with respect to:

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the composition of our board of directors and, consequently, determinations of our board with respect to our business direction and policy, including the appointment and removal of our officers;

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mergers, other business combinations and other transactions, including those that may result in a change of control;

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decisions regarding payment of dividends or other distributions and the amount of any such dividends or distributions;

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sales and dispositions of our assets; and

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the amount of debt that we incur.

Our controlling shareholder may influence the adoption of actions that could be contrary to your interests and may be able to prevent other shareholders, including you, from blocking these actions or from causing different actions to be taken. We cannot assure you that our controlling shareholder will act in a manner consistent with your best interests. In addition, actions by our controlling shareholder with respect to the disposition of our common shares, or the perception that such action might occur, may negatively affect the trading prices of our common shares and ADSs.

Our ability to pay dividends is limited by law and economic conditions.

In accordance with Argentine corporate law, we may pay dividends in Pesos out of retained earnings, if any, to the extent set forth in our Audited Financial Statements. Our ability to generate retained earnings is subject to the results of our operations. Although during 2014 inflation accelerated mainly due to the currency devaluation process carried out by the Argentine Central Bank, we paid dividends on November 17, 2015. The uncertainty surrounding future rates of inflation may affect our results of operations and consequently our ability to pay dividends. If the Peso continues to devaluate significantly, all of the negative effects on the Argentine economy related to such devaluation could recur, with adverse consequences on our business and as a result on the results of our operations and our ability to pay dividends. Nevertheless, it is expected that the inflation rate is being reduced during this 2016 pursuant to the economic measures that are being adopted.

The ability of holders of the ADSs to receive cash dividends may be limited.

The ability of ADS holders to receive cash dividends may be limited by the ability of the ADS depositary to convert cash dividends paid in Pesos into U.S. dollars. Under the terms of our deposit agreement with the ADS depositary for the ADSs, to the extent that the ADS depositary can in its judgment, and in accordance with local exchange regulations, convert Pesos (or any other foreign currency) into U.S. dollars on a reasonable basis and transfer the resulting U.S. dollars abroad, the ADS depositary will as promptly as practicable convert or cause to be converted all cash dividends received by it in Pesos on the deposited securities common shares into U.S. dollars. If in the judgment of the ADS depositary this conversion is not possible on a reasonable basis (or is not permitted by applicable Argentine laws, regulations and approval requirements), the ADS depositary may distribute the foreign currency received by it in Pesos in Argentina or in its discretion hold such currency uninvited for the respective accounts of the owners entitled to receive the same. As a result, if the exchange rate fluctuates significantly during a time when the ADS depositary cannot or does not convert the foreign currency, you may lose some or all of the value of the dividend distribution. For further information see “Risks Relating to Argentina—Restrictions on transfers of foreign currency and the repatriation of capital from Argentina may impair our ability to pay dividends and distributions.”

ITEM 4. Information on the Company

A. History and Development of the Company

General Information

Our legal name is IRSA Propiedades Comerciales S.A. formerly known as Alto Palermo S.A. (APSA). We were authorized and incorporated by Decree issued by the Argentine Executive Branch on August 29, 1889, registered under No. 126 of Page 268 of Book IV, and registered in the Public Registry of Commerce of the City of Buenos Aires on February 27, 1976 under No. 323 on Page 6 of Book 85, Volume A of Argentine Corporations. Pursuant to our bylaws, our term of duration expires on August 28, 2087. Our common shares are listed and traded on the MVBA through theBuenos Aires Stock Exchange (“Bolsa de Comercio de Buenos Aires” or the “BCBA”), under the ticker “IRCP”, and our ADS on the NASDAQ under the ticker “IRCP”. Our headquarters and principal executive offices are located at Moreno 877, 22 Floor, (C1091AAQ), Ciudad Autónoma de 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 Mellon whose address is PO Box 358516, Pittsburgh, PA 15252-8516, and whose telephone is (+1 201) 680-6825. Our website is www.irsacp.com.ar. Information contained in or accessible 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 such sites.

History

We were organized in 1889 under the name Sociedad Anónima Mercado de Abasto Proveedor (SAMAP), and until 1984, we owned and operated the main fresh products market in the City of Buenos Aires. Our main asset during that period was the historic Mercado de Abasto building which served as the location of the market from 1889 to 1984, moment in which we leased our operations. In July 1994, IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”) acquired a controlling interest in us and, subsequently, we resumed real estate operations. In April 1997, we merged with fourteen 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). Since then, we have continued to grow through a series of acquisitions and the development of our businesses.

Since 1996, we have expanded our real estate activities in the shopping center segment, through the acquisition of controlling interests in sixteen shopping centers: Paseo Alcorta, Alto Palermo Shopping, Buenos Aires Design, Alto Avellaneda, Alto NOA, Abasto Shopping, Patio Bullrich, Mendoza Plaza Shopping, Alto Rosario, Córdoba Shopping Villa Cabrera, Dot Baires, Soleil Premium Outlet, La Ribera Shopping, Patio Olmos Shopping, Distrito Arcos and Alto Comahue Shopping.

On December 22, 2014, we acquired from our controlling shareholder, IRSA, 83,789 m2 of premium office space including the República Building, the Bouchard 710 building, the Della Paolera 265 building, the Intercontinental Plaza Building, the Suipacha 652 building and the land reserve “Intercontinental II” (the "Acquired Properties") with potential to develop up to 19,600 square meters, each located in the City of Buenos Aires, to implement our objective of expanding our business of developing and operating commercial properties in Argentina and to create a unique and unified portfolio of rental properties consisting of the best office buildings in the city of Buenos Aires and the best shopping centers in Argentina. The total value of the transaction was US$308.0 million, based on third party appraisals.

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Our former legal name, Alto Palermo S.A. (APSA), was modified by resolution adopted at the Extraordinary General Shareholders’ meeting held on February 5, 2015, to IRSA Commercial Properties S.A. As of June 30, 2016, our main shareholder is IRSA with 94.61% of our capital stock. Our shares are listed on the MVBA, through the BCBA and Nasdaq, under the symbol "IRCP".

As a consequence of the assets acquired in December 2014, as of June 30, 2016, we own and/or manage 16 shopping centers in Argentina, 15 of which are operated by us, totaling 333,155 square meters and 79,048 square meters of gross leasable in 6 premium office buildings of rental office property.

Significant acquisitions, dispositions and development of businesses

The following is a description of the most significant events in terms of acquisitions, dispositions, real estate barter transactions and other transactions which occurred during the years ended June 30, 2016, 2015 and 2014:

Fiscal year ended as of June 30, 2016

Acquisitions

Building office to be constructed owned by IRSA

We have acquired from our controlling company IRSA, 16,012 square meters corresponding to 14 floors (13 to 16 and 21 to 30) for purposes of long-term leasing and 142 parking spaces in the building to be built in the Catalina area in the City of Buenos Aires. The building to be constructed has a total gross leasing area of 35,468 square meters in 30 office floors and 316 parking lots in four undergrounds; possession is scheduled to be delivered in December 2019 and the conveyance deed is expected to be executed in December 2020.

The price of the transaction was established based on two components: a “Determined” part corresponding to the incidence of land on the square meters acquired by us in an amount of Ps. 455.7 million (approximately US$/square meter 1,600 + VAT) that were paid on the execution date and a “To Be Determined” part, where IRSA will shift the company only the real cost of the construction works per square meter.

Plot of land adjoining Shopping Alto Avellaneda

On December 30, 2015, we signed a purchase agreement –granting possession– for the acquisition of a plot of land of approximately 3,822 square meters located in Avellaneda, Province of Buenos Aires, for a potential enlargement of the shopping center Alto Avellaneda. The transaction amounted to US$ 2.0 million, out of which US$ 1.3 million have been paid. The balance will be paid as follows: US$ 0.2 million upon registration of the measurement plan and US$ 0.5 million upon delivery of the deed conveying title to the property.

Dispositions

Units of Intercontinental Plaza building

On February 2, 2016, we conveyed title to 851 square meters corresponding to an office and 8 parking lots in the Intercontinental Plaza building to an unrelated party. We still hold 6,308 square meters of the building. The total amount of the transaction was Ps. 41.5 million, which has already fully paid by the purchaser. The gross profit of the transaction amounts to Ps. 20.1 million.

On September 10, 2015, we conveyed title to 5,963 square meters corresponding to 7 office floors, 56 parking lots and 3 storage units in the Intercontinental Plaza building to a unrelated party, with 7,159 square meters of the building being held by us. The total amount of the transaction was Ps. 324.5 million, which has already fully paid by the purchaser. The gross profit of the transaction amounted to Ps. 155.8 million.

Fiscal year ended as of June 30, 2015

Acquisitions

Acquisition of investment properties from IRSA.

On December 22, 2014, we acquired from IRSA, 83,789 m2 of its premium office portfolio including the buildings República, Bouchard 710, Della Paolera 265, Intercontinental Plaza and Suipacha 652 and the “Intercontinental II” plot of land in order to consolidate a vehicle which main corporate purpose is to develop and operate commercial properties in Argentina.

The total purchase price of the transaction was US$308 million, which have already been paid as of June 30, 2016.

Acquisition of plot of land in the province of Córdoba

On May 6, 2015, we acquired a plot of land located in Villa Cabrera, Córdoba. The price was agreed upon at Ps. 3.1 million, which has already been paid.

Dispositions

Decrease of equity interest in Avenida Inc.

On July 18, 2014, we exercised warrants and increased our shareholding in Avenida Inc.(“Avenida”) to 35.46% of its capital stock. However, our interest in Avenida was further reduced to 23.01% as a result of a simultaneous acquisition of a 35.12% interest in Avenida by a new investor. Subsequently, on September 2, 2014, we sold, trough Torodur S.A. (“Torodur”) 1,430,000 shares representing 5 % of the Avenida’s capital stock in the amount of Ps.19.1 million (US$2.3 million), thus reducing our equity interest to 17.68%. Such transaction generated a gain of Ps.8.8 million included in "Other operation results, net" in the statement of comprehensive income. On July, 2015, following last year sale of 5% and the recent capital round, our share interest was diluted to 11.38% of Avenida.

Sale of units in Intercontinental Plaza building

On May 5, 2015 we sold to a non related party, 8,470 square meters, corresponding to 9 offices floors and 72 parking units. The amount of the transaction was Ps.376.4 million, which has been paid in full. The gross profit before tax of the transaction amounted to Ps. 123.7 million.

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Fiscal year ended as of June 30, 2014

Acquisitions

Acquisition of building adjacent to Alto Palermo Shopping

On May 22, 2014, we acquired a property with a 40 square meters area, adjacent to Alto Palermo Shopping, located in Av. Santa Fe 3255/57/59 for US$3.8 million.

Subscription of common shares of Avenida.

On August 29, 2013, we have subscribed through Torodur, 3,703,704 common shares of Avenida, representing 24.79% of its outstanding capital. Additionally, we were granted a warrant to increase our interest up to 37.04%. The purchase price for the transaction was Ps.13.0 million, which has already been paid in full. After the acquisition, Avenida, incorporated Avenida Compras S.A. in Argentina, a company engaged in e-commerce, which is wholly owned by Avenida.

Purchase Option Agreement for Arcos del Gourmet S.A.

On September 16, 2013, we entered into an agreement with Messrs. Eduardo Giana, Pablo Bossi and Patricio Tobal (non-controlling shareholders of Arcos del Gourmet S.A.), whereby we were granted an exclusive and irrevocable option to purchase up to 10% of the equity interest of Arcos del Gourmet S.A. (“Arcos del Gourmet”), which can be executed up to December 31, 2018. In the event the option is exercised, we should pay the amount of US$8.0 million.

Furthermore, in the aforementioned agreement the price of the option was set as follows: (a) a fixed amount of Ps.2.0 million which was cancelled, and (b) a variable amount payable monthly, which result from applying 4.5% on the amounts accrued in the immediate preceding month for rental and right of admission, net of certain expenses. Such variable sum will be paid during 5 years from the opening of the shopping mall, during that period Messrs. Giana, Tobal and Bossi assigned to us the economic rights of Arcos del Gourmet.

Fiscal Year 2016

During the fiscal year ended on June 30, 2016, we invested in capital expenditures for Ps. 188.0 million, out of which: (i) Ps. 167.7 million were used in the acquisition of investment properties, mainly, in connection with improvements to our shopping centers; (ii) Ps. 13.7 million are related to the acquisition of property, plant and equipment; and (iii) Ps. 6.6 million were used in advance payments for the acquisition of general investments.

Fiscal Year 2015

During the fiscal year ended on June 30, 2015, our capital expenditures amounted to Ps. 2,927.5 million, of which: (i) Ps. 186.5 million were used in development of properties, (Ps. 1.5 million of which was used in Distrito Arcos and Ps. 185.0 million in Alto Comahue); (ii) Ps. 14.0 million were used in advance payments for the acquisition of general investments; (iii) Ps. 60.4 million were related to improvements made to our shopping centers; (iv) Ps. 28.1 million were related to the acquisition of machinery, equipment, vehicles, furniture and fixtures, and other buildings and facilities; (v) Ps. 2.0 million were used in improvements made to our offices and other rental properties, and (vi) Ps. 2,636.5 million were used in the acquisition of properties from our parent company.

Fiscal Year 2014

During the fiscal year ended on June 30, 2014, our capital expenditures were Ps. 285.7 million, of which: (i) Ps. 179.3 million were used in development of properties, Ps. 99.9 million of which was used in the "Arcos" project and Ps. 79.4 million in the Shopping Neuquén project; (ii) Ps. 29.6 million were used in advance payments for the acquisition of general investments; (iii) Ps. 61.1 million were related to improvements made to our shopping centers; (iv) Ps. 11.9 million were related to the acquisition of machinery, equipment, and furniture and fixtures, and other buildings and facilities; (v) Ps. 4.3 million were used in improvements made to our offices and other rental properties and (vi) Ps. 0.1 million are related to the acquisition of land reserves.

Recent Developments

Acquisition of shares of EHSA

In July 2016, we acquired from FEG Entretenimientos S.A., 25% of the shares of EHSA, a company in which we already owned 50%, and from Mr. Marcelo Figoli 1.25% of the shares of Entretenimiento Universal S.A. ("ENUSA"). The purchase price of the acquisition was Ps. 66.5 million, 50% of which was already paid, and the balance was paid in two equal installments payable within 60 and 90 days. As of the date of this annual report, the total amount was fully paid.

We also sold 5% of the shares of EHSA to Mr. Diego Finkelstein. The sales amount was set in the amount of Ps. 13.45 million, 50% having been perceived, while the balance will be perceived in two equal installments payable within 60 and 90 days. As a result, we own 70% of capital and votes of EHSA and Mr. Diego Finkelstein the remaining 30%.

EHSA holds, directly and indirectly, 100% of the shares of OGDEN Argentina S.A. ("OASA") and 95% of the shares of ENUSA. OASA owns 50% of the shares and votes of La Rural S.A. ("LRSA"), a company that has the usufruct for the commercial operation of the "Predio Ferial de Palermo" in the City of Buenos Aires, with the Rural Society Argentina ("SRA") that owns the remaining 50%. In addition, OASA manages LRSA through agreements with the SRA including the right to appoint the president, with a casting vote in certain issues- and general manager. Meanwhile, ENUSA is mainly engaged in the realization of certain shows at Predio Ferial Palermo.

Resignation as alternate director

On September 29, 2016, we informed that we have received a communication from Mr. David Alberto Perednik notifying his resignation as alternate director. The resignation will be taken into account at the next Ordinary Shareholders Meeting.

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B. Business Overview

Operations and principal activities

We are the largest owner and manager of shopping centers and one of the largest owners of office and other commercial properties in Argentina in terms of gross leasable area and number of rental properties. As of June 30, 2016, our total assets were Ps.9,299.5 million, and our shareholders’ equity was Ps.1,672.1 million. Our operating income for the fiscal years ended June 30, 2016 and June 30, 2015, was Ps.1,934.6 million and Ps. 1,348.4 million, respectively.

We are owners and/or managers of 16 shopping centers in Argentina, 15 of which are operated by the Company, totaling 333,155 square meters of Gross Leaseable Area as of the closing of fiscal year 2016. Moreover, the Company owns 79,048 square meters in 6 premium office buildings and has a large reserve of land for future commercial developments. We are operators and owners of majority stakes in 16 of our shopping centers in Argentina, seven of which are located in the City of Buenos Aires (Abasto, Alcorta Shopping, Alto Palermo, Patio Bullrich, Buenos Aires Design, Dot Baires Shopping and Distrito Arcos), two in the Greater Buenos Aires area (Alto Avellaneda and Soleil), and the rest in various provinces (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera in the City of Córdoba, and Alto Comahue in the City of Neuquén). In addition, IRSA Propiedades Comerciales operates La Ribera Shopping in the City of Santa Fe through a joint venture, and owns the historic real estate that hosts the Patio Olmos shopping center in the Province of Córdoba, which is operated by a third party.

We operate our business through four principal business segments, namely “Shopping Centers”, “Offices and Others”, “Sales and Developments” and “Financial Operations and Others” as further described below:

●

“Shopping Centers” includes the operating results from our commercial exploitation and development of shopping centers, mainly derived from leasing and providing services related to the lease of retail stores and other spaces at our shopping centers. Our Shopping Centers segment includes highly diversified, multi-format assets that focus on shopping centers that target middle-income to high-income consumers. As of June 30, 2016, the average occupancy rate of our shopping centers was 98.4%. Our Shopping Centers segment had operating income of Ps.1,673.4 million for fiscal 2016, 37.6% higher than fiscal 2015, representing 85.5% of our consolidated operating income for such periods.

●

“Offices and Others” includes the operating results arising from the lease of offices and other rental properties and the provision of related services. Our Offices and Others segment had operating income of Ps.134.6 million for fiscal 2016, 624% higher than fiscal 2015, representing 6.9% of our consolidated operating income for such periods.

●

“Sales and Developments” includes the operating results of sales undeveloped parcels of land and/or trading properties and those originated in their development and maintenance. Also includes the results of the sales of investment properties. Our Sales and Developments segment had operating income of Ps.149.3 million for fiscal 2016, 16.6% higher than fiscal 2015, representing 7.6% of our consolidated operating income for such periods.

●

“Financial Operations and Others” includes the results of operations from financing activities developed through Tarshop S.A., and the residual transactions of consumer financing from Apsamedia S.A. (currently merged with us). The e-commerce activities conducted through our associate Avenida Inc. were included until the first quarter of fiscal 2015. Such investment was considered as financial asset from the second quarter of fiscal 2015. Our Financial Operations and Others segment had operating income loss of Ps.0.9 million for fiscal 2016.

Our common shares are listed and traded on the MVBA through the BCBA under the ticker “IRCP” and our ADSs are listed on NASDAQ under the ticker “IRCP.” Our controlling shareholder is IRSA, a leading Argentine real estate company engaged in a diverse range of activities, whose common shares are listed on the MVBA and on the New York Stock Exchange (“NYSE”).

Business Strategy

As a leading company in Argentina dedicated to acquiring, developing and managing commercial properties that include shopping centers and office buildings and other rental properties, we seek to (i) generate stable cash flows through the operation of our rental properties and (ii) achieve long-term appreciation of our real estate assets. We seek to achieve these goals and maintain our leadership in our markets through the implementation of the following strategies.

Investment Strategy. We seek to meet the unmet demand for shopping venues in urban centers throughout Argentina while seeking to optimize the shopping experience of our clients’ customers. In addition, we look to benefit from the unsatisfied demand for premium office buildings in the City of Buenos Aires. We seek to achieve these objectives by implementing the following investment strategies:

●

Selectively develop and acquire new shopping centers. We look to develop new shopping centers with different business formats located in densely populated urban areas or that have attractive growth prospects, including the metropolitan area of Buenos Aires, cities in certain provinces of Argentina and possibly abroad. Our strategically located land bank enables us to develop new shopping centers in potentially attractive areas that we believe meet those requirements. Furthermore, we seek to selectively acquire shopping centers we believe will benefit from our know-how, tenant relationships, centralized management and leasing strategies, thereby enabling us to enter new markets and achieve synergies within our portfolio of properties.

●

Purchase and develop premium office buildings. Since the Argentine economic crisis in 2001 and 2002, there has been limited investment in high-quality office buildings in the City of Buenos Aires. As a result, we believe there is substantial unsatisfied demand for such properties. We seek to become the leader in the high quality office properties business in Argentina by targeting premium corporate tenants and to purchase and develop premium office buildings in strategically located business districts in the City of Buenos Aires and other locations we believe offer attractive returns and potential for long-term capital gains.

●

Regularly improve our properties. We consistently look for ways to improve our properties and make them more attractive for existing and future tenants from a commercial and financial perspective in order to maintain our high occupancy rates, increase our lease renewal rates, and optimize our leasable area and our land reserves.

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●

Develop ancillary, synergistic projects. We seek to develop real estate and other commercial projects, including e-commerce activities performed through our associate Avenida Inc., which are ancillary to our shopping centers and benefit from the flow of customers in the areas where we operate. Our development of residential real estate such as “Torres de Abasto,” near the Abasto Shopping in the City of Buenos Aires, and “Condominios del Alto I” and “Condominios del Alto II” near the Alto Rosario Shopping in the City of Rosario, Province of Santa Fe, are good examples of this strategy.

Operational Strategy. Our main operational goal is to maximize our profitability at our shopping centers and office buildings. We seek to achieve this goal by implementing the following operational strategies:

●

Strengthen and consolidate relationships with our tenants. Maintaining strong relationships with our tenants is critical to our continued success. We strive to maintain and enhance our business relationships with over 1,000 companies and retail brands that constitute our group of tenants at our shopping centers. We seek to continually improve our shopping centers to keep them modern and attractive, offering shoppers an excellent shopping experience while maintaining competitive occupancy costs for our tenants. Further, we look to offer a favorable mix of products and services, including administrative and marketing advice and activities. We also focus on consolidating and strengthening the relationships with tenants at our office building, striving to ensure that they obtain the benefits of leasing in our premium office buildings.

●

Seek an optimum tenant mix and attractive lease conditions. We endeavor to maintain high occupancy rates at our shopping centers by leasing to a diversified mix of credit-worthy tenants with highly renowned brands, to enable us to achieve stable and attractive rental income per square meter. We also seek to keep an optimum tenant mix in our office buildings, where the credit-worthiness of our corporate clients is key to maintaining solid and stable cash-flows.

●

Improve brand awareness and loyalty of consumers and tenants. We have a valuable and renowned shopping center brand portfolio. We strive to improve brand recognition and the loyalty of consumers and tenants with expansive marketing campaigns that include advertising, promotional events and various other marketing initiatives aimed at emphasizing our premium product offering, tailored to the preferences of the end-consumers at our shopping centers. We also seek to improve such loyalty, in particular among young women, families and tourists, by adding value to our properties through high quality entertainment and food court offerings aimed at increasing shoppers’ visit frequency and duration.

●

Improve operating margins. We seek to benefit from our economies of scale in order to achieve cost savings and improve our operating margins, which have been high during the last ten years.

Shopping Centers

Overview

As of June 30, 2016, we owned a majority interest in, and operated, a portfolio of 16 shopping centers in Argentina, seven of which are located in the City of Buenos Aires (Abasto, Alcorta Shopping, Alto Palermo Shopping, Patio Bullrich, Buenos Aires Design, Dot Baires Shopping and Distrito Arcos), two are located in the greater Buenos Aires area (Alto Avellaneda and Soleil Premium Outlet), and the rest are located in different provinces of Argentina (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera and Patio Olmos ,operated by a third party, in the City of Córdoba, La Ribera Shopping in Santa Fe ,through a joint venture, and Alto Comahue in the City of Neuquén).

The shopping centers we operate comprise a total of 333,155.4 square meters of GLA (excluding certain spaces occupied by hypermarkets which are not our tenants). Total tenant sales in our shopping centers, as reported by retailers, were Ps. 28,904.9 million for fiscal year 2016 and Ps. 21,527.0 million for fiscal year 2015, representing an increase of 34.3%, including Distrito Arcos and Alto Comahue. 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.

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The following table shows certain information about our shopping centers as of June 30, 2016:

	Date of Acquisition/Development	Location	GLA in square meters(1)	Stores	Occupancy rate (2)	IRSA Commercial Properties’ Interest (3)	Book Value (4)
Abasto (6)	Jul-94	City of Buenos Aires, Argentina	36,737.6	170	99.8%	100%	104,660
Alto Palermo	Nov-97	City of Buenos Aires, Argentina	18,966.0	142	99.6%	100%	75,752
Alto Avellaneda	Dic-97	Province of Buenos Aires, Argentina	35,887.0	134	100.0%	100%	51,955
Alcorta Shopping	Jun-97	City of Buenos Aires, Argentina	15,876.7	112	89.1%	100%	51,585 (5)
Patio Bullrich	Oct-98	City of Buenos Aires, Argentina	11,782.7	88	99.1%	100%	61,011
Alto Noa	Mar-95	Salta, Argentina	19,039.9	89	100.0%	100%	15,696
Buenos Aires Design	Nov-97	City of Buenos Aires, Argentina	13,903.1	62	95.7%	53.7%	4,237
Mendoza Plaza	Dec-94	Mendoza, Argentina	42,043.0	139	95.2%	100%	52,832
Alto Rosario(6)	Nov-04	Santa Fe, Argentina	28,795.5	143	100.0%	100%	77,459
Córdoba Shopping –Villa Cabrera	Dec-06	Córdoba, Argentina	15,581.7	110	99.2%	100%	40,352
Dot Baires Shopping	May-09	City of Buenos Aires, Argentina	49,640.7	150	100.0%	80%	391,066
Soleil Premium Outlet	Jul-10	Province of Buenos Aires, Argentina	13,991.1	78	100.0%	100%	80,386
La Ribera Shopping	Aug-11	Santa Fe, Argentina	9,850.7	63	99.3%	50%	24,476
Distrito Arcos (7)	Dec-14	City of Buenos Aires, Argentina	11,170.1	60	97.0%	90.0%	279,107
Alto Comahue (8)	Mar-15	Neuquén, Argentina	9,889.6	102	96.6%	99.1%	314,359
Patio Olmos (9)	Sep-07	Córdoba, Argentina				100%	24,989
Total			333,155.4	1,642	98.4%		1,649,922

(1)

Corresponds to the total leasable surface area of each property. Excludes common areas and parking spaces.

(2)

Calculated by dividing square meters leased under leases in effect by gross leasable area as of fiscal year end.

(3)

Our effective interest in each of its business units.

(4)

Cost of acquisition, plus improvements, less accumulated depreciation. Values in thousands of Pesos (Ps.).

(5)

Includes Ps. 13,454 thousands from Ocampo parking space.

(6)

Excludes Museo de los Niños (3,732 sqm in Abasto and 1,261 sqm in Alto Rosario).

(7)

Opening was on December 18, 2014.

(8)

Opening was on March 17, 2015.

(9)

IRSA CP owns the historic building of the Patio Olmos shopping center in the province of Cordoba, operated by a third party.

Accumulated Rental Income as of June 30, 2016, 2015 and 2014

	As of June 30,
	2016	2015	2014
	In thousands of Ps.
Abasto	384,144	301,685	238,021
Alto Palermo	391,913	295,285	244,214
Alto Avellaneda	265,195	199,920	160,894
Alcorta Shopping	186,700	140,533	105,792
Patio Bullrich	118,498	98,359	79,374
Alto Noa	72,631	50,669	38,746
Buenos Aires Design	45,382	35,320	27,360
Mendoza Plaza	119,037	91,694	74,111

Alto Rosario	181,501	137,639	100,072
Córdoba Shopping –Villa Cabrera	68,050	54,445	39,763
Dot Baires Shopping	261,364	199,474	158,306
Soleil Premium Outlet	80,113	59,366	44,178
La Ribera Shopping	20,779	13,068	9,360
Distrito Arcos (1)	78,121	22,934	-
Alto Comahue (2)	47,787	11,690	-
Total (3)	2,321,215	1,712,081	1,320,191

(1) Opening was on December 18, 2014.

(2) Opening was on March 17, 2015.

(3) Does not include income neither from Fibesa nor from Patio Olmos.

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Tenant Retail Sales (1)

The following table sets forth the total approximate tenant retail sales in millions of Pesos at the shopping centers in which we had an interest for the fiscal years stated below:

	As of June 30,
	2016	2015	2014
	In millions of Ps.
Abasto	4,043.1	3,150.2	2,447.0
Alto Palermo	3,499.4	2,662.1	2,111.2
Alto Avellaneda	3,781.1	2,913.3	2,333.8
Alcorta Shopping	1,899.9	1,474.7	1,120.4
Patio Bullrich	1,061.0	888.5	689.3
Alto Noa	1,369.0	1,068.6	766.1
Buenos Aires Design	414.4	326.0	272.2
Mendoza Plaza	2,368.8	1,906.7	1,514.7
Alto Rosario	2,628.1	1,951.8	1,378.3
Córdoba Shopping- Villa Cabrera	990.7	756.0	546.6
Dot Baires Shopping	3,254.3	2,570.6	2,008.3
Soleil Premium Outlet	1,282.2	938.4	664.0
La Ribera Shopping	633.5	398.1	280.8
Distrito Arcos (2)	962.3	339.9	-
Alto Comahue (3)	717.1	182.1	-
Total sales	28,904.9	21,527.0	16,132.8

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

(2) Opening was on December 18, 2014.

(3) Opening was on March 17, 2015.

Accumulated Sales per type of Business

	As of June 30,
	2016	2015	2014
	In millions of Ps.
Anchor Store	1,590.5	1,299.3	1,098.4
Clothes and footwear	15,201.4	11,124.8	7,940.1
Entertainment	1,025.7	740.6	546.5
Home	783.9	617.1	486.4
Home Appliances	3,861.5	2,994.2	2,526.5
Restaurant	2,722.2	1,938.4	1,476.8
Miscellaneous	3,368.2	2,589.4	1,922.3
Services	351.5	223.1	135.8
Total	28,904.9	21,527.0	16,132.8

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Occupancy Rate

The following table sets forth the occupancy rate expressed as a percentage of the gross leasable area as of the dates stated at the end of the following fiscal years:

	As of June 30,
	2016	2015	2014
Abasto	99.8%	100.0%	99.4%
Alto Palermo	99.6%	99.7%	98.9%
Alto Avellaneda	100.0%	99.9%	99.5%
Alcorta Shopping	89.1%	100.0%	99.8%
Patio Bullrich	99.1%	100.0%	99.6%
Alto Noa	100.0%	100.0%	99.7%
Buenos Aires Design	95.7%	94.6%	92.3%
Mendoza Plaza	95.2%	96.1%	95.0%
Alto Rosario	100.0%	97.9%	97.0%
Córdoba Shopping Villa Cabrera	99.2%	99.8%	99.8%
Dot Baires Shopping	100.0%	99.7%	99.7%
Soleil Premium Outlet	100.0%	99.4%	100.0%
La Ribera Shopping	99.3%	99.3%	99.6%
Distrito Arcos	97.0%	97.3%	-
Alto Comahue	96.6%	94.2%	-
Total Percentage	98.4%	98.7%	98.4%

 Rental Price

The following table shows the annual average rental price per square meter for the fiscal years ended June 30, 2016, 2015 and 2014:(1)

	As of June 30,
	2016	2015	2014
	In millions of Ps.
Abasto	10,456.4	8,227.2	6,254.6
Alto Palermo	20,663.9	15,107.9	12,618.5
Alto Avellaneda	7,389.7	5,443.2	4,400.3
Alcorta Shopping	11,759.4	9,106.1	7,000.2
Patio Bullrich	10,056.9	8,452.8	6,762.3
Alto Noa	3,814.7	2,656.6	2,022.5
Buenos Aires Design	3,264.2	2,543.2	1,874.9
Mendoza Plaza	2,831.3	2,181.1	1,802.8
Alto Rosario	6,303.1	4,847.2	3,390.4
Córdoba Shopping Villa Cabrera	4,367.3	3,552.0	2,503.8
Dot Baires Shopping	5,265.1	4,001.7	3,389.3
Soleil Premium Outlet	5,726.0	4,242.5	2,908.4
La Ribera Shopping	2,109.4	1,340.3	1,129.7
Distrito Arcos (2)	6,993.8	1,891.1	-
Alto Comahue (3)	4,832.1	1,236.1	-

(1)Corresponds to consolidated annual accumulated rental prices according to the IFRS divided by gross leasable square meters. Does not include income neither from Fibesa nor from Patio Olmos.

(2)Opening was on December 18, 2014.

(3)Opening was on March 17, 2015.

Lease Expirations (1) (2)

The following table sets forth the schedule of estimated lease expirations for our shopping centers for leases in effect as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases earlier:

As of June 30, 2016
Year of expiration	Number of Agreements	Square meters to expire	Percentage to expire	Amount (Ps.)(3)	Percentage of Agreements
2016	171(1)	33,155.2(1)	10%(1)	96,293,785.4	8%
2017	487	83,781.3	25%	356,833,346.8	30%
2018	403	69,906.2	21%	308,857,789.9	26%
2019 and subsequent years	581	146,312.7	44%	409,126,531.0	35%
Total (2)	1,642	333,155.4	100%	1,171,111,453.1	100%

(1) Including vacant stores relating to leases expired as of June 30, 2016. A lease may be associated to one or more stores.

(2) Does not reflect our ownership interest in each property.

(3) Annual base rent of each agreement as in effect as of June 30, 2016.

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Five largest tenants in the portfolio

The five largest tenants in our portfolio (in terms of sales) accounted for approximately 15% of our gross leaseable area as of June 30, 2016 and approximately 9.1% of the annual base rent for the fiscal year then ended.

New Agreements and Renewals

The following table shows certain Information about lease agreements as of June 30, 2016:

Type of Business	Number of Agreements	Annual Base Rent Amount	Annual Admission Rights Amount	Average Annual Base Rent per sqm (Ps.)		Number of non-renewed agreements(1)	Non-renewed agreements(1) Annual Base Rent Amount
				New and renewed	Former agreements
		In million of Ps.					In million of Ps.
Clothing and footwear	456	345.3	95.9	6,394.0	4,029.7	515	366.1
Miscellaneous(2)	103	76.1	25.0	3,622.4	2,904.1	118	91.6
Restaurant	86	45.0	8.3	3,990.2	3,381.3	130	74.5
Home & décor	43	19.5	5.4	3,735.3	2,480.8	48	26.4
Houseware	26	39.5	4.0	4,997.9	3,216.9	25	29.2
Entertainment	9	13.5	1.1	673.3	322.9	23	17.2
Services	12	6.4	0.5	1,867.2	1,702.2	48	20.7
Total	735	545.2	140.3	4,435.8	2,550.3	907	625.9

(1) 

Includes vacant stores as of June 30, 2016. Leasable Area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.

(2) 

Miscellaneous includes Anchor Store.

Depreciation

Depreciation, based on a component approach, is calculated using the straight-line method to allocate the cost over the assets’ estimated useful lives.

Detailed Information about each of our shopping centers

Set forth below is certain information regarding our shopping center portfolio, including identification 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 170-store shopping center located in downtown 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. The main building is a landmark building that, between 1889 and 1984 was the primary fresh produce market for the City of Buenos Aires. Our Company converted the property into a 116,646 square meter shopping center (including parking and common areas) with approximately 36,737.6 square meters of gross leaseable area (40,469.9 square meters if we consider Museo de los Niños). Abasto is the fourth largest shopping center in Argentina in terms of gross leaseable area.

Abasto has a 27-restaurant food court, a 12-screen movie theatre complex with seating capacity for approximately 3,100 people, covering a surface area of 8,021 square meters, entertainment area and also houses the Museo de los Niños (Children´s Museum) with a surface area of 3,732.8 square meters (the latter is not included within the gross leaseable area). The shopping center is distributed over five stories and includes a parking lot for 1,200 vehicles covering a surface area of 40,469.9 square meters.

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 neighborhood of the City of Buenos Aires.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 4,043.1 million, representing sales per square meter for about Ps.110,053.6, 28.3% higher than sales recorded in fiscal year 2015. Total rental income increased from Ps. 301.7 million for fiscal year ended June 30, 2015 to Ps. 384.1 million for fiscal year ended June 30, 2016, which represents annual income per gross leaseable square meter of Ps. 8,227.2 in fiscal year 2015 and Ps. 10,456.4 in fiscal year 2016.

As of June 30, 2016, Abasto Shopping’s occupancy rate was 99.8%.

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Abasto’s five largest tenants

Abasto’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 32.7% of its gross leaseable area as of June 30, 2016 and approximately 8.7% of the annual base rent for the fiscal year then ended.

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

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Hoyts General Cinema – Theaters	Cinema	8,021.0	21.8
Zara	Clothes and footwear big store	1,790.0	4.9
Fravega	Electronics/Home Appliances/Computing	885.2	2.4
Musimundo	Electronics/Home Appliances/Computing	661.4	1.8
Garbarino	Electronics/Home Appliances/Computing	656.7	1.8
Total		12,014.3	32.7

Tenant mix of Abasto (1)

The following table sets forth the mix of tenants by types of businesses in Abasto:

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and Footwear	16,226.5	44.2
Entertainment	11,559.3	31.5
Restaurant	3,065.6	8.3
Home Appliances	2,730.7	7.4
Miscellaneous	2,271.1	6.2
Home & décor	498.7	1.4
Services	385.7	1.0
Total	36,737.6	100

(1) Includes vacant stores as of June 30, 2016.

Revenues from Abasto

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

	As of June 30,
	2016	2015	2014
	(In thousands of Ps.)
Base rent	215,228	166,440	129,715
Percentage rent	84,115	69,186	55,829
Total rent	299,344	235,626	185,544
Revenues from admission rights	38,561	30,024	25,043
Management fees	5,532	4,277	3,464
Parking	40,117	30,822	23,719
Commissions	-	439	-
Other	591	497	251
Total (1)	384,144	301,685	238,021

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expiration for Abasto(1)

The following table includes the lease expiration for Abasto during the periods indicated for existing leases as of June 30, 2016, assuming that none of these tenants will exercise their renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (2)	Percentage of Agreements
2016	16	2,093.9	6%	15,452,307.2	8%
2017	65	8,438.9	23%	59,457,997.0	32%
2018	35	4,163.7	11%	37,085,266.1	20%
2019 and subsequent years	54	22,041.2	60%	73,781,435.5	40%
Total	170	36,737.6	100%	185,777,005.8	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

Alto Palermo, City of Buenos Aires

Alto Palermo is a 142-store shopping center that opened in 1990 in a well-established 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, a few minutes from downtown Buenos Aires with nearby access from the Bulnes subway station. Alto Palermo has a total constructed area of 65,029 square meters (including parking) that consists of 18,966.0 square meters of gross leaseable area. Alto Palermo features an entertainment center and a food court with 17 restaurants. Alto Palermo is spread over four levels and has a 654-car pay parking lot of 32,405 square meters. Alto Palermo’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.

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During the fiscal year ended on June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales totaling approximately Ps. 3,499.4 million, 31.5% higher than the same period of fiscal year 2015. Sales per square meter reached Ps. 184,508.0. Total rental income increased from Ps. 295.3 million for fiscal 2015 to Ps. 391.9 million for fiscal 2016, which represents annual income per gross leaseable square meter of Ps. 15,107.9 in fiscal year 2015 and Ps. 20,663.9 in fiscal year 2016.

As of June 30, 2016, Alto Palermo’s occupancy rate was 99.6%.

Alto Palermo’s five largest tenants

Alto Palermo’s five largest tenants (in terms of sales) accounted for approximately 23.9% of its gross leaseable area at June 30, 2016 and approximately 10% of its annual base rent for the fiscal year then ended.

The following table describes Alto Palermo’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Zara	Clothes and footwear big store	1,384.0	7.3
Nike	Sports clothes and footwear	1,462.1	7.7
Prune	Leather clothes and accessories	199.9	1.1
Garbarino	Electronics/Home Appliances/Computing	185.7	1.0
Wendy’s	Restaurant	1,308.5	6.9
Total		4,540.2	24.0

Tenant Mix of Alto Palermo (1)

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	11,254.5	59.3
Restaurant	2,890.8	15.2
Services	1,911.0	10.1
Miscellaneous	2,108.2	11.1
Home Appliances	556.4	2.9
Home & décor	245.2	1.3
Total	18,966.0	100

(1)

Includes vacant stores as of June 30, 2016.

Revenues from Alto Palermo

The following table sets forth certain information relating to the revenues of Alto Palemo for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	240,540		176,989	149,020
Percentage rent	67,376		56,549	43,648
Total rent	307,916		233,538	192,669
Revenues from admission rights	48,471		35,096	30,604
Management fees	5,142		3,976	3,221
Parking	29,983		22,051	17,170
Commissions	-		197	209
Other	401		427	341
Total (1)	391,913		295,285	244,214

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for Alto Palermo(1)

The following table shows a schedule of lease expirations for Alto Palermo during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise their renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.)(2)	Percentage of Agreements
2016	16	2,747.1	14%	18,236,835.0	9%
2017	52	5,455.7	29%	68,159,497.6	34%
2018	38	6,460.2	34%	55,778,918.8	28%

2019 and subsequent years	36	4,303.1	23%	56,428,217.9	28%
Total	142	18,966.0	100%	198,603,469.2	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

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Alto Avellaneda, Greater Buenos Aires area

Alto Avellaneda is a 134-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 total constructed area of 108,598.8 square meters (including parking) which consists of 35,887.0 square meters of GLA. The shopping center has a multiplex cinema with six screens, the first Walmart superstore in Argentina, an entertainment center, a food court with 19 restaurants and an anchor store, Falabella, which opened on April 28, 2008. Walmart (not included in gross leaseable area) purchased the space it occupies, but it pays for its pro rata share of the common expenses of Alto Avellaneda’s parking lot. The shopping center 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.

On December 30, 2015, we signed a purchase agreement granting possession for the acquisition of a plot of land of approximately 3,822 square meters located in Avellaneda, Province of Buenos Aires, for a potential expansion of the Alto Avellaneda shopping center. See “Significant acquisitions, dispositions and development of businesses” for more information.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 3,781.1 million, which represents a year-on-year growth of 29.8%. Sales per square meter were Ps. 105,362.7. Total rental income increased from Ps. 199.9 million for fiscal 2015 to Ps. 265.2 million for fiscal 2016, which represents annual income per gross leaseable square meter of Ps. 5,443.2 in fiscal year 2015 and Ps. 7,389.7 in fiscal year 2016.

As of June 30, 2016, Alto Avellaneda’s occupancy rate was 100%.

Alto Avellaneda’s five largest tenants

Alto Avellaneda’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 40.6% of its gross leaseable area as of June 30, 2016 and approximately 22.1% of its annual base rent for the fiscal year then ended.

The following table sets forth certain information about Alto Avellaneda’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Falabella	Department Store	11,629.0	32.4
Zara	Clothes and footwear	1,585.0	4.4
Garbarino	Home Appliances	639.8	1.8
Fravega	Home Appliances	510.0	1.4
Compumundo	Home Appliances	190.6	0.5
Total		14,554.4	40.6

Tenant mix of Alto Avellaneda

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	12,144.4	33.8
Department Store	11,629.0	32.4
Entertainment	6,192.7	17.3
Miscellaneous	1,709.4	4.8
Home Appliances	1,717.0	4.8
Restaurant	1,651.3	4.6
Services	528.9	1.5
Home & décor	314.4	0.9
Total	35,887.0	100

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Revenues from Alto Avellaneda

The following table sets forth certain information relating to the sales of Alto Avellaneda for the fiscal years indicated:

As of June 30,
2016	2015	2014

		(In thousands of Ps.)
Base rent	166,830		119,957	99,538
Percentage rent	68,335		56,034	42,987
Total rent	235,166		175,991	142,525
Revenues from admission rights	24,920		19,587	15,070
Management fees	4,746		3,670	2,973
Parking	-		-	-
Commissions	-		310	126
Other	363		362	200
Total (1)	265,195		199,920	160,894

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for Alto Avellaneda

The following table sets forth a schedule of lease expirations for Alto Avellaneda during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their lease prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.)(1)	Percentage of Agreements
2016	6	3,180.4	9%	7,416,703.0	5%
2017	40	7,045.5	20%	39,892,947.7	27%
2018	41	15,513.8	43%	43,389,574.2	29%
2019 and subsequent years	47	10,147.2	28%	59,601,380.0	40%
Total	134	35,887.0	100%	150,300,604.9	100%

(1) Annual base rent as of June 30, 2016 of agreements to expire.

Buenos Aires Design, City of Buenos Aires

Buenos Aires Design is a shopping center with 62 stores specialized in decoration and home appliances store which opened in 1993. The Company owns a 53.7% interest in ERSA, which has the concession to operate Buenos Aires Design. The other shareholder of ERSA is Hope Funds S.A., which has a 46.3% equity interest.

As a result of a public auction, in February 1991, the City of Buenos Aires granted ERSA a 20-year concession to use a plot of land in the Centro Cultural Recoleta. The concession’s effective date was November 19, 1993 and was set to expire on November 18, 2013. In 2010, the government of the Buenos Aires City, pursuant to Decree No. 867/2010, extended the concession term for an additional five-year period, and the expiration date of the agreement was extended to November 18, 2018. The concession agreement requires that ERSA pay the City of Buenos Aires a fix amount per year which is adjusted annually. It establishes that the concession may be terminated for any of the following reasons, among others: material 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; (iv) destruction or abandonment of the area under concession; (v) bankruptcy or liquidation; and (vi) 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 10% of the net expenditures of expenses.

Buenos Aires Design is in an exclusive 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 as many exclusive hotels and restaurants are located in this area due to its closeness 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 26,131.5 square meters (including parking) that consists of 13,903.1 square meters of GLA. The shopping center has nine restaurants anchored by the Hard Rock Cafe and a terrace that covers approximately 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, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 414.4 million, which represents a year-on-year growth of 27,1% and approximately Ps. 29,804.3 per square meter. Total rental income increased from Ps. 35.3 million for fiscal 2015 to Ps. 45.4 million for fiscal 2016, which represents annual income per gross leaseable square meter of Ps. 2,543.2 in fiscal year 2015 and Ps. 3,264.2 in fiscal year 2016.

As of June 30, 2016, Buenos Aires Design’s occupancy rate was 95.7%.

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 20.2% of its gross leasable area as of June 30, 2016 and approximately 18.7% of its annual base rent for the fiscal year then ended.

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The following table contains certain information about Buenos Aires Design’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Hard Rock Café	Restaurant	1,215.9	8.7
Morph	Home & décor	1,032.3	7.4
Barugel Azulay	Home & décor	311.8	2.2
CW & CO	Home & décor	196.9	1.4
Solare	Home & décor	51.7	0.4
Total		2,808.6	20.2

Tenant mix of Buenos Aires Design (1)

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Home & décor	8,020.6	57.9
Restaurant	3,607.3	25.7
Miscellaneous	2,091.2	15.1
Home Appliances	184.0	1.3
Total	13,903.1	100.0

(1)Includes vacant stores as of June 30, 2016.

Revenues from Buenos Aires Design

The following table sets forth certain information relating to the revenues of Buenos Aires Design for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	28,801		22,603	17,338
Percentage rent	2,164		1,616	1,221
Total rent	30,964		24,219	18,559
Revenues from admission rights	3,585		2,720	2,296
Management fees	2,808		2,172	1,647
Parking	7,944		6,184	4,819
Other	81		25	39
Total (1) (2)	45,382		35,320	27,360

(1) Does not reflect our interest in Emprendimiento Recoleta S.A.

(2) Does not include income from Fibesa or from income expenses and collective promotion fund.

Lease expirations for Buenos Aires Design(1)

The following table shows a schedule of lease expirations for Buenos Aires Design during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminates their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.)(2)	Percentage of Agreements
2016	7	1,499.5	11%	1,109,292.8	4%
2017	23	5,310.0	38%	11,070,463.3	42%
2018	9	895.9	6%	4,902,576.8	18%
2019 and subsequent years	23	6,197.7	45%	9,448,614.4	36%
Total	62	13,903.1	100%	26,530,947.4	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreemenet as in effect as of June 30, 2016.

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Alcorta Shopping, City of Buenos Aires

Alcorta Shopping is a 112-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. Alcorta Shopping has a total constructed area of approximately 87,553.8 square meters (including parking) that consists of 15,876.7 square meters of GLA. Alcorta Shopping has a cinema with two screens, a food court with 11 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’s parking lot. The shopping center is spread out over three levels and has a pay parking lot for approximately 1,300 cars. Alcorta Shopping’s targeted clientele consists of high-income individuals between the ages of 34 and 54.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 1,899.9 million, which represents fiscal year sales for approximately Ps. 119,664.9 per square meter and a year-on-year growth of 28.8%. Total rental income increased from approximately Ps. 140.5 million for fiscal 2015 to Ps. 186.7 million for fiscal 2016, which represents annual income per gross leaseable square meter of Ps. 9,106.1 in fiscal year 2015 and Ps. 11,759.4 in fiscal year 2016.

As of June 30, 2016, Alcorta Shopping’s occupancy rate was 89.1%.

Alcorta Shopping’s five largest tenants

Alcorta Shopping’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 13.2% of its gross leaseable area as of June 30, 2016 and approximately 11.6% of its annual base rent for the fiscal year then ended.

The following table provides certain information about Alcorta Shopping’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Zara	Clothes and footwear	1,100.4	6.9
Nike	Clothes and footwear	400.0	2.5
Rapsodia	Clothes and footwear	258.2	1.6
Fravega	Home Appliances	249.0	1.6
Jazmin Chebar	Clothes and footwear	80.3	0.5
Total		2,087.9	13.2

Tenant mix of Alcorta Shopping (1)

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	7,899.1	49.8
Entertainment	2,568.4	16.2
Services	1,996.1	12.6
Restaurant	1,474.9	9.3
Miscellaneous	1,109.1	7.0
Home & décor	501.1	3.2
Home Appliances	328.1	2.1
Total	15,876.7	100

(1)Includes vacant stores as of June 30, 2016.

Revenues from Alcorta Shopping

The following table sets forth certain information relating to the revenues of Alcorta Shopping for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	105,511		77,541	57,994
Percentage rent	44,465		36,534	28,056
Total rent	149,976		114,075	86,050
Revenues from admission rights	20,042		15,893	12,207
Management fees	1,676		1,296	1,050
Parking	14,709		8,795	6,303
Commissions	-		314	-
Other	297		160	182
Total (1)	186,700		140,533	105,792

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

35

 

Lease expirations for Alcorta Shopping(1)

The following table shows a schedule of lease expirations for Alcorta Shopping during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercises renewal options or terminate thir leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (2)	Percentage of Agreements
2016	16	2,948.5	19%	4,248,600.0	5%
2017	34	3,006.1	19%	27,388,849.2	30%
2018	29	4,527.2	29%	35,119,346.2	38%
2019 and subsequent years	33	5,395.0	34%	25,160,137.9	27%
Total	112	15,876.7	100%	91,916,933.3	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

Patio Bullrich, City of Buenos Aires

Patio Bullrich is an 88-store shopping center which opened in 1988 and the first shopping center to launch operations in the City of Buenos Aires.

Patio Bullrich is in the Recoleta neighborhood, 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 the most prestigious hotels of the City of Buenos Aires and the subway, bus and train systems. Additionally, 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 29,982 square meters (including parking) that consist of 11,782.7 square meters of GLA and common areas covering 12,472 square meters. The shopping center has a four-screen multiplex cinema with 1,381 seats and a food court of 13 restaurants. The shopping center is spread out over four levels and has a pay parking lot for 215 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 over 45 years old.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 1,061.0 million, which represents annual sales for approximately Ps. 90,046.2 per square meter and a year-on-year increase of 19.4%. Total rental income increased from Ps. 98.4 million for fiscal 2015 to Ps. 118.5 million for fiscal 2016, which represents monthly revenues per gross leaseable square meter of Ps. 8,452.8 in fiscal year 2015 and Ps. 10,056.9 in fiscal year 2016.

As of June 30, 2016, Patio Bullrich’s occupancy rate was 99.1%.

Patio Bullrich’s five largest tenants

Patio Bullrich’s five largest tenants (in terms of sales in the shopping center) accounted for approximately 19.9% of its gross leaseable area as of June 30, 2016 and approximately 17.6% of its annual base rent for the fiscal year then ended.

The following table sets forth certain information about Patio Bullrich’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Zara	Great shop of clothes and footwear	786.0	6.7
Rouge Internacional	Perfumery / Drugstore	599.6	5.1
Etiqueta Negra	Men's clothes and footwear	576.1	4.9
Rapsodia	Women’s clothes and footwear	279.5	2.4
Jazmin Chebar	Women’s clothes and footwear	109.0	0.9
Total		2,350.2	19.9

Tenant mix of Patio Bullrich (1)

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	5,661.8	48.1
Miscellaneous	2,557.3	21.7
Entertainment	1,327.4	11.3

Restaurant	1,253.1	10.6
Services	685.7	5.8
Home & décor	297.5	2.5
Total	11,782.7	100

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Revenues from Patio Bullrich

The following table sets forth certain information relating to the revenues of Patio Bullrich for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	69,520		57,375	47,700
Percentage rent	15,750		13,351	8,674
Total rent	85,270		70,726	56,374
Revenues from admission rights	14,489		12,753	11,316
Management fees	4,056		3,136	2,540
Parking	14,480		11,537	9,017
Commissions	-		90	-
Other	203		117	127
Total (1)	118,498		98,359	79,374

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for Patio Bullrich(1)

The following table shows a schedule of lease expirations for Patio Bullrich during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (2)	Percentage of Agreements
2016	14	1,454.0	12%	11,557,982.4	18%
2017	24	2,351.1	20%	20,393,190.0	31%
2018	21	3,581.2	30%	21,586,888.9	33%
2019 and subsequent years	29	4,396.5	37%	11,898,552.7	18%
Total	88	11,782.7	100%	65,436,614.0	100%

(1) Includes vacant stores as of June 30, 2016.

(2) The amount expresses the annual base rent as of June 30, 2016.

Alto NOA, City of Salta

Alto Noa is an 89-store shopping center that opened in 1994. Alto Noa is located in the City of Salta, the capital of the Province of Salta, in the northwestern region of Argentina. The province of Salta has a population of approximately 1.2 million with approximately 0.6 million living in the City of Salta. The shopping center has a total constructed area of approximately 30,876 square meters (including parking) which consists of 19,039.9 square meters of GLA. Alto Noa has a food court with 13 restaurants, a large entertainment center, a supermarket and a multiplex cinema with eight screens. The shopping center occupies one floor and has a free parking lot for 551 cars. Alto Noa’s target clientele consists of middle-income individuals between the ages of 28 and 40.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 1,369.0 million, which represents fiscal period sales for approximately Ps. 71,900.2 per square meter and a year-on-year increase of 28.1%. Total rental income increased from Ps. 50.7 million in fiscal 2015 to Ps. 72.6 million in fiscal 2016, which represents annual income per gross leasable square meter of Ps. 2,656.6 in fiscal year 2015 and Ps. 3,814.7 in fiscal year 2016.

As of June 30, 2016, Alto Noa’s occupancy rate 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 49.5% of its gross leaseable area as of June 30, 2016 and approximately 19.5% of its annual base rent for the fiscal year then ended.

The following table sets forth certain information about Alto NOA’s five largest tenants as of June 30, 2016:

37

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Carrefour	Miscellaneous	3,080.5	16.2
YPF	Miscellaneous	1,812.5	9.5
Hoyts General Cinema	Entertainment	3,808.4	20.0
Garbarino	Home Appliances	428.5	2.3
Fravega	Home Appliances	286.3	1.5
Total		9,416.2	49.5

Tenant mix of Alto NOA

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Entertainment	6,170.0	32.4
Miscellaneous	5,692.2	29.9
Clothes and footwear	4,129.5	21.7
Home Appliances	1,309.8	6.9
Restaurant	1,154.1	6.1
Services	378.5	2.0
Home & décor	205.8	1.1
Total	19,039.9	100

 Revenues from Alto NOA

The following table sets forth certain information relating to the revenues of Alto NOA for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	38,835		26,263	21,450
Percentage rent	29,182		21,021	14,635
Total rent	68,018		47,284	36,085
Revenues from admission rights	3,862		2,707	2,201
Management fees	503		389	315
Parking	-		-	-
Commissions	-		69	-
Other	249		220	145
Total (1)	72,631		50,669	38,746

(1)

Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for Alto NOA

The following table shows a schedule of lease expirations for Alto NOA during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.)(1)	Percentage of Agreements
2016	8	427.6	2%	2,442,864.0	7%
2017	31	9,312.5	49%	11,780,582.2	34%
2018	14	1,424.0	7%	5,626,427.9	16%
2019 and subsequent years	36	7,875.8	41%	14,388,647.2	42%
Total	89	19,039.9	100%	34,238,521.2	100%

(1) Annual base rent of each agreement as in effect as of June 30, 2016.

 

38

Mendoza Plaza, City of Mendoza

Mendoza Plaza is a 139-store shopping center which opened in 1992 and is located in the City of Mendoza, the capital of the Province of Mendoza. The city of Mendoza is the fourth largest city in Argentina with a population of approximately 1.0 million. Mendoza Plaza Shopping consists of 42,043.0 square meters of GLA and has a multiplex cinema covering an area of approximately 3,659 square meters with ten screens, the Chilean department store Falabella, a food court with 18 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, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 2,368.8 million, which represents a year-on-year growth of 24.2%. Sales per square meter were approximately Ps. 56,342.1. Total rental income increased from Ps. 91.7 million in fiscal 2015 to Ps. 119.0 million in fiscal 2016, which represents annual income per gross leaseable square meter of Ps. 2,181.1 in fiscal year 2015 and Ps. 2,831.3 in fiscal year 2016.

As of June 30, 2016, Mendoza Plaza’s occupancy rate was 95.2%.

Five largest tenants of Mendoza Plaza

Mendoza Plaza’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 37.3% of its gross leaseable area as of June 30, 2016 and approximately 17.7% of its annual base rent for the fiscal year then ended.

The following table sets forth certain information about Mendoza Plaza’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Falabella	Department Store	8,563.0	20.4
Super Plaza Vea	Miscellaneous	4,419.1	10.5
Musimundo	Home Appliances	1,106.6	2.6
Garbarino	Home Appliances	813.9	1.9
Fravega	Home Appliances	796.2	1.9
Total		15,698.8	37.3

Tenant mix of Mendoza Plaza (1)

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Entertainment	9,473.8	22.5
Miscellaneous	8,272.9	19.7
Department Store	8,563.0	20.4
Clothes and footwear	8,328.5	19.8
Home Appliances	2,890.2	6.9
Restaurant	2,998.3	7.1
Services	1,160.9	2.8
Home & décor	355.3	0.8
Total	42,043.0	100.0

(1) Includes vacant stores as of June 30, 2016.

Revenues from Mendoza Plaza

The following table sets forth certain information relating to the revenues of Mendoza Plaza for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	65,426		46,634	38,674
Percentage rent	43,619		38,013	29,079
Total rent	109,045		84,647	67,753
Revenues from admission rights	6,287		4,071	3,718
Management fees	2,663		2,005	1,820
Parking	-		-	-
Commissions	-		93	78
Other	1042		878	742
Total (1)	119,037		91,694	74,111

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

39

Lease expirations for Mendoza Plaza(1)

The following table shows a schedule of lease expirations for Mendoza Plaza during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (2)	Percentage of Agreements
2016	17	10,013.2	24%	5,533,579.6	9%
2017	48	12,810.0	30%	19,507,895.9	33%
2018	23	3,229.0	8%	9,789,977.2	16%
2019 and subsequent years	51	15,990.9	38%	24,929,717.9	42%
Total	139	42,043.0	100%	59,761,170.5	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

 

Alto Rosario, City of Rosario

Alto Rosario is a 143-store shopping center located in the City of Rosario, Province of Santa Fe, the third largest city in Argentina in terms of population. It has a total constructed area of approximately 100,750 square meters which consists of 28,795.5 square meters of gross leasable area (excluding Museo de los Niños). Alto Rosario has a food court with 18 restaurants, a large entertainment center, a supermarket and a Showcase cinema with 14 state-of-the-art screens. The shopping center occupies one floor and has a free parking lot for 1,736 cars. Alto Rosario’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 2,628.1 million, which represents a year-on-year increase of 34.6%. Sales per square meter were approximately Ps. 91,265.9. Total rental income increased from Ps. 137.6 million in fiscal 2015 to Ps. 181.5 million in fiscal 2016, which represents annual income per gross leasable square meter of Ps. 4,847.2 in fiscal year 2015 and Ps. 6,303.1 in fiscal year 2016.

As of June 30, 2016, Alto Rosario’s occupancy rate was 100%.

Five largest tenants of Alto Rosario

Alto Rosario’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 37.6% of its gross leasable area as of June 30, 2016 and approximately 10% of its annual base rent for the fiscal year then ended.

The following table sets forth certain information about Alto Rosario’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Showcase Cinema	Entertainment	8,984.0	31.2
Sport 78	Clothes and footwear	671.7	2.3
Musimundo	Home Appliances	498.0	1.7
Fravega	Home Appliances	386.5	1.3
Garbarino	Home Appliances	300.0	1.0
Total		10,840.2	37.6

Tenant mix of Alto Rosario

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

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	10,916.5	37.9
Entertainment	9,880.0	34.3
Miscellaneous	2,068.8	7.2
Restaurant	2,247.3	7.8
Home & décor	1,750.2	6.1
Home Appliances	1,909.0	6.6
Services	23.8	0.1
Total	28,795.5	100.0

40

 

Revenues from Alto Rosario

The following table sets forth certain information relating to the revenues of Alto Rosario for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	101,180		72,703	54,686
Percentage rent	62,657		53,567	36,491
Total rent	163,837		126,270	91,177
Revenues from admission rights	14,960		9,230	7,307
Management fees	1,990		1,539	1,247
Parking	-		-	-
Commissions	-		147	53
Other	713		453	288
Total (1)	181,501		137,639	100,072

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for Alto Rosario(1)

The following table shows a schedule of lease expirations for Alto Rosario during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (1)	Percentage of Agreements
2016	15	2,360.5	8%	6,522,034.1	7%
2017	45	5,627.0	20%	27,691,424.8	31%
2018	42	4,710.4	16%	24,214,998.5	28%
2019 and subsequent years	41	16,097.6	56%	29,584,279.0	34%
Total	143	28,795.6	100%	88,012,736.3	100%

(1) Annual base rent of each agreement as in effect as of June 30, 2016.

 

Córdoba Shopping, Villa Cabrera, City of Córdoba

Córdoba Shopping Villa Cabrera covers 35,000 square meters of surface area, with 15,581.7 square meters being gross leaseable area. Córdoba Shopping has 110 commercial stores, a 12-screen multiplex cinema and parking lot for 1,500 vehicles, located in Villa Cabrera, City of Córdoba, Province of Córdoba.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 990.7 million, which represents a year-on-year growth of 31.0%. Sales per square meter were approximately Ps. 63,579.4. Total rental income increased from Ps. 54.4 million in fiscal 2015 to Ps. 68.1 million in fiscal 2016, which represents annual income per gross leaseable square meter of Ps. 3,552.0 in fiscal year 2015 and Ps. 4,367.3 in fiscal year 2016.

As of June 30, 2016, Córdoba Shopping’s occupancy rate was 99.2%.

Five largest tenants of Córdoba Shopping – Villa Cabrera

Córdoba Shopping’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 42.2% of its gross leaseable area as of June 30, 2016 and approximately 9,2% of its annual base rent for the fiscal year then ended.

The following table sets forth certain information about Córdoba Shopping’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Showcase Cinema	Entertainment	5,442.5	34.9
Garbarino	Home Appliances	497.0	3.2
Nike	Clothes and footwear	379.5	2.4
Mc Donald’s	Restaurant	146.0	0.9
Jazmin Chebar	Clothes and footwear	116.3	0.7
Total		6,581.3	42.2

 

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Tenant mix of Córdoba Shopping Villa Cabrera (1)

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	6,295.5	40.4
Entertainment	5,842.0	37.5
Miscellaneous	860.8	5.5
Restaurant	1,250.1	8.0
Home Appliances	535.1	3.4
Services	571.9	3.7
Home & décor	226.3	1.5
Total	15,581.7	100.0

(1)Includes vacant stores as of June 30, 2016.

Revenues from Córdoba Shopping Villa Cabrera

The following table sets forth certain information relating to the revenues of Córdoba Shopping for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	33,365		26,250	19,932
Percentage rent	28,594		23,039	15,797
Total rent	61,959		49,289	35,729
Revenues from admission rights	3,590		3,260	2,521
Management fees	2,173		1,580	1,310
Parking	-		-	-
Commissions	-		118	28
Other	327		198	175
Total (1)	68,050		54,445	39,763

(1)

Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for Córdoba Shopping Villa Cabrera(1)

The following table shows a schedule of lease expirations for Córdoba Shopping during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (2)	Percentage of Agreements
2016	9	892.0	6%	2,015,450.5	7%
2017	42	4,058.3	26%	10,847,414.8	37%
2018	28	7,846.1	50%	7,841,382.0	27%
2019 and subsequent years	31	2,785.3	18%	8,865,859.7	30%
Total	110	15,581.7	100%	29,570,107.0	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

 

Dot Baires Shopping, City of Buenos Aires

Dot Baires Shopping is a shopping center that opened in May 2009. It has four floors and three underground levels, covering surface area of 173,000 square meters, of which 49,640.7 square meters constitute GLA, comprising 150 retail stores, a hypermarket, a ten-screen multiplex cinema and parking space for 2,200 vehicles.

Dot Baires Shopping is located at the intersection of Avenida General Paz and the Panamerican Highway in the neighborhood of Saavedra in the City of Buenos Aires, and is the largest shopping center in the City in terms of square meters. As of June 30, 2016, our equity interest in Panamerican Mall S.A. was 80%.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 3,254.3 million, which represents a year-on-year increase of 26.6% and fiscal year sales for approximately Ps. 65,558.1 per square meter. Total rental income increased from Ps. 199.5 million in fiscal 2015 to Ps. 261.4 million in fiscal 2016, which represents annual income per gross leasable square meter of Ps. 4,001.7 in fiscal year 2015 and Ps. 5,265.1 in fiscal year 2016.

As of June 30, 2016, Dot Baires Shopping’s occupancy rate was 100%.

42

 

Five largest tenants of Dot Baires Shopping

Dot Baires Shopping’s five largest tenants (in terms of sales of this shopping center) accounted for approximately 58% of its gross leaseable area as of June 30, 2016 and approximately 19.1% of its annual base rent for the fiscal year then ended.

The following table describes Dot Baires Shopping’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Wallmart	Miscellaneous	12,600.0	25.4
Falabella	Department Store	8,086.7	16.3
Hoyts General Cinema	Entertainment	6,475.8	13.0
Zara	Clothes and footwear	1,178.9	2.4
Garbarino	Home Appliances	472.5	1.0
Total		28,813.9	58.0

Tenant mix of Dot Baires Shopping

The following table sets forth the mix of tenants by types of businesses in Dot Baires Shopping:

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Miscellaneous	15,043.1	30.3
Clothes and footwear	13,280.9	26.8
Department Store	8,086.7	16.3
Entertainment	7,135.0	14.4
Services	2,365.7	4.8
Restaurant	1,722.3	3.5
Home Appliances	1,487.2	3.0
Home & décor	519.7	1.0
Total	49,640.7	100.0

  Revenues from Dot Baires Shopping

The following table sets forth certain information relating to the revenues of Dot Baires Shopping for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	134,620		96,838	87,754
Percentage rent	67,556		59,544	39,222
Total rent	202,176		156,382	126,976
Revenues from admission rights	17,973		14,060	10,541
Management fees	3,352		2,592	2,099
Parking	37,127		25,994	18,358
Other	737		446	332
Total (1)(2)	261,364		199,474	158,306

(1)

 Does not reflect our interest in Panamerican Mall S.A.

(2)

 Does not include income from Fibesa or from income from expenses and collective promotion Fund.

Lease expirations for Dot Baires Shopping

The following table shows a schedule of lease expirations for Dot Baires Shopping during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (1)	Percentage of Agreements
2016	29	3,247.9	7%	18,720,315.4	14%
2017	37	14,227.5	29%	42,062,996.9	32%
2018	32	4,663.7	9%	25,474,577.0	19%
2019 and subsequent years	52	27,501.7	55%	46,531,832.4	35%
Total	150	49,640.7	100%	132,789,721.7	100%

(1) Annual base rent of each agreement as in effect as of June 30, 2016.

 

43

   

Soleil Premium Outlet, Greater Buenos Aires

In December 2007, we entered into an agreement with INC S.A. (“INCSA”), a non-related company, for the acquisition of Soleil Premium Outlet.

On July 1, 2010, we executed the final deed for partial conveyance of title and closing minutes with INCSA, whereby INCSA transferred to us the shopping center’s going concern, which we started to operate on the referred date. The transaction was exclusive of any debt or credit prior to the transaction with respect to INCSA’s business, as well as the real property where a hypermarket currently operates located in the premises. On April 12, 2011, the Argentine Antitrust Authority (“CNDC”) approved to the transaction.

As from April 2013, as a result of a comprehensive renovation of the shopping center and a strong advertising campaign, it was renamed Soleil Premium Outlet. At present, it has a surface area of 48,313 square meters, 13,991.1 square meters of which are GLA. It comprises 78 stores and 2,335 parking spaces. Soleil Premium Outlet is located in San Isidro, Province of Buenos Aires. It opened in Argentina more than 25 years ago and it was the first Premium Outlet in the country.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 1,282.2 million, which represents annual average sales for approximately Ps. 91,644.1 per square meter and a year-on-year turnover growth of 36.6%. Total rental income increased from Ps. 59.4 million for fiscal 2015 to Ps. 80.1 million for fiscal 2016, representing annual income per gross leasable square meter of Ps. 4,242.5 in fiscal year 2015 and Ps. 5,726.0 in fiscal year 2016.

As of June 30, 2016, Soleil Premium Outlet’s occupancy rate was 100%.

Five largest tenants of Soleil Premium Outlet

Soleil Premium Outlet’s five largest tenants (in terms of sales of this shopping center) accounted for approximately 16.8% of its gross leasable area as of June 30, 2016 and approximately 18.5% of its annual base rent for the fiscal year then ended.

The following table describes Soleil Premium Outlet’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Stock Center	Clothes and footwear	700.9	5.0
Adidas	Clothes and footwear	480.0	3.4
Garbarino	Home Appliances	472.0	3.4
Dexter Shop	Clothes and footwear	366.6	2.6
Fravega	Home Appliances	336.4	2.4
Total		2,355.9	16.8

Tenant mix of Soleil Premium Outlet

The following table sets forth the mix of tenants by types of business in Soleil Premium Outlet:

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	8,353.9	59.7
Entertainment	3,263.4	23.3
Home Appliances	808.4	5.8
Restaurant	753.1	5.4
Miscellaneous	374.2	2.7
Services	290.8	2.1
Home & décor	147.3	1.1
Total	13,991.1	100.0

44

 

Revenues from Soleil Premium Outlet

The following table sets forth certain information relating to the revenues of Soleil Premium Outlet for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	44,597		33,422	25,972
Percentage rent	28,911		20,700	13,620
Total rent	73,508		54,122	39,592

Revenues from admission rights	5,335	4,057	3,671
Management fees	1,076	801	649
Parking	-	-	-
Commissions	-	238	112
Other	194	148	154
Total (1)	80,113	59,366	44,178

(1) Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for Soleil Premium Outlet

The following table shows a schedule of lease expirations for Soleil Premium Outlet during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (1)	Percentage of Agreements
2016	6	606.3	4%	1,760,166.8	4%
2017	34	4,534.8	32%	16,212,477.8	40%
2018	14	2,495.0	18%	9,326,974.0	23%
2019 and subsequent years	24	6,354.9	45%	13,590,524.5	33%
Total	78	13,991.1	100%	40,890,143.2	100%

(1) Annual base rent of each agreement as in effect as of June 30, 2016.

 

La Ribera Shopping, City of Santa Fe

We hold 50% of the shares of Nuevo Puerto Santa Fe S.A.(“NPSF”), a corporation that leases space in of a building in which it built and currently operates “La Ribera” shopping center, which has a surface area of 43,219 square meters, comprising 63 retail stores and 7 2D and 3D-screen multiplex cinema. It also comprises a 510-square meter cultural center and 24,553 square meters in outdoor areas and free parking space. Its gross leasable area is approximately 9,850.6 square meters.

The shopping center is strategically located within the port of the City of Santa Fe in the Province of Santa Fe, the place with the largest development in terms of real estate in the City of Santa Fe, 27 kilometers away from the City of Paraná and 96 kilometers away from the City of Rafaela, its range of influence represents a potential market of over one million people.

During the fiscal year ended June 30, 2016, the public visiting the shopping center generated nominal tenant retail sales that totaled approximately Ps. 633.5 million, which represents a year-on-year increase of 59.1% and sales per square were approximately Ps. 64,315.5. Total rental income increased from Ps. 13.1 million in fiscal 2015 to Ps. 20.8 million in fiscal 2016, representing annual income per gross leasable square meter of Ps. 1,340.3 in fiscal year 2015 and 2,109.4 in fiscal 2016.

As of June 30, 2016, La Ribera Shopping’s occupancy rate was 99.3%.

Five largest tenants of La Ribera Shopping

La Ribera’s five largest tenants (in terms of sales of this shopping center) accounted for approximately 41.1% of its gross leasable area as of June 30, 2016 and approximately 30.4% of its annual base rent for the fiscal year then ended.

The following table describes La Ribera’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Cinemark	Entertainment	2,474.0	25.1
Musimundo	Home Appliances	804.0	8.2
Mostaza y Pan	Restaurant	78.1	0.8
McDonald’s	Restaurant	471.6	4.8
Red Sport	Clothes and footwear	222.0	2.3
Total		4,049.7	41.1

Tenant mix of La Ribera Shopping (1)

The following table sets forth the mix of tenants by types of business in La Ribera:

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Entertainment	3,230.0	32.8
Clothes and footwear	2,949.5	29.9
Restaurant	1,866.0	18.9

Miscellaneous	885.9	9.0
Home Appliances	804.0	8.2
Home & décor	86.0	0.9
Services	29.2	0.3
Total	9,850.6	100.0

(1)Includes vacant stores as of June 30, 2016.

45

 

Revenues from La Ribera Shopping

The following table sets forth certain information relating to the revenues of La Ribera for the fiscal years indicated:

	As of June 30,
	2016		2015	2014
		(In thousands of Ps.)
Base rent	9,036		5,014	3,988
Percentage rent	10,956		7,563	5,000
Total rent	19,992		12,577	8,988
Revenues from admission rights	342		201	141
Management fees	372		273	211
Parking	-		-	-
Commissions	-		-	-
Other	73		17	20
Total (1) (2)	20,779		13,068	9,360

(1)

Does not reflect our interest in the company Nuevo Puerto Santa Fe.

(2)

Does not include income from Fibesa or from income from expenses and collective promotion fund.

Lease expirations for La Ribera Shopping(1)

The following table shows a schedule of lease expirations for La Ribera during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants exercise renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (2)	Percentage of Agreements
2016	4	1,021.1	10%	1,277,654.6	9%
2017	11	1,226.0	12%	1,767,609.7	13%
2018	13	1,208.1	12%	2,656,534.8	19%
2019 and subsequent years	35	6,395.5	65%	8,070,501.0	59%
Total	63	9,850.7	100%	13,772,300.2	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

 

Distrito Arcos, City of Buenos Aires

We opened Distrito Arcos on December 18, 2014. Distrito Arcos is a premium outlet located in the neighborhood of Palermo, City of Buenos Aires. It has 11,170.1 square meters of GLA, comprised of 60 stores, 115 parking spaces y 35 selling stands.

During a second stage, we plan to build a fitness center, a home appliances store and a robust cultural offer with 66 stores, covering approximately 2,000 square meters of additional GLA. During the 2016 fiscal year, visitors to the shopping center generated nominal tenant retail sales that totaled approximately Ps. 962.3 million, which represent sales per square meter of approximately Ps. 86,151.6. Total rental income was approximately Ps. 78.1 million for the period ended June 30, 2016, which represents total revenues for the period per gross leasable area of Ps. 6,993.8.

 As of June 30, 2016 Distrito Arcos’ occupancy rate was 97.0%.

Five largest tenants of Distrito Arcos

Distrito Arcos’ five largest tenants (in terms of sales of this shopping center) accounted for approximately 14.3% of its gross leasable area as of June 30, 2016, and 21.2% of its annual base rent.

The following table describes Distrito Arcos’ five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Prune	Clothes and footwear	316.9	2.8
Kosiuko	Clothes and footwear	344.6	3.1

Lacoste	Clothes and footwear	352.4	3.2
Adidas	Clothes and footwear	275.2	2.5
Rapsodia	Clothes and footwear	312.5	2.8
Total		1,601.6	14.3

46

 

Tenant mix of Distrito Arcos(1)

The following table sets forth the mix of tenants by types of businesses in Distrito Arcos:

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	8,764.3	78.5
Services	89.0	0.8
Restaurant	727.8	6.5
Miscellaneous	1,589.0	14.2
Total	11,170.1	100

(1)Includes vacant stores as of June 30, 2016.

Revenues from Distrito Arcos

The following table sets forth certain information relating to the revenues from Distrito Arcos for the fiscal years indicated:

	As of June 30,
	2016		2015(2)
		(In thousands of Ps.)
Base rent	34,943		11,753
Percentage rent	29,982		8,379
Total rent	64,926		20,132
Revenues from admission rights	3,219		2,413
Management fees	752		220
Parking	8,853		-
Commissions	10		120
Other	362		49
Total (1)	78,121		22,934

(1)

Does not include income from Fibesa or from income from expenses and collective promotion fund.

(2)

Opening December 18, 2014 (revenues for six months).

Lease expirations for Distrito Arcos(1)

The following table shows a schedule of lease expirations for Distrito Arcos during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants will exercise their renewal options or terminate their leases prior to maturity:

Year of expiration	Number of Agreements	Square Meters to Expire	Percentage to Expire	Amount of Lease Payments (Ps.) (2)	Percentage of Agreements
2016	1	199.2	2%	-	0%
2017	1	378.0	3%	600,000.0	2%
2018	41	7,230.4	65%	21,171,509.6	67%
2019 and subsequent years	17	3,362.5	30%	9,940,416.5	31%
Total	60	11,170.1	100%	31,711,926.1	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

 

Alto Comahue, City of Neuquén

Alto Comahue, our 15th shopping center, was inaugurated on March 17, 2015, and is located in the City of Neuquén, in the Patagonian region of Argentina. It covers 35,000 square meters and has 9,889.6 square meters of GLA, approximately 333 roof-covered and open-air parking spaces and a large entertainment and leisure area. Alto Comahue offers 102 retail stores that house the most prestigious brands in Argentina, and will have a six-screen multiplex cinema and a theme restaurant. It is a three-story building consisting of a basement where the parking lot and service area are located; the ground floor consisting of 5,100 square meters for retail stores, and the first floor consisting of 720 square meters for restaurants with unique views of the city and 2,700 square meters of retail stores.

The development is a part of a mixed-use complex that also includes a supermarket that is currently in operation and two additional parcels of land. One of these parcels is assigned to development of a hotel and the other, which extends over 18,000 sqm -owned by the company-, to a future housing development. During this fiscal year, visitors to the shopping center generated nominal tenant retail sales that totaled approximately Ps. 717.1 million, which represent sales per square meter of approximately Ps. 72,511.2. Total rental income was approximately Ps. 47.8 million, which represents total revenues for the period per gross leasable area of Ps. 4,832.1.

As of June 30, 2016, Alto Comahue’s occupancy rate was 96.6%.

47

Five largest tenants of Alto Comahue

Alto Comahue’s five largest tenants (in terms of sales of this shopping center) accounted for approximately 11.8% of its gross leasable area as of June 30, 2016, and 1.4% of its annual base rent.

The following table describes Alto Comahue’s five largest tenants as of June 30, 2016:

Tenant	Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Compumundo	Home Appliances	127.5	1.3
Mc Donald’s	Restaurant	155.5	1.6
Fravega	Home Appliances	217.1	2.2
Dexter Shop	Clothes and footwear	420.6	4.3
Garbarino	Home Appliances	241.7	2.4
Total		1,162.4	11.8

Tenant mix of Alto Comahue (1)

The following table sets forth the mix of tenants by types of businesses in Alto Comahue:

Type of Business	Gross Leasable Area (sqm)	Gross Leasable Area (%)
Clothes and footwear	5,382.6	54.4
Miscellaneous	1,294.6	13.1
Restaurant	1,101.0	11.1
Home Appliances	969.1	9.8
Services	514.6	5.2
Home & décor	251.2	2.5
Entertainment	376.5	3.8
Total	9,889.6	100.0

(1)Includes vacant stores as of June 30, 2016.

Revenues from Alto Comahue

The following table sets forth certain information relating to the revenues derived from Alto Comahue for the fiscal years indicated:

	As of June 30,
	2016		2015 (2)
		(In thousands of Ps.)
Base rent	29,392		6,730
Percentage rent	15,370		4,087
Total rent	44,762		10,817
Revenues from admission rights	1,897		567
Management fees	752		220
Parking	-		-
Commissions	33		60
Other	344		26
Total (1)	47,787		11,690

(1)

Does not include income from Fibesa or from income from expenses and collective promotion fund.

(2)

Opening March 17, 2015 (revenues are for three months).

48

Lease expirations for Alto Comahue(1)

The following table shows a schedule of lease expirations for Alto Comahue during the periods indicated for existing leases as of June 30, 2016, assuming that none of the tenants will exercise their renewal options or terminate their leases prior to maturity:

Year of expiration Number of Agreements Square Meters to Expire Percentage to Expire Amount of Lease Payments (Ps.) (2) Percentage of Agreements

2016	7	463.9	5%	-	-
2017	-	-	-	-	-
2018	23	1,957.7	20%	4,892,838.0	22%
2019 and subsequent years	72	7,468.1	75%	16,906,414.4	78%
Total	102	9,889.6	100%	21,799,252.4	100%

(1) Includes vacant stores as of June 30, 2016.

(2) Annual base rent of each agreement as in effect as of June 30, 2016.

 

Competition

Given that most of our shopping centers are located in densely populated areas, there are competing shopping centers within, or in close proximity to, our target 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 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 is difficult for other companies to compete with us in areas through the development of new shopping centers. Our principal competitor is Cencosud S.A. which owns and operates Unicenter Shopping and the Jumbo hypermarket chain, among others.

The following table shows certain information concerning the most significant owners and operators of shopping centers in Argentina.

Company	Shopping Center	Location(1)	Gross leasable Area		Stores		% of gross leasable area at national level(2)			Store percentage(2)
IRSA Commercial Properties
	Dot Baires Shopping	CABA		49,641		150		2.14	%		2.16	%
	Mendoza Plaza Shopping	Mendoza		42,043		139		1.81	%		2.00	%
	Abasto de Buenos Aires	CABA		40,470		170		1.74	%		2.45	%
	Alto Avellaneda	GBA		35,887		134		1.54	%		1.93	%
	Alto Rosario	Rosario		30,057		143		1.29	%		2.06	%
	Alto Palermo Shopping	CABA		18,966		142		0.82	%		2.05	%
	Alto Noa	Salta		19,040		89		0.82	%		1.28	%
	Alcorta Shopping	CABA		15,877		112		0.68	%		1.62	%
	Córdoba Shopping	Córdoba		15,582		110		0.67	%		1.59	%
	Soleil Premium Outlet	GBA		13,991		78		0.60	%		1.12	%
	Buenos Airess Design	CABA		13,903		62		0.62	%		0.89	%
	Distrito Arcos	CABA		11,170		60		0.48	%		0.87	%
	Patio Bullrich	CABA		11,783		88		0.51	%		1.27	%
	La Ribera Shopping	Santa Fe		9,851		63		0.42	%		0.91	%
	Alto Comahue	Neuquén		9,890		102		0.43	%		1.47	%
	Subtotal			338,148		1,642		14.55	%		23.67	%
Cencosud S.A.
	Subtotal			650,256		1,456		28.01	%		21.02	%
Other
Operators
	Subtotal			1,334,846		3,836		57.44	%		55.32	%
Total				2,323,278		6,934		100	%		100	%

(1) “GBA” means Greater Buenos Aires, the Buenos Aires metropolitan area, and “CABA” means the City of Buenos Aires.

(2) Percentage over total shopping centers in Argentina that are members of the Argentine Chamber of Shopping Centers (Cámara Argentina de Shopping Centers, CASC). Figures may not sum due to rounding.

Source: Argentine Chamber of Shopping Centers.

Offices and Others Segment

We are engaged in the acquisition, development and management of office buildings and other rental properties in Argentina. In December 2014, we acquired 83,789 square meters of the premium office portfolio from our parent IRSA, including Edificio República, Bouchard 710, Dellapaolera 265, Intercontinental Plaza, Suipacha 652 and the land reserve “Intercontinental II” with potential for development of 19,600 square meters. As a result, we consolidated a vehicle mainly aimed at developing and operating commercial rental properties in Argentina.

The following table shows information about the leasable area and occupancy for the latest three fiscal periods:

	2016	2015	2014
Leasable area (square meters)	79,048	95,001	11,242
Occupancy of total portfolio	98.6%	98.3%	100.0%
Rent in Ps./square meter	386.0	226.00	112.5
Rent in US$/square meter	25.90	24.90	18.69

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The following table present information regarding our rental office and other properties segment as of June 30, 2016:

						Annual Accumulated Rental Income for the fiscal years Ps./000(4)
	Date of Acquisition	Gross Leasable Area (1)	Occupancy(2)	IRSA CP’s ownership Interest	Monthly Income (3)	2016	2015	2014	Book Value
(Ps. Amounts in thousands)		(sqm)			(in Ps.)	(in Ps.)			(in Ps.)
Offices
Edificio República	12/22/2014	19,885	100.0%	100%	7,637	75,122	33,449	-	670,723
Torre Bankboston	12/22/2014	14,873	100.0%	100%	5,098	51,690	23,378	-	512,073
Intercontinental Plaza (7)	12/22/2014	6,569	100.0%	100%	2,036	29,078	29,628	-	122,416
Bouchard 710	12/22/2014	15,014	100.0%	100%	7,020	67,250	26,936	-	494,861
Suipacha 652/64	12/22/2014	11,465	91%	100%	2,085	22,507	8,384	-	111,736
Dot Building	11/28/2006	11,242	100.0%	80%	3,521	31,229	27,416	18,985	115,792
Subtotal Offices		79,048	99%	N/A	27,398	276,876	149,191	18,985	2,027,601
Other Properties
Nobleza Piccardo (6)	05/31/2011	109,610	75%	50%	185	2,172	7,960	8,238	8,966
Other Properties (5)	N/A	40,596	N/A	N/A	2,078	5,089	2,981	346	164,289
Subtotal Other Properties		150,206	66%	N/A	2,263	7,261	10,941	8,584	62,552
Total Offices and Other		229,254	77%	N/A	29,660	284,137	160,132	27,569	2,090,154

(1) Corresponds to the total leasable surface area of each property as of June 30, 2016. Excludes common areas and parking spaces.

(2) Calculated by dividing occupied square meters by leasable area as of June 30, 2016.

(3) The lease agreements in effect as of June 30, 2016 were computed for each property.

(4) Corresponds to total consolidated lease agreements.

(5) Includes the following properties: Ferro, Dot Adjoining Plot, Anchorena 665, Chanta IV and Intercontinental plot of land

(6) Through Quality Invest S.A.

(7) On July 29, 2016, we executed a bill of sale for 1,702 square meters corresponding to two office floors and 16 parking units to an unrelated party, for a total amount of US$6.01 million, US$1.60 million which has already been paid, while the remaining balance will be paid upon execution of the deed of conveyance and delivery of possession.

Management of Office Buildings

We generally act as manager of the office buildings in which we hold an interest. In most cases, we are owners of the entire building or a significant number of units. Management is usually conducted pursuant to the terms and conditions of a co-owners’ agreement, and decisions are adopted by simple majority of owners (based on the area owned by each of them). As managers, we are in charge of the security, maintenance and cleaning services, which are generally outsourced. The cost of these services is paid by the tenants, except in the case of units that have not been leased. We market our leasable area through authorized brokers or by means of our direct efforts.

Leases

We usually lease our office and other properties under lease agreements for average terms of three years, except for a few agreements which are entered into for five-year terms. Agreements are renewable for two or three years, at the tenant’s option. They are generally denominated in U.S. dollars and pursuant to the Argentine laws, they are not subject to adjustment for inflation. Rental price for renewal periods are negotiated at market value.

The following table shows the occupancy rate of our offices for the fiscal years ended June 30, 2016 and 2015:

	Occupancy Rate(1)
Offices	2016	2015
Edificio República	100.0%	93.6%
Torre Bankboston	100.0%	100.0%
Intercontinental Plaza	100.0%	100.0%

Bouchard 710	100.0%	100.0%
Suipacha 652/64	90.7%	96.7%
DOT Building	100.0%	100.0%
Total Offices	98.6%	98.3%

(1)

Leased square meters pursuant to lease agreements in effect as of June 30, 2016 and 2015 over gross leasable area of offices for the same periods.

50

 

The following table shows average annual income per square meter for our offices during the fiscal years ended June 30, 2016, 2015 and 2014.

	Average annual income per square meter(1), as of June 30
	2016	2015	2014
Offices		(Ps./sqm)
Edificio República	3,615	3,115	3,075
Torre Bankboston	3,778	2,819	2,467
Intercontinental Plaza	4,291	2,484	2,402
Bouchard 710	4,539	3,219	2,844
Suipacha 652/64	1,961	1,399	1,512
DOT Building	2,778	2,439	2,410

(1)

Calculated by dividing annual rental income by the gross leaseable area of offices based on our interest in each building as of June 30 for each fiscal period.

Leases expiration

We usually lease our office and other properties under lease agreements for average terms of three years, except for a few agreements that specify five-year terms. Agreements are renewable for two or three years, at the tenant’s option. They are generally denominated in U.S. dollars and pursuant to the Argentine laws are not subject to adjustment for fluctuations in the rate of inflation. Rental prices for renewal periods are negotiated at market value.

The following table shows certain information on leases agreements as of June 30, 2016:

Building	Number of lease agreements (1)(5)	Annual rental price (2)	Rental price per new and renewed sqm (3)	Rental price per previous sqm (3)	Number of lease agreements not renewed	Lease agreements not renewed Annual rental price (4)
Intercontinental	1	2,504,208	232	232	-	-
Bouchard 710	3	12,876,430	339	332	-	-
Della Paolera 265	3	11,232,929	375	284	1	32,089,160
Edificio República	4	18,461,402	400	477	-	-
DOT Building	1	3,728,987	374	327	2	5,729,101
Suipacha 664	3	6,478,965	151	145	3	14,179,968
Total Offices	15	55,282,921	311	290	6	51,998,229

1)

Includes new and renewed lease agreements executed in FY 2016.

2)

Lease agreements in U.S. dollars converted to Pesos at the exchange rate prevailing in the first effective month of the agreement, multiplied by 12 months.

3)

Monthly value.

4)

Lease agreements in U.S. dollars converted to Pesos at the exchange rate prevailing in the last effective month of the agreement, multiplied by 12 months.

5)

It does not include lease agreements over parking spaces, antennas or terrace area.

The following table contains a schedule of estimated lease expirations for our offices in connection with the lease agreements in effect as of June 30, 2016, assuming that none of the tenants will exercise their renewal option or declare the early termination of their lease agreements (most tenants have lease renewal clauses).

Lease Expiration Fiscal Year	Number of Lease Agreements subject to Expiration	Square Meters subject to Expiration	Percentage of Total Square Meters subject to Expiration	Annual Revenues for Leases under Agreements about to Expire	Percentage of total Revenues subject to Expiration
		(m2)	(%)	(Ps.)	(%)
2016	21	29,832	32	30,282,290	10
2017	20	23,455	25	74,398,611	23
2018	33	22,420	24	139,449,143	44
2019 and subsequent years	23	16,745	20	74,186,723	23
Total	97	92,452	100	318,316,766	100

Includes Offices whose lease agreement had not been renewed as of June 30, 2016

It does not include vacant leaseable square meters.

It does not include square meters or revenues from parking spaces.

51

A description of rental office properties is provided below:

Edificio República, City of Buenos Aires

This property was designed by renowned Architect César Pelli (who also designed the World Financial Center in New York and the Petronas Towers in Kuala Lumpur). It is a unique premium office building in downtown Buenos Aires with approximately 19,885 meters of gross leaseable square and 178 parking spaces. The main tenants include Apache Energía, Estudio Beccar Varela, BASF Argentina S.A., ENAP Sipetrol Argentina S.A., Facebook Argentina S.R.L. and BACS Banco de Crédito y Securitización S.A., among other.

Torre BankBoston, City of Buenos Aires

The BankBoston Tower is a modern office building located at Carlos Maria Della Paolera 265 in the City of Buenos Aires. It was designed by Architect Cesar Pelli and has 27 floors and 60 parking spaces over 31,670 square meters of gross leaseable area also. We have a 47% ownership interest in the building. At present, our main tenants include Exxon Mobile and Kimberly Clark de Argentina, among other.

Intercontinental Plaza, City of Buenos Aires

Intercontinental Plazais a modern 24-story building located next to the Intercontinental Hotel in the historic neighborhood of Monserrat in downtown City of Buenos Aires. We own a 29% interest in the building which covers an area averaging 22,535 square meters of gross leaseable area with 321 parking spaces. The principal tenants currently include Cognizant Tech Solutions de Arg SRL., CRESUD Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agrícola (“CRESUD”), IRSA and Industrias Pugliese S.A., among others.

Bouchard 710, City of Buenos Aires

Bouchard 710 is an office building located in the Retiro district. The building is a 12-story tower, with an average area per floor of 1,251 square meters, with 165 units for car parking. Tenants are Sibille S.C. (KPMG) and Microsoft de Argentina S.A., Samsung Electronics Argentina S.A., Energy Consulting Services S.A., Chubb Argentina de Seguros S.A. and Booking.com S.A., among others. Its surface area averages 15,014 square meters of gross leaseable area.

Suipacha 652/64, City of Buenos Aires

Suipacha 652/64 is a 7-story office building located in the office district of the City of Buenos Aires. We own the entire building and 62 parking spaces. The building has unusually large floors, most measuring 1,580 square meters. The building’s principal tenants include Monitor de Medios Publicitarios S.A., Organización de Servicios Director Empresarios (OSDE) and Tarshop S.A., among others. The building has 11,453 square meters of gross leaseable area.

Dot Building, City of Buenos Aires

Panamerican Mall S.A., our subsidiary, developed an office building of 11,242 square meters of gross leaseable area next to Dot Baires Shopping. This building was inaugurated in July 2010, which meant our arrival at the growing corridor of the Northern Area with respect to offices for rent. The building’s principal tenants include General Electric International Inc., Mallinckrodt Medical Arg. Limited, Carrier y Boston Scientific Argentina S.A, Astrazeneca S.A., Covidien S.A., among others.

Competition

Virtually all of our office properties and other rental properties (not including shopping centers) are located in developed urban areas. There is a great number of office buildings, shopping centers, retail stores and residential houses in the zones where our properties are located. Ours is a highly fragmented market and the abundant number of comparable properties in the vicinities may have an adverse impact on the ability to lease or sell office space and other properties and may have an adverse impact on the sale and rental price of properties.

In the future, both domestic and foreign companies are likely to participate in the real estate development market in Argentina, hence competing with us for business opportunities. In addition, in the future we may participate in the development of a market for foreign real property, and we are likely to find well-established competitors.

In the premium office segment, we compete with other relevant market players, such as RAGHSA, Consultatio, Grupo Madero Este, Grupo Werthein, Grupo Farallón and YAR Construcciones.

Sales and Developments Segment

This segment includes properties available for sale, units to be received under barter agreements and land reserves of our portfolio. As of June 30, 2016, we owned plots and properties strategically located in the City of Buenos Aires, Greater Buenos Aires and throughout the provinces of Argentina with potential to develop new projects.

Detailed information on each of our properties:

Residential Properties

Condominios del Alto I – City of Rosario, Province of Santa Fe

As of June 30, 2016, the project has been completed and there are no units available for sale.

Condominios del Alto II –City of Rosario, Province of Santa Fe

As of June 30, 2016, the works in parcel H have been completed and all the units subject to the barter have been received, with 13 parking spaces available for sale.

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Intangibles - Units to be received under barter agreements

Beruti Plot of Land – City of Buenos Aires.

On October 13, 2010, IRSA CP and TGLT S.A. ("TGLT”) entered into an exchange agreement in connection with a plot of land located at Beruti 3351/59 in the City of Buenos Aires for cash and 2,170 own square meters in future residential apartments to be constructed by TGLT in the plot. In addition, TGLT will deliver to the Company 32 residential parking spaces and 171 commercial parking spaces.

Conil – Avellaneda, Province of Buenos Aires.

These plots of the Company face Alto Avellaneda shopping center, totaling 2,398 sqm distributed in two opposite corners and according to urban planning standards, around 6,000 sqm may be built. Its intended use, either through an own development or sale to a third party, is residential with the possibility of a retail space as well. In November 2014, a Barter Deed was executed to carry out a residential development, in consideration of which the Company will receive 1,365 sqm of retail stores located on the ground floors of blocks 99 and 95 at Güemes 836 and Güemes 902, respectively. Consideration for block 95 will be delivered in January 2018 and consideration for block 99 will be delivered in September 2018. The barter was valued at US$ 0.7 million.

Mixed Uses:

Ex UOM- Luján, Province of Buenos Aires.

This 116-hectare plot of land is located at kilometer 62 Km of the West Highway, in the intersection with Route 5 and was originally purchased by CRESUD. In May 2012, we acquired the property through a purchase and sale agreement entered with a related party. Our intention is to carry out a mixed-use project, taking advantage of the environment consolidation and the strategic location of the plot. At present, negotiations are underway to change the zoning parameters, thus making the project feasible.

Ex Nobleza Piccardo Plant - San Martín, Province of Buenos Aires.

On March 31, 2011, Quality Invest S.A. and Nobleza Piccardo S.A.I.C. y F. (Nobleza) executed the title deed for the purchase of a plot of land extending over 160,000 square meters located in the District of San Martín, Province of Buenos Aires, currently intended for industrial purposes and suitable in terms of characteristics and scales for mixed-use developments. The price for the property was US$ 33 million, 30% of which was paid at such time. A promissory note and a first-priority mortgage were issued for the balance of the price on the property, in favor of Nobleza. The balance incurs interest at an annual rate of 7.5% on the outstanding balance were paid in full –principal plus interest- in March 2013.

Simultaneously with execution of the title deed, the parties entered into a lease agreement whereby Nobleza leased the whole property for a term of up to 36 months from May 2011 (Note 5 to the financial statements). This lease agreement contained a clause providing for partial return of the property from month eight to month 14 from the date of execution. Prior to expiration, an extension was executed for two to six months due to expire in December 2012, and Quality Invest S.A. obtained usufruct rights to more than half the plot of land. The return of the remaining area set forth in the Agreement and due to occur in May 2014 was further extended until December 31, 2014. On March 2, 2015, a Certificate was executed by Nobleza and Quality Invest S.A. for full return of the property, and the contract relationship between the parties came to an end.

On May 16, 2012, the Municipality of San Martin granted a pre-feasibility permit for commercial use, entertainment, events, offices, etc., which would enable performance of a mixed-use development thereon.

Pursuant to an Ordinance enacted on December 30, 2014, a process was initiated to obtain a rezoning permit for the plot of land to be used mainly for Commercial Purposes, which considerably expands the uses and potential buildable square meters through new urban indicators. On January 5, 2016, a Provincial Decree was published in the Official Gazette of the Province of Buenos Aires granting its approval, and the new urban and rezoning standards thus became effective.

As approved in the Ordinance, on January 20, 2015, Quality Invest S.A. entered into a Zoning Agreement with the Municipality of San Martin which governs various issues related to applicable regulations and provides for a mandatory assignment of square meters in exchange for monetary contributions subject to fulfillment of certain administrative milestones of the rezoning process, the first of which (for Ps. 20,000,000) was paid to the Municipality ten days after the execution of the above mentioned agreement.

Moreover, on June 27, 2016, the plot subdivision plan was filed with the Municipality, in compliance with another significant milestone assumed by the Company under the Zoning Agreement.

Residential

Coto Residential Project.

We own approximately 23,000 square meters in air space above the Coto hypermarket that is close to the Abasto Shopping Center in the heart of the City of Buenos Aires. We and Coto Centro Integral de Comercialización S.A. (Coto) executed and delivered a deed dated September 24, 1997 whereby we acquired the rights to receive parking units and the rights to build above the premises located in the block formed by Agüero, Lavalle, Guardia Vieja and Gallo streets, in the Abasto neighborhood.

In June 2016, a preliminary barter agreement was signed, subject to certain conditions, for a term of one year, at the end of which the deed will be signed. The project will be a residential development and, as consideration, we will receive 3,621 square meters in apartments plus a monetary payment of US$ 1 million. The consideration for Torre I will be delivered by June 2021, while the consideration for Torre II will be delivered by September 2022. The value of the barter was set at US$ 7.5 million.

Córdoba Shopping Center Project

We own a few plots adjacent to Córdoba Shopping Center with a construction capacity of approximately 17,300 square meters in the center of the City of Córdoba.

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In May 2016, a preliminary barter agreement was signed for 13,500 square meters out of the total construction capacity, subject to certain conditions, for a term of one year, at the end of which the deed will be signed. It will be a mixed residential and office project and, as part of the consideration, we will receive 2,160 square meters in apartments, parking spaces, plus the management of permits, unifications and subdivisions in three plots. The consideration will be delivered by May 2021 for Torre I and by July 2023 for Torre II. The value of the barter was US$ 4 million.

Neuquén Residential Plot – Neuquén, Province of Neuquén.

Through Shopping Neuquén S.A., we own a plot of 13,000 square meters with construction capacity per FOT of 18,000 square meters of residential properties in an area with significant growth potential. This area is located close to the recently inaugurated shopping center, the hypermarket recently opened and a hotel to be constructed in months to come.

Retail

Caballito Plot – City of Buenos Aires.

This is a property of approximately 23,791 square meters in the City of Buenos Aires, neighborhood of Caballito, one of the most densely populated of the city, which we purchased in November 1997. This plot would allow developing a shopping center having 30,000 sqm, including a hypermarket, a cinema complex, and several recreation and entertainment activity areas. At present, the legislature of the City of Buenos Aires has received a legislative bill to approve the zoning parameters corresponding to this property which already has the consent of the Executive Branch.

Dot Adjoining Plot – City of Buenos Aires.

On May 3, 2012, the Government of the City of Buenos Aires, through the General Office of Zoning Interpretation (Dirección General de Interpretación Urbanística) approved, through a pre-feasibility study, the parcel subdivision of the Ex-Philips plot contingent upon the observance of the applicable building regulations in each of the resulting parcels. In addition, all the uses and parameters established under the municipal ordinance previously issued by the above mentioned authority are being observed.

On June 3, 2013, we received notice that the Government of the City of Buenos Aires had approved the requested parcel subdivision of the ex-Philips plot. As a result, the property was divided into three parcels: two parcels of approximately 6,400 sqm and a parcel adjoining DOT Shopping of 15,900 sqm intended for the future expansion of the shopping center by 47,000 sqm.

Offices

Philips Adjoining Plots 1 and 2 – City of Buenos Aires.

These two parcels with 6,400 sqm with construction capacity of 19,200 sqm each, are at present a significant land reserve jointly with a plot where the extension of Dot Baires Shopping is planned. As a result of major developments, the intersection of Av. General Paz and the Panamerican Highway has experienced a significant growth in recent years. The project of theses parcels will conclude the consolidation of this area.

Intercontinental Plaza II Plot - City of Buenos Aires.

In the heart of the neighborhood of Monserrat, just a few meters from the most trafficked avenue in the city and the financial center, is the Intercontinental Plaza complex consisting of an office tower and the exclusive Hotel Intercontinental. In the current plot of 6,135 square meters a second office tower of 19,600 square meters and 25 stories could be built to supplement the tower currently located in the intersection of Moreno and Tacuarí streets.

Future Developments

	Developments			Acquisitions+Development
	Greenfields	Expansions
	Polo Dot (1st Stage)	Alto Palermo	Other	Catalinas
Start of works	FY2017	FY2017		FY2017
Estimated opening	FY 2019	FY2018		FY2020
GLA (sqm)	31,635	3,884		16,012
% held by IRSA Propiedades Comerciales	80%	100%		45%
Investment amount at 100% (US$ million)	54	28.5		101
Work progress (%)	0%	0%		0%
Estimated stabilized EBITDA (US$ million)	US$ 8-10	US$ 6-8		US$ 6-8

Alto Palermo Expansion

The expansion project of Alto Palermo shopping center adds approximately 4,000 square meters of GLA to the shopping center with the highest sales per square meter in our portfolio and consists in moving the food court to a third level using the area of an adjacent building acquired in 2015. Works are estimated to take between 18 and 24 months.

First Stage of Polo Dot

The project called “Polo Dot”, located in the commercial complex adjacent to our shopping center Dot Baires, has experienced significant growth since our first investments in the area. The total project will consist in 3 office buildings (one of them could include a hotel) in land reserves owned by the Company and the expansion of the shopping center by approximately 15,000 square meters of gross leaseable area. At a first stage, we will develop an 11-floor office building with an area of approximately 30,000 square meters on an existing building, in respect of which we have already executed a lease agreement for approximately half the footage, before starting the works. Construction will begin during the next fiscal period and is estimated to last between 18 and 24 months before the building is operational. The second stage of the project will include two office/hotel buildings that will add 38,400 square meters of gross leaseable area to the complex. We have seen a significant demand for Premium office spaces in our new commercial complex and we are confident that we will be able to open these buildings with attractive rent levels and full occupancy.

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Catalinas building

During the last quarter of the fiscal year 2016, we acquired from our parent IRSA Inversiones y Representaciones S.A. (“IRSA”). 16,012 square meters that correspond to 14 floors and 142 parking spaces in the building to be developed in the “Catalinas” area in the City of Buenos Aires, one of the one of the most sought-after spots for office development in Argentina. The building to be constructed will have 35,468 square meters of gross leaseable area consisting of 30 office floors and 316 parking spaces. Construction is scheduled to begin towards the end of the year 2016 and will take approximately three years to complete.

Other Assets

As of June 30, 2016, IRSA CP held a 9.5% interest in the stock capital of TGLT, a real estate company listed on the BASE, mainly engaged in the development of residential projects in Argentina and Uruguay. In addition, it held its 11.4% interest in the e-commerce company Avenida Inc.

Moreover, it maintained its 20% interest in Tarjeta Shopping S.A., a consumer finance company, and increased to 35% its indirect interest in La Rural S.A., a company that holds usufruct rights for the commercial operation of the emblematic “Predio Ferial de Palermo” (Palermo exhibition center) in the City of Buenos Aires.

Administration and Management of Shopping Centers

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 NOA, Dot Baires, Alto Rosario, Soleil Premium Outlet, Patio Bullrich, Distrito Arcos and Alto Comahue and a percentage of the common area maintenance expenses in Buenos Aires Design, Córdoba Shopping, Mendoza Plaza, and La Ribera Shopping.

During fiscal year ended June 30, 2016, we received the following amounts in monthly maintenance fees (in thousands):

●Ps.480 in Alto Palermo,

●Ps.443 in Alto Avellaneda,

●Ps.517 in Abasto,

●Ps.379 in Patio Bullrich,

●Ps.186 in Alto Rosario,

●Ps.157 in Paseo Alcorta,

●Ps.313 in Dot Baires,

●Ps.47 in Alto NOA,

●Ps.97 in Soleil Premium Outlet,

●Ps.85 in Distrito Arcos,

●Ps.85 in Alto Comahue,

●6% of the total amount of the common area maintenance expenses in Córdoba Shopping,

●10% of the total amount of the common area maintenance expenses in Buenos Aires Design,

●5% of the total amount of the common area maintenance expenses in Mendoza Plaza, and

●5% of the total amount of the common area maintenance expenses in La Ribera Shopping.

Our total revenues from management fees during the fiscal year ended June 30, 2016, were approximately Ps.34 million.

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Principal Terms of our Leases

Under the Argentine Civil and Commercial Code (which became effective on August 1, 2015) lease terms may not exceed fifty years, except for leases regulated by Law No. 25,248. Generally, terms in our lease agreements go from three to ten years.

Leasable space in our shopping centers is marketed through an exclusive arrangement with our wholly owned subsidiary and real estate brokers Fibesa. 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.

The rent 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 3% and 12% of tenant’s gross sales). Furthermore, pursuant to the rent escalation clause in most of our leases, a tenant’s Base Rent generally increases between 18% and 27% on an annual and cumulative basis from the thirteenth (13th) month of effective date 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.

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, which range between three and six. 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 different factors. The common area expenses include, among others, administration, security, operations, maintenance, cleaning and taxes.

We carry out promotional and marketing activities in an effort to increase consumer traffic at our shopping centers. The cost of these activities are covered by 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, by up to a cap of 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 unit as a shell without any fixtures or improvements. 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 own computer systems to monitor tenants’ sales (except stands) 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 point of sale that is linked to a main computer server in the administrative office of such shopping center. We use the information generated from the computer monitoring system for statistics regarding total sales, average sales, peak sale hours, etc., for marketing purposes and as a reference for the processes of internal audit. The lease contracts for tenants in Alto Avellaneda, Alto Palermo, Alcorta Shopping, Patio Bullrich, Buenos Aires Design, Abasto, Alto Rosario, Alto NOA, Dot Baires Shopping, Córdoba Shopping, Soleil Premium Outlet, La Ribera Shopping, Mendoza Plaza, Distrito Arcos and Alto Comahue contain a clause requiring tenants to be linked to the computer monitoring system, there being certain exceptions to this requirement.

Insurance

We carry all-risk insurance for the shopping centers and other buildings covering property damage caused by fire, explosion, gas leak, hail, storms and wind, earthquakes, vandalism, theft and business interruption. In addition, we carry liability insurance covering any potential damage to third parties or property caused by the conduct of our business throughout Argentina. We are in compliance with all legal requirements related to mandatory insurance, including insurance required by the Occupational Risk Law (Ley de Riesgos del Trabajo), life insurance required under collective bargaining agreements and other insurance required by laws and executive orders. Our history of damages is limited to one single claim resulting from a fire in Alto Avellaneda Shopping in March 2006, a loss which was substantially recovered from our insurers. These insurance policies contain specifications, limits and deductibles which we believe are adequate to the risks to which we are exposed in our daily operations. We further maintain liability insurance covering our directors’ and corporate officers’ liability.

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.

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 provisions which govern the relationship with our shopping center tenants.

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Leases

Argentine law imposes certain restrictions on property owners, including:

●

a prohibition to include automatic price adjustment clauses based on inflation increases in lease agreements; an

●

the imposition of a two-year minimum lease term for all purposes, except in particular cases such as embassy, consulate or international organization venues, room with furniture for touristic purposes for less than three months, custody and bailment of goods, exhibition or offering of goods in fairs or in cases where due to the circumstances, the subject matter of the lease agreement requires a shorter term.

Rent Increases

In addition, there are contradictory court rulings with respect to whether the rent price can or cannot be increased during the term of the lease agreement. For example, Section 10 of the Public Emergency Law prohibits the adjustment of rent under lease agreements subject to official inflation rates, such as the consumer price index or the wholesale price index. Most of our lease agreements have incremental rent increase clauses that are not based on any official index. As of the date of this annual report no tenant has filed any legal action against us challenging incremental rent increases, but we cannot assure that such actions will not be filed in the future and, if any such actions were successful, that they will not have an adverse effect on our company.

Lease Term Limits

Under the Argentine Civil and Commercial Code (which became effective on August 1, 2015) lease terms may not exceed fifty 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.

Rescission Rights

The Argentine Civil and Commercial Code provides that tenants may rescind lease agreements earlier after the first six months of the effective date. 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.

Other

The Argentine Civil and Commercial Code, among other rules, repealed the Urban Lease Law (No. 23,091), which provided for a rule similar to the one described above, but established the obligation to give at least 60 days’ prior notice of exercise of the unilateral right to termination by the tenant. There are no court rulings yet with respect to the new regulations related to: (i) unilateral right to termination by tenant; i.e. whether the parties may waive the tenant’s right to terminate the agreement unilaterally; or in relation to (ii) the possibility of establishing a penalty different from the penalty described above in the event of termination.

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 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 adversely affecting our rental income. The Argentine Civil and Commercial Procedure Code enables the lessor to pursue what is known as an “executory proceeding” upon lessees’ failure 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 formalities of debt instrument itself. The aforementioned code also permits special eviction proceedings, which are carried out in the same way as ordinary proceedings. The Argentine Civil and Commercial Code requires that a notice be given to the tenant demanding payment of the amounts due in the event of breach prior to eviction, of no less than ten days for leases for residential purposes, and establishes no limitation or minimum notice for leases for other purposes. However, historically, large court dockets and numerous procedural hurdles have resulted in significant delays to eviction 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 Use of the Land

Buenos Aires Urban Planning Code. Our real estate activities are subject to several municipal zoning, building, occupation 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 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

Real Estate Installment Sales Law. The Real Estate Installment Sales Law No. 14,005, as amended by Law No. 23,266 and Decree No. 2015/85 (the “Real Estate Installment Sales Law”), imposes a series of requirements on contracts for the sale of subdivided real estate property regarding, for example, the sale price which is paid in installments and the deed, which is not conveyed until final payment of such price. The provisions of this law require, among other things:

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The registration of the intention to sell the property in subdivided plots with the Real Estate Registry (Registro de la Propiedad Inmueble) corresponding to the jurisdiction of the property. Registration will only be possible with regard 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 its 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 with the Real Estate Registry 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.

Buildings Law. Buildings Law No. 19,724 (Ley de Pre horizontalidad) was repealed by the new Argentine Civil and Commercial Code which became effective on August 1, 2015. The new regulations provide that for purposes of execution of agreements with respect to build units or units to be built, the owner is required to purchase insurance in favor of prospective purchasers against the risk of frustration of the operation pursuant to the agreement for any reason. A breach of this obligation prevents the owner from exercising any right against the purchaser–such as demanding payment of any outstanding installments due – unless he/she fully complies with their obligations, but does not prevent the purchaser from exercising its rights against seller.

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 for.

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. Architectural requirements refer to pathways, stairs, ramps and parking.

Other Regulations

Consumer Relationship. Consumer or End User Protection. The Argentine Constitution expressly establishes in Article 42 that consumers and users of goods and services have a right to protection of health, safety and economic interests in a consumer relationship. Consumer Protection Law No. 24,240, as amended, regulates several issues concerning the protection of consumers and end users in a consumer relationship, in the arrangement and execution of contracts.

The Consumer Protection Law, and the applicable sections of the Argentine Civil and Commercial Code are intended to regulate the constitutional right conferred under the Constitution on the weakest party of the consumer relationship and prevent potential abuses deriving from the stronger bargaining position of vendors of goods and services in a mass-market economy where standard form contracts are widespread.

As a result, the Consumer Protection Law and the Argentine Civil and Commercial Code deem void and unenforceable certain contractual provisions included in consumer contracts entered into with consumers or end users, including those which:

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deprive obligations of their nature or limit liability for damages;

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imply a waiver or restriction of consumer rights and an extension of seller rights; and

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impose the shifting of the burden of proof from the consumer to the seller in order to protect the consumers.

In addition, the Consumer Protection Law imposes penalties ranging from warnings to the forfeiture of concession rights, privileges, tax regimes or special credits to which the sanctioned party was entitled, including closing down of establishments for a term of up to 30 days.

The Consumer Protection Law and the Argentine Civil and Commercial Code define consumers or end users as the individuals or legal entities that acquire or use goods or services free of charge or for a price for their own final use or benefit or that of their family or social group. In addition, both laws provide that those who though not being parties to a consumer relationship as a result thereof acquire or use goods or services, for consideration or for non-consideration, for their own final use or that of their family or social group are entitled to such protection rights in a manner comparable to those engaged in a consumer relationship. 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 Argentine Civil and Commercial Code defines a consumer agreement as such agreement that is entered into between a consumer or end user and an individual or legal entity that acts professionally or occasionally either with a private or public company that manufactures goods or provides services, for the purpose of acquisition, use or enjoyment of goods or services by consumers or users for private, family or social use. The protection under the laws afforded to consumers and end users encompasses the entire consumer relationship process (from the offering of the product or service) and it is not only based on a contract, including the consequences thereof.

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In addition, the Consumer Protection Law establishes a joint and several liability system under which for any damages caused to consumers, if resulting from a defect or risk inherent in the thing or the provision of a service, the producer, manufacturer, importer, distributor, supplier, seller and anyone who has placed its trademark on the thing or service shall be liable. The Consumer Protection Law excludes the services supplied by professionals that require a college degree and registration in officially recognized professional organizations or by a governmental authority. However, this law regulates the advertisements that promote the services of such professionals. The Consumer Protection Law determines that the information contained in the offer addressed to undetermined prospective consumers, binds the offer or 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.

Pursuant to Resolution No. 104/2005 issued by the Secretariat of Technical Coordination reporting to the Argentine Ministry of Economy, Consumer Protection Law adopted Resolution No. 21/2004 issued by the Mercosur’s Common Market Group which requires that those who engage in commerce over the Internet (E-Business) shall disclose in a precise and clear manner the characteristics of the products and/or services offered and the sale terms. Failure to comply with the terms of the offer is deemed an unjustified denial to sell and gives rise to sanctions.

On September 17, 2014, a new Consumer Protection Law was enacted by the Argentine Congress Law No. 26,993. This law, known as “System for Conflict Resolution in Consumer Relationships,” provided for the creation of new administrative and judicial procedures for this field of Law. It created a two-instance administrative system: the Preliminary Conciliation Service for Consumer Relationships (Servicio de Conciliación Previa en las Relaciones de Consumo,or “ COPREC”) and the Consumer Relationship Audit, and a number of courts assigned to resolution of conflicts between consumers and producers of goods and services (Fuero Judicial Nacional de Consumo). In order to file a claim, the amount so claimed should not exceed a fixed amount equivalent to 55 adjustable minimum living wages, which are determined by the Ministry of Labor, Employment and Social Security. The claim is required to be filed with the administrative agency. If an agreement is not reached between the parties, the claimant may file the claim in court. COPREC is currently in full force and effect. However, the court system (fuero judicial nacional de consumo) is not in force yet, therefore, any court claims should be currently filed with the existing applicable courts. A considerable volume of claims filed against us are expected to be settled pursuant to the system referred to above, without disregarding the full force and effect of different instances for administrative claims existing in the provincial sphere and the City of Buenos Aires, which remain in full force and effect, where potential claims related to this matter could also be filed.

Antitrust Law. Law No. 25,156, as amended, 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 and the aggregate volume of business of the companies concerned exceeds in Argentina the amount of Ps.200.0 million, in such case the respective concentration should be submitted for approval to the CNDC. The request for approval may be filed, either prior to the transaction or within a week after its completion.

When a request for approval is filed, the CNDC may (i) authorize the transaction, (ii) subordinate the transaction to the accomplishment of certain conditions, or (iii) reject the authorization.

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 each are exempted from the administrative authorization. Notwithstanding the foregoing, when the transactions effected by the companies concerned during the prior 12-month period exceed in the aggregate Ps. 20.0 million or Ps. 60.0 million in the last 36 months, these transactions must be notified to the CNDC.

As our consolidated annual sales volume and our parent’s consolidated annual sales volume exceed Ps. 200.0 million, we should give notice to the CNDC of any concentration provided for by the Antitrust Law.

Credit Card Law. Law No. 25,065, as amended by Law No. 26,010 and Law No. 26,361, governs certain aspects of the business activity known as “credit card system.” Regulations impose minimum contract contents and approval thereof by the Argentine Ministry of Industry, as well as limitations on chargeable interest by users and commissions charged by the retail stores that adhere to the system. The Credit Card Law applies both to banking and non-banking cards, such as “Tarjeta Shopping,” issued by Tarshop. Pursuant to Communication “A” 5477 issued by the Argentine Central Bank, loans granted under credit cards by non-financial entities cannot exceed 25% of the monthly interest rate published by the Central Bank for loans to individuals without security interests.

Environmental Law. Our activities are subject to a number of national, provincial and municipal environmental provisions.

Article 41 of the Argentine Constitution, as amended in 1994, provides that all Argentine inhabitants have the right to a healthy and balanced environment fit for human development and have the duty to preserve it. Environmental damage shall bring about primarily the obligation to restore it as provided by applicable law. The authorities shall control the protection of this right, the rational use of natural resources, the preservation of the natural and cultural heritage and of biodiversity, and shall also provide for environmental information and education. The National Government shall establish minimum standards for environmental protection whereas Provincial and Municipal Governments shall fix specific standards and regulatory provisions.

On November 6, 2009, the Argentine Congress passed Law No. 25,675. Such law regulates the minimum standards for the achievement of a sustainable environment and the preservation and protection of biodiversity and fixes environmental policy goals.

Law No. 25,675 establishes the activities that will be subject to an environmental impact assessment procedure and certain requirements applicable thereto. In addition, such Law sets forth the duties and obligations that will be triggered by any damage to the environment and mainly provides for restoration of the environment to its former condition or, if that is not technically feasible, for payment of compensation in lieu thereof. Such Law also fosters environmental education and provides for certain minimum reporting obligations to be fulfilled by natural and legal entities.

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In addition, the CNV Rule require the obligation to report to the CNV any events of any nature and fortuitous acts that seriously hinder or could potentially hinder performance of our activities, including any events that generate or may generate significant impacts on the environment, providing details on the consequences thereof.

The new Argentine Civil and Commercial Code has entered into force on August 1, 2015. As a consequence, we are still in the process of analyzing together with our legal advisors the impact of this new legislation in the operations of our business. It has introduced as a novel feature the acknowledgement of collective rights, including the right to a healthy and balanced environment. Accordingly, the Argentine Civil and Commercial Code expressly sets forth that the law does not protect an abusive exercise of individual rights if such exercise could have an adverse impact on the environment and the rights with a collective impact in general.

For additional information see “Item 3 (d). Risk Factors - Risk relating to our Business - Our business is subject to extensive regulation and additional regulations may be imposed in the future.”

C. Organizational Structure

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, 2016:

Subsidiary	Activity	Country of incorporation	Ownership percentage	Voting power percentage (1)	Percentage of our total net revenues
Arcos del Gourmet S.A.	Real estate commercial	Argentina	90%	90%	0.2%
Fibesa S.A.	Real estate agent	Argentina	97%	97%	2.1%
Emprendimiento Recoleta S.A.	Building	Argentina	54%	54%	1.9%
Shopping Neuquén S.A.	Development of undertakings	Argentina	99%	99%	0.0%
Panamerican Mall S.A.	Real estate investments	Argentina	80%	80%	10.8%
Torodur S.A.	Investments	Uruguay	100%	100%	0.0%

(1) Percentage of equity interest has been rounded. It does not contemplate irrevocable capital contributions.

D. Property, Plant and Equipment

Our properties include shopping centers, office buildings and land reserves for the construction of shopping centers or apartment buildings. All of our properties are located in Argentina. Also, for information about our future developments please see “Business Overview - Future Developments.”

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

Property	Location	Use	Encumbrance
Shopping center portfolio
Alto Palermo Shopping	City of Buenos Aires, Argentina	Shopping Center	-
Abasto	City of Buenos Aires, Argentina	Shopping Center	-
Alto Avellaneda	City of Avellaneda, Argentina	Shopping Center	-
Alcorta Shopping	City of Buenos Aires, Argentina	Shopping Center	-
Patio Bullrich	City of Buenos Aires, Argentina	Shopping Center	-
Alto NOA	City of Salta, Argentina	Shopping Center	-
Buenos Aires Design	City of Buenos Aires, Argentina	Shopping Center	-
Alto Rosario	City of Rosario, Argentina	Shopping Center	-
Mendoza Plaza	City of Mendoza, Argentina	Shopping Center	-
Córdoba Shopping – Villa Cabrera (1)	City of Córdoba, Argentina	Shopping Center	Antichresis
Dot Baires Shopping	City of Buenos Aires, Argentina	Shopping Center	-
Soleil Premiun Outlet	City of San Isidro, Argentina	Shopping Center	-
Patio Olmos (2)	City of Córdoba, Argentina	Shopping Center	-
Alto Comahue (4)	City of Neuquén, Argentina	Shopping Center	-
Distrito Arcos (5)	City of Buenos Aires, Argentina	Shopping Center	-
Ocampo parking space	City of Buenos Aires, Argentina	Shopping Center	-
Office and Other rental properties portfolio
Abasto offices	City of Buenos Aires, Argentina	Rental Office	-
Alto Palermo Shopping Annex	City of Buenos Aires, Argentina	Rental Office	-
Dot Building	City of Buenos Aires, Argentina	Rental Office	-
Anchorena 545 (Chanta IV)	City of Buenos Aires, Argentina	Rental Office	-
Anchorena 665	City of Buenos Aires, Argentina	Rental Office	-
Zelaya 3102	City of Buenos Aires, Argentina	Rental Office	-
Suipacha 664	City of Buenos Aires, Argentina	Rental Office	-

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Bouchard 710	City of Buenos Aires, Argentina	Rental Office	-
Intercontinental Plaza	City of Buenos Aires, Argentina	Rental Office	-
República building	City of Buenos Aires, Argentina	Rental Office	-
Bank Boston tower	City of Buenos Aires, Argentina	Rental Office	-
Paseo del Sol	City of Buenos Aires, Argentina	Rental Office	-
Undeveloped parcels of land
Building annexed to DOT	City of Buenos Aires, Argentina	Undeveloped parcels of land	-
Caballito – Ferro (3)	City of Buenos Aires, Argentina	Undeveloped parcels of land	-
Luján plot of land	City of Luján, Argentina	Undeveloped parcels of land	-
Intercontinental plot of land Tower B	City of Buenos Aires, Argentina	Undeveloped parcels of land	-
Properties under development
PH Office Park	City of Buenos Aires, Argentina	Properties under development	-

(1)

Included in Investment Properties is the cinema building located at Córdoba Shopping – Villa Cabrera, which is encumbered by a right of antichresis as a result of a financial debt held by Empalme (merged with SAPSA. As from January 1, 2009) with NAI INTERNACIONAL II Inc. The total amount of the debt was Ps. 17.7 million as of June 30, 2016.

(2)

We lease this property to a shopping center operator under an operating lease that expires in 2032.

(3)

We have a parcel of land with a surface area of 23,791 square meters in the “Caballito” neighborhood, one of the most highly populated areas in the City of Buenos Aires, which we purchased in November 1997. This land could be used to build a 30,000 square meter shopping center including a hypermarket, a cinema complex and various leisure and entertainment areas. At present, the legislature of the City of Buenos Aires has received a legislative bill to approve the zoning parameters corresponding to this property which already has the consent of the Executive Branch.

(4)

Opening was on March 17, 2015, in the city of Neuquén, in the Argentine Patagonia.

(5)

Opening was on December 18, 2014.

Our central administration is located on the different floors of Intercontinental Plaza building, located at 877 Moreno in the Autonomous City of Buenos Aires, owned by us as from the acquisition date on December 22, 2014. We consider that all our facilities are appropriate for our current needs and suitable for their intended uses.

ITEM 4A. Unresolved staff comments

Not applicable.

ITEM 5.    Operating and Financial Review and Prospects

A. Operating Results

The following Management’s Discussion & Analysis of the financial condition and results of operations should be read in conjunction with our Audited Consolidated Financial Statements and accompanying notes included elsewhere in this annual report, as well as the information presented under “Item 3 (a). Key information – A. Selected Consolidated Financial Data”. Our discussion of our operating and financial review and prospects contain forward-looking statements that are based on current plans and expectations. These forward-looking statements are affected by risks and uncertainties that are discussed in “Item 3. Key information – D. Risk Factors”.

For purposes of the following discussion, unless otherwise specified, references to fiscal years 2016, 2015, 2014 and 2013 relate to the fiscal years ended June 30, 2016, 2015, 2014 and 2013, respectively.

For more information please see Note 38 to our Audited Consolidated Financial Statements, “Foreign currency assets and liabilities”.

Critical Accounting Policies and Estimates

Our Audited Consolidated Financial Statements are prepared in accordance with IFRSs as issued by the IASB, and the accounting policies employed are set out in our Accounting Policies section in the financial statements. In applying these policies, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. The actual outcome could differ from those estimates. Some of these policies require a high level of judgment because the areas are especially subjective or complex.

The discussion below should also be read in conjunction with our disclosure of significant IFRS accounting policies, which is provided in Note 2 to our Audited Consolidated Financial Statements, “Summary of significant accounting policies”.

We believe the most critical accounting policies and significant areas of judgment and estimation are in:

●

Impairment testing of goodwill and non-current assets other than goodwill

●

Determination of the fair value of financial instruments

●

Allowances

●

Taxation

●

Business combinations

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Impairment testing of goodwill and non-current assets other than goodwill

IFRS requires us to undertake an annual test for impairment of indefinite lived assets and, for finite lived assets, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment testing is an area involving management judgment, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, we are required to make certain assumptions in respect of highly uncertain matters including management’s expectations of estimates of future cash flows, market rents for similar properties in the same location and condition, and discount rates.

For purposes of the impairment testing, we group assets at the lowest levels for which there are separately identifiable cash flows, known as cash generating units (“CGU”). Given the nature of our assets and activities, most of our individual assets do not generate independent cash flows that are independent of those from CGUs. Therefore, we estimate the recoverable amount of the CGU to which the asset belongs, except where the fair value less costs to sell of the individual asset is higher than its book value; or the value in use of the asset can be estimated as being close to its fair value less costs to sell, where fair value can be reliably determined.

Generally, we consider each shopping center, office building and undeveloped property as a separate CGU. Details of the methods, estimates and assumptions we make in our annual impairment testing of goodwill are included in Note 5 in the Audited Consolidated Financial Statements. No impairment of goodwill was identified.

Fair value of derivatives and other financial instruments

The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques like extrapolation pricing model. We use our judgment to select a variety of methods and make assumptions that are based on market conditions existing at statement of financial position.

When no quoted prices in an active market are available, fair values are based on recognized valuation methods. We uses a range of valuation models for the measurement of Level 2 and Level 3 instruments, details of which may be obtained from the following table:

Description	Pricing model	Pricing method	Parameters
Foreign-currency contracts	Present value method	Theoretical price	Money market curve; Interest curve; Foreign exchange curve.
Arcos del Gourmet S.A. purchase option	Discounted cash flow	-	Projected revenues and discount rate
Avenida Inc.	Cap rate valuation	Theoretical price	Comparable market multiple (EV/GMV ratio)

Allowance for trade receivables

We maintain an allowance for trade receivables to account for estimated losses resulting from the inability of customers to make required payments. When evaluating the adequacy of an allowance for trade receivables, we base our estimates on the aging of accounts receivable balances and historical write-off experience, customer credit worthiness and changes in customer payment terms. If the financial condition of customers were to deteriorate, actual write-offs might be higher than expected.

Taxation

We are subject to income taxes in numerous jurisdictions. Our tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of our total tax charge necessarily involves a degree of estimation and judgment in respect of certain items whose tax treatment may not be always determined with certainty due to interpretation. The final resolution of some of these items may give rise to material profits, losses and/or cash flows. The complexity of our structure makes the degree of estimation and judgment more challenging. The resolution of issues may not always be within our control and may depend on the efficiency of legal action, if necessary. Issues can, and often do, take many years to resolve. Payments in respect of tax liabilities for an accounting period result from payments on account and on the final resolution of open items. As a result there can be substantial differences between the tax charge in the Consolidated Statements of comprehensive income and tax payments.

We recognize deferred tax assets only to the extent it is probable that future taxable profit will be available against which the temporary differences can be utilized. We assess the realizability of deferred tax assets by considering whether it is probable that some portion or all of the deferred tax assets will not be realized. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

The amounts recognized in the Audited Consolidated Financial Statements in respect of each matter are derived from our best estimate and judgment as described in Note 5 to the Audited Consolidated Financial Statements.

Business combinations

Business combinations are accounted for using the acquisition method. Accounting for business combinations requires the determination of the fair value of the various assets and liabilities of the acquired business. The Company uses all available information to make these fair value determinations, and for major acquisitions, may hire an independent appraisal firm to assist in making fair value estimates. In some instances, assumptions with respect to the timing and amount of future revenues and expenses associated with an asset might have to be used in determining its fair value. These assumptions may differ materially from those initial estimates, and if the timing is delayed significantly or if the net cash flows decline significantly, the asset could become impaired.

The Company has elected to recognize acquisition of assets or group of assets carried out between entities under common control who also qualify as “Business Combination” according to IFRS 3, using the acquisition method.

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Overview

We are owners and/or managers of 16 shopping centers in Argentina, 15 of which are operated by the Company, totaling 333,155 square meters of Gross Leaseable Area as of the closing of fiscal year 2016. Moreover, the Company owns 79,048 square meters in 6 premium office buildings and has a large reserve of land for future commercial developments. We are operators and owners of majority stakes in 14 of our shopping centers in Argentina, seven of which are located in the City of Buenos Aires (Abasto, Alcorta Shopping, Alto Palermo, Patio Bullrich, Buenos Aires Design, Dot Baires Shopping and Distrito Arcos), two in the Greater Buenos Aires area (Alto Avellaneda and Soleil), and the rest in various provinces (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera in the City of Córdoba, and Alto Comahue in the City of Neuquén). In addition, IRSA Propiedades Comerciales operates La Ribera Shopping in the City of Santa Fe through a joint venture, and owns the historic real estate that hosts the Patio Olmos shopping center in the Province of Córdoba, which is operated by a third party.

Effects of the Argentine Macroeconomic Environment

All of our assets are located in Argentina, where we conduct our operations. Therefore, our financial condition and the results of our operations are significantly dependent upon the economic conditions prevailing in Argentina.

The table below shows Argentina’s GDP growth, inflation, Dollar exchange rates and the appreciation (devaluation) of the Peso against the U.S. Dollar for the indicated periods.

	Fiscal year ended June 30,
	2016			2015		2014
GDP growth		(3.4%)			1.2%		0.0%
Inflation (IPIM) (1)		26.7%			13.6%		27.7%
Inflation (CPI) (2)		47.1%			14.0%		15.0% (2)
Appreciation (depreciation) of the Peso against the U.S. Dollar (3)		(65.9%	)		(12.0%)		(50.6%)
Average exchange rate per US$1.00 (4)	Ps.14.9900			Ps.9.0380		Ps.8.0830

(1)

IPIM is the wholesale price index as measured by the Argentine Ministry of Economy and Production. Given the modifications to the system that INDEC uses to measure IPIM, there is no data for any price variations from July 1, 2015 to June 30, 2016. For that reason, we show accumulated prices from January 1, 2016 to June 30, 2016, published by INDEC.

(2)

CPI is the consumer price index as measured by the Argentine Ministry of Economy and Production. Since January 2014, the Argentine government established IPCNu, which more broadly reflects consumer prices by considering price information from the 23 provinces of Argentina and the City of Buenos Aires. Therefore, the consumer price index for our fiscal 2014 only takes into account the six-month period after the new consumer price index was introduced. Given the modifications to the system that INDEC uses to measure CPI, there is no data for any price variations for the fiscal year ended at June 30, 2016, yet. For that reason, we show the interanual inflation published by “Dirección General de Estadísticas y Censos de la Ciudad de Buenos Aires, Ministerio de Hacienda”. It differ from inflation showed for 2015 and 2014 because of the change of government and changes in the systems of measure of the INDEC. See Risk factor “There are concerns about the accuracy of Argentina’s official inflation statistics.”

(3)

Depreciation corresponding to fiscal year 2016 is mostly due to the devaluation that took place on December 17, 2015. See Risk factor “Exchange controls and restrictions on transfers abroad and capital inflow restrictions have been limited in the past, and may limit the availability of international credit.”

(4)

Represents average of the selling and buying exchange rate.

Sources: INDEC, Argentine Ministry of Economy and Production, City of Buenos Aires Ministry of Treasury, and Central Bank.

According to the IMF, Argentina’s growth projections for 2016 show that GDP is expected to contract by 1.8%, due to a slight adjustment recession during the year, because of the correction of macroeconomic and microeconomic distortions in Argentina. However, growth is expected to strengthen to 2.7 percent in 2017 on the back of moderating inflation and more supportive monetary and fiscal policy stances.

Argentine GDP decreased 3.4% during our fiscal 2016, compared to the growth of 1.2% in our fiscal 2015. Consumption was the primary driver of economic activity, as shopping center sales grew 41.4% as of June 30, 2016, compared to June 30, 2016, driven by the increase in nominal salaries. As of June 30, 2016, the unemployment rate was at 9.3% of the country’s economically active population, compared to 6.6% as of June 30, 2015.

Argentina’s country risk, measured by the Emerging Market Bond Index, decreased 97 basis points for the 12 months ended June 30, 2016, maintaining a high spread vis-à-vis other countries in the region. The debt premium paid by Argentina was at 518 points in June 2016, compared to 352 paid by Brazil and 213 paid by Mexico.

Changes in short- and long-term interest rates, unemployment and inflation may reduce the availability of consumer credit and the purchasing power of individuals who frequent shopping centers. These factors, combined with low GDP growth, may reduce general consumption rates in our shopping centers. Since most of the lease agreements in our shopping centers, our main source of revenue, require tenants to pay a percentage of their total sales as rent, a general reduction in consumption may reduce our revenue. A reduction in the number of shoppers in our shopping centers and consequently, in the demand for parking, may also reduce our revenues from services rendered.

Effects of inflation

The following are annual inflation rates during our fiscal years indicated, based on information published by the INDEC, which is dependent on the Argentine Ministry of Economy and Production:

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Fiscal Year ended June 30	Consumer Price Index(1)	Wholesale Price Index
2002	28.4%	88.2%
2003	10.2%	8.1%
2004	4.9%	8.6%
2005	9.0%	7.7%
2006	11.0%	12.1%
2007	8.8%	9.4%
2008	9.3%	13.8%
2009	5.26%	5.4%
2010	11.0%	15.2%
2011	9.67%	12.5%
2012	9.90%	12.8%
2013	10.5%	13.5%
2014 (from January 2014)	15.0%	27.7%
2015	14.0%	13.6%
2016	47.1% (2)	26.7%

(1)

In January 2014 the Argentine government established IPCNu, which more broadly reflects consumer prices by considering price information from the 23 provinces of Argentina and the City of Buenos Aires. Therefore, the consumer price index for our fiscal 2014 only takes into account the six-month period starting on January 1, 2014. Given the modifications to the system that INDEC uses to measure CPI, there is no data for any price variations for the fiscal year ended at June 30, 2016, yet. For that reason, we show the interanual inflation published by “Dirección General de Estadísticas y Censos de la Ciudad de Buenos Aires, Ministerio de Hacienda”. It differ from inflation showed for 2015 and 2014 because of the change of government and changes in the systems of measure of the INDEC. See Risk factor “There are concerns about the accuracy of Argentina’s official inflation statistics.”

(2)

Given the modifications to the system that INDEC uses to measure IPIM, there is no data for any price variations from July 1, 2015 to June 30, 2016. For that reason, we show accumulated prices from January 1, 2016 to June 30, 2016, published by INDEC.

Continuing increases in inflation are likely to have an adverse effect on our operations. Additionally, the minimum lease amounts paid by tenants in our shopping centers are generally adjusted in accordance with the CER, an inflation index published by the Central Bank. Although higher inflation rates in Argentina may increase the minimum lease amount, given that tenants tend to pass on any increases in their own expenses to consumers, higher inflation may lead to increased sale prices charged by tenants for their products, which will ultimately reduce their sales volumes and consequently the portion of rent we receive based on their total sales.

Since the INDEC modified its methodology used to calculate the consumer price index in January 2007, there have been concerns about the accuracy of Argentina’s official inflation statistics, which led to the creation of the IPCNu in February 2014 in order to address the quality of official data.

Seasonality

Our business is directly affected by seasonality, influencing the level of our tenants’ sales. During summer holidays (January and February) our tenants’ sales typically reach their minimum level, whereas during winter holidays (July) and in December (Christmas) they reach their maximum level. Tenants selling clothes generally change their collections in spring and autumn, positively affecting our shopping centers’ sales. Sales at discount prices at the end of each season are also one of the main seasonal factors affecting our business.

Effects of interest rate fluctuations

Most of our U.S. Dollar denominated debt accrues interest at a fixed rate. An increase in interest rates will not necessary result in a significant increase in our financial costs and may not materially affect our financial condition or 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. Foreign currency exchange restrictions that may be 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.

During fiscal 2016 and fiscal 2015, the Argentine Peso depreciated against the U.S. dollar by approximately 66% and 12%, respectively, which caused an impact on the comparability of our results of operations for the year ended June 30, 2016 to our results of operations for the year ended June 30, 2015, primarily in our revenues from office rentals and our net assets and liabilities denominated in foreign currency. The devaluation affected assets and liabilities denominated in foreign currency, and this effect is shown in the line “financial results, net” of our income statement.

As a result of the devaluation of the Peso and the discontinuation of the official exchange rate by the newly elected Argentine government that took office in December 2015, the seller exchange rate was Ps. 9.6880 per US$ 1.00 on November 30, 2015, Ps.13.0400 per US$1.00 on December 31, 2015 and Ps.15.3100 per US$1.00 on September 30, 2016. See “Local Exchange Market and Exchange Rates.”

Factors Affecting Comparability of our Results

During fiscal year ended June 30, 2016, the Argentine Peso depreciated by approximately 66% against the U.S. Dollar, with the ensuing impact on the comparison of the figures stated in the these financial statements, mainly resulting from the exposure of our revenues and costs of the “Offices and Other” segment and our net assets and liabilities denominated in foreign currency to exchange rate fluctuations. Also, for information about inflation effects see “Operating Results - Effects of inflation.”

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Shopping centers:

For the fiscal years ended June 30, 2016 and 2015

During fiscal year 2016, we maintained the same portfolio of operating shopping centers.

As it concerns the new shopping centers opened in fiscal year 2015, “Distrito Arcos” and “Alto Comahue”, the periods during which operating income (loss) was recorded were different in both fiscal 2015 and 2016. Fiscal year 2016 includes 12 months of operations of Distrito Arcos and Alto Comahue, while fiscal year 2015 includes six and-a-half months, and three and a half month of operations, respectively, of each new shopping center. However, the income (loss) derived from these new developments, both in the income statement and in the information by segments, was not significant compared to the total results of this segment, for the indicated years. For this reason, there were no material effects on the comparability of information.

For the fiscal years ended June 30, 2015 and 2014

During fiscal year 2015 we inaugurated two new shopping centers: “Distrito Arcos,” located in the area of Palermo, City of Buenos Aires, in December 2014 and “Alto Comahue,” located in the City of Neuquén, Argentine Patagonian region, in March 2015. Income from these new developments, both in the income statement and the information by segment was not significant against the total results of this segment, for the indicated years. For this reason, there were no material effects on the comparability of information.

Offices and Other:

For the fiscal years ended June 30, 2016 and 2015

During fiscal year 2016, the comparability of revenues and costs from the Offices and Other segment was affected by the partial sale of rental property allocated to this segment. In this regard, during fiscal year 2016 we sold an area of 6,814 m2 in the Intercontinental Plaza building.

For the fiscal years ended June 30, 2015 and 2014

During fiscal year 2015, the Offices and Other segment was affected by the acquisition (in December 2014) of five new buildings from our parent IRSA. This represented the addition of 83,789 square meters in offices including Edificio República, Bouchard 710, Della Paolera 265, Intercontinental Plaza and Suipacha 652 and the “Intercontinental II” land reserve. This transaction was considered as a Business Combination, and as such, costs related to the acquisition were recognized as net income (loss). Subsequently, during June 2015, 8,470 square meters of such area were sold, which relates to the Intercontinental Plaza building.

Sales and Developments

For the fiscal years ended June 30, 2016 and 2015

Operating income (loss) from this segment was mainly affected by the partial sale of the functional units in the Intercontinental Plaza building, originally allocated to lease, during fiscal year 2016 and, to a lesser extent, by a decrease in sales of properties compared to fiscal year 2015 in relation to Condominios I and II projects.

For the fiscal years ended June 30, 2015 and 2014

Operating income (loss) from this segment was mainly affected by the partial sale of the functional units in the Intercontinental Plaza building, originally allocated to lease, during fiscal year 2015 and, to a lesser extent, by a decrease in sales of properties compared to fiscal year 2015 in relation to Condominios I and II projects.

Financial Transactions and Other:

For the fiscal years ended June 30, 2016 and 2015

During fiscal year 2016, there was no factor affecting comparability of information, except for the effect of the change in the valuation of the investment in Avenida accounted for during fiscal 2015. No operating income (loss) was accounted for during fiscal 2016 in relation to this investment, as compared to fiscal year 2015 when operating income (loss) was accounted for in connection with the first three months of the year.

For the fiscal years ended June 30, 2015 and 2014

During fiscal year 2015, income (loss) from this segment was affected by transactions consummated in relation to the investment in Avenida, including the exercise of warrants, a dilution of a portion of our share interest in Avenida in view of the entry of a new investor and the sale of 5.33% of our shareholding. As a result of these transactions, we ceased to exert significant influence on Avenida and, hence, to recognize our investment as an investment in an associate accounted for under the equity method, and we started to recognize it as a financial asset recorded at fair value through profit or loss under financial and holding results, net which are not disclosed in the information by segment.

Business Segment Reporting

We are required to disclose segment information in accordance with IFRS 8, which requires that we report financial and descriptive information about our reportable segments. Operating segments are components of our business about which separate financial information is available that is evaluated regularly by our Executive committee, in order to allocate resources and assess performance. The discussion below should be read in conjunction with our disclosure provided in Note 6 to our Audited Consolidated Financial Statements incorporated by reference herein.

We operate our business through four different segments:

●

Our “Shopping Centers” segment includes the operating results of our shopping centers portfolio principally composed by lease and service revenues from tenants.

●

Our “Offices and Others” segment includes the operating results of our lease and service revenues of office space and other non-retail building properties principally comprised of lease and service revenue from tenants.

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●

Our “Sales and Developments” segment includes the operating results of sales of undeveloped parcels of land and/or trading properties, as the results related with its development and maintenance. Also included in this segment are the results of the sales of real property intended for rent.

●

Our “Financial Operations and Others” segment primarily includes the financial activities carried out by the associate Tarshop S.A., the residual financial operations of its subsidiary Apsamedia S.A. (currently merged with IRSA CP). The e-commerce activities conducted through the associate Avenida Inc. were also included until the first quarter of the fiscal year ended June 30, 2015, then it has been considered as an investment in financial assets.

Below is a summary of our business segments for each of the periods indicated.

	Fiscal year 2016
	Urban properties			Investments	Total urban properties and investments
	Shopping Centers	Offices and others	Sales and developments	Financial operations and others
	(in thousands of Ps.)
Revenue (i)	2,409,082	284,137	2,679	1,013	2,696,911
Costs	(370,589)	(115,502)	(5,720)	(77)	(491,888)
Gross profit / (loss)	2,038,493	168,635	(3,041)	936	2,205,023
Gain from disposal of investment properties	-	-	175,963	-	175,963
General and administrative expenses	(178,643)	(19,870)	(20,296)	-	(218,809)
Selling expenses	(145,278)	(12,824)	(4,264)	(1,835)	(164,201)
Other operating results, net	(41,133)	(1,377)	980	(18)	(41,548)
Profit / (loss) from operations	1,673,439	134,564	149,342	(917)	1,956,428
Share in profit / (loss) of associates and joint ventures	-	14,478	-	(31,447)	(16,969)
Segment profit / (loss) before financing and taxation	1,673,439	149,042	149,342	(32,364)	1,939,459
Investment properties	1,722,467	2,090,154	201,543	-	4,014,164
Property, plant and equipment	49,053	67,656	-	-	116,709
Trading properties	-	-	14,189	-	14,189
Goodwill	1,323	3,911	-	-	5,234
Right to receive units ("Barters")	-	-	38,281	-	38,281
Inventories	18,560	-	-	-	18,560
Investments in associates and joint ventures	-	30,925	-	75,487	106,412
Operating assets (ii)	1,791,403	2,192,646	254,013	75,487	4,313,549

	Fiscal year 2015
	Urban properties			Investments	Total urban properties and investments
	Shopping Centers	Offices and others	Sales and developments	Financial operations and others
	(in thousands of Ps.)
Revenue (i)	1,778,310	160,132	6,616	147	1,945,205
Costs	(264,771)	(74,752)	(4,947)	(56)	(344,526)
Gross profit	1,513,539	85,380	1,669	91	1,600,679
Gain from disposal of investment properties	-	-	126,686	-	126,686
General and administrative expenses	(136,151)	(2,960)	-	-	(139,111)
Selling expenses	(112,824)	(5,505)	(254)	(380)	(118,963)
Other operating results, net	(48,565)	(58,340)	-	8,759	(98,146)
Profit from operations	1,215,999	18,575	128,101	8,470	1,371,145
Share of (loss) / profit of associates and joint ventures	-	(2,563)	-	10,740	8,177
Segment profit before financing and taxation	1,215,999	16,012	128,101	19,210	1,379,322
Investment properties	1,703,344	2,368,155	194,782	-	4,266,281
Property, plant and equipment	48,345	61,649	-	-	109,994
Trading properties	-	-	11,721	-	11,721
Goodwill	1,323	3,911	-	-	5,234
Right to receive units ("Barters")	-	-	38,281	-	38,281
Inventories	15,711	-	-	-	15,711
Investments in associates and joint ventures	-	20,746	-	35,934	56,680
Operating assets (ii)	1,768,723	2,454,461	244,784	35,934	4,503,902

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	Fiscal year 2014
	Urban properties			Investments	Total urban properties and investments
	Shopping Centers	Offices and others	Sales and developments	Financial operations and others
	(in thousands of Ps.)
Revenue (i)	1,383,008	27,569	51,917	574	1,463,068
Costs	(267,728)	(9,753)	(10,916)	(373)	(288,770)
Gross profit	1,115,280	17,816	41,001	201	1,174,298
Gain from disposal of investment properties	-	-	308	-	308
General and administrative expenses	(101,538)	(253)	-	(55)	(101,846)
Selling expenses	(73,427)	(817)	(3,851)	110	(77,985)
Other operating results, net	(43,743)	-	13,390	54	(30,299)
Profit from operations	896,572	16,746	50,848	310	964,476
Share of loss of associates and joint ventures	-	(885)	-	(18,500)	(19,385)
Segment profit before financing and taxation	896,572	15,861	50,848	(18,190)	945,091
Investment properties	1,655,241	166,288	35,572	-	1,857,101
Property, plant and equipment	20,455	3,196	-	-	23,651
Trading properties	-	-	9,539	-	9,539
Goodwill	1,829	3,911	-	-	5,740
Right to receive units ("Barters")	9,264	-	23,608	-	32,872
Inventories	10,625	-	-	-	10,625
Investments in associates and joint ventures	-	23,208	-	33,680	56,888
Operating assets (ii)	1,697,414	196,603	68,719	33,680	1,996,416

(i) Our revenues are entirely originated in Argentina.

(ii) All of our assets included in the segment are located in Argentina.

Our shopping centers, offices and other rental properties, and trading properties, are located in Argentina.

The CODM evaluates performance of business segments based on segment profit, defined as profit or loss from operations before financing and taxation. The measurement principles for our segment reporting structure are based on the IFRS principles adopted in the Audited Consolidated Financial Statements, except for:

●

The operating income from the joint ventures Nuevo Puerto Santa Fe S.A. and Quality Invest S.A. are reported under the proportional consolidation method. Under this method, the income/loss generated by joint ventures is reported in the Consolidated Statements of Comprehensive Income line-by-line, rather than in a single item as required by IFRS. Management believes that the proportional consolidation method provides more useful information to understand the business return, because the assets and income/loss generated by consolidated operations are similar to the assets and income/loss booked under the equity method. This is due to the fact that under the proportional consolidation method, revenues and expenses are reported separately, instead of offsetting and reporting them as a single item in the Consolidated Statements of Comprehensive Income. Therefore, the proportional consolidation method is used by the CODM to assess and understand the return and the results of operations of these businesses as a whole.

Operating results of Entertainment Holding S.A. joint venture is accounted for under the equity method. Management believes that, in this case, this method provides more adequate information for this type of investment where the main asset consists of an indirect interest of 25% of La Rural S.A.

●

Operating results does not include the amounts pertaining to building administration expenses and collective promotion funds, and so does it exclude total recovered costs, whether by way of building administration expenses or other concepts included under financial results (for example default interest and other concepts) and not analyzed to assess the operating performance of the segment. The CODM examines the net amount from both concepts (total surplus or deficit between building administration expenses and collective promotion funds and recoverable expenses).

These costs and income are presented now for reconciliation of all segments and their respective consolidating operating income.

Revenues generated and goods and services exchanged between segments are calculated on the basis of market prices. Intercompany transactions between segments, if any, are eliminated.

The following tables present a reconciliation between the total results of operations corresponding to segment information and the results of operations as per the Consolidated Statement of Comprehensive Income. The adjustments are related to the presentation of the results of joint ventures on an equity-accounted basis under IFRS and expenses and collective promotion funds.

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Fiscal year 2016
Total Segment reporting	Adjustment for Expenses and Collective Promotion Fund	Adjustment for share of profit / (loss) of joint ventures	Adjustment for inter-segment eliminations	Total as per Statement of Comprehensive Income

	(in thousands of Ps.)
Revenues	2,696,911	1,183,627	(22,038)	-	3,858,500
Costs	(491,888)	(1,201,305)	13,001	-	(1,680,192)
Gross profit / (loss)	2,205,023	(17,678)	(9,037)	-	2,178,308
Gain from disposal of investment properties	175,963	-	-	-	175,963
General and administrative expenses	(218,809)	-	667	-	(218,142)
Selling expenses	(164,201)	-	1,980	-	(162,221)
Other operating results, net	(41,548)	-	2,229	-	(39,319)
Profit from operations	1,956,428	(17,678)	(4,161)	-	1,934,589
Share of loss of associates and joint ventures	(16,969)	-	(365)	-	(17,334)
Segment profit before financing and taxation	1,939,459	(17,678)	(4,526)	-	1,917,255

	Fiscal year 2015
	Total Segment reporting	Adjustment for Expenses and Collective Promotion Fund	Adjustment for share of profit / (loss) of joint ventures	Adjustment for inter-segment eliminations	Total as per Statement of Comprehensive Income
	(in thousands of Ps.)
Revenues	1,945,205	833,905	(21,029)	-	2,758,081
Costs	(344,526)	(847,980)	9,438	-	(1,183,068)
Gross profit / (loss)	1,600,679	(14,075)	(11,591)	-	1,575,013
Gain from disposal of investment properties	126,686	-	-	-	126,686
General and administrative expenses	(139,111)	-	404	108	(138,599)
Selling expenses	(118,963)	-	1,280	-	(117,683)
Other operating results, net	(98,146)	-	1,212	(108)	(97,042)
Profit / (loss) from operations	1,371,145	(14,075)	(8,695)	-	1,348,375
Share of profit of associates and joint ventures	8,177	-	6,408	-	14,585
Segment profit / (loss) before financing and taxation	1,379,322	(14,075)	(2,287)	-	1,362,960

	Fiscal year 2014
	Total Segment reporting	Adjustment for Expenses and Collective Promotion Fund	Adjustment for share of profit / (loss) of joint ventures	Adjustment for inter-segment eliminations	Total as per Statement of Comprehensive Income
	(in thousands of Ps.)
Revenues	1,463,068	667,824	(17,518)	(360)	2,113,014
Costs	(288,770)	(675,226)	7,398	360	(956,238)
Gross profit / (loss)	1,174,298	(7,402)	(10,120)	-	1,156,776
Gain from disposal of investment properties	308	-	-	-	308
General and administrative expenses	(101,846)	-	293	108	(101,445)
Selling expenses	(77,985)	-	1,131	-	(76,854)
Other operating results, net	(30,299)	-	3,020	(108)	(27,387)
Profit / (loss) from operations	964,476	(7,402)	(5,676)	-	951,398
Share of (loss) / profit of associates and joint ventures	(19,385)	-	5,850	-	(13,535)
Segment profit / (loss) before financing and taxation	945,091	(7,402)	174	-	937,863

Income/ (loss) from interests in joint ventures:

As mentioned in Note 2.3.e) to our Audited Consolidated Financial Statements as of and for the years ended June 30, 2016 and 2015, the income / (loss) from our joint ventures NPSF and Quality Invest are accounted under the equity method in "Share of profit/(loss) of associates and joint ventures" of our consolidated statements of comprehensive income.

However, as explained in Note 6 to our Audited Consolidated Financial Statements as of and for the years ended June 30, 2016 and 2015, the operating results from these two joint ventures are accounted using the proportionate consolidation method on information by segments. Such method shows results from joint ventures in the Consolidated Statement of Comprehensive Income by Segments line by line and not in a single line as required by IFRS. The operating results from our joint ventures are allocated to each segment based on the nature of the operations that generate such results.

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In addition, the information by segments contemplates certain inter-segment operations between related parties that were eliminated from the Consolidated Statement of Comprehensive Income but which represent genuine revenues and/or costs of each segment. Such operations mainly include lease of spaces and management fees. The operating income (loss) from our joint ventures is allocated to each business segment based on the nature of the operations that generate such results.

Results of Operations for the fiscal years ended June 30, 2016 and 2015

Revenues

	Fiscal year 2016
	Income Statement (2)	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Revenues	(in millions of Ps.)
Shopping Centers	3,490.5	(1,101.3)	19.9	-	2,409.1
Offices and Others	364.3	(82.4)	2.2	-	284.1
Sales and Developments	2.7	-	-	-	2.7
Financial Operations and Others	1.0	-	-	-	1.0
Total revenues	3,858.5	(1,183.6)	22.0	-	2,696.9

(1) See Note 6 to our Audited Consolidated Financial Statements.

(2) Includes revenues from sales, leases and services (Ps. 2,674.9 million) and income from Expenses and Collective Promotion Fund (Ps. 1,183.6 million).

	Fiscal year 2015
	Income Statement (1)(2)	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Revenues	(in millions of Ps.)
Shopping Centers	2,570.8	(805.6)	13.1	-	1,778.3
Offices and Others	180.4	(28.3)	8.0	-	160.1
Sales and Developments	6.6	-	-	-	6.6
Financial Operations and Others	0.1	-	-	-	0.1
Total Revenues	2,758.1	(833.9)	21.0	-	1,945.2

(1) See Note 6 to our Audited Consolidated Financial Statements.

(2) Includes Revenues from sales, leases and services (Ps. 1,924.2 million) and income from Expenses and Collective Promotion Fund (Ps. 833.9 million).

Revenues from sales, leases and services, rose by 39.9%, from Ps. 2,758.1 million during the fiscal year 2015 to Ps. 3,858.5 million during the fiscal year 2016.

Income from Expenses and Collective Promotion Fund increased by 41.9%, from Ps. 833.9 million (Ps. 805.6 million of which were generated by Shopping Centers segment and Ps. 28.3 million to the Offices and Other segment) during fiscal year 2015 to Ps. 1,183.6 million (Ps. 1,101.3 million of which were generated by Shopping Centers segment and Ps. 82.4 million by the Offices and Other segment) during fiscal year 2016.

In addition, revenues from our joint ventures increased by 4.8%, from Ps. 21.0 million (Ps. 13.1 million of which were generated by Shopping Centers segment and Ps. 8.0 million by the Offices and Other segment) during fiscal year 2015 to Ps. 22.0 million (Ps. 19.9 million of which were generated by the Shopping Centers segment and Ps. 2.2 million by the Offices and Other segment) during fiscal year 2016.

Pursuant to the information by segments (taking into account the revenues from our joint ventures and disregarding income from Expenses and Collective Promotion Fund and inter-segment revenues), revenues increased by 38.6%, from Ps. 1,945.2 million during fiscal year 2015 to Ps. 2,696.9 million during fiscal year 2016. This increase was mainly attributable to: (i) a Ps. 630.8 million increase in revenues from the Shopping Centers segment (Ps. 6.8 million of which were attributable to the results of our joint ventures); (ii) a Ps. 124.0 million increase in the revenues from the Offices and Other segment (with a Ps. 5.8 million decrease in revenues from our joint ventures), and (iii) an increase of Ps. 0.9 million in revenues from the Financial Transactions and Other segment; partially offset by (iv) a Ps. 3.9 million decrease in revenues from the Sales and Developments segment.

Shopping Centers. Revenues from the Shopping Centers segment increased by 35.5%, from Ps. 1,778.3 million during fiscal year 2015 to Ps. 2,409.1 million during fiscal year 2016, is mainly attributable to: (i) a Ps. 471.3 million increase in revenues from fixed and variable leases as a result of a 34.4% increase in the total sales of our tenants, up from Ps. 21,508.7 million during fiscal year 2015 to Ps. 28,904.9 million during fiscal year 2016; (ii) a Ps. 50.9 million increase in revenues from admission rights (key money), (iii) a Ps. 41.3 million increase in revenues from parking charges, and (iv) a Ps. 36.5 million increase in revenues from commissions, among other items.

Offices and Others. Revenues from the Offices and Other segment increased by Ps. 124.0 million, from Ps. 160.1 million in fiscal year 2015 to Ps. 284.1 million in fiscal year 2016. This variation mainly results from revenues generated by the new offices.

Sales and Developments. Revenues from the Sales and Developments segment often change significantly from one period to the other due to non-recurrence of different sale transactions carried out by us. Revenues from the Sales and Developments segment decreased by Ps. 3.9 million, from Ps. 6.6 million during fiscal year 2015 to Ps. 2.7 million during fiscal year 2016. Such decrease mainly resulted from a decline in the sales of units in the Condominios I and II project during fiscal year 2016.

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Financial Operations and Others. Revenues from the Financial Operations and Others segment did not experience significant changes, up from Ps. 0.1 million during fiscal year 2015 to Ps. 1 million during fiscal year 2016.

Costs

		Fiscal year 2016
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Costs	(in millions of Ps.)
Shopping Centers		(1,484.8)	1,118.9	(4.7)	-	(370.6)
Offices and Others		(189.6)	82.4	(8.3)	-	(115.5)
Sales and Developments		(5.7)	-	-	-	(5.7)
Financial Operations and Others		(0.1)	-	-	-	(0.1)
Total costs		(1,680.2)	1,201.3	(13.0)	-	(491.9)

(1) See Note 6 to our Audited Consolidated Financial.

		Fiscal year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Costs	(in millions of Ps.)
Shopping Centers		(1,080.5)	819.7	(4.0)	-	(264.8)
Offices and Others		(97.6)	28.3	(5.5)	-	(74.8)
Sales and Developments		(4.9)	-	-	-	(4.9)
Financial Operations and Others		(0.1)	-	-	-	(0.1)
Total costs		(1,183.1)	848.0	(9.4)	-	(344.5)

(1) See Note 6 to our Audited Consolidated Financial Statements.

Total consolidated costs, increased by 42.0%, up from Ps. 1,183.1 million during fiscal year 2015 to Ps. 1,680.2 million during fiscal year 2016. In turn, total consolidated costs as a percentage of total revenues was 42.9% during fiscal year 2015 compared to 43.5% during fiscal year 2016.

In turn, costs from Expenses and Collective Promotion Fund increased by 41.7%, up from Ps. 848.0 million during fiscal year 2015 to Ps. 1,201.3 million during fiscal year 2016. The variation was mainly due to: I) an increase in Expenses and Collective Promotion Fund generated by the Shopping Centers segment, which increased by 36.5%, up from Ps. 819.7 million during fiscal year 2015 to Ps. 1,118.9 million during fiscal year 2016, as a result of: (i) an increase in publicity and advertising expenses of Ps. 111.8 million; (ii) an increase in salaries, social security charges and other personnel expenses of Ps. 103.1 million; (iii) an increase in maintenance, security, repairs and related expenses of Ps. 100.8 million (mostly attributable to an increase in security and maintenance services and utility rates); (iv) an increase in taxes, rates and contributions, and other expenses of Ps. 25.5 million; and (v) an increase in other miscellaneous items of Ps. 42.0 million (incurred in covering the deficit in the Collective Promotion Fund and expenses). In addition, the variation was due to: II) an increase in expenses resulting from the Expenses from the Offices and Other segment, which increased by Ps. 54.1 million, up from Ps. 28.3 million during fiscal year 2015 to Ps. 82.4 million during fiscal year 2016, mainly due to the acquisition of the new buildings (maintenance, cleaning and leases expenses and expenses and other for Ps. 36.1 million, salaries and social security expenses for Ps. 10.8 million, taxes, rates and contributions and utilities for Ps. 8.9 million).

In addition, costs from our joint ventures increased by 37.8%, from Ps. 9.4 million (Ps. 4 million of which are allocated to the Shopping Centers segment and Ps. 5.5 million to the Offices and Other segment) during fiscal year 2015 to Ps. 13.0 million (Ps. 4.7 million of which were attributable to the Shopping Centers segment and Ps. 8.3 million to the Offices and Other segment) during fiscal year 2016.

Therefore, based on the information by segment (taking into account the costs from our joint ventures and disregarding costs from Expenses and Collective Promotion Fund and business inter-segment costs), costs increased by 42.8%, from Ps. 344.5 million during fiscal year 2015 to Ps. 491.9 million during fiscal year 2016. Total costs as a percentage of total revenues pursuant to the information by segments increased from 17.7% during fiscal year 2015 to 18.2% during fiscal year 2016.

Shopping Centers. Costs attributable to the Shopping Centers segment increased from Ps. 264.8 million during fiscal year 2015 to Ps. 370.6 million during fiscal year 2016, mainly generated by: (i) higher costs in connection with the deficit in Expenses and Collective Promotion Fund of our Shopping Centers of Ps. 59.1 million; (ii) an increase in depreciation and amortization charges of Ps. 28.1 million; (iii) an increase in maintenance, security, cleaning, repairs and related expenses of Ps. 9.8 million (mainly due to an increase in security and cleaning expenses and utility rates); and (iv) an increase in salaries, social security charges and other personnel expenses of Ps. 9.2 million. Costs attributable to the Shopping Centers segment costs, as a percentage of revenues from this segment, rose from 14.9% during fiscal year 2015 to 15.4% during fiscal year 2016.

Offices and Others. The costs of the Offices and Other segment increased by 54.5%, from Ps. 74.8 million during fiscal year 2015 to Ps. 115.5 million during fiscal year 2016, mainly due to (i) higher amortization expenses derived from the acquisition of new offices for Ps. 28.4 million; (ii) an increase in leases and expenses of Ps 5.5 million; (iii) an increase in maintenance, repair and service expenses of Ps. 3.9 million and (iv) an increase in taxes, rates and contributions of Ps. 3.5 million. The costs of the Offices and Other segment, as a percentage of revenues from this segment, fell from 46.7% during fiscal year 2015 to 40.7% during fiscal year 2016.

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Sales and Developments. The costs of the Sales and Developments segment did not experience significant changes, increasing from Ps. 4.9 million during fiscal year 2015 to Ps. 5.7 million during fiscal year 2016. The costs of the Sales and Developments segment, as a percentage of the revenues from this segment, increased from 74.8% during 2015 to 213.5% during fiscal year 2016.

Financial Operations and Others. The cost of the Financial Operations and Others segment did not experience any change over the year.

Gross profit

		Fiscal Year 2016
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments (1)
Gross profit	(in millions of Ps.)
Shopping Centers		2,005.6	17.7	15.2	-	2,038.5
Offices and Others		174.8	-	(6.1)	-	168.6
Sales and Developments		(3.0)	-	-	-	(3.0)
Financial Operations and Others		0.9	-	-	-	0.9
Total gross profit		2,178.3	17.7	9.0	-	2,205.0

(1) See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal Year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments (1)
Gross profit	(in millions of Ps.)
Shopping Centers		1,490.3	14.1	9.1	-	1,513.5
Offices and Others		82.8	-	2.5	-	85.4
Sales and Developments		1.7	-	-	-	1.7
Financial Operations and Others		-	-	-	-	0.1
Total gross profit		1,575.0	14.1	11.6	-	1,600.7

(1) See Note 6 to our Audited Consolidated Financial Statements.

Total consolidated gross profit, as per the income statement, increased by 38.3%, from Ps. 1,575.0 million during fiscal year 2015 to Ps. 2,178.3 million during fiscal year 2016. Total consolidated gross profit, as a percentage of total revenues, did not experience any significant change standing at 57.1% during fiscal year 2015 as compared to 56.5% during fiscal year 2016.

In turn, gross profit (loss) from Expenses and Collective Promotion Fund increased by a 25.5%, from Ps. 14.1 million (attributable to the Shopping Centers segment) during fiscal year 2015 to Ps. 17.7 million (attributable to the Shopping Centers segment) during fiscal year 2016.

In addition, gross profit (loss) from joint ventures decreased by 22.0%, from Ps. 11.6 million (Ps. 9.1 million of which are allocated to the Shopping Centers segment and Ps. 2.5 million to the Offices and Other segment) during fiscal year 2015 to Ps. 9.0 million (including gross profit of Ps. 15.2 million from our Shopping Centers segment and a loss of Ps. 6.1 million attributable to the Offices and Other segment) during fiscal year 2016.

Therefore, based on the information by segment, total gross profit (taking into account the gross profit (loss) from our joint ventures and disregarding the gross profit (loss) from Expenses and Collective Promotion Fund and the business inter-segment gross profit) increased by 37.8%, from Ps. 1,600.7 million during fiscal year 2015 to Ps. 2,205.0 million during fiscal year 2016. Total gross profit as a percentage of revenues remained steady during both fiscal years, falling from 82.3% during fiscal year 2015 to 81.8% during fiscal year 2016.

Shopping Centers. Gross profit from the Shopping Centers segment increased by 34.7%, from Ps. 1,513.5 million during fiscal year 2015 to Ps. 2,038.5 million for fiscal year 2016, mainly as a result of an increase in total sales of our tenants, giving rise to higher rental percentages under our lease agreements. Gross profit from our Shopping Centers segment as a percentage of revenues for the segment experienced a slight decrease from 85.1% during fiscal year 2015 to 84.6% during fiscal year 2016.

Offices and Others. Gross profit from the Offices and Other segment increase by 97.5% from Ps. 85.4 million during fiscal year 2015 to Ps. 168.6 million during fiscal year 2016. Gross profit from the Offices and Other segment as a percentage of revenues from this segment increased from 53.3% during fiscal year 2015 to 59.3% during fiscal year 2016, mainly as a result of a higher increase in this segment's costs against revenues as explained above for this year.

Sales and Developments. Gross profit from the Sales and Development segment decreased by Ps. 4.7 million, from a profit of Ps. 1.7 million during fiscal year 2015 to a loss of Ps. 3.0 million during fiscal year 2016. This decrease mainly resulted from lower revenue from sales of the units in Condominios I and II in Rosario during fiscal year 2016 compared to the fiscal year 2015. Gross profit from the Sales and Development segment as a percentage of the revenues from this segment decreased from 25.2% during fiscal year 2015 to (113.5%) during fiscal year 2016, mainly as a result of lower revenues from this segment against costs as explained above.

Financial Operations and Others. Gross profit from the Financial Operations and Others segment did not experience significant variations, increasing from Ps. 0.1 million during fiscal year 2015 to Ps. 0.9 million during fiscal year 2016.

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Income from sale of investment properties

Income from the sale of investment properties, derived from our Sales and Developments segment, increased from Ps. 126.7 million during fiscal year 2015 to Ps. 176.0 million during fiscal year 2016, mainly as a result of the sale of a larger number of units in the Intercontinental building.

Administrative expenses

		Fiscal year 2016
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Administrative expenses	(in millions of Ps.)
Shopping Centers		(178.3)	-	(0.4)	-	(178.6)
Offices and Others		(19.6)	-	(0.3)	-	(19.9)
Sales and Developments		(20.3)	-	-	-	(20.3)
Financial Operations and Others		-	-	-	-	-
Total Administrative Expenses		(218.1)	-	(0.7)	-	(218.8)

(1) See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Administrative expenses	(in millions of Ps.)
Shopping Centers		(136.0)	-	(0.2)	-	(136.2)
Offices and Others		(2.7)	-	(0.2)	(0.1)	(3.0)
Sales and Developments		-	-	-	-	-
Financial Operations and Others		-	-	-	-	-
Total Administrative Expenses		(138.6)	-	(0.4)	(0.1)	(139.1)

(1) See Note 6 to our Audited Consolidated Financial Statements.

Administrative expenses increased by 57.4%, from Ps. 138.6 million during fiscal year 2015 to Ps. 218.1 million during fiscal year 2016. Total administrative expenses as a percentage of revenues increased slightly from 5.0% during fiscal year 2015 to 5.7% during fiscal year 2016.

Administrative expenses attributable to our joint ventures did not experience significant changes, standing at Ps. 0.4 million (Ps. 0.2 million of which are attributable to the Shopping Centers segment and Ps. 0.2 million to the Offices and Other segment) during fiscal year 2015 and at Ps. 0.7 million (Ps. 0.4 million of which are allocated to the Shopping Centers segment and Ps. 0.3 million to the Offices and Other segment) during fiscal year 2016.

Administrative expenses (taking into account administrative expenses attributable to our joint ventures, and inter-segment eliminations) grew by 57.3%, from Ps. 139.1 million during fiscal year 2015 to Ps. 218.8 million during fiscal year 2016, mainly as a result of: (i) a Ps. 42.5 million increase in administrative expenses of our Shopping Centers segment, (ii) a Ps. 20.3 million increase in administrative expenses of our Sales and Development segment, and (iii) a Ps. 16.9 million increase in administrative expenses of our Offices segment. Administrative expenses as a percentage of total revenues, increased from 7.2% during fiscal year 2015 to 8.1% during fiscal year 2016.

Shopping Centers. Administrative expenses attributable to our Shopping Centers segment increased by 31.2%, from Ps. 136.2 million during fiscal year 2015 to Ps. 178.6 million during fiscal year 2016, mainly due to: (i) an increase of Ps. 21.3 million in salaries, social security charges and other personnel expenses; (ii) a Ps. 12.6 million increase in director’s fees; (iii) an increase of Ps. 5.3 million in fees and compensation for services; (iv) an increase of Ps. 1.4 million in bank expenses; and (v) an increase in depreciation and amortization expenses of Ps. 1.2 million. Administrative expenses of Shopping Centers as a percentage of revenues from such segment fell from 7.7% during fiscal year 2015 to 7.4% during fiscal year 2016.

Offices and Others. Administrative expenses of the Offices and Other segment increased by Ps. 16.9 million, from Ps. 3.0 million during fiscal year 2015 to Ps. 19.9 million during fiscal year 2016, mainly as a result of: (i) a Ps. 10.3 million increase in directors’ fees; (ii) a Ps. 2.5 million increase in fees and compensation for services; and (iii) an increase of Ps. 2.4 million in salaries, social security charges and other personnel expenses. Administrative expenses of the Offices and Other segment as a percentage of revenues from this segment increased from 1.8% during fiscal year 2015 to 7.0% during fiscal year 2016.

Sales and Developments. Administrative expenses of the Sales and Developments segment experienced a rise of Ps. 20.3 million mainly as a result of: (i) an increase of Ps. 10.7 million in directors’ fees; (ii) an increase of Ps. 5.2 million in salaries, social security charges and other personnel expenses; and (iii) an increase of Ps. 2.4 million in fees and compensation for services.

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Selling expenses

		Fiscal year 2016
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Selling expenses	(in millions of Ps.)
Shopping Centers		(143.5)	-	(1.8)	-	(145.3)
Offices and Others		(12.6)	-	(0.2)	-	(12.8)
Sales and Developments		(4.3)	-	-	-	(4.3)
Financial Operations and Others		(1.8)	-	-	-	(1.8)
Total Selling Expenses		(162.2)	-	(2.0)	-	(164.2)

(1) See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Selling expenses	(in millions of Ps.)
Shopping Centers		(112.0)	-	(0.8)	-	(112.8)
Offices and Others		(5.0)	-	(0.5)	-	(5.5)
Sales and Developments		(0.3)	-	-	-	(0.3)
Financial Operations and Others		(0.4)	-	-	-	(0.4)
Total Selling Expenses		(117.7)	-	(1.3)	-	(119.0)

(1) See Note 6 to our Audited Consolidated Financial Statements.

Selling expenses increased by 37.8%, from Ps. 117.7 million during fiscal year 2015 to Ps. 162.2 million during fiscal year 2016. Selling expenses as a percentage of total revenues remained steady at 4.3% during fiscal year 2015 and at 4.2% during fiscal year 2016.

Selling expenses from our joint ventures showed a slight increase, from Ps. 1.3 million during fiscal year 2015 (Ps. 0.8 million of which are allocated to the Shopping Centers segment and Ps. 0.5 million to the Offices and Other segment) to Ps. 2 million during fiscal year 2016 (Ps. 1.8 million of which are allocated to the Shopping Centers segment and Ps. 0.2 million to the Offices and Other segment).

Therefore, and taking into account selling expenses from our joint ventures and inter-segment eliminations, selling expenses increased by 38.0%, from Ps. 119.0 million during fiscal year 2015 to Ps. 164.2 million during fiscal year 2016. This increase was mainly attributable to: (i) a Ps. 32.5 million increase in selling expenses of the Shopping Centers segment; (ii) higher selling expenses of Ps. 7.3 million from the Offices and Other segment; (iii) higher selling expenses of Ps. 1.5 million from the Financial Transactions and Other segment, and (iv) a Ps. 4.0 million increase in selling expenses from the Sales and Developments segment. Selling expenses (taking into account selling expenses derived from our joint ventures and inter-segment eliminations) as a percentage of total revenues remained steady at 6.1% in both fiscal years.

Shopping Centers. Selling expenses from the Shopping Centers segment increased by 28.8%, from Ps. 112.8 million during fiscal year 2015 to Ps. 145.3 million during fiscal year 2016, mainly as a result of: (i) an increase in taxes, rates and contributions of Ps. 30.2 million, mainly generated by higher turnover taxes; (ii) a Ps. 3.2 million increase in salaries, social security charges and other personnel expenses; and (iii) a Ps. 2.6 million increase in publicity and advertising expenses, partially offset by (iv) a decline of Ps. 3.1 million in loan losses charges; and (v) a decline of Ps. 1 million in fees and compensation for services. Selling expenses as a percentage of the revenues from the Shopping Centers segment fell from 6.3% during fiscal year 2015 to 6.0 % during fiscal year 2016.

Offices and Others. Selling expenses from the Offices and Other segment increased by Ps. 7.3 million, from Ps. 5.5 million during fiscal year 2015 to Ps. 12.8 million during fiscal year 2016, mainly as a result of: (i) an increase in taxes, rates and contributions of Ps. 2.3 million, mainly generated by higher turnover taxes; (ii) a Ps. 2.0 million increase in salaries, social security charges and other personnel expenses; and (iii) an increase of Ps. 1.8 million in loan losses charges. Selling expenses from the Offices and Other segment as a percentage of the revenues from such segment increased from 3.4 % during fiscal year 2015 to 4.5% during fiscal year 2016.

Sales and Developments. Selling expenses from our Sales and Developments segment increased by Ps. 4.0 million, from Ps. 0.3 million during fiscal year 2015 to Ps. 4.3 million during fiscal year 2016, mainly due to an increase in overheads during fiscal year 2016, as compared to fiscal year 2015.

Financial Operations and Others. Selling expenses from the Financial Operations and Others segment increased by Ps. 1.5 million, from Ps. 0.4 million during fiscal year 2015 to Ps. 1.8 million during fiscal year 2016, mainly as a result of increased loan losses related to the consumer financing residual activity.

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Other operating results, net

		Fiscal Year 2016
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Other operating results, net	(in millions of Ps.)
Shopping Centers		(39.4)	-	(1.7)	-	(41.1)
Offices and Others		(1.0)	-	(0.4)	-	(1.4)
Sales and Developments		1.2	-	(0.2)	-	1.0
Financial Operations and Others		-	-	-	-	-
Total Other operating results, net		(39.3)	-	(2.2)	-	(41.5)

(1) See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal Year 2015
			Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments (1)
Other operating results, net	(in millions of Ps.)
Shopping Centers			(47.4)	-	(1.2)	-	(48.6)
Offices and Others			(58.3)	-	(0.1)	0.1	(58.3)
Sales and Developments			-	-	-	-	-
Financial Operations and Others			8.8	-	-	-	8.8
Total Other operating results, net			(97.0)	-	(1.2)	0.1	(98.1)

(1) See Note 6 to our Audited Consolidated Financial Statements.

Other operating results, net was a lower loss of a Ps. 39.3 million during fiscal year 2016 from a loss of Ps. 97.0 million during fiscal year 2015. Total Other operating results, net as a percentage of total revenues declined from 3.5% during fiscal year 2015 to 1.0% during fiscal year 2016.

The total loss from our joint ventures increased by Ps. 1.0 million, from Ps. 1.2 million (which were allocated to the Shopping Centers segment) during fiscal year 2015 to Ps. 2.2 million (Ps. 1.7 million of which were allocated to the Shopping Centers segment, Ps. 0.4 million to the Offices and Other segment and Ps. 0.2 million to the Sales and Developments segment) during fiscal year 2016.

Taking into account our interest in joint ventures and inter-segment eliminations, Other operating results, net declined from a loss of Ps. 98.1 million during fiscal year 2015 to a loss of Ps. 41.5 million during fiscal year 2016, mainly as a result of a lower loss from the Offices and Other segment in the amount of Ps. 57.0 million. Total Other operating results, net as a percentage of revenues (taking into account other operating results derived from our joint ventures and inter-segment eliminations) declined from 5.0% during fiscal year 2015 to 1.5% during fiscal year 2016.

Shopping Centers. Other operating results, net from the Shopping Centers segment decreased by 15.3%, from a loss of Ps. 48.6 million during fiscal year 2015 to a loss of Ps. 41.1 million during fiscal year 2016, mainly as a result of (i) a lower charge for lawsuits and contingencies of Ps. 8.1 million, partially offset by (ii) an increase in donations of Ps. 2.9 million, among other factors. Other operating results, net as a percentage of revenues from this segment decreased from 2.7% during fiscal year 2015 to 1.7% during fiscal year 2016.

Offices and Others. Other operating results, net from the Offices and Other segment changed from a loss of Ps. 58.3 million during fiscal year 2015 to a loss of Ps. 1.4 million during fiscal year 2016, attributable to non-recurring notarial and stamp taxes related to the acquisition of the new offices during fiscal year 2015. Other operating results, net as a percentage of revenues from this segment decreased from 36.4% during fiscal year 2015 to 0.5% during fiscal year 2016.

Sales and Developments. Other operating results, net from the Sales and Developments segment did not experience significant changes.

Financial Operations and Others. Other operating results, net from the Financial Operations and Others segment declined by Ps. 8.8 million, mainly as a result of a non-recurring gain from the sale of a portion of our interest in Avenida during fiscal year 2015.

Operating income

		Fiscal Year 2016
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Operating income	(in millions of Ps.)
Shopping Centers		1,644.4	17.7	11.3	-	1,673.4
Offices and Others		141.6	-	(7.0)	-	134.6
Sales and Developments		149.6	-	(0.2)	-	149.3
Financial Operations and Others		(0.9)	-	-	-	(0.9)
Total Operating income		1,934.6	17.7	4.2	-	1,956.4

(1)

See Note 6 to our Audited Consolidated Financial Statements.

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		Fiscal Year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Operating income	(in millions of Ps.)
Shopping Centers		1,195.0	14.1	6.9	-	1,216.0
Offices and Others		16.9	-	1.7	-	18.6
Sales and Developments		128.1	-	-	-	128.1
Financial Operations and Others		8.5	-	-	-	8.5
Total Operating income		1,348.4	14.1	8.7	-	1,371.1

 (1) See Note 6 to our Audited Consolidated Financial Statements.

Total operating income increased by 43.5%, from Ps. 1,348.4 million during fiscal year 2015 to Ps. 1,934.6 million during fiscal year 2016. Total operating income as a percentage of total revenues increased from 48.9% during fiscal year 2015 to 50.1% during fiscal year 2016.

Operating income from our joint ventures declined by 52.1%, from Ps. 8.7 million (Ps. 6.9 million of which are allocated to the Shopping Centers segment and Ps. 1.7 million to the Offices and Other segment) during fiscal year 2015 to Ps. 4.2 million (with a gain of Ps. 11.3 million being attributable to the Shopping Centers segment and a loss of Ps. 7.0 million and Ps. 0.2 million being attributable to the Offices and Other segment and the Sales and Developments segment, respectively) during fiscal year 2016.

Taking into account revenue from our joint ventures and disregarding income from Expenses and Collective Promotion Fund and inter-segment revenue, our operating income increased by 42.7%, from Ps. 1,371.1 million during fiscal year 2015 to Ps. 1,956.4 million during fiscal year 2016, mainly as a result of: (i) an increase in operating income from the Shopping Centers segment of Ps. 457.4 million; (ii) an increase in income from the Offices and Other segment of Ps. 116.0 million; and (iii) an increase in operating income from the Sales and Developments segment of Ps. 21.2 million; offset by lower operating income from the Financial Operations and Others segment of Ps. 9.4 million. Total operating income (taking into account our joint ventures, inter-segment eliminations and eliminations for costs from Expenses and Collective Promotion Fund from the shopping centers and offices segments) as a percentage of total revenues increased from 70.5% during fiscal year 2015 to 72.5% during fiscal year 2016.

Shopping Centers. Operating income from the Shopping Centers segment increased by 37.6% during fiscal year 2016, from Ps. 1,216.0 million during fiscal year 2015 to Ps. 1,673.4 million during fiscal year 2016. Operating income from the Shopping Centers segment as a percentage of the revenues from such segment increased from 68.4% during fiscal year 2015 to 69.5% during fiscal year 2016.

Offices and Others. Operating income from the Offices and Other segment increased by Ps. 116.0 million, from Ps. 18.6 million during fiscal year 2015 to Ps. 134.6 million during fiscal year 2016. Operating income from the Offices and Other segment, as a percentage of the revenues from such segment, increased by 11.6% during fiscal year 2015 to 47.4% during fiscal year 2016.

Sales and Developments. Operating income from the Sales and Developments segment increased by Ps. 21.2 million, from Ps. 128.1 million during fiscal year 2015 to Ps. 149.3 million during fiscal year 2016.

Financial Operations and Others. Operating income from the Financial Operations and Others segment declined from a gain of Ps. 8.5 million during fiscal year 2015 to a loss of Ps. 0.9 million during fiscal year 2016.

Share of profit of associates and joint ventures

The share from profit of associates and joint ventures decreased by Ps. 31.9 million, from a profit of Ps. 14.6 million during fiscal year 2015 to a loss of Ps. 17.3 million during fiscal year 2016 mainly due to a lower profit of Ps. 42.2 million generated by our Financial Transactions and Other segment; partially offset by profit of Ps. 7.5 million from our Offices and Other segment.

Offices and Others. The share from profit of associates and joint ventures increased by Ps. 17.0 million from a loss of Ps. 2.6 million during fiscal year 2015 to a profit of Ps. 14.5 million during fiscal year 2016, mainly generated by our interest in Entertainment Holding S.A.

Financial Operations and Others. The share of profit of associates and joint ventures from the Financial Operations and Others segment declined by Ps. 42.2 million from a profit of Ps. 10.7 million during fiscal year 2015 to a loss of Ps. 31.4 million during fiscal year 2016, mainly generated by: (i) a larger loss from our investment in Tarshop S.A. equal to Ps. 22.8 million mainly due to uncollectible write-offs and (ii) the non-recurring profit of Ps. 19.4 million from the disposal of Avenida accounted for during fiscal year 2015.

Financial results, net

Financial results, net increased by 57.5%, from a loss of Ps. 451.5 million during fiscal year 2015 to a loss of Ps. 711.2 million during fiscal year 2016.

Financial revenues increased by Ps. 407.4 million, from Ps. 105.1 million during fiscal year 2015 to Ps. 512.6 million during fiscal year 2016, mainly as a result of: (i) a Ps. 374.6 million increase in foreign exchange gains due to the impact of a higher depreciation of the Peso during fiscal year 2016 on our US Dollar-denominated net assets compared to lower depreciation during fiscal year 2015 (the Peso/Dollar exchange rate increased by 66.2% during fiscal year 2016, from Ps. 8.988 as of June 30, 2015 to Ps. 14.94 as of June 30, 2016, while during fiscal year 2015, it increased by 11.89% compared to fiscal year 2014, from Ps. 8.03 as of June 30, 2014 to Ps. 8.988 as of June 30, 2015), and (ii) a net increase of Ps. 32.9 million in interest income, mainly generated by default interest payable by clients and related parties, and gains (losses) from the sale of securities and fixed-term bank deposits.

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Financial expenses increased by 386.6%, from Ps. 603.9 million during fiscal year 2015 to Ps. 2,938.5 million during fiscal year 2016, mainly as a result of: (i) a Ps. 1,979.9 million increase in foreign exchange losses due to the impact of higher depreciation of the Peso during fiscal year 2016 on the amount outstanding of our US Dollar-denominated debt as compared to depreciation during fiscal year 2015 (the Peso/Dollar exchange rate increased by 65.5% during fiscal year 2016, from Ps. 9.088 to US$ 1.00 as of June 30, 2015 to Ps. 15.04 to US$ 1.00 as of June 30, 2016, while during fiscal year 2015, it increased by 11.74% compared to fiscal year 2014, from Ps. 8.133 to US$ 1.00 as of June 30, 2014 to Ps. 9.088 to US$ 1.00 as of June 30, 2015); (ii) a Ps. 283.3 million increase in interest expense, mainly attributable to higher interest on intercompany indebtedness, Notes and bank overdrafts; (iii) an increase in other financial expenses of Ps. 58.4 million mainly attributable to expenses in connection with the tender offer and request for consent of IRSA CP Class I Notes and increased charges on account of tax on bank credits and debits and turnover tax; and (vi) capitalized finance cost of Ps. 13.0 million in fiscal year 2015.

Other financial results increased by Ps. 1,667.5 million from a gain of Ps. 47.2 million during fiscal year 2015 to a gain of Ps. 1,714.7 million during fiscal year 2016, mainly as a result of: (i) a Ps. 416.2 million increase in revenues generated by the valuation of financial assets at fair value (derived from the re-valuation of Government securities and Bonds, mutual funds and other investments) and (ii) larger gains from future currency exchange derivatives, mainly dollar currency futures were traded in Mercado a Término de Rosario S.A, and interest rate swaps of Ps. 1,251.3 million.

Income Tax

Profit before Income Tax increased by 32,3% from Ps. 911.4 million during fiscal year 2015 to Ps. 1,206.0 million during fiscal year 2016, due to the factors described above. Profit before Income Tax includes Uruguayan-source income, which is taxed at 0%. Profit before Income Tax at the prevailing tax rate does not include such uruguayan sourced income, and therefore Income Tax expenses increased only 1.2%, from Ps. 290.8 million during fiscal year 2015 to Ps. 294.3 million during fiscal year 2016.

In determining the income tax charge, we apply the deferred tax method, recognizing the temporary differences between the book value, the valuation of assets and liabilities for tax purposes and the application of tax loss carry forwards. For this reason, the amount recorded as income tax reflects not only the amount payable but also the recognition of the tax on the taxable income as booked.

Net Income

As a result of the factors described above, net income for fiscal year 2016 increased by 46.9%, from Ps. 620.6 million during fiscal year 2015 to Ps. 911.7 million during fiscal year 2016. Income attributable to our parent company's shareholders increased by 40.5%, from Ps. 581.3 million during fiscal year 2015 to Ps. 816.6 million during fiscal year 2016. Income attributable to non-controlling interest increased by 141.7% during fiscal year 2016, from Ps. 39.3 million to Ps. 95.1 million during fiscal year 2015.

Results of Operations for the fiscal years ended June 30, 2015 and 2014

Revenues

	Fiscal Year 2015
	Income Statement(2)		Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Revenues		(in millions of Ps.)
Shopping Centers	2,570.8		(805.6)	13.1	-	1,778.3
Offices and Others	180.4		(28.3)	8.0	-	160.1
Sales and Developments	6.6		-	-	-	6.6
Financial Operations and Others	0.1		-	-	-	0.1
Total revenues	2,758.1		(833.9)	21.0	-	1,945.2

(1) See Note 6 to our Audited Consolidated Financial Statements.

(2) Includes revenues from sales, leases and services (Ps. 1,924.2 million) and income from Expenses and Collective Promotion Fund (Ps. 833.9 million).

		Fiscal Year 2014
		Income Statement(2)	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Revenues	(in millions of Ps.)
Shopping Centers		2,033.1	(659.7)	9.3	0.4	1,383.0
Offices and Others		27.5	(8.1)	8.2	-	27.6
Sales and Developments		51.9	-	-	-	51.9
Financial Operations and Others		0.6	-	-	-	0.6
Total revenues		2,113.0	(667.8)	17.5	0.4	1,463.1

(1) See Note 6 to our Audited Consolidated Financial Statements.

(2) Includes revenues from sales, leases and services (Ps. 1,445.2 million) and income from Expenses and Collective Promotion Fund (Ps. 667.8 million).

Revenues from sales, leases and services rose by 33.1%, from Ps. 1,445.2 million during the fiscal year 2014 to Ps. 1,924.2 million during the fiscal year 2015.

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Income from Expenses and Collective Promotion Fund increased by 24.9%, from Ps. 667.8 million (Ps. 659.7 million of which were generated by the Shopping Centers segment and Ps. 8.1 million by the Offices and Other segment) during fiscal year 2014 to Ps. 833.9 million (Ps. 805.6 million of which were generated by the Shopping Centers segment and Ps. 28.3 million by the Offices and Other segment) during fiscal year 2015.

Revenues from our joint ventures increased by 20.0%, from Ps. 17.5 million (Ps. 9.2 million of which were generated by to the Shopping Centers segment and Ps. 8.2 million by the Offices and Other segment) during fiscal year 2014 by Ps. 21.0 million (Ps. 13.1 million of which were generated by the Shopping Centers segment and Ps. 8.0 million to the Offices and Other segment) during fiscal year 2015.

Finally, during fiscal year 2015 no inter-segment revenues were recorded, for which reason a Ps. 0.4 million decrease was recorded for this item.

Pursuant to the information by segment (taking into account the revenues from our joint ventures and disregarding income from Expenses and Collective Promotion Fund and inter-segment revenues), revenues increased by 33.0%, from Ps. 1,463.1 million during fiscal year 2014 to Ps. 1,945.2 million during fiscal year 2015. This increase was mainly attributable to: (i) a Ps. 395.3 million increase in revenues from the Shopping Centers segment (Ps. 3.8 million of which were attributable the results of our joint ventures) and (ii) a Ps. 132.6 million increase in the revenues from the Offices and Other segment (Ps. 0.2 million of which were attributable the results of our joint ventures), partially offset by a decrease in revenues from the Sales and Developments segment equal to Ps. 45.3 million and Ps. 0.4 million in revenues from the Financial Operations and Others segment.

Shopping Centers. Revenues from the Shopping Centers segment increased by 28.6%, from Ps. 1,383.0 million during fiscal year 2014 to Ps. 1,778.3 million during fiscal year 2015, mainly attributable to: (i) a Ps. 317.8 million increase in revenues from fixed and variable leases as a result of a 33.3% increase in the total sales of our tenants, up from Ps. 16,132.8 million during fiscal year 2014 to Ps. 21,508.7 million during fiscal year 2015; (ii) a Ps. 30.0 million increase in revenues from admission rights, (iii) a Ps. 30.6 million increase in revenues from parking charges; and (iv) a Ps. 17.0 million increase in revenues from commissions, management fees and other.

Offices and Others. Revenues from the Offices and Other segment increased by Ps. 132.6 million, from Ps. 27.6 million in fiscal year 2014 to Ps. 160.1 million in fiscal year 2015. This variation mainly results from (i) revenues generated by the new offices acquired in December 2014 for Ps. 121.8 million and (ii) an increase in the revenues from office leases in the Dot building and other rental properties of Ps. 10.8 million.

Sales and Developments. Revenues from the Sales and Developments segment generally change significantly from one period to the other due to non-recurrence of different sale transactions carried out by us. Revenues from the Sales and Developments segment decreased by Ps. 45.3 million, from Ps. 51.9 million during fiscal year 2014 to Ps. 6.6 million during fiscal year 2015. Such decrease mainly resulted from a decline in the sales of units in the Condominios I and II project during fiscal year 2015.

Financial Operations and Others. Revenues from the Financial Operations and Others segment decreased from Ps. 0.6 million during fiscal year 2014 to Ps. 0.1 million during fiscal year 2015 as a result of a decline in revenues from residual consumer financing activities carried out by us.

Costs

	Fiscal Year 2015
	Income Statement		Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Costs		(in millions of Ps.)
Shopping Centers	(1,080.5)		819.7	(4.0)	-	(264.8)
Offices and Others	(97.6)		28.3	(5.5)	-	(74.8)
Sales and Developments	(4.9)		-	-	-	(4.9)
Financial Operations and Others	(0.1)		-	-	-	(0.1)
Total costs	(1,183.1)		848.0	(9.4)	-	(344.5)

(1) See Note 6 to our Audited Consolidated Financial Statements.

	Fiscal Year 2014
	Income Statement		Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Costs		(in millions of Ps.)
Shopping Centers	(931.7)		667.1	(2.7)	(0.4)	(267.7)
Offices and Others	(13.3)		8.1	(4.6)	-	(9.8)
Sales and Developments	(10.9)		-	-	-	(10.9)
Financial Operations and Others	(0.4)		-	-	-	(0.4)
Total costs	(956.2)		675.2	(7.4)	(0.4)	(288.8)

(1) See Note 6 to our Audited Consolidated Financial Statements.

Total consolidated costs increased by 23.7%, up from Ps. 956.2 million during fiscal year 2014 to Ps. 1,183.1 million during fiscal year 2015. In turn, total consolidated costs as a percentage of total revenues was 45.3% during fiscal year 2014 compared to 42.9% during fiscal year 2015.

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In turn, costs from Expenses and Collective Promotion Fund increased by 25.6%, up from Ps. 675.2 million during fiscal year 2014 to Ps. 848.0 million during fiscal year 2015. The variation was mainly due to: I) an increase in Expenses and Collective Promotion Fund generated by the Shopping Centers segment, which increased by 22.9%, up from Ps. 667.1 million during fiscal year 2014 to Ps. 819.7 million during fiscal year 2015, as a result of: (i) an increase in maintenance, security, cleaning, repairs and related expenses of Ps. 59.8 million (mainly attributable to an increase in security and maintenance services and utility rates); (ii) an increase in publicity and advertising expenses of Ps. 27.9 million, (iii) an increase in salaries, social security charges and other personnel expenses of Ps. 30.2 million; (iv) an increase in taxes, rates and contributions, and other expenses of Ps. 20.8 million; and (v) an increase in other miscellaneous items of Ps. 14.1 million (mainly generated by travel, transportation, and stationery expenses, among others). In addition, the variation was due to an increase in expenses in the Offices and Other segment, which increased by Ps. 20.2 million, up from Ps. 8.1 million during fiscal year 2014 to Ps. 28.3 million during fiscal year 2015, mainly due to the acquisition of the new buildings (salaries and social security expenses for Ps. 4.3 million, taxes, rates and contributions and utilities for Ps. 7.6 million, maintenance, cleaning and leases expenses and expenses and other for Ps. 8.2 million).

In addition, costs from our joint ventures increased by 27.6%, from Ps. 7.4 million (Ps. 2.8 million of which are allocated to the Shopping Centers segment and Ps. 4.6 million to the Offices and Other segment) during fiscal year 2014 to Ps. 9.4 million (Ps. 4.0 million of which were attributable to the Shopping Centers segment and Ps. 5.5 million to the Offices and Other segment) during fiscal year 2015.

Finally, during fiscal year 2015 no inter-segment costs were recorded, for which reason a Ps. 0.4 million decrease was recorded for this item.

Therefore, based on the information by segment (taking into account the costs from our joint ventures and disregarding costs from common maintenance expenses and common advertising fund and business inter-segment costs), costs increased by 19.3%, from Ps. 288.8 million during fiscal year 2014 to Ps. 344.5 million during fiscal year 2015. Total costs as a percentage of total revenues pursuant to the information by segments decreased from 19.7% during fiscal year 2014 to 17.7% during fiscal year 2015.

Shopping Centers. Costs attributable to the Shopping Centers segment showed a slight decline of 1.1%, from Ps. 267.7 million during fiscal year 2014 to Ps. 264.8 million during fiscal year 2015, mainly generated by: (i) lower costs for the deficit in Common Maintenance Expenses and Common Advertising Fund of our Shopping Centers in the amount of Ps. 35.9 million; and (ii) a decrease in depreciation and amortization charges of Ps. 3.9 million; partially offset by higher costs derived from: (a) an increase in maintenance, security, cleaning, repairs and related expenses of Ps. 12.9 million (mainly due to an increase in security and cleaning expenses and utility rates); (b) an increase in salaries, social security charges and other personnel expenses of Ps. 10.1 million; (c) an increase in taxes, rates and contributions and other expenses of Ps. 8.8 million (mainly due to increases in provincial taxes on land and municipal rates for utilities, among other items); and (d) an increase in fees and compensation for services of Ps. 5.6 million. The Shopping Centers segment costs, as a percentage of revenues from this segment decreased from 19.4% during fiscal year 2014 to 14.9% during fiscal year 2015.

Offices and Others. The costs of the Offices and Other segment increased by Ps. 65.0 million, from Ps. 9.8 million during fiscal year 2014 to Ps. 74.8 million during fiscal year 2015, mainly due to higher amortization expenses derived from the acquisition of new offices for Ps. 61.9 million. The costs of the Offices and Other segment, as a percentage of the revenues from this segment, increased from 35.4% during fiscal year 2014 to 46.7% during fiscal year 2015.

Sales and Developments. The costs of the Sales and Developments segment showed a Ps. 6.0 million decline, from Ps. 10.9 million during fiscal year 2014 to Ps. 4.9 million during fiscal year 2015, mainly due to a decrease in the sale of units in the Condominios I and II projects of the Rosario plots of land. The costs of the Sales and Developments segment, as a percentage of the revenues from this segment increased from 21.0% during fiscal year 2014 to 74.8% during 2015.

Financial Operations and Others. The cost of the Financial Operations and Others segment decreased from Ps. 0.4 million during fiscal year 2014 to Ps. 0.1 million during fiscal year 2015, mainly as a result of a gradual decline in residual consumer financing activities of us. The costs of the Financial Transactions and Other segment, as a percentage of the revenues from this segment, decreased from 65.0% during fiscal year 2014 to 38.1% during 2015.

Gross profit

The following table shows our Gross Profit by business segment for the indicated periods.

	Fiscal Year 2015
	Income Statement		Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Gross profit		(in millions of Ps.)
Shopping Centers	1,490.3		14.1	9.1	-	1,513.5
Offices and Others	82.8		-	2.5	-	85.4
Sales and Developments	1.7		-	-	-	1.7
Financial Operations and Others	-		-	-	-	0.1
Total gross profit	1,575.0		14.1	11.6	-	1,600.7

(1) See Note 6 to our Audited Consolidated Financial Statements.

	Fiscal Year 2014
	Income Statement		Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Gross profit		(in millions of Ps.)
Shopping Centers	1,101.4		7.4	6.5	-	1,115.3
Offices and Others	14.2		-	3.6	-	17.8
Sales and Developments	41.0		-	-	-	41.0
Financial Operations and Others	0.2		-	-	-	0.2
Total gross profit	1,156.8		7.4	10.1	-	1,174.3

(1) See Note 6 to our Audited Consolidated Financial Statements.

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Total consolidated gross profit, as per the income statement, increased by 36.2%, from Ps. 1,156.8 million during fiscal year 2014 to Ps. 1,575.0 million during fiscal year 2015. Total consolidated gross profit, as a percentage of total revenues, increased from 54.7% during fiscal year 2014 to 57.1% during fiscal year 2015.

In turn, gross profit (loss) from Expenses and Collective Promotion Fund increased by 90.2%, from Ps. 7.4 million (attributable to the Shopping Centers segment) during fiscal year 2014 to Ps. 14.1 million (attributable to the Shopping Centers segment) during fiscal year 2015.

In addition, gross profit (loss) from our joint ventures increased by 14.5%, from Ps. 10.1 million (Ps. 6.5 million of which are allocated to the Shopping Centers segment and Ps. 3.6 million to the Offices and Other segment) during fiscal year 2014 to Ps. 11.6 million (Ps. 9.1 million of which are attributable to the Shopping Centers segment and Ps. 2.5 million to the Offices and Other segment) during fiscal year 2015.

Therefore, based on the information by segment, gross profit (taking into account the gross profit (loss) from our joint ventures and disregarding the gross profit (loss) from expenses and the collective promotion fund and the business inter-segment gross profit) increased by 36.3%, from Ps. 1,174.3 million during fiscal year 2014 to Ps. 1,600.7 million during fiscal year 2015. The gross profit as a percentage of revenues increased from 80.3% during fiscal year 2014 to 82.3% during fiscal year 2015.

Shopping Centers. Gross profit from the Shopping Centers segment increased by 35.7%, from Ps. 1,115.3 million for fiscal year 2014 to Ps. 1,513.5 million during fiscal year 2015, mainly as a result of an increase in total sales of our tenants, giving rise to higher rental percentages under our lease agreements. Gross profit from our Shopping Centers segment as a percentage of revenues for the segment increased from 80.6% during fiscal year 2014 to 85.1% during fiscal year 2015.

Offices and Others. Gross profit from the Offices and Other segment increased by Ps. 67.6 million from Ps. 17.8 million during fiscal year 2014 to Ps. 85.4 million during fiscal year 2015. Gross profit from the Offices and Other segment as a percentage of revenues from this segment decreased from 64.6% during fiscal year 2014 to 53.3% during fiscal year 2015, mainly attributable to a higher increase in this segment's costs against revenues as explained above for this period.

Sales and Developments. Gross profit from the Sales and Developments segment decreased by 95.9%, from Ps. 41.0 million during fiscal year 2014 to Ps. 1.7 million during fiscal year 2015. This decrease mainly resulted from lower revenue from sales of the units in Condominios I and II in Rosario during fiscal year 2015 compared to the fiscal year 2014. Gross profit from the Sales and Developments segment as a percentage of the revenues from this segment decreased from 79.0% during fiscal year 2014 to 25.2% during fiscal year 2015, mainly as a result of lower revenues from this segment against costs as explained above.

Financial Operations and Others. Gross profit from the Financial Operations and Others segment decreased by 54.7%, from Ps. 0.2 million during fiscal year 2014 to Ps. 0.1 million during fiscal year 2015. Gross profit from this segment as a percentage of revenues increased from 35.0% during fiscal year 2014 to 61.9% during fiscal year 2015. This variation is mainly due to a decrease in residual consumer financing activities of us.

Income from sale of investment properties

Income from the sale of investment properties, derived from our Sales and Developments segment, increased from Ps. 0.3 million during fiscal year 2014 to Ps. 126.7 million during fiscal year 2015, mainly as a result of: (i) a Ps. 123.7 million income generated by the sale of units in the Intercontinental building, in June 2015 and (ii) a Ps. 2.9 million income generated by the sale under a barter agreement of the Conil property, in November 2014.

Administrative expenses

The following table shows our Administrative Expenses by business segment for the indicated periods.

		Fiscal Year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Administrative expenses	(in millions of Ps.)
Shopping Centers		(136.0)	-	(0.2)	-	(136.2)
Offices and Others		(2.7)	-	(0.2)	(0.1)	(3.0)
Sales and Developments		-	-	-	-	-
Financial Operations and Others		-	-	-	-	-
Total Administrative expenses		(138.6)	-	(0.4)	(0.1)	(139.1)

(1) See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal Year 2014
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Administrative expenses	(in millions of Ps.)
Shopping Centers		(101.4)	-	(0.1)	-	(101.5)
Offices and Others		(0.1)	-	(0.1)	(0.1)	(0.3)
Sales and Developments		-	-	-	-	-
Financial Operations and Others		(0.1)	-	-	-	(0.1)
Total Administrative expenses		(101.4)	-	(0.3)	(0.1)	(101.8)

1) See Note 6 to our Audited Consolidated Financial Statements.

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Administrative expenses increased by 36.6%, from Ps. 101.4 million during fiscal year 2014 to Ps. 138.6 million during fiscal year 2015. Total administrative expenses as a percentage of revenues increased from 4.8% during fiscal year 2014 to 5.0% during fiscal year 2015.

Administrative expenses attributable to our joint ventures showed a slight increase from Ps. 0.3 million during 2014 to Ps. 0.4 million during 2015.

Therefore, administrative expenses (taking into account administrative expenses attributable to our joint ventures, and inter-segment eliminations) grew by 36.6%, from Ps. 101.8 million during fiscal year 2014 to Ps. 139.1 million during fiscal year 2015, mainly as a result of a Ps. 34.6 million increase in administrative expenses of our Shopping Centers segment. Administrative expenses as a percentage of total revenues, increased from 7.0% during fiscal year 2014 to 7.2% during fiscal year 2015.

Shopping Centers. Administrative expenses attributable to our Shopping Centers segment increased by 34.1%, from Ps. 101.5 million during fiscal year 2014 to Ps. 136.2 million during fiscal year 2015, mainly due to: (i) an increase in directors’ fees of Ps. 25.7 million; (ii) a Ps. 3.3 million increase in fees and compensation for services; (iii) an increase in depreciation and amortization expenses of Ps. 1.9 million, and (iv) a Ps. 3.8 million increase in other items such as maintenance, security, cleaning, repairs and related expenses and taxes, rates and contributions). Administrative expenses of Shopping Centers as a percentage of revenues from such segment increased from 7.3% during fiscal year 2014 to 7.7% during fiscal year 2015.

Offices and Others. Administrative expenses of the Offices and Other segment increased by Ps. 2.7 million, from Ps. 0.3 million during fiscal year 2014 to Ps. 3.0 million during fiscal year 2015, mainly as a result of higher costs derived from new offices in the amount of Ps. 2.7 million, related to salaries, social security charges and other personnel expenses. Administrative expenses of the Offices and Other segment as a percentage of revenues from this segment increased from 0.9% during fiscal year 2014 to 1.8% during fiscal year 2015.

Selling expenses

The following table shows our Selling Expenses by business segment for the indicated periods.

		Fiscal Year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Selling expenses	(in millions of Ps.)
Shopping Centers		(112.0)	-	(0.8)	-	(112.8)
Offices and Others		(5.0)	-	(0.5)	-	(5.5)
Sales and Developments		(0.3)	-	-	-	(0.3)
Financial Operations and Others		(0.4)	-	-	-	(0.4)
Total Selling expenses		(117.7)	-	(1.3)	-	(119.0)

(1) See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal Year 2014
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Selling expenses	(in millions of Ps.)
Shopping Centers		(72.7)	-	(0.7)	-	(73.4)
Offices and Others		(0.4)	-	(0.4)	-	(0.8)
Sales and Developments		(3.9)	-	-	-	(3.9)
Financial Operations and Others		0.1	-	-	-	0.1
Total Selling expenses		(76.9)	-	(1.1)	-	(78.0)

(1) See Note 6 to our Audited Consolidated Financial Statements.

Selling expenses increased by 53.1%, from Ps. 76.9 million during fiscal year 2014 to Ps. 117.7 million during fiscal year 2015. Selling expenses as a percentage of total revenues increased from 3.6% during fiscal year 2014 to 4.3% during fiscal year 2015.

Selling expenses from our joint ventures showed a slight increase, from Ps. 1.1 million during fiscal year 2014 (Ps. 0.7 million of which are allocated to the Shopping Centers segment and Ps. 0.4 million to the Offices and Other segment) to Ps. 1.3 million during fiscal year 2015 (Ps. 0.8 million of which are allocated to the Shopping Centers segment and Ps. 0.5 million to the Offices and Other segment).

Therefore, and taking into account selling expenses from our joint ventures and inter-segment eliminations, selling expenses increased by 52.5%, from Ps. 78.0 million during fiscal year 2014 to Ps. 119.0 million during fiscal year 2015. This increase was mainly attributable to: (i) a Ps. 39.4 million increase in selling expenses of the Shopping Centers segment; (ii) higher selling expenses of Ps. 4.7 million from the Offices and Other segment and; (iii) higher selling expenses of Ps. 0.5 million from the Financial Transactions and Other segment, partially offset by (iv) a Ps. 3.6 million decrease in selling expenses from the Sales and Developments segment. Selling expenses (taking into account selling expenses derived from our joint ventures and inter-segment eliminations) as a percentage of total revenues increased from 5.3% during fiscal year 2014 to 6.1% during fiscal year 2015.

Shopping Centers. Selling expenses from the Shopping Centers segment increased by 53.7%, from Ps. 73.4 million during fiscal year 2014 to Ps. 112.8 million during fiscal year 2015, mainly as a result of: (i) an increase in taxes, rates and contributions of Ps. 18.1 million, mainly generated by higher turnover taxes; (ii) a Ps. 8.1 million increase in publicity and advertising expenses; (iii) an increase of Ps. 5.1 million in loan losses charges; and (iv) an increase of Ps. 6.1 million in salaries, social security charges and other personnel expenses. Selling expenses as a percentage of the revenues from the Shopping Centers segment increased from 5.3% during fiscal year 2014 to 6.3% during fiscal year 2015.

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Offices and Others. Selling expenses from the Offices and Other segment increased by Ps. 4.7 million, from Ps. 0.8 million during fiscal year 2014 to Ps. 5.5 million during fiscal year 2015, mainly as a result of an increase in turnover tax generated by the acquisition of the new office buildings in December 2014. Selling expenses from the Offices and Other segment as a percentage of the revenues from such segment increased from 3.0 % during fiscal year 2014 to 3.4 % during fiscal year 2015.

Sales and Developments. Selling expenses from our Sales and Developments segment decreased by 93.4%, from Ps. 3.9 million during fiscal year 2014 to Ps. 0.3 million during fiscal year 2015, mainly due to a decrease in turnover tax and commissions and fees related to a decline in sales during fiscal year 2015, compared to fiscal year 2014. Selling expenses from the Sales and Developments segment as a percentage of the revenues from this segment decreased from 7.4 % during fiscal year 2014 to 3.8 % during fiscal year 2015.

Financial Operations and Others. Selling expenses from the Financial Operations and Others segment changed from a Ps. 0.1 million income during fiscal year 2014 to a loss of Ps. 0.4 million during fiscal year 2015, mainly as a result of increased loan losses related to the consumer financing residual activity.

Other operating results, net

		Fiscal Year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Other operating results, net	(in millions of Ps.)
Shopping Centers		(47.4)	-	(1.2)	-	(48.7)
Offices and Others		(58.3)	-	(0.1)	0.1	(58.3)
Sales and Developments		-	-	-	-	-
Financial Operations and Others		8.8	-	-	-	8.8
Total Other operating results, net		(97.0)	-	(1.2)	0.1	(98.1)

(1)

See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal Year 2014
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Other operating results, net	(in millions of Ps.)
Shopping Centers		(43.1)	-	(0.6)	-	(43.7)
Offices and Others		2.3	-	(2.4)	0.1	-
Sales and Developments		13.4	-	-	-	13.4
Financial Operations and Others		0.1	-	-	-	0.1
Total Other operating results, net		(27.4)	-	(3.0)	0.1	(30.3)

(1) See Note 6 to our Audited Consolidated Financial Statements.

Other operating results, net increased from a loss of Ps. 27.4 million during fiscal year 2014 to a loss of Ps. 97.0 million during fiscal year 2015. Total other operating results, net as a percentage of total revenues increased from 1.3% during fiscal year 2014 to 3.5% during fiscal year 2015.

Other operating results, net derived from our joint ventures decreased by Ps. 1.8 million, from a loss of Ps. 3.0 million (Ps. 0.6 million of which were attributable to the Shopping Centers segment and Ps. 2.4 million to the Offices and Other segment) during fiscal year 2014 to a loss of Ps. 1.2 million (which were attributable to the Shopping Centers segment) during fiscal year 2015.

Taking into account our interest in joint ventures and inter-segment eliminations, Other operating results, net increased from a loss of Ps. 30.3 million during fiscal year 2014 to a loss of Ps. 98.1 million during fiscal year 2015, mainly as a result of (i) a loss of Ps. 58.3 million from the Offices and Other segment; and (ii) a decrease in other operating results from the Sales and Developments segment of Ps. 13.4 million. Total Other operating results, net as a percentage of revenues (taking into account other operating results derived from our joint ventures and inter-segment eliminations) increased from 2.1% during fiscal year 2014 to 5.0% during fiscal year 2015.

Shopping Centers. Other operating results, net from the Shopping Centers segment increased by 11.0%, from a loss of Ps. 43.7 million during fiscal year 2014 to a loss of Ps. 48.6 million during fiscal year 2015, mainly as a result of (i) an increase in donations of Ps. 2.7 million, and (ii) an increase in project expenses of Ps. 2.8 million.

Other operating results, net from this segment as a percentage of the revenues from this segment decreased from 3.2% during fiscal year 2014 to 2.7% during fiscal year 2015.

Offices and Others. Other operating results, net from the Offices and Other segment changed from zero during fiscal year 2014 to a loss of Ps. 58.3 million during fiscal year 2015, attributable to notarial and stamp tax expenses related to the acquisition of the new offices in December 2014.

Sales and Developments. Other operating results, net from the Sales and Developments segment changed from an income of Ps. 13.4 million (attributable to the income generated by the sale of a plot of land in Neuquén, allocated to construction of a hotel) during fiscal year 2014 to zero million during fiscal year 2015.

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Financial Operations and Others. Income from other operating results, net from the Financial Operations and Others segment increased from Ps. 0.1 million during fiscal year 2014 to Ps. 8.8 million during fiscal year 2015, mainly as a result of income generated by the sale of a portion of our interest in Avenida Inc. during fiscal year 2015.

Operating income

		Fiscal Year 2015
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Operating income	(in millions of Ps.)
Shopping Centers		1,195.0	14.1	6.9	-	1,216.0
Offices and Others		16.9	-	1.7	-	18.6
Sales and Developments		128.1	-	-	-	128.1
Financial Operations and Others		8.5	-	-	-	8.5
Total operating income		1,348.4	14.1	8.7	-	1,371.1

(1) See Note 6 to our Audited Consolidated Financial Statements.

		Fiscal Year 2014
		Income Statement	Expenses and Collective Promotion Fund	Interest in Joint Ventures	Inter-segment Eliminations	Information by Segments(1)
Operating income	(in millions of Ps.)
Shopping Centers		884.1	7.4	5.1	-	896.6
Offices and Others		16.1	-	0.6	-	16.7
Sales and Developments		50.8	-	-	-	50.8
Financial Operations and Others		0.3	-	-	-	0.3
Total operating income		951.4	7.4	5.7	-	964.5

(1) See Note 6 to our Audited Consolidated Financial Statements.

Total operating income increased by 41.7%, from Ps. 951.4 million during fiscal year 2014 to Ps. 1,348.4 million during fiscal year 2015. Total operating income as a percentage of total revenues increased from 45.0% during fiscal year 2014 to 48.9% during fiscal year 2015.

Operating income from our joint ventures increased by 53.2%, from Ps. 5.7 million (Ps. 5.1 million of which are allocated to the Shopping Centers segment and Ps. 0.6 million to the Offices and Other segment) during fiscal year 2014 to Ps. 8.7 million (Ps. 6.9 million of which are allocated to the Shopping Centers segment and Ps. 1.7 million to the Offices and Other segment) during fiscal year 2015.

Taking into account revenue from our joint ventures and disregarding revenue from the Expenses and Collective Promotion Fund and inter-segment revenue, our operating income increased by 42.2%, from Ps. 964.5 million during fiscal year 2014 to Ps. 1,371.1 million during fiscal year 2015, mainly as a result of: (i) an increase in operating income from the Shopping Centers segment of Ps. 319.4 million; (ii) an increase in income from the Sales and Developments segment of Ps. 77.3 million; (iii) an increase in operating income from the Financial Operations and Others segment of Ps. 8.2 million; and (iv) higher operating income from the Offices and Others segment of Ps. 1.8 million. Total operating income (taking into account our joint ventures, inter-segment eliminations and eliminations for costs from expenses and the Collective Promotion Fund from the shopping centers and offices segments) as a percentage of total revenues increased from 65.9% during fiscal year 2014 to 70.5% during fiscal year 2015.

Shopping Centers. Operating income from the Shopping Centers segment increased by 35.6% during fiscal year 2015, from Ps. 896.6 million during fiscal year 2014 to Ps. 1,216.0 million during fiscal year 2015. Operating income from the Shopping Centers segment as a percentage of the revenues from such segment increased from 64.8% during fiscal year 2014 to 68.4% during fiscal year 2015.

Offices and Others. Operating income from the Offices and Other segment increased from Ps. 16.7 million during fiscal year 2014 to Ps. 18.6 million during fiscal year 2015. Operating income from the Offices and Other segment, as a percentage of the revenues from such segment, decreased from 60.7% during fiscal year 2014 to 11.6% during fiscal year 2015.

Sales and Developments. Operating income from the Sales and Developments segment increased by Ps. 77.3 million, from Ps. 50.8 million during fiscal year 2014 to Ps. 128.1 million during fiscal year 2015. Operating income from the Sales and Developments segment, as a percentage of the revenues from such segment, increased from 97.9% during fiscal year 2014 to 1,936.2% during fiscal year 2015.

Financial Operations and Others. Operating income from the Financial Operations and Others segment increased from Ps. 0.3 million during fiscal year 2014 to Ps. 8.5 million during fiscal year 2015.

Share of profit (loss) of associates and joint ventures

The share of profit (loss) in associates and joint ventures increased by Ps. 28.1 million, from a loss of Ps. 13.5 million during fiscal year 2014 to income of Ps. 14.6 million during fiscal year 2015. This variation was mainly due to (i) a profit of Ps. 29.2 million generated by our Financial Transactions and Other segment; partially offset by a loss of Ps. 1.7 million from our Offices and Other segment.

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Offices and Others. The share of loss in associates and joint ventures increased from a loss of Ps. 0.9 million during fiscal year 2014 to a loss of Ps. 2.6 million during fiscal year 2015, mainly generated by our interest in Entertainment Holding S.A.

Financial Operations and Others. The share of profit in associates and joint ventures from the Financial Operations and Others segment increased from a loss of Ps. 18.5 million during fiscal year 2014 to a profit of Ps. 10.7 million during fiscal year 2015, mainly generated by: (i) the profit from our investment in Avenida until September 2014 in the amount of Ps. 21.3 million and (ii) a lower loss from Tarshop S.A. equal to Ps. 7.9 million.

Financial results, net

Financial results, net increased by 50.2%, from a loss of Ps. 300.7 million during fiscal year 2014 to a loss of Ps. 451.5 million during fiscal year 2015.

Financial revenues decreased by 15.5%, from Ps. 124.5 million during fiscal year 2014 to Ps. 105.1 million during fiscal year 2015, mainly as a result of: (i) a Ps. 28.6 million decrease in foreign exchange gains due to the impact of a lower Peso depreciation during fiscal year 2015 on our U.S. Dollar-denominated net assets compared to a higher depreciation during fiscal year 2014 (the Peso/Dollar exchange rate increased by 11.9% during fiscal year 2015, from Ps. 8.033 as of June 30, 2014 to Ps. 8.988 as of June 30, 2015, while during fiscal year 2014, it increased by 50.2% compared to fiscal year 2013, from Ps. 5.348 as of June 30, 2013 to Ps. 8.033 as of June 30, 2014), mainly offset by (ii) a net increase of Ps. 9.3 million in interest income, mainly generated by default interest payable by clients and related parties, and gains(losses) from the sale of securities and fixed-term bank deposits.

Financial expenses increased by 20.8%, from Ps. 499.9 million during fiscal year 2014 to Ps. 603.9 million during fiscal year 2015, mainly as a result of: (i) a Ps. 178.1 million increase in interest expense, mainly attributable to: (i) higher interest on the intercompany indebtedness due to the acquisition of offices from our parent company IRSA in December 2014, for a purchase price of Ps. 96.8 million; (ii) interest on bank overdrafts of Ps. 48.6 million; (iii) interest of Ps. 14.2 million on the debt incurred to finance the purchase of Shopping Soleil Premium Outlet; (iv) interest on our Series I Notes due 2017 equal to Ps. 16.0 million; (v) an increase in other financial expenses of Ps. 12.2 million for the tax on bank credits and debits; and (vi) a decrease in recovery for capitalized financial expenses of Ps. 9.4 million; partially offset by a Ps. 95.7 million decrease in loss from foreign exchange as a result of the impact of a lower depreciation of the Peso against other currencies during fiscal year 2015 on our U.S. Dollar-denominated indebtedness compared to a higher depreciation during fiscal year 2014 (the US Dollar exchange rate increased by 11.74% during fiscal year 2015, from Ps. 8.133 to US$ 1.00 as of June 30, 2014 to Ps. 9.088 to US$ 1.00 as of June 30, 2015, while during fiscal year 2014, it increased by 50.95% compared to fiscal year 2013, from Ps. 5.388 as of June 30, 2013 to Ps. 8.133 as of June 30, 2014).

Other financial results decreased by Ps. 27.5 million from a Ps. 74.7 million gain during fiscal year 2014 to a Ps. 47.2 million gain during fiscal year 2015, mainly as a result of: (i) a Ps. 84.3 million decrease in revenues generated by the valuation of financial assets at fair value (derived from the valuation of Government securities and Bonds and a reduction in the shareholding of mutual funds and other investments) and (ii) lower income generated by future currency exchange derivatives and interest rate swaps of Ps. 15.5 million; partially offset by a Ps. 72.2 million income generated by the valuation at fair value of the shares in Avenida as of June 2015.

Income Tax

Income tax expense increased by 28.3%, from Ps. 226.7 million during fiscal year 2014 to Ps. 290.8 million during fiscal year 2015, mainly due to a change in income before income tax at the prevailing tax rate.

In determining the income tax charge, we apply the deferred tax method, recognizing the temporary differences between the book value, the valuation of assets and liabilities for tax purposes and the application of tax loss carryforwards. For this reason, the amount recorded as income tax reflects not only the amount payable but also the recognition of the tax on the taxable income as booked.

Net Income

As a result of the factors described above, net income for fiscal year 2015 increased by 51.2%, from income of Ps. 410.5 million during fiscal year 2014 to a Ps. 620.6 million income during fiscal year 2015. Income attributable to our parent company's shareholders increased by 54.2%, from Ps. 377.0 million during fiscal year 2014 to Ps. 581.3 million during fiscal year 2015. Income attributable to the non-controlling interest increased by 17.5% during fiscal year 2015, from Ps. 33.5 million to Ps. 39.3 million during fiscal year 2014.

B. Liquidity and Capital Resources

Our principal sources of liquidity have historically been:

●

cash generated from operations;

●

cash generated from the issuance of capital stock and notes; and

●

cash from borrowings (including bank overdrafts) and financing arrangements.

Our principal cash requirements or uses (other than in connection with our operating activities) have historically been:

●

the acquisition of shopping centers;

●

the development of new shopping centers;

●

the improvement of existing shopping centers;

●

 the development of 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 of investment opportunities as they arise

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We believe our working capital and our cash from operating activities are adequate for us 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 through the sale of properties available for sale.

	Fiscal years ended
	June 30,
	2016	2015	2014
	(in millions of Ps.)
Net cash flow generated by operating activities	1,013.4	1,257.6	921.5
Net cash flow used in investing activities	(1,864.6)	(414.2)	(517.9)
Net cash flow generated by (used in) financing activities	579.7	(660.9)	(516.9)
Net (decrease) increase in cash and cash equivalents	(271.5)	182.4	(113.3)

Cash Flow Information

Operating Activities

Fiscal Year 2016

Our operating activities generated net cash of Ps. 1,013.4 million for the fiscal year ended June 30, 2016 a decrease compared to the year ended on June 30, 2015 equal to 19.4% or Ps. 244.2 million, mainly due to an increase in; (i) net income for the year of Ps. 911.7 million; (ii) income tax expense of Ps. 294.3 million; (iii) amortization and depreciation expense of Ps. 239.5 million; and (iv) financial results, net of Ps. 2,413.9; partially offset by a reduction in (a) gain (loss) from derivatives in Ps. 1,248.4 million; (b) changes to the fair value of financial assets in the amount of Ps. 466.3 million; and (c) an increase in trade and other receivables of Ps. 606.3 million.

Fiscal Year 2015

Our operating activities generated net cash of Ps. 1,257.6 million for the fiscal year ended June 30, 2015 an increase compared to the year ended on June 30, 2014 equal to 36.5% or Ps. 336.1 million, mainly due to an increase in operating cash inflows without considering changes in certain assets and liabilities of Ps. 1,472.5 million, mainly comprised of; (i) net income of Ps. 620.6 million; (ii) income tax expense of Ps. 290.8 million; (iii) amortization and depreciation expense of Ps. 180.4 million and (iv) financial results, net of Ps. 531.3 million; the reduction in operating cash resulting from an increase in trade and other receivables of Ps. 289.7 million and income tax paid of Ps. 226.3 million, partially offset by an increase in trade and other payables of Ps. 251.1 million, in salaries and social security charges of Ps. 23.9 million and a decrease in properties for sale of Ps. 5.5 million.

Fiscal Year 2014

Our operating activities generated net cash of Ps. 921.5 million for the fiscal year ended June 30, 2014, an increase compared to the year ended on June 30, 2013 equal to 40.7% or Ps. 266.8 million, mainly due to an increase in operating cash inflows without considering changes in certain assets and liabilities of Ps. 1,141.6 million, mainly comprised of: (i) net income of Ps. 410.5 million; (ii) income tax expense of Ps. 226.7 million; (iii) amortization and depreciation expense of Ps. 121.0 million; and (iv) financial results, net of Ps. 424.5 million; the reduction in operating cash resulting from an increase in trade and other receivables of Ps. 69.9 million and income tax paid of Ps. 240.4 million, partially offset by an increase in trade and other payables of Ps. 40.7 million, in salaries and social security charges of Ps. 14.6 million and a decrease in properties for sale of Ps. 51.9 million.

Investment Activities

Fiscal Year 2016

Cash used in investing activities was Ps. 1,864.6 million for the fiscal year ended on June 30, 2016 primarily due to: (i) an increase in financial assets, net of Ps. 1,462.8 million; (ii) acquisition and capital contributions in associates and joint ventures equal to Ps. 73.0 million; (iii) acquisition of property, plant and equipment equal to Ps. 13.7 million; (iv) acquisition of investment properties in the amount of Ps. 167.7 million; and (v) loans granted to related parties in the amount of Ps. 533.5 million, partially offset by the proceeds from the sale of investment properties in the amount of Ps. 357.2 million.

Fiscal Year 2015

Cash used in investing activities was Ps. 414.2 million for the fiscal year ended on June 30, 2015 primarily due to: (i) development of properties of Ps. 186.5 million, Ps. 1.5 million of which was used in Distrito Arcos and Ps. 185.0 million in Alto Comahue; (ii) an increase in financial assets, net of Ps. 521.5 million; (iii) acquisition and capital contributions in associates equal to Ps. 32.0 million; (iv) improvements made to our shopping centers of Ps. 60.4 million; (v) the acquisition of furniture and fixtures, machinery and equipment and other buildings and facilities of Ps. 26.2 million; (vi) advance payments to suppliers of Ps. 14.0 million; (vii) improvements made to our offices and other rental properties of Ps. 2.0 million; and (viii) the acquisition of properties from our parent company equal to Ps. 2,636.5 million; partially offset by (a) collection of proceeds from the sale of investment properties equal to Ps. 365.2 million, (b) collection of interest on financial assets equal to Ps. 102.3 million, (c) collection of loans granted to related parties equal to Ps. 76.8 million and (d) the sale of capital stock of Avenida Inc. in the amount of Ps. 19.1 million.

Fiscal Year 2014

Cash used in investing activities was Ps. 517.9 million for the fiscal year ended on June 30, 2014 primarily due to: (i) development of properties of Ps. 179.3 million, Ps. 99.9 million of which was used in the "Arcos" project and Ps. 79.4 million in the Shopping Neuquén project and; (ii) a decrease in financial assets, net of Ps. 10.8 million; (iii) loans granted to related parties of Ps. 268.5 million; mainly by us to Tyrus S.A. (a subsidiary of IRSA Inversiones y Representaciones S.A.); (iv) improvements made to our shopping centers of Ps. 61.1 million; (v) advance payments to suppliers of Ps. 29.6 million; (vi) the acquisition of capital stock of Avenida Inc. and Avenida Compras S.A. of Ps. 13.0 million; (vii) the acquisition of furniture and fixtures, machinery and equipment and other buildings and facilities of Ps. 11.9 million; (viii) improvements made to our offices and other rental properties of Ps. 4.3 million; and (ix) the acquisition of land reserves of Ps. 0.1 million.

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Financing Activities

Fiscal Year 2016

Cash generated by financing activities was Ps. 579.67 million for the fiscal year ended on June 30, 2016, primarily due to: (i) repayment of borrowings of Ps. 5,043 million; (ii) interest expense of Ps. 278.2 million; (iii) payment of dividends of Ps. 114.6 million; (iv) payment of financial derivatives of Ps. 581; and (v) repayment of notes of Ps. 1,686 million; partially offset by (a) borrowings of Ps. 1,043 million; (b) collection of financial derivatives of Ps. 1,831 million; and (c) issuance of notes in the amount of Ps. 5,411 million.

Fiscal Year 2015

Cash used in financing activities was Ps. 660.9 million for the fiscal year ended on June 30, 2015, primarily due to: (i) repayment of borrowings of Ps. 509.6 million; (ii) interest paid of Ps. 213.4 million; (iii) payment of Ps. 148.5 million in dividends; (iv) payment of financial derivatives of Ps. 16.1 million; and (v) dividends paid to non-controlling interests of Ps. 3.9 million; partly offset by borrowings of Ps. 329.8 million.

Fiscal Year 2014

Cash used in financing activities was Ps. 516.9 million for the fiscal year ended on June 30, 2014, primarily due to: (i) payment of dividends of Ps. 405.9 million; (ii) repayment of borrowings of Ps. 348.2 million; (iii) interest paid of Ps. 141.0 million; and (iv) dividends paid to non-controlling interests of Ps. 7.4 million; partly offset by borrowings of Ps. 365.4 million and recovery from derivatives of Ps. 61.7 million.

Capital Expenditures

Fiscal Year 2016

During the fiscal year ended on June 30, 2016, we made capital expenditures investments of Ps. 188.0 million, of which: (i) Ps. 167.7 million were used in the acquisition of investment properties, mainly, in connection with improvements to our shopping centers; (ii) Ps. 13.7 million are related to the acquisition of property, plant and equipment; and (iii) Ps. 6.6 million were used in advance payments for the acquisition of general investments.

Fiscal Year 2015

During the fiscal year ended on June 30, 2015, we made capital expenditure investments of Ps. 2,927.5 million, of which: (i) Ps. 186.5 million were used in development of properties, Ps. 1.5 million of which was used in Distrito Arcos and Ps. 185.0 million in Alto Comahue; (ii) Ps. 14.0 million were used in advance payments for the acquisition of general investments; (iii) Ps. 60.4 million were related to improvements made to our shopping centers; (iv) Ps. 28.1 million are related to the acquisition of machinery, equipment, and furniture and fixtures, and other buildings and facilities; (v) Ps. 2.0 million were used in improvements made to our offices and other rental properties, and (vi) Ps. 2,636.5 million are related to the acquisition of properties from our parent company.

Fiscal Year 2014

During the fiscal year ended on June 30, 2014, made in capital expenditure investments of Ps. 285.7 million, of which: (i) Ps. 179.3 million were used in development of properties, Ps. 99.9 million of which was used in the "Arcos" project and Ps. 79.4 million in the Shopping Neuquén project; (ii) Ps. 29.6 million were used in advance payments for the acquisition of general investments; (iii) Ps. 61.1 million were related to improvements made to our shopping centers; (iv) Ps. 11.9 million were related to the acquisition of machinery, equipment, and furniture and fixtures, and other buildings and facilities; (v) Ps. 4.3 million were used in improvements made to our offices and other rental properties; and (vi) Ps. 0.1 million are related to the acquisition of land reserves.

Indebtedness

Our total consolidated debt outstanding as of June 30, 2016 was Ps. 5,893.1 million, 91.5% of which was denominated in US Dollars and the remaining 8.5% was denominated in Pesos.

The following table presents a breakdown of our indebtedness as of June 30, 2016 with a breakdown of its main components:

	Currency (in thousands)	Less than a year	From 1 to 2 years	From 2 to 3 years	From 3 to 4 years	More tan  4 years	Total	Average rate %(9)
Financial and Bank Loans
Notes Series II due 2023	US$	127,652	-	-	-	5,261,871	5,389,523	8.75
Notes Series I due 2017 (1) (2) (3)	US$	409,091	-	-	-	-	409,091	Mixed rate
Banco Provincia de Buenos Aires loan(4)	Ps.	36,074	-	-	-	-	36,074	-
Bank overdrafts(5)	Ps.	39,792	-	-	-	-	39,792	Mixed rate
Bank Loans(6)	Ps.	5,837	1,133	1,191	-	-	8,161	-
Finance leases(7)	US$	1,661	1,260	645	476	-	4,042	8.75
Total financial and bank loans		620,107	2,393	1,836	476	5,261,871	5,886,683
Related parties(8)	Ps.	6,385	-	-	-	-	6,385	Badlar
Total related parties		6,385	-	-	-	-	6,385
Total debt		626,492	2,393	1,836	476	5,261,871	5,893,068

Cash and cash equivalents and Current investments in financial assets	(1,805,372)
Total Net Debt	4,087,696

(1)

Includes interest, fees and expenses in connection with the issuance of debt to accrue.

(2)

Net of repurchased notes.

(3)

On September 18, 2015, we issued non-convertible notes Class I in the amount of Ps. 407.3 million, which pay a combined rate and have a maturity of 18 months. During the first three months, interest will be accrued at a fixed rate of 26.5 % and, from the fourth month until maturity, the Badlar rate plus 400 basis points will be applied. Interest will be paid on a quarterly basis and principal will be repaid in a lump sum at maturity.

(4)

On December 12, 2012, we subscribed a loan with Banco Provincia de Buenos Aires in the amount of Ps. 29 million. Principal was payable in nine quarterly consecutive installments starting in December 2013 with a one-year grace period to start repayment. In December 2015, the last principal installment was settled. On September 30, 2015, we subscribed a new loan with Banco Provincia de Buenos Aires in the amount of Ps. 145 million. Principal is payable in twelve monthly consecutive installments and interest is accrued at a 23% rate.

(5)

Granted by diverse financial institutions. They accrue interest rates ranging from 22% to 39% annually, and are due within a maximum term of three months from each year end.

(6)

On December 23, 2013, we subscribed a loan with Citibank N.A. of Ps. 5.9 million, which accrues interest at a 15.25% rate. Principal is payable in nine quarterly consecutive installments starting in December 2014. Additionally, on December 30, 2014, we subscribed a new loan with Citibank N.A. in the amount of Ps. 10 million, which accrues interest at a rate of 26.5%. Principal is payable in nine quarterly consecutive installments starting in December 2015.

(7)

They accrue interest rates ranging from 3.2% to 14.3% annually.

(8)

It includes credit lines with Nuevo Puerto Santa Fe and IRSA that bear interest at Badlar and at a fixed rate of 8.5%, respectively. Loan with IRSA was fully paid in at year end.

(9)

Average weighted rates.

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Issuance of Notes

IRSA CP’s Series I Notes due 2017

On September 18, 2015, we issued Series I Notes under our Global Note Program for a total principal amount of Ps. 407,260,000. The Notes fall due 18 months after their issue date and accrue interest at a mixed rate of 26.5% per annum during the first three months, and for the remaining term, at the Badlar Private Rate plus 400 basis points. Interest is payable on a quarterly basis.

IRSA CP’s Series II 8.75% Notes due 2023

On March 3, 2016, we announced launched a cash tender offer for any and all of our outstanding 7.875% Notes due 2017, Series I.

On March 23, 2016, we issued Notes in an aggregate principal amount of US$ 360 million under our Global Note Program. The Series II Notes accrue interest semi-annually, at a fixed rate of 8.75% per annum, and are repayable upon maturity, on March 23, 2023. Their issue price was 98.722% of the principal amount. The use of proceeds was: (a) the repurchase of our IRSA CP Notes up to the outstanding amount of US$120 million and (b) the repayment in full the US$240.0 million unpaid balance of the purchase price we owe to IRSA for our acquisition of office buildings and land reserves in December 2014, along with accrued interest thereon.

IRSA CP’s Notes due 2023 are subject to certain covenants, events of default and limitations, such as the limitation on incurrence of additional indebtedness, limitation on restricted payments, limitation on transactions with affiliates, and limitation on merger, consolidation and sale of all or substantially all assets.

To incur additional indebtedness, IRSA CP is required to meet the Consolidated Interest Coverage Ratio on additional indebtedness, which should be greater than 2.00. The Consolidated Interest Coverage Ratio is defined as Consolidated EBITDA divided by consolidated interest expense. Consolidated EBITDA is defined as operating income plus depreciation and amortization and other consolidated non-cash charges.

The Series 2 Notes contain financial covenants limiting IRSA CP’s ability to declare or pay dividends in cash or in kind, unless the following conditions have been met at the time of payment:

a)

no Event of Default shall have occurred and be continuing;

b)

IRSA CP is able to incur at least US$ 1.00 of Additional Indebtedness under the “Limitation on Incurrence of Additional Indebtedness"; and

c)

the aggregate amount of such Restricted Payment exceeds the sum of:

i.

100% of cumulative EBITDA for the period (treated as one accounting period) from July 1, 2015 through the last day of the last fiscal quarter ended prior to the date of such Restricted Payment minus an amount equal to 150% of consolidated interest expense for such period; and

ii.

any reductions of Indebtedness of the Issuer or its Subsidiaries after the Issue Date any reductions of Indebtedness of the Issuer or its Subsidiaries after the Issue Date exchange to Capital Stock of the Issuer or its Subsidiaries.

On March 28, 2016 and April 8, 2016, we purchased US$ 59,152,000 and US$ 352,000, respectively, in aggregate principal amount of our 7.875% Notes due 2017, Series I, and also on those dates it instructed the Trustee to repay US$ 59,504,000 in aggregate principal amount of such Notes, resulting in an aggregate principal amount outstanding of our 7.875% Notes due 2017, Series I, of US$ 60,496,000. On April 4, 2016, the Board of Directors of IRSA CP approved the repayment of the outstanding balance of the US$ 60,496,000 of IRSA CP’s Notes, Series I. Payment of such Notes was made on May 4, 2016.

On April 6, 2016, we had repaid the outstanding balance of intercompany loan with IRSA for US$ 240 million plus accrued interest, which loan was related to the acquisition of an office portfolio in December 2014.

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C. Research and Development, Patents and Licenses, etc.

We have several trademarks registered with the Instituto Nacional de la Propiedad Industrial, the Argentine institute for industrial property. We use these trademarks to name our commercial centers and in connection with marketing and charitable events that we organize from time to time. We do not own any patents nor benefit from licenses from third parties.

D. Trend Information

International Outlook:

As reported by the International Monetary Fund (“IMF”) in its “World Economic Outlook” (“WEO”), global activity increased by 3.1% in 2015, slightly below the projections mainly as a result of a strong decline in activity during the last quarter in the year. World growth is expected to reach 3.2% in 2016 and 3.5% in 2017. In 2016 and 2017, growth in developed economies is expected to remain steady at about 2%, driven by the growth in the United States of 2.5%, and in the Euro area, of 1.5%.

As of April 2016, emerging and developing economies have recorded growth rates at 4%, also slightly below the projections. They are expected to grow 4.1% and 4.7% by the end of 2016 and 2017. Emerging economies continue facing challenges as regards the inflow of foreign capital. Countries which are more flexible in terms of foreign exchange responded better to the global flow of capital than in previous desacelerations.

During 2014 and 2015, the commodities markets suffered a strong decline. Mainly, oil exhibited a sustained negative trend until reaching a historical low in February 2016. During 2016, the commodities markets exhibited a strong recovery with a 31.6% rise in oil prices. Soybean reversed the decline it had suffered in 2014 and 2015 and rose 33.6%.

The IMF’s forecasts indicate that inflation in the economies of emerging and developing markets will decrease from 4.7% in 2015 to 4.5% in 2016, due to the decline in the prices of raw materials and the effects of last year’s currency depreciations evening out.

Average inflation in advanced economies will remain below the goals set by central banks, mostly as a result of the lower price of oil. As of April 2016, the general level of inflation in advanced economies averaged 0.3%, the lowest since the global financial crisis.

Argentine economy:

On October, 2016, IMF published its growth projection for 2016 for 1.8% decline of the GDP. This correction was due to the change in policies implemented by the new government administration aimed at balancing certain macroeconomic distortions. Growth is expected to strengthen to 2.7 percent in 2017 on the back of moderating inflation and more supportive monetary and fiscal policy stances.

Shopping center and supermarket sales reached a total Ps. 4,374 million in April 2016, which represents a 41.4% increase as compared to the same period last year. Accumulated sales for the first four months of the year totaled Ps. 14,586 million, representing a 29.2% increase as compared to the same period last year.

The INDEC reports that, as of April 2016, industrial activity in Argentina decreased by 6.7% as compared to the same month in 2015. Manufacturing production accumulated a 2.4% decline during the first four months of the year as compared to the same period last year.

Regarding the balance of payments, in the first quarter of 2016 the current account deficit reached US$ 4,013 million, with US$ 1,403 million allocated to the goods and services trade balance, and US$ 2,572 million to the income account, which represents 72% of the foreign direct investment return.

During the first quarter of 2016, the financial account showed a surplus of US$ 8,510 million resulting from net income from the non-financial public sector and the Argentine Central Bank (“BCRA”) for US$ 6,233 million, from the non-financial private sector for US$ 1,701 million, and from the financial sector for US$ 576 million.

The stock of international Reserves fell by US$ 5,844 million in 2015. During the first half of 2016, reserves grew by US$ 4,944 million. At July, reserves stood at US$ 25,512 million.

Total gross external debt increased by US$ 10,605 million during the first quarter of 2016 and stood at US$ 163,236 million at March 2016.

The non-financial public sector and Argentine Central Bank debt was estimated at US$ 92,469 million, having increased by US$ 8,593 million during the first quarter of 2016. The Argentine Central Bank’s government security and bond outstanding balance increased by US$ 3,431 million during the first quarter of 2016. At the end of this quarter, the balance stood at 43,794 million.

The non-financial private debt grew US$ 2,261 during the first quarter of 2016. At March 2016, such debt stood at US$ 67,621 million.

The financial sector debt excluding the Argentine Central Bank decreased by US$ 250 million during the first quarter of 2016, reaching a total of US$ 3,145 million.

In connection with the fiscal sector, revenues recorded a year-on-year increase of 38.9% as of March 2016, whereas primary expenditure grew by 38.7% during the same period.

In local financial markets, the Private Badlar rate in Pesos ranged from 20% to 30% in the period from July 2015 to June 2016, averaging 28% in June 2016 against 20% in June 2015. The Argentine Central Bank discontinued its controlled floating exchange rate policy in December 2015; consequently, the Peso sustained a 63% nominal depreciation in the period from July 2015 to June 2016. At June 2016, the exchange rate stands at 14.50 pesos for each dollar.

At June 2016, Argentina’s country risk decreased by 97 basis points in year-on-year terms, maintaining a high spread vis-à-vis the rest of the countries in the region. The debt premium paid by Argentina was at 518 basis points in June 2016, compared to the 352 paid by Brazil and the 213 paid by Mexico.

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Our Segments

Private consumption continues to be a significant component of economic activity, although in the past months there has been a slight deceleration in its growth rate. At June 2016, the Consumer Confidence Index (CCI) had shown a 22.2% decline as compared to June 2015, as well as a 1.9% increase as compared to June 2014. Sales in shopping centers in April 2016 reached a total amount of Ps. 4,374 million, which represented a 41.4% increase compared to the same month in 2015. Accumulated sales for the first four months of the year totaled Ps. 14,586 million and reached a 29.2% percentage variation compared to the same period the previous year.

According to Colliers International, as of June 2016, the A+ and A office inventory remained stable since the fourth quarter of 2015 at 1,655,954 sqm. In terms of rental availability, there was a 1% decrease in the vacancy rate to 6.4% during the second quarter of 2016 compared to the same period the previous year. Thus, the vacancy rate has remained at a stable range between 6% and 8% since 2010. These values indicate that the market is healthy in terms of its operations, allowing an optimum level of supply with balanced values. According to the market segments, class A properties show a vacancy rate of 7% for the entire stock, while A+ properties buildings show a vacancy rate of 5%.

During the second quarter of 2016, net absorption was negative at 400 sqm, i.e., more meters than the ones that have been occupied have become vacant, a situation that was not seen since 2012. This behavior of demand is mainly explained by the sub-market Zona Norte GBA, which concentrates most of the spaces that have become vacant. On the other hand, it is verified that the area that has become vacant in A+ properties (-2,908 sqm) was mostly absorbed by class A properties (as it was 2,474 sqm).

During the second quarter of 2016, rental prices remained steady as compared to the general average prices seen over the past ten years (US$ 24.8 per square meter). Compared to the previous quarter, a 2.5% increase was recorded (from US$ 24.1 per square meter to US$ 24.7 per square meter). This slight increase shows a 1.4% increase in rental prices for A+ properties (US$ 27.2 per square meter in the second quarter against US$ 26.8 per square meter in the first quarter) and a 2.4% increase in rental prices for A properties (US$ 23.4 per square meter in the second quarter against US$ 22.9 per square meter in the first quarter). The spread between both categories is US$ 3.8 and reached US$ 12 in low vacancy periods.

In turn, the sub-market Catalinas is currently the one with the best prices in the market. The average value of the properties in such area amounts to US$ 27.9 per square meter. This value is expected to increase over the next few months due to the addition of new towers with prices already over US$ 35 per square meter in the inventory.

At June 2016, the sub-market Zona Norte GBA shows average rental prices of US$ 23.3, almost at the same values of June 2015. Moreover, during the same month, the vacancy rate was 8.9%, compared to 9.5% in June 2015.

E. Off-Balance Sheet Arrangements

As of June 30, 2016, we did not have any off-balance sheet transactions, arrangements or obligations with unconsolidated entities or others that are reasonably likely to have a material effect on our financial condition, results of operations or liquidity.

F. Tabular Disclosure of Contractual Obligations

The table below presents the maturity of our significant contractual obligations as of June 30, 2016, which consist of loans, bonds, and development obligations and agreements to purchase real estate. The table does not include deferred income tax liability, 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
As of June 30, 2016	Less than 1 year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 4 years	More than 4 years	Total(1)
	(In thousands of Ps.)
Trade and other payables	403,329	2,153	1,420	8,917	744	416,563
Borrowings (excluding finance leases liabilities)	1,217,484	479,468	474,957	473,760	6,708,028	9,353,697
Finance leases	1,661	1,260	645	476	-	4,042
Derivative financial instruments	2,857	-	-	-	-	2,857
Total	1,625,331	482,881	477,022	483,153	6,708,772	9,777,159

(1) Includes accrued and prospective interest, if applicable

G. Safe Harbor

See the discussion at the beginning of this Item 5 and the disclosure regarding forward-looking information in the introduction of this annual report for forward-looking safe harbor provisions.

ITEM 6. Directors, Senior Management and Employees

A. Directors and Senior Management

Board of Directors

We are managed by a board of directors. Our bylaws provide that the board of directors will consist of a minimum of eight and a maximum of 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. Alternate directors will be summoned to act as directors in case of absence, vacancy or demise, until a new director is appointed.

As of the date of this annual report, our board of directors is comprised of nine directors and seven alternate directors.

The table below contains certain information relating to our directors and alternate directors:

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Name	Date of birth	Office held	Date of appointment	Term in office expires in (1)	Office held since
Eduardo Sergio Elsztain	01/26/1960	Chairman	2015	2018	1994
Saúl Zang	12/30/1945	First Vice-chairman	2015	2018	2003
Alejandro Gustavo Elsztain	03/31/1966	Executive vice-chairman	2015	2018	2003
Daniel Ricardo Elsztain	12/22/1972	Regular director	2015	2018	2004
Fernando Adrián Elsztain	01/04/1961	Regular director	2015	2018	1998
Leonardo Fabricio Fernández(2)	06/30/1967	Regular director	2015	2018	2007
Enrique Antonini(2)	03/16/1950	Regular director	2015	2018	2007
Gastón Armando Lernoud	06/04/1968	Regular director	2015	2018	2010
Marcos Oscar Barylka(2)	06/29/1945	Regular director	2015	2018	2006
Juan Manuel Quintana	02/11/1966	Alternate director	2015	2018	2003
Pablo Daniel Vergara del Carril	10/03/1965	Alternate director	2015	2018	2006
Salvador Darío Bergel	04/17/1932	Alternate director	2015	2018	2006
Mauricio Elías Wior	10/23/1956	Alternate director	2015	2018	2006
Gabriel Adolfo Gregorio Reznik	11/18/1958	Alternate director	2015	2018	2004

(1)

As appointed by the Shareholders` meeting convened on October 30, 2015.

(2)

Independent directors, pursuant to Rule 10A-3(b)(1) of the Exchange Act.

The following is a brief biographical description of each member of our board of directors:

Eduardo Sergio 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 20 years. He is the chairman of the board of directors of IRSA, Consultores Assets Management S.A., Dolphin Netherlands, Arcos del Gourmet S.A., Cresud, BACS Banco de Crédito & Securitización S.A., BrasilAgro Companhia Brasileira de Propiedades Agrícolas, Tarshop S.A., E-Commerce Latina S.A., and Banco Hipotecario S.A., among other companies. He is also Director at IDBD Development Corporation Ltd. He is Fernando Adrián Elsztain’s cousin and Alejandro Gustavo Elsztain’s and Daniel Ricardo 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 the Zang, Bergel & Viñes Law Firm. Mr. Zang is Chairman at Puerto Retiro S.A. and Vice-chairman of IRSA, Fibesa S.A. and Cresud, among other companies. He is also a member of the board of directors of Banco Hipotecario S.A., Nuevas Fronteras S.A., BrasilAgro Companhia Brasileira de Propiedades Agrícolas, IDBD Development Corporation Ltd., BACS Banco de Crédito & Securitización S.A., Tarshop S.A. and Palermo Invest S.A., among other companies.

Alejandro Gustavo Elsztain. Mr. Elsztain obtained a degree in agricultural engineering from the University of Buenos Aires. He is currently Chairman of the board of directors of Fibesa S.A. and Second Vice-chairman of the board of directors of IRSA and Cresud. In addition, he is Vice-chairman of the board of directors of Nuevas Fronteras S.A. and Hoteles Argentinos S.A. He is also a regular Director at BrasilAgro Companhia Brasileira de Propiedades Agrícolas, Emprendimientos Recoleta S.A. and IDBD Development Corporation Ltd., among other companies. Mr. Alejandro Gustavo Elsztain is the brother of our Chairman, Eduardo Sergio Elsztain and of Daniel Ricardo Elsztain. He is also Fernando Adrián Elsztain’s cousin.

Daniel Ricardo Elsztain. Mr. Elsztain obtained a degree in economic sciences at Torcuato Di Tella University and has a Master degree in Business Administration. He is also director of Condor Hospitality Trust. He has been our commercial director since 1998. Mr. Elsztain is Mr. Eduardo Sergio Elsztain’s and Mr. Alejandro Gustavo Elsztain’s brother and Fernando Adrián Elsztain’s cousin.

Fernando Adrián Elsztain. Mr. Elsztain studied Architecture from University of Buenos Aires. He has been engaged in the real estate business as consultant and as managing officer of a real estate agency. He is Chairman of the Board of Directors of Llao Llao Resorts S.A., Palermo Invest S.A. and Nuevas Fronteras S.A. He is also director of IRSA, Hoteles Argentinos S.A. and alternate director of Banco Hipotecario S.A. and Puerto Retiro S.A. He is the cousin of our Chairman, Eduardo Sergio Elsztain and our directors, Alejandro Gustavo Elsztain and Daniel Ricardo Elsztain.

Leonardo Fabricio Fernández. Mr. Fernández obtained a degree in law at 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 University of Buenos Aires. He is currently a member of the boards of directors of Banco Mariva S.A. (since 1992) and Mariva Bursátil S.A. (since 1997). He has served as a member of the board of directors of IRSA from 1993 to 2002 and he is currently Alternate Director. He is a member of the Banking Lawyers Committee (Comité de Abogados Bancarios) of the Bank Association and the International Bar Association.

Gastón Armando Lernoud. Mr. Lernoud obtained a law degree from Universidad del Salvador in 1992. He holds a master in corporate law at Palermo University (Universidad de Palermo) in 1996. He was a senior associate at Zang, Bergel & Viñes until June 2002, when he joined as legal counsel.

Marcos Oscar Barylka. Mr. Barylka obtained a degree in commercial activities from the Gral. San Martín School. Mr. 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.

Juan Manuel Quintana. Mr. Quintana obtained a law degree from the University of Buenos Aires. He is a partner at Zang, Bergel & Viñes. In addition, he serves as Alternate Director of Nuevas Fronteras S.A. and Emprendimiento Recoleta S.A., among other companies.

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Pablo Daniel Vergara del Carril. Mr. Vergara del Carril obtained a law degree from Argentina’s Catholic University where he teaches Commercial Law and Contract Law. He also lectures on Corporate Law, the Law of Contracts and Capital Markets for post-graduate programs. He is a member of the Legal Advisory Committee of Cámara de Sociedades Anónimas as well as Vice President of the Antitrust Law Committee of the Buenos Aires Bar Association (Colegio de Abogados de la Ciudad de Buenos Aires). He is a partner at Zang, Bergel & Viñes and a member of the board of directors of Emprendimiento Recoleta S.A., Nuevas Fronteras S.A., and Banco Hipotecario S.A.

Salvador Darío Bergel. Mr. Bergel obtained a law degree and a PhD at Universidad del Litoral. He is professor emeritus of Universidad de Buenos Aires and was a founding partner of Zang, Bergel & Viñes Law Firm. He also serves as an alternate director of Cresud.

Mauricio Elías Wior. Mr. Wior obtained his bachelor degrees in economics and accounting, and a master degree in finance from Tel Aviv University in Israel. Mr. Wior is currently a member of the board of directors of Ertach S.A. and Banco Hipotecario S.A. He has held positions at Bellsouth where 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); American 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.

Gabriel Adolfo Gregorio Reznik. Mr. Reznik obtained a degree in civil engineering from the University of Buenos Aires. He worked for IRSA from 1992 until May 2005 at which time he resigned. He formerly worked for an independent construction company in Argentina. He is a regular of the board of directors of Emprendimiento Recoleta S.A., Puerto Retiro S.A., and Banco Hipotecario S.A., among others.

Employment Contracts with Our Directors

We do not have written contracts with our directors. However, Alejandro G. Elsztain, Fernando A. Elsztain and Daniel R. Elsztain are employed by us under the Labor Contract Law No. 20,744. In addition, our director Gaston Armando Lernoud provide services to us under the corporate services agreement. Law No. 20,744 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 an Executive Committee made up by four directors, including our chairman and vice chairman.

The current members of the Executive Committee are Messrs. Eduardo Sergio Elsztain, Saúl Zang, Alejandro Gustavo Elsztain, and Fernando Adrián Elsztain.

The Executive Committee 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 Committee to perform the following:

● designate managers and establish their duties and compensation;

● hire, impose disciplinary measures and terminate personnel, as well as determine salaries and compensation;

● enter into contracts related to our corporate purpose;

● manage and dispose of our assets;

● borrow funds for use in our operations; and

● create liens to secure our obligations, and engage in all acts necessary to manage our daily activities.

Senior Management

Senior management performs its duties in accordance with the instructions of our board of directors.

The following chart shows information about our current senior management:

Name	Date of birth	Position	Current position held since
Alejandro Gustavo Elsztain	03/31/1966	Chief Executive Officer	2002
Daniel Ricardo Elsztain	12/22/1972	Chief Operating Officer	2011
Matías Gaivironsky	02/23/1976	Chief Financial and Administrative Officer	2016
Juan José Martinucci	01/31/1972	Chief Commercial Officer	2013

The following is a brief description of each of our executive officers who are not members of our board of directors:

Matías Gaivironsky. Matías Gaivironsky obtained a degree in business administration from University of Buenos Aires. He has a master degree in Finance from CEMA University. Since 1997 he has served in different positions at Cresud, IRSA and with us, and he was appointed Chief Financial Officer in December 2011. In early 2016 he was appointed our Chief Financial and Administrative Officer. Formerly, in 2008, he acted as Chief Financial Officer of Tarshop S.A.

Juan José Martinucci. Juan José Martinucci obtained a degree in business sciences from Fundación de Altos Estudios, where he graduated as Specialized Technician in Strategical Communication. He subsequently, he attended the Management Development Program at IAE Business School. With more than 20 years experience working with us, he has served in different managerial positions, from Center Manager in Alto Palermo Shopping to his latest position as Shopping Center Regional Manager for five years. Since the beginning of 2013, he serves as Chief Commercial Officer.

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Supervisory Committee

Our Supervisory Committee (“Comisión Fiscalizadora”) is responsible for reviewing and supervising our administration and affairs. In addition, it verifies compliance with our by-laws and the resolutions adopted at shareholders’ meetings. The members of our Supervisory Committee are appointed at our Annual General Ordinary shareholders’ meeting for a one-year term. Our Supervisory Committee is composed of three members and three alternate members.

The following table sets forth information about the members of our Supervisory Committee who were elected at the Annual General Ordinary Shareholders’ Meeting held on October 30, 2015. Positions will expire when the next annual general ordinary shareholders’ meeting takes place which is expected to be held on or about October 31, 2016:

Name and position	Date of birth	Office in IRSA Commercial Properties	Current office held since
José Daniel Abelovich	07/20/1956	Regular syndic	2005
Marcelo Héctor Fuxman	11/30/1955	Regular syndic	2010
Noemí Ivonne Cohn	05/20/1959	Regular syndic	2010
Sergio Leonardo Kolaczyk	11/28/1964	Alternate syndic	2011
Roberto Daniel Murmis	04/07/1959	Alternate syndic	2010
Alicia Graciela Rigueira	12/02/1951	Alternate syndic	2010

Set forth below is a brief biographical description of each member of our Supervisory Committee:

José Daniel Abelovich. Mr. Abelovich obtained a degree in accounting from University of Buenos Aires. He is a founding member and partner of Abelovich, Polano & Asociados S.R.L. a firm member of Nexia International, an accounting firm in Argentina. Formerly, he was 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, among others, of the supervisory committees of Cresud, IRSA, Hoteles Argentinos, Inversora Bolívar and Banco Hipotecario S.A.

Marcelo Héctor Fuxman. Mr. Fuxman obtained a degree in accounting from University of Buenos Aires. He is a partner of Abelovich, Polano & Asociados S.R.L., a firm member of Nexia International, an accounting firm in Argentina. He is also member, among others, of the supervisory committees of Cresud, IRSA, Inversora Bolívar and Banco Hipotecario S.A.

Noemí Ivonne Cohn. Mrs. Cohn obtained a degree in accounting from the University of Buenos Aires. She is a partner at Abelovich, Polano & Asociados S.R.L. / Nexia International, an accounting firm in Argentina, where she works in the audit area. Mrs. Cohn worked in the audit area of Harteneck, Lopez y Cía., Coopers & Lybrand in Argentina and Los Angeles, California. Mrs. Cohn is a member, among others, of the supervisory committees of Cresud and IRSA.

Sergio Leonardo Kolaczyk. Mr. Kolaczyk obtained a degree in accounting from University of Buenos Aires. He serves at Abelovich, Polano & Asociados S.R.L./Nexia International. He is also an alternate member of the supervisory committees of Cresud and IRSA, among other companies.

Roberto Daniel Murmis. Mr. Murmis holds a degree in accounting from Buenos Aires University. He is a partner at Abelovich, Polano & Asociados S.R.L, a firm member of Nexia International. He formerly served as an advisor to the Secretariat of Public Revenue (Secretaría de Ingresos Públicos) of the Argentine Ministry of Economy. Furthermore, he is a member of the supervisory committees of Cresud, IRSA, Futuros y Opciones S.A. and Llao Llao Resorts S.A., among other companies.

Alicia Graciela Rigueira. Mrs. Rigueira holds a degree in accounting from the Buenos Aires University. Since 1998, she has been a manager at Estudio Abelovich, Polano & Asociados S.R.L., a firm member of Nexia International. From 1974 to 1998, Mrs. Rigueira served in different positions at Harteneck, Lopez y Cía., affiliated with Coopers & Lybrand. Mrs. Rigueira lectured at the School of Economic Sciences of the Lomas de Zamora University (Universidad de Lomas de Zamora).

Audit Committee

In accordance with the Argentine Capital Markets Law, and the CNV Rules, our board of directors established an audit committee. The primary function of our Audit Committee is to assist our board of directors in performing its duty of exercising due care, diligence and competence in issues relating to us, specifically in the enforcement of the accounting policy and in the issuance of accounting and financial information, the management of business risk and of internal control systems, the conduct and ethical soundness of the company’s business, the supervision of the integrity of our financial statements, the compliance by our company with the legal provisions, the independence and capability of the independent auditor and the performance of the internal audit function of our company and of the external auditors. Also, the Audit Committee may, at the request of the Board, render an opinion as to whether transactions between related parties involving relevant amounts can be reasonably considered adequate according to normal market conditions. In accordance with the applicable rules our Audit Committee must hold sessions at least with the same frequency required to the board of directors.

The audit committee may be requested by our board of directors to report if the conditions of a related party transaction may be reasonably considered adequate according to normal market conditions. In accordance with the applicable rules our Audit Committee must hold sessions at least with the same frequency required to the board of directors (on a three month basis).

Capital Markets Law and the CNV Rules requires that public companies in Argentina as us must have an Audit Committee comprise of three members of the board of directors, the majority of which must be independent. Notwithstanding, our Audit Committee is comprised by three independent directors in compliance with the requirements of the SEC.

On November February 5, 2016, our board of directors appointed Enrique Antonini, Leonardo Fernández and Marcos Barylka, all of them independent board 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 U.S. Securities Exchange Act of 1934.

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B. Compensation

Members of the Board of Directors and Executive Committee

The Argentine Companies Law establishes that if the compensation of the members of the board of directors 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, including wages and compensation for technical or administrative permanent activities, cannot exceed 25% of our earnings. Such amount should be limited to 5% when there are no dividends distributions, and will be increased proportionally to the distribution until reaching the limit of 25% 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.

Nevertheless 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 Argentine Companies Law, and taking into consideration if the directors perform technical or administrative activities and our fiscal year’s results. Once the amounts are determined, they are considered by the shareholders meeting.

We do not enter into employment agreements with our directors. Nor do we provide stock option plans or any other compensation system for the board members other than as described above.

At our annual ordinary shareholders meeting held on October 30, 2015, the shareholders agreed to pay an aggregate compensation of Ps.76.4 million to the members of the board of directors for the fiscal year ended June, 2015. At the end of the 2016 fiscal year, these amounts had been fully paid.

Supervisory Committee

The shareholders’ meeting held on October 30, 2015, approved by a majority vote not to pay any compensation to our Supervisory Committee.

Senior Management

Our senior managers are paid a fixed amount that is determined on the basis of their experience, competencies and background. Senior management is also paid an annual bonus that varies depending on the performance of each individual and on the results of our operations.

For the year ended June 30, 2015, our senior management (including members of our board of Directors) was paid a total of Ps.14.1 million.

As of June 30, 2015 we had a total of Ps.14.1 million earmarked as pension, retirement and/or similar benefits for our directors and the members of our executive committee, Supervisory Committee and Audit Committee.

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.

Defined Contribution Plan

We have a defined contribution plan covering our key managers in Argentina. The Plan became effective on January 1, 2006. Employees may begin participation voluntarily on monthly enrollment dates. Participants may make pre-tax contributions to the Plan of up to 2.5% of their monthly salary (“Base Contributions”) and pre-tax contributions of up to 15% of their annual bonuses (“Extraordinary Contributions”). Under the Plan, we match employee contributions to the plan at a rate of 200% for Base Contributions and 300% for Extraordinary Contributions. Contribution expense was Ps.2.3 million, Ps.2.2 million and Ps.1.1 million for the years ended June 30, 2014, June 30, 2013 and June 30, 2012, respectively. Participant contributions are held in trust as required by law. Individual participants may direct the trustee to invest their accounts in authorized investment alternatives. Our contributions are also held in trust. Participants or their assignees, as the case may be, may have access to the 100% of our contributions under the following circumstances:

1.

ordinary retirement in accordance with applicable labor regulations;

2.

total or permanent incapacity or disability; and

3.

death.

In case of resignation or unjustified termination, the manager may redeem the amounts contributed by us only if he or she has participated in the Plan for at least 5 years.

Incentive Plan for Managers

Our Shareholders’ Meetings held on October 31, 2011, October 31, 2012, October 31, 2013 and November 14, 2014 ratified the resolutions approved thereat relating to the incentive plan for the our executive officers, providing that up to 1% of our shareholders’ equity by allocating the same number of owned treasury stock (the “Plan”), and delegated to the board of directors the broadest powers to fix the price, term, form, modality, opportunity and other conditions to implement such plan. Under such framework, and in accordance with the Capital Markets Law, we made the corresponding filings with the CNV and, pursuant to comments received from the CNV, we made modifications to the Plan which, once cleared by the CNV, were explained to and approved by the shareholders meeting that took place on November 14, 2014, which in turn, delegated to the board of directors the broadest powers to administer the Plan.

We have developed a medium and long term incentive and retention stock program (the “Stock Program”) for our management team and key employees under which share-based contributions were calculated based on the annual bonus for the years 2011, 2012, 2013 and 2014.

The beneficiaries under the Plan are invited to participate by the board of directors and their decision to access the Plan is voluntary.

In the future, the Participants or their successors in interest will have access to 100% of the benefit (IRSA’s shares contributed by us) in the following cases:

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if an employee resigns or is dismissed for no cause, he or she will be entitled to the benefit only if five years have elapsed from the moment of each contribution;

●

retirement;

●

total or permanent disability;

●

death.

While participants are part of the Stock Program and until the conditions mentioned above are met to receive the shares corresponding to the contributions based on the 2011 to 2013 bonus, participants will receive the economic rights corresponding to the shares assigned to them.

For fiscal 2014, the Stock Program provided an extraordinary reward consisting of freely available stock payable in a single opportunity on a date to be determined by us. The date was fixed for June 26, 2015 for our payroll employees and the payroll employees of PAMSA, ERSA, ARCOS and FIBESA who received IRSA’s shares.

In addition, we have decided to grant a bonus to all personnel with more than two years of seniority and who do not participate in the Stock Program described above, which bonus consists of a number of shares equivalent to their compensation for June 2014.

The shares allocated to the Plan by us are shares purchased in 2009, which the Shareholders’ Meeting held on October 2011 specifically decided to allocate to the Stock Program.

Compensation Committee

We do not have a compensation committee.

C. Board Practices

For information about the date of expiration of the current term of office and the period during which each director has served in such office see Item 6. “Directors, Senior Management and employees – A. Directors and Senior Management”.

Benefits upon Termination of Employment

There are no contracts providing for benefits to directors upon termination of employment, other than those described under the following sections: (i) ITEM 6: Directors, Senior Management and Employees – B. Compensation – Capitalization Plan and (ii) ITEM 6: Directors, Senior Management and Employees – B. Compensation – Incentive Plan for Managers.

Audit Committee

In accordance with Capital Markets Law, and the CNV Rules, our board of directors established an audit committee. The primary function of our Audit Committee is to assist our board of directors in performing its duty of exercising due care, diligence and competence in issues relating to us, specifically in the enforcement of the accounting policy and in the issuance of accounting and financial information, the management of business risk and of internal control systems, the conduct and ethical soundness of the company’s business, the supervision of the integrity of our financial statements, the compliance by our company with the legal provisions, the independence and capability of the independent auditor and the performance of the internal audit function of our company and of the external auditors. Also, the Audit Committee may, at the request of the Board, render an opinion as to whether transactions between related parties involving relevant amounts can be reasonably considered considered adequate according to normal market conditions. In accordance with the applicable rules our Audit Committee must hold sessions at least with the same frequency required to the board of directors.

the audit committee may be requested by our board of directors to report if the conditions of a related party transaction may be reasonably considered adequate according to normal market conditions. In accordance with the applicable rules our Audit Committee must hold sessions at least with the same frequency required to the board of directors (on a three month basis).

Capital Markets Law and the CNV Rules requires that public companies in Argentina as us must have an Audit Committee comprise of three members of the board of directors, the majority of which must be independent. Notwithstanding, our Audit Committee is comprised by three independent directors in compliance with the requirements of the SEC.

On November February 5, 2016, our board of directors appointed Enrique Antonini, Leonardo Fernández and Marcos Barylka, all of them independent board 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 U.S. Securities Exchange Act of 1934.

Compensation Committee

There is no compensation committee.

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  D. Employees

As of June 30, 2016, we had 964 employees, of which 461 employees are subject to collective bargaining agreements. We believe that we are in good relationships with our employees. We subcontract third parties through tender processes for construction of its development projects and for the provision of security, maintenance and cleaning services at its shopping centers and offices.

The following table shows the number of employees as of the indicated dates:

	Fiscal year ended June 30,
		2016	2015	2014
IRSA Propiedades Comerciales S.A.(1)		828	827	730
Emprendimiento Recoleta S.A.		30	29	28
Fibesa S.A.		20	22	24
Panamerican Mall S.A.		70	71	73
Arcos del Gourmet S.A.		6	8	1
Nuevo Puerto Santa Fe S.A.		16	16	16
Total		964	973	872

(1) In January 2014 we assigned administrative employees to Cresud under the Agreement for the Exchange of Corporate Services. For further information, see “Related Party Transactions”. In April and May 2015, the employees assigned to IRSA related to operation of buildings and the Real Estate division was transferred to us as part of the transferred office assets made on December 22, 2014. For more information see Item 4.A History and Development of the Company. In June 2015 the employees assigned to Cresud under the Joint Administrative Services Agreement were transferred us.

E. Share Ownership

The following table sets forth the amount and percentage of our common shares beneficially owned by our directors, senior managers and members of the supervisory committee as of June 30, 2016(2).

		Share Ownership
Name	Position	Amount	Percentage
		(in thousands)
Directors
Eduardo Sergio Elsztain	Chairman	1,192,218(1)	94.6%(1)
Saúl Zang	First Vice Chairman	—	—
Alejandro Gustavo Elsztain	Executive Vice Chairman / Chief Executive Officer	1,615	0.1%
Daniel Ricardo Elsztain	Director / Chief Operating Officer	—	—
Fernando Adrián Elsztain	Director	—	—
Leonardo Fabricio Fernández	Director	—	—
Enrique Antonini	Director	—	—
Gastón Armando Lernoud	Director	17	—
Marcos Oscar Barylka	Director	—	—
Pablo Daniel Vergara del Carril	Alternate Director	28	—
Salvador Darío Bergel	Alternate Director	—	—
Mauricio Elías Wior	Alternate Director	—	—
Gabriel A.G. Reznik	Alternate Director	—	—
Juan Manuel Quintana	Alternate Director	—	—
Senior Management
Matias Gaivironsky	Chief Financial Officer	9	—
Juan José Martinucci	Chief Commercial Officer	—	—
Supervisory Committee
José Daniel Abelovich	Member	—	—
Marcelo Héctor Fuxman	Member	—	—
Noemi Cohn	Member	—	—
Sergio Leonardo Kolaczyk	Alternate Member	—	—
Roberto Daniel Murmis	Alternate Member	—	—
Alicia Graciela Rigueira	Alternate Member	—	—

(1) Mr. Eduardo Sergio Elsztain, chairman of our board of directors, as of June 30, 2016, beneficially own of 154,992,345 common shares of Cresud representing 30.88% (on a fully diluted basis) of its total share capital. Although Mr. Elsztain does not own a majority of the common shares of Cresud, he is its largest shareholder and exercises substantial influence over Cresud. Cresud, as of June 30, 2016, owned 63.4% of IRSA’s common shares. If Mr. Elsztain were considered to control Cresud due to his significant influence over it, he would be considered to be the beneficial owner of 63.4% of IRSA’s common shares (includes (i) 366,788,251 common shares beneficially owned by Cresud, and (ii) 900 common shares owned directly by Mr. Elsztain). Therefore, IRSA, as of June 30, 2016 owns 94.6% of our common shares. If Mr. Elsztain were considered the beneficial owner of 63.4% of IRSA, he would be the beneficial owner of 94.6% of our common shares through IRSA.

(2) David Alberto Perednik resigned his position as alternate director on September 29, 2016. For more information please see “Recent Developments-Resignation as alternate director.”

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Option Ownership

No options to purchase common 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, common shares or securities, other than those described under the following sections: (i) ITEM 6: Directors, Senior Management and Employees – B. Compensation – Capitalization Plan and (ii) ITEM 6: Directors, Senior Management and Employees – B. Compensation – Incentive Plan. For more information please see the aforementioned section.

ITEM 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

Information about Major Shareholders

Share Ownership, as of June 30, 2016

The following table sets forth information regarding ownership of our capital stock by each person known to us to own beneficially at least 5% of our common shares, the ANSES (the Argentine Social Security National Agency) and all our directors and officers as a group, as of the date of this annual report.

	Share Ownership
	Number of common shares (in thousands)	Actual Percentage(1)
IRSA	1,192,218	94.6%
Directors and officers excluding Eduardo Sergio Elsztain(2)	1,669	0.1%
ANSES	17,393	1.4%
Total	1,211,280	96.1%

(1)	Figures may not sum due to rounding.
(2)	Includes only direct ownership of our directors and senior management, other than Eduardo Elsztain. Information as of June 30, 2016.

Through its ownership of our common stock, IRSA currently has voting control over us and has the power to direct or influence 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 common shares are listed and traded in the MVBA through the BCBA and the New York Stock Exchange.

As of June 30, 2016, Cresud owned 63.4% of IRSA’s common shares. Cresud is a leading Argentine producer of basic agricultural products. Cresud’s common shares are listed and traded in the MVBA through the BCBA and the NASDAQ.

Mr. Eduardo Sergio Elsztain is the chairman of our board of directors, and the beneficial owner of (i) 154,992,345 common shares of Cresud held by IFISA, (ii) 752 common shares of Cresud held by Consultores Venture Capital; and (iii) 565 common shares held directly by him, representing 30.9% of the share capital of Cresud. Although Mr. Elsztain does not own a majority of the common shares of Cresud, he is its largest shareholder and exercises substantial influence over Cresud. In addition, as of June 30, 2016, Cresud owned 63.4% of IRSA’s common shares. If Mr. Elsztain were considered to control Cresud due to his significant influence over it, he would be considered to be the beneficial owner of 63.4% of IRSA’s common shares (includes (i)) 366,788,251 common shares beneficially owned by Cresud and (ii) 900 common shares owned directly by Mr. Elsztain). Therefore, IRSA currently owns 94.6% of our common shares. If Mr. Elsztain were considered to be the beneficial owner of 63.4% of IRSA, he would be the beneficial owner of 94.6% of our common shares.

Changes in Share Ownership

	Share Ownership as of June 30,
Shareholder	2016			2015			2014		2013		2012
IRSA		94.6	%		95.8	%	95.7	%	95.7	%	95.6	%
Directors and officers		0.1	%		0.1	%	0.1	%	0.1	%	0.1	%
ANSES		1.4	%		1.4	%	1.4	%	1.4	%	1.4	%

Differences in Voting Rights

Our major shareholders do not have different voting rights.

Arrangements for change in control

There are no arrangements that may at a subsequent date result in a change in control.

Securities held in the host country

As of June 30, 2016, we had 1,260,140,508 common shares issued and outstanding of which 1,185,238,908 (or 94.1%) were held in Argentina. As of June 30, 2016, we had 1,872,540 American Depositary Shares (“ADS”) outstanding (representing 74,901,600 of our common shares, or 5.9% of all of our total common shares issued and outstanding). As of such date, we had seven registered holders of our ADS in the United States.

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B. Related Party Transactions

We enter into transactions with related parties on an arm’s-length basis. A related party transaction means any transaction entered into directly or indirectly by us or any of our subsidiaries that is material based on the value of the transaction to (a) any director, officer or member of our management or shareholders; (b) any entity in which any such person described in clause (a) is interested; or (c) any person who is connected or related to any such person described in clause (a).

Offices and Shopping centers spaces leases

IRSA and Cresud rent office space for their executive offices located at the Intercontinental Plaza tower at Moreno 877 in the Autonomous City of Buenos Aires, which we have owned since December 2014. They also rent space that we own in the Abasto Shopping Center.

The offices of our president are located at 108 Bolivar, in the Autonomous City of Buenos Aires. The property has been rented to Isaac Elsztain e Hijos S.A., a company controlled by Eduardo Sergio Elsztain, our chairman, and certain of his family members and to Hamonet S.A., a company controlled by Fernando A. Elsztain, one of our directors, and certain of his family members.

In addition, Tarshop, Bacs Banco de Crédito y Securitización S.A., BHN Sociedad de Inversión S.A., BHN Seguros Generales S.A. and BHN Visa S.A. rent offices owned by us in different buildings. In addition, we also let various spaces in our Shopping Centers (stores, stands, storage space or advertising space) to third parties and related parties such as Tarshop S.A. and Banco Hipotecario S.A..

Lease agreement entered into with these related parties include clauses and values in line with those agreed upon with unrelated parties.

Agreement for the Exchange of Corporate Services with Cresud and IRSA

Considering that each of IRSA, Cresud and us have operating areas which are somewhat similar, the Board of Directors deemed it advisable to implement alternatives aimed at reducing certain fixed costs of our combined activities and to lessen their impact on operating results while seizing and optimizing the individual efficiencies of each of them in the different areas comprising the management of operations.

To such end, on June 30, 2004, a Master Agreement for the Exchange of Corporate Services (“Frame Agreement") was entered into between IRSA, Cresud and us, which was amended several times to bring it in line with evolving requirements. The agreement has a term of 24 months, is renewable automatically for equal periods, unless it is terminated by any of the parties upon prior notice.

This agreement currently provides for the exchange and sharing of services among the following areas: Human Resources, Finance, Institutional Relations, Administration and Control, Insurance, Security, Agreements, Technical Tasks, Infrastructure and Services, Procurement, Architecture and Design, Development and Works, Real Estate, Hotels, Board of Directors, Board of directors of Real Estate Business, General Manager Office, Board Safety, Audit Committee, Real Estate Business Management, Human Resources of Real Estate Business, Fraud Prevention, Internal Audit and Agricultural Investment Management.

Pursuant to this agreement, the companies hired an external consulting firm to review and evaluate half-yearly the criteria used in the process of liquidating the corporate services, as well as the basis for distribution and source documentation used in the process indicated above, by means of a half-yearly report.

The operations indicated above allow both IRSA and Cresud to keep our strategic and commercial decisions fully independent and confidential, with cost and profit apportionment being allocated on the basis of operating efficiency and equity, without pursuing individual economic benefits for any of the related companies.

Special reimbursement with different payment methods

We and our related parties undertake different commercial actions and promotions intended to promote the influx and consumption of the public in our shopping centers.

Certain promotions are offered on specific dates or periods, different types of discounts to clients and/or interest-free financing plans. We and our related parties entered into agreements with different financial entities and/or related parties, such as Banco Hipotecario S.A. and Tarshop S.A.

These agreements generally establish different reimbursement rates for costumers that purchase in all the shops that are part of the network using the payment methods specified by each financial entity and, in certain circumstances, additional financing plans with zero interest rates. The costs of the reimbursements given to the customers generally are distributed proportionally among the tenants of the shops and the financial entities, while the cost of the financing at zero interest rate is assumed by the financial entities. We and our related parties act as intermediaries, ensuring that the tenants adhere to the plan and advertising of these promotions. These activities do not generate any cash or transfer of income or cost between us and our related parties.

Hospitality Services

We and our related parties hire, in certain occasions, hotel services and lease conference rooms for events to Nuevas Fronteras S.A., Hoteles Argentinos S.A. and Llao Llao Resorts S.A., subsidiaries of IRSA.

Financial and service operations

We work with several financial entities in Argentina for operations including, but not limited to, credit, investment, purchase and sale of securities and financial derivatives. Such entities include Banco Hipotecario S.A. and its subsidiaries. Furthermore, Banco Hipotecario S.A. and BACS Banco de Crédito y Securitización S.A. usually act as underwriters in Capital Market transactions.

Donations to Fundación IRSA and Fundación Museo de los Niños

Fundación IRSA is a non-profit charity institution that seeks to support and generate initiatives concerning education, the promotion of corporate social responsibility and the entrepreneurial spirit of the youth. It carries out corporate volunteering programs and fosters donations by the employees. The main members of Fundación IRSA's Board of Administrators are: Eduardo S. Elsztain (Chairman); Saul Zang (Vice-Chairman I), Alejandro Elsztain (Vice-Chairman II) and Mariana C. de Elsztain (Secretary). It finances its activities with donations from IRSA Propiedades Comerciales S.A., IRSA, Cresud and others related companies.

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Fundación Museo de los Niños is a non-profit association established by the same founders of Fundación IRSA and its Management Board is formed by the same members as Fundación IRSA’s.

On October 31, 1997, we entered into an agreement with Fundación IRSA whereby 3,800 square meters of the constructed area at the Abasto shopping center was granted under a gratuitous bailment agreement for a term of 30 years. Subsequently, on October 29, 1999, Fundación IRSA assigned free of cost all the rights of use over such store and its respective obligations to Fundación Museo de los Niños.

On November 29, 2005, we signed another agreement with Fundación Museo de los Niños granting under gratuitous bailment 2,670.11 square meters of the constructed area at Alto Rosario shopping center for a term of 30 years.

Fundación Museo de los Niños has used these spaces to set up “Museo de los Niños”, Abasto and “Museo de los Niños, Rosario”, two interactive learning centers intended for children and adults. Both agreements establish the payment of common expenses and direct expenses related to the services performed by these stores should be borne by Fundación Museo de los Niños.

Line of Credit granted to IRSA

On June 25, 2014, we increased the existing credit line expiring on June 25, 2015 to US$ 60 million, which is priced at the one-year LIBOR rate plus 3.0%. Under this credit line, we and any of our subsidiaries will be lenders and IRSA and/or its subsidiaries (not our subsidiaries) will be the borrowers. In June 2015, the line of credit was renewed for an additional year until June 24, 2016. In addition, on July 5, 2016 the credit line was increased by up to US$ 120.0 million at an annual rate of 9% and expires on June 24, 2017.

As of the date of this annual report, the total amount granted from us to IRSA amounts to US$45 million.

Borrowings

In the normal course of its activities, we enter into diverse loan agreements or credit facilities between the related companies and/or other related parties. These loans accrue interest at market rates.

Purchase of financial assets

We usually invests excess cash in several instruments that may include those issued by related companies, acquired at issuance or from unrelated third parties through secondary market deals.

Investment in mutual funds of BACS Administradora de Activos S.A. S.G.F.C.I.

We invest from time to time our liquid fund in mutual funds managed by BACS Administradora de Activos S.A. S.G.F.C.I., which is a subsidiary of Banco Hipotecario, among other entities.

Legal Services

We hire legal services from Estudio Zang, Bergel & Viñes, in which Saúl Zang is a partner. Mr. Zang is a member of our Board of Directors and that of our related companies.

Property purchase - sale

We in the course of business operations may acquire or sell to or from other related parties certain real estate properties used for rental purposes

Acquisition of Investment Properties from IRSA

On December 22, 2014, we acquired from IRSA, 83,789 m2 of its premium office portfolio including the buildings República, Bouchard 710, Della Paolera 265, Intercontinental Plaza and Suipacha 652 and the “Intercontinental II” plot of land in order to consolidate a vehicle which main corporate purpose is to develop and operate commercial properties in Argentina. The total purchase price of the transaction was US$308 million, which had been paid as of June 30, 2016. For more information, see “Fiscal year ended as of June 30, 2015 - Acquisitions.”

On April 7, 2016, we acquired from IRSA, 16,012 m2 covering 14 floors and 142 garages in the building to be developed in the area of “Catalinas”, City of Buenos Aires. The purchase price of the transaction was established taking into account two components. On the one hand, the total surface area as measured in square meters to be acquired, settled on the amount of Ps. 455.7 million, which were already paid. On the other hand, an amount that will be determined according to the actual cost of the construction by square meters. For more information, see “Fiscal year ended as of June 30, 2016 - Acquisitions.”

Transfer of tax credits

Sociedad Anónima Carnes Pampeanas S.A. (a company controlled by Cresud) and Cresud, assigned credits to us and other related parties corresponding to value added tax export refunds related to such companies’ business activity.

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

Arcos del Gourmet

  In December 2011, we started to develop, through our subsidiary Arcos, the “Arcos” project located in the neighborhood of Palermo, City of Buenos Aires. On December 10, 2013, Administrative and Tax Contentious Court of Appeal of the City of Buenos Aires ratified an injunction that suspends the opening of the shopping center on the grounds that it has failed to obtain certain government permits. Despite the fact that the construction has all government permits in place, we have filed an appeal against the decision and have requested that the injunction be lifted, with favorable expectations. In such sense, on April 10, 2014, the government of the City of Buenos Aires issued a new environmental compliance certificate. We obtained a successful decision based on procedural matters. As a result of this decision, the lawsuit was rejected.

On the other hand, there is another judicial process currently being heard entitled “Federación de Comercio e Industria de la Ciudad de Buenos Aires y Otros c/ Gobierno de la Ciudad Autónoma de Buenos Aires s/ Amparo”. On August 29, 2014 the lower court rendered a decision rejecting the case.This resolution was appealed but afterwards, confirmed in December, 2014. Therefore, on December 18th, 2014, the “Arcos” Project was opened to the public, operating normally nowadays. Notwithstanding, the plaintiff appeared before the Superior Court of the City of Buenos Aires to request the review of the case based on the constitutional’s matters involved. The Court has not rendered a decision yet.

Moreover, on May 18th, 2015 we were notified of the revocation of the Agreement for the Reorganization for Use and Exploitation Nº AF000261 (“Contrato de Readecuación de Concesión de Uso y Explotación NºAF000261” issued by the Agency for the Management of the State Assets (“Agencia de Administración de Bienes del Estado” or “AABE”) through Resolution Nº 170/2014. This Resolution was not enacted due to breach of contract by Arcos del Gourmet nor it has implied up to the date of this annual report the interruption of the economic exploitation neither of the functioning of the shopping center that we operate there. We have filed the proper administrative and judicial motions to revoke the Resolution and as of the date of this annual report these proceedings are ongoing.

Other Litigation

On December 3, 2009, we filed a request with the Argentine Antitrust Authority’s opinion regarding our acquisition of common shares of Arcos del Gourmet. The Argentine Antitrust Authority advised the parties that the transaction had to be filed with the Antitrust Authority. The transaction approval request was thus filed on December, 2010. As of the date of this annual report, the Argentine Antitrust Authority has not granted such approval.

On April 11, 2011, Quality Invest requested the Argentine Antitrust Authority’s opinion regarding the acquisition by Quality Invest of an industrial plant owned by Nobleza Piccardo S.A.I.C. y F. located in San Martín, Province of Buenos Aires. The Argentine Antitrust Authority stated that there was an obligation to notify the situation, but Quality filed an appeal against this decision. Subsequently, the Court of Appeals confirmed the Antitrust Authorities' decision regarding the obligation to notify. Therefore, on February 23, 2012, the transaction was filed and on March 8, 2016 the transaction was authorized by the Antitrust Authorities.

On December 7, 2012, we have notified the Argentine Antitrust Authority of the acquisition of 50% of the common shares of EHSA, a company which holds 50% of the common shares of La Rural, which operates a convention center (Predio Ferial de Palermo); as of the date of this Annual Report the transaction is being analyzed by the Argentine Antitrust Authority.

For more information see “Item 3 (d) Risk Factors—Risk Relating to our business—Our business is subject to extensive regulation and additional regulations may be imposed in the future.”

Dividend Policy

Pursuant to Argentine law, the distribution and payment of dividends to shareholders is only valid 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.

Pursuant to the 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 the compensation of our directors and the members of our Supervisory Committee; and

●

additional amounts are allocated to the payment of dividends, optional reserve, or to set up reserves for any other purpose as determined by our shareholders.

According to rules issued by the CNV, cash dividends must be paid to shareholders within 30 days of the resolution approving their distribution. In the case of stock dividends, the common shares must be delivered to shareholders within three months of the annual ordinary shareholders’ meeting that approved them.

The following table illustrates the ratio between the amounts paid as dividends and the total amount paid as dividends on each fully paid-in share for the fiscal years mentioned. The amounts stated in Pesos correspond to nominal Pesos on their respective dates of payment. See “Local Exchange Market and Exchange Rates”:

Year	Cash dividends		Share dividends		Total per share
	(Ps. )		(Ps.)		(Ps.)
2011		243,824,500		-		0.1936
2012		294,054,600		-		0.2334
2013		306,500,000		-		0.2432
2014		407,522,074		-		0.3234
2015		437,193,000		-		0.3469
2016		283,580,353		-		0.2250

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B. Significant changes

 

Shareholders‘ Meeting:

Our 2016 annual meeting of shareholders will be held on October 31, 2016, in order to consider and approve, among others, (i) treatment and allocation of net income for the fiscal year ended June 30, 2016, (ii) consideration of payment of a cash dividend for up to Ps.312 million (iii) treatment of amounts paid as personal assets tax levied on the shareholders, (iv) renewal of delegation of powers conferred to the Board of Directors in order to determine the time and currency of issuance and further terms and conditions governing the issue of notes under the US$500,000,000 global note program currently in effect, as approved by the shareholders’ meetings dated October 31, 2011 and March 26, 2015 and its increase by an additional amount of US$100,000,000 as approved by the shareholders’ meeting dated October 30, 2015, (v) grant of indemnities to the Directors, Statutory Auditors and Managers who perform or have performed duties for the Company accessorily to the D&O policies, and (vi) amendment to article eleven of the bylaws regarding the renewal of the Board of Directors by thirds.

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

As of June 30, 2016, our outstanding capital stock consists of 1,260,140,508 shares of common stock, Ps. 0.1 face value per share.

Our common stock has one vote per share. All of the shares of our common stock are validly issued, fully paid and non-assessable.

Price history of our stock

Our common shares are listed and traded on the MVBA through theBCBA (MVBA:“IRCP”). Each common share listed on the MVBA represents 10 shares of common stock. Our shares are listed on the BCBA (currently the MVBA) since March 26, 1996. Each ADS represents 40 shares of common stock. ADSs in custody are listed and traded on the NASDAQ Global Market under the symbol “IRCP”. Our ADSs were listed on the NASDAQ on November 15, 2000, and they were issued by the Bank of New York Mellon acting as depository of the ADSs. The following chart shows, for the period indicated, the maximum and minimum closing listed prices of our common shares on the MVBA and of our ADSs on the NASDAQ.

	MVBA						NASDAQ
	Ps. Per 10 shares						US$ Per ADS
	Share Volume		High		Low		ADS Volume		High		Low
Fiscal Year 2012
1st Quarter		18,037		23.00		17.50		248,393		22.77		14.20
2nd Quarter		39,489		19.00		14.10		266,017		17.39		12.30
3rd Quarter		22,318		25.00		16.90		168,934		20.98		13.25
4th Quarter		63,243		23.00		17.00		318,674		18.55		10.42
Annual		143,087		25.00		14.10		1,002,018		22.77		10.42
Fiscal Year 2013
1st Quarter		5,871		22.50		20.00		99,866		15.74		12.15
2nd Quarter		90,077		28.00		22.55		188,528		17.00		15.00
3rd Quarter		17,519		34.00		27.50		156,742		17.73		13.78
4th Quarter		11,772		34.00		30.00		127,352		16.50		13.68
Annual		125,239		34.00		20.00		572,488		17.73		12.15
Fiscal Year 2014
1st Quarter		11,197		41.00		31.50		102,359		19.27		15.78
2nd Quarter		12,974		55.00		45.00		175,356		23.40		18.85
3rd Quarter		18,962		54.00		41.00		141,499		23.30		15.30
4th Quarter		9,884		53.00		41.20		110,745		22.52		17.40
Annual		53,017		55.00		31.50		529,959		23.40		15.30
Fiscal Year 2015
1st Quarter		17,546		80.00		47.50		80,099		23.00		19.75
2nd Quarter		24,189		77.00		58.00		78,402		23.00		17.95
3rd Quarter		9,817		89.00		60.00		81,134		38.00		22.60
4th Quarter		22,237		95.00		87.00		46,710		35.00		29.00
Annual		73,789		95.00		47.50		286,345		38.00		17.95
Fiscal Year 2016
1st Quarter		28,119		120.00		90.00		49,801		35.00		24.75
2nd Quarter		14,195		135.00		109.00		338,943		39.00		28.76
3rd Quarter		19,607		128.00		100.00		207,474		37.00		31.75
4th Quarter		34,857		144.00		127.00		227,759		39.80		36.51
Annual		96,778		144.00		90.00		823,977		39.80		24.75
Fiscal Year 2017
1st Quarter		36,716		175.00		136.00		49,981		44.70		36.00
July 2016		5,029		146.00		136.00		25,726		38.75		36.00
August 2016		4,812		143.00		138.00		9,683		39.35		37.33

September 2016	26,875	175.00	142.50	14,572	44.70	39.30
As of October 13, 2016	4,320	169.00	185.00	23,160	41.88	48.00

Source: Bloomberg

Due to the aggregate ownership of approximately 94.61% as of June 30, 2016 by our principal shareholder, the liquidity of our common shares is restricted and may frequently cause our stock not to be traded daily.

B. Plan of Distribution

This section is not applicable.

C. Markets

Argentine Securities Markets

In December 2012 the Argentine government has enacted a new Capital Markets Law, which sets out the rules to govern capital markets, its players, and the securities traded therein subject to the CNV regulation and monitoring.

On September 5, 2013, the CNV has enacted the CNV Rules, by virtue of which it regulates the new provisions of the Capital Markets Law for issuers of securities, in regard to the initial public offering and reporting duties.

Almost all the provisions of the former Decree No. 677/2011 (the “Transparency Decree”) have been incorporated in the Capital Markets Law and in the CNV Rules. The Capital Markets Law provides rules and provisions guided by the following goals and principles:

● Promoting the participation of small investors, union associations, industry groups and trade associations, professional associations and all public savings entities in the capital market, particularly encouraging mechanisms designed to promote domestic savings and channel such funds towards the development of production;

● Strengthening mechanisms for the protection of and prevention of abuses against small investors for the protection of consumers’ rights;

● Promoting access of small and medium-sized companies to the capital market;

● Fostering the creation of a federally integrated capital market through mechanisms designed to achieve an interconnection of computer systems from different trading markets, with the use of state-of-the-art technology; and

● Encouraging simpler trading procedures available to users to attain greater liquidity and competitiveness in order to provide the most favorable conditions for the implementation of transactions.

The CNV is a self-administered agency of the Argentine Government with jurisdiction covering the territory of Argentina, governed by the provisions of the Capital Markets Law, and the CNV Rules among other related statutory regulations. The relationship of the CNV and the Argentine Executive is maintained through the Ministerio de Economía y Finanzas Públicas (Ministry of Economy and Public Finance), which shall hear any appeals filed against decisions made by the CNV, notwithstanding any other legal actions and remedies contemplated in the Capital Markets Law.

The CNV supervises and regulates the authorized markets in which the securities and the collective investment products are traded, the corporations authorized in the public offer regime, and all the other players authorized to operate in the public offer regime, as the registered agents, the trading agents, the financial advisors, the underwriters and distributors, the brokers, the settlement and clearing agents, the managers of collective investment products, the custodians of collective investment products, the collective depositories, and the risk rating agencies, among others. Argentine institutional investors and insurance companies are regulated by separate government agencies, whereas financial institutions are regulated mainly by the Central Bank.

Before offering securities to the public in Argentina, an issuer must meet certain requirements established by the CNV with regard to the issuer’s assets, operating history and management. Only securities approved for a public offering by the CNV may be listed on a stock exchange. However, CNV approval does not imply any kind of certification as to the quality of the securities or the solvency of the issuer, even though issuers of listed securities are required to file unaudited quarterly financial statements and audited annual financial statements in accordance with IFRS, as issued by the IASB (excluding financial institutions under the supervision of the Central Bank, insurance companies under the supervision of the Insurance Superintendence and medium and small enterprises) and various other periodic reports with the CNV and the stock exchange on which their securities are listed, as well as to report to the CNV and the relevant stock exchange any event related to the issuer and its shareholders that may affect materially the value of the securities traded.

In Argentina, debt and equity securities traded on an exchange must, unless otherwise instructed by their shareholders, be deposited with a Central Securities Depository, in Argentina. Currently the only depositary authorized to act in accordance with the Capital Markets Law and CNV Rules is Caja de Valores S.A. a corporation owned by the BCBA, the MVBA and certain provincial exchange, and provides central depositary facilities, as well as acting as a clearinghouse for securities trading and as a transfer and paying agent for securities transactions.

Before the enactment of the Capital Markets Law and the CNV Rules there were 12 securities exchanges in Argentina, which were located in the City of Buenos Aires, Bahía Blanca, Chaco, Corrientes, Córdoba, La Plata, La Rioja, Mendoza, Rosario, Salta, Santa Fe, and Tucumán. Six of these exchanges (the BASE, Rosario, Córdoba, La Rioja, Mendoza, and Santa Fe) had affiliated stock markets in accordance with the requirements of Law No. 17,811 which was derogated by the Capital Markets Law.

Pursuant to the Capital Markets Law, the CNV has authorized six stock markets since September 2014, which are: Mercado Abierto Electrónico S.A. (“MAE”), Mercado a Término de Buenos Aires S.A., Mercado a Término de Rosario S.A., MVBA., Mercado de Valores de Córdoba S.A. y Mercado Argentino de Valores S.A.

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The principal exchange for the Argentine securities market under the previous legislation was the BCBA. Under the new Capital Markets Law the BCBA has been authorized to operate as qualified entity, under the appointment of the MVBA. As a result of the foregoing, the MVBA is currently the principal exchange market in Argentina in which the securities are listed.

The MVBA is a corporation consisting of 183 shareholders who used to be the sole and exclusive individuals or entities authorized to trade in the MVBA, either as principals or agents, before Capital Markets Law became into force. Since then, all agents registered and authorized to act as intermediaries by the CNV will be able to trade in any securities exchange, including the BCBA as long as they obtain a membership of such stock exchange, not applying any longer the requirements to be a shareholder of such stock exchange.

The securities that may be listed on the MVBA are: stocks, corporate bonds, convertible corporate bonds, close-ended investment funds, financial trust, indexes, derivatives and public bonds. The MVBA is legally qualified for admission, suspension, and delisting of securities according to its own rules approved by the CNV.

Another relevant exchange of the securities market in Argentina is the MAE, which was recently authorized to operate by the CNV under the new regulations. The MAE works as an electronic platform 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. MAE brokers/dealers members, 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 MAE, in other exchanges or in both of them concurrently.

Argentina’s equity markets have historically been composed of individual investors, though in recent years there has been an increase in the level of investment by banks and insurance companies in these markets; however, Argentine mutual funds (fondos comunes de inversión) continue to have very low participation.

Information regarding the BCBA

	As of June 30,
		2016	2015
Market capitalization (Ps. billion)		3,625	4,025
Average daily trading volume (1) (Ps. million)		310	150
Number of listed companies		100	99

(1) During the month of June.

Although companies may list all of their capital stock on the MVBA, 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 MVBA. As of June 30, 2016, approximately 100 companies had equity securities listed on the MVBA. The Argentine securities markets are substantially more volatile than the securities markets in the United States and certain other developed countries. The MVBA Index experienced a 30.1% decrease in 2011, a 15.9% increase in 2012, a 88.9% increase in 2013, a 59.1% increase in 2014, a 36.1% increase in 2015 and a 25.8% increase during the six months of 2016. In order to control price volatility, the MVBA 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 Stock Market

Our ADSs are listed and traded in the NASDAQ Global Market under the trading symbol “IRCP”.

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.

B. Memorandum and Articles of Association

Our corporate purpose

Our legal name is “IRSA Propiedades Comerciales S.A.” Our former legal name was Alto Palermo S.A. (APSA), which was modified by vote of the Extraordinary General Shareholders’ meeting held on February 5, 2015. We were organized and incorporated on August 29, 1889 under Argentine law as a stock corporation (Sociedad Anónima). Our by-laws were registered in the public registry of commerce of the city of Buenos Aires, currently named 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:

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● Invest, develop and operate real estate, and specially shopping centers;

● Invest, develop and operate personal property, and specially securities;

● Issuing of Credit Cards;

● 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;

● Marketing products;

● Agencies and representations;

● Advise third parties with respect to the aforementioned activities; and

● Fund projects, undertakings, works and/or real estate transactions of third parties.

Board of Directors

Voting of proposals in which Directors have material interest

Capital Markets Law establishes in Section 78, that the directors, and members of the supervisory committee of those companies whose securities are publicly offered, shall act in a loyal and diligent manner when exercising their functions. In that sense the aforementioned persons must follow the following rules:

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shall not be allowed to make use of any corporate assets or confidential information for his/her own private purposes;

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shall not be allowed to profit or permit a third party to profit, whether by an action or an omission to act, from any business opportunities available to the company;

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shall be required to exercise any powers conferred to them solely for the purposes for which they were conferred under the law or the corporate bylaws or by a shareholders’ meeting or the board of directors; and

●

shall be required to meticulously ensure that no conflict of interest, whether direct or indirect, shall under any circumstances arise between his/her actions and the company’s interests.

In case of doubt as to a director’s compliance with his/her duty of loyalty, the burden of proof shall be borne by such person.

The Argentine Corporations Law No. 19,550 establishes in Section 271 that directors may enter into agreements with the company, that concern the business in which the company engages, always provided that they are entered into under market conditions. The agreements that do not fulfill the requirements mentioned above may only be executed with the prior approval of the board of directors.

Furthermore, the Capital Markets Law in Section 72 states for companies authorized in the public offer regime, that any acts performed or contracts executed between the company and a related party and involving a significant amount shall be performed or executed pursuant to the procedure set forth below:

a)	A “related party” shall mean any of the following persons with respect to the issuer:
i)		Directors, members of the supervisory body or surveillance committee, as well as chief executive officers or special managers of the issuing company appointed under section 270 of Argentine Companies Law No. 19,550;

ii) Natural persons or legal entities controlling or holding a substantial interest, as determined by the CNV, in the capital stock of the issuer or the issuer’s controlling entity;

iii) Any other company under the common control of the same controlling entity;

iv) The ascendants, descendants, spouses or siblings of any of the natural persons referred to in paragraphs i) and ii) above; and

v) Companies in which any of the persons referred to in paragraphs i) to iv) above hold a significant direct or indirect interest. Provided none of the circumstances described above is present, a subsidiary of the issuer shall not be deemed a “related party”.

b) A “significant amount” shall be deemed involved in an act or contract when such amount exceeds 1% of the company’s shareholders’ equity as shown in the most recently approved balance sheet.

The board of directors or any members thereof shall request the audit committee to state whether in its opinion the terms of a transaction may be reasonably deemed adapted to regular and usual market conditions. The audit committee shall issue its pronouncement within 5 business days.

Notwithstanding the above inquiry from the audit committee, a resolution may be adopted by the company on the basis of a report from 2 independent evaluation companies, which shall express their opinion on the same matter and other terms of the transaction.

Nevertheless that, Section 272 of the Corporations Law provides that when a director has an opposite interest to the one of the company, he or she should notify that situation to the board of directors and the supervisory committee and abstain to vote in that respect. The violation of this provision results in the director being jointly and severally unlimitedly liable.

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 Corporations Law, it should be approved by the majority of 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

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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 common 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 common shares in order to be eligible for appointment as director.

Meetings of the Board of Directors

The Board of Directors can celebrate their meetings using teleconference technology. An absolute majority of the directors will constitute the quorum. Only the directors physically present at the time and those using teleconference technologies will be taken into consideration for the quorum. The resolutions of the Board of Directors will be passed by the vote of the majority of the directors physically present at the meeting and those using teleconference technologies.

Rights, preferences and restrictions attaching to the common shares

Dividend rights

The Corporations Law 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.

Pursuant to the Corporations Law 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 our 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 Corporations Law and in the bylaws. The rights of shareholders provided for by the Corporations Law 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.

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.

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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 common 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 Capital Markets Law. 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 with at least 10 days prior notice in the publications of Argentine exchanges or securities markets in which our common shares are traded if all common 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 common shares are traded.

Quorum and Voting Requirements

The quorum for ordinary meetings of shareholders on first call is a majority of the common shares entitled to vote, and action may be taken by the affirmative vote of an absolute majority of the common 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 common shares present, regardless of the number of such common shares. The quorum for an extraordinary shareholders’ meeting on first call is sixty percent of the common 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 common shares present that are entitled to vote on such action, except that the approval of a majority of common 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 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 theCNV 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.

No Limitations on ownership of securities

There are no legal limitations to own our securities or exercise voting rights for residents, non-resident or foreign shareholders.

    Ownership threshold above which ownership should be disclosed

The CNV Rules requires 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 CNV. 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 theCNV on a monthly basis, of their beneficial ownership of common shares, debt securities, and call and put options related to securities of such companies and their controlling, controlled or affiliated companies.

Furthermore, the CNV 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 theCNV 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

At the shareholders’ meeting held on October 25, 2007, our shareholders voted to amend the following sections of our 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 to the provisions of section 65 of Decree 677/01–currentlyy section 61 of Capital Markets Law-. Such amendment is attached here to as Exhibit 1.2.

At the shareholders’ meeting held on October 31, 2012, our shareholders voted to amend the following sections of our by-laws: (i) Section Sixteen in order to allow the Board of Directors to celebrate their meetings using teleconference technology. An absolute majority of the directors will constitute the quorum. Only the directors physically present at the time and those using teleconference technologies will be taken into consideration for the quorum. The resolutions of the Board of Directors will be passed by the vote of the majority of directors physically present at the meeting and those using teleconference technologies. Such amendment is attached here to as Exhibit 1.3.

At the shareholders’ meeting held on February 5, 2015, our shareholders voted to amend Section One of our by-laws in order to modify our legal name to IRSA Propiedades Comerciales S.A. Such amendment is attached here to as Exhibit 1.4.

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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

Foreign Currency Regulation

Under Decree No. 260/2002, the Argentine government had set up an exchange market through which all foreign currency exchange transactions are made. Such transactions were subject to the regulations and requirements imposed by the Argentine Central Bank. Under Communication “A” 3471, as amended, the Central Bank established certain restrictions and requirements applicable to foreign currency exchange transactions. If such restrictions and requirements are not met, criminal penalties shall be applied.

Under Communication “A” 6037, dated August 8th, 2016, no further authorization is required for residents and non-residents to have access to local exchange market and there is no amount or matter that limits the access thereto.

Outflow and Inflow of Capital

Inflow of capital

Under Argentine Foreign Investment Law No. 21,382, as amended, and the wording restated under Executive Branch Decree No. 1853/1993, the purchase of stock of an Argentine company by an individual or legal entity domiciled abroad or by an Argentine “foreign capital” company (as defined under the Foreign Investment Law) represents a foreign investment.

Under Decree No. 616/2005, as amended by Decree No. 3/2015, the Argentine government softened certain restrictions on the inflow and outflow of foreign currency into and from the Argentine exchange market, including that inflowing new indebtedness and debt renewals by persons domiciled abroad must be agreed and cancelled within periods not shorter than 120 calendar days –instead of the 365 day-period as originally established-, irrespective of the method of payment. Additionally, such debt may not be prepaid before the lapse of such period. Such restrictions do not apply to (i) foreign trade financing, or (ii) primary public offering of equity or debt instruments issued under the public offering procedure and listed on self-regulated markets.

Obligation for the settlement of funds through the MULC

General rules. Exports.

Pursuant to Decree No. 1606/2011 and Communications “A” 3602 and “A” 3493 of the Central Bank, any foreign currency derived from foreign trade must be settled through the MULC.

Within 365 running days as of the date of the disbursement of the funds abroad, corresponding to the payment of exportation of goods, advance payments of exports and pre financing loans for exports, such funds must be settled through the MULC. Such funds shall be credited in a local bank account duly opened in favor of the client, which may be either in Pesos or in another currency.

Services

Communication “A” 5264 set forth that the payments in foreign currency received by residents for the export of services and payment of losses for insurance policies hired with nonresidents under the applicable rules must be settled through the MULC within 365 running days as of its collection abroad or locally or its deposit in foreign bank accounts.

Such funds are exempted to be settled through the MULC to the extent such exemption is actually contemplated in the foreign exchange regulations and such amounts are applied for the cancellation of foreign financial indebtedness.

Outflow of capital, including the availability of cash or cash equivalents

Exchange Transactions Inquiry Program

Communication “A” 5850, of December 2015, revoke Communication “A” 5245 that regulated an Exchange Transaction Inquiry Program established on October 28, 2011, by the Federal Administration of Public Revenues (Administración Federal de Ingresos Públicos, or “AFIP”) through which the entities authorized by the Central Bank to deal in foreign exchange were supposed to inquire and register through an IT system the total Peso amount of each exchange transaction at the moment it is closed.

Financial Indebtedness

Any transactions arising from financial indebtedness of the financial sector, private non-financial sector and local governments are no longer subject to be settled in the foreign exchange market. However, if settled in the foreign exchange market, then according to Decree No. 616/2005 and 3/2015, these cannot be set off before the minimum term of stay, which is 120 running days (except for bonds listed in the authorized exchange stock markets).

Formation of off-shore assets by residents with and without subsequent allocation to specific purposes

Under Communication “A” 5850, 5899 and 6037 of the Central Bank, residents shall have access to the local exchange market without prior authorization of the Central Bank in order to purchase of foreign currency for the formation of off-shore assets by residents.

Outflow of funds for payment to non-residents

According to Communication “A” 5264, amended by Communication “A” 5377 (issued on December 14, 2012) and Communication “A” 6037, there are no limits or restrictions applicable for residents who access the foreign exchange market to pay services, debts and profits to non-residents. The access to the MULC requires the filing of certain documentation by residents demonstrating the validity of transactions in which the funds are purchased for its remittance abroad.

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Payment of services

As it was mentioned above, there is no restriction applicable for payments to be made to non-residents for performed services. The regulation covers all types of services without making any specifications. The financial entity shall require the filing of documentation supporting the authenticity of the transaction, the service rendered by the non-resident to the resident and the amount to be transferred abroad.

If services performed are not related to the activities actually developed by the resident, the financial entity shall require a copy of the contract by which the payment obligation arises from and an auditor report. Such requirements intend to demonstrate the actual rendering of services to the non-resident and the existence of the debt.

Payment of rents (interest, profits and dividends)

As of January 8, 2003, Communication “A” 3859, item 3, allowed Argentine companies to transfer abroad profits and dividends related to closed financial statements certified by independent accountants without being required to obtain the prior authorization of the Central Bank. Such Communication was replaced by Communication “A” 5264, amended by Communication “A” 5377 and Communication “A” 6037.

The payments of profits and dividends to non-residents or holders of our ADRs are authorized, insofar as such payments are made according to financial statements duly audited and approved at our annual meeting of shareholders’.

Payment of foreign financial indebtedness

Access to the exchange market is allowed for payments of principal amounts due.

In general terms, access to MULC for payment of principal, interest and prepayment of financial indebtedness incurred by Argentine residents in the private non-financial sector and financial sector are allowed subject to regulations set forth by Communications “A” 6037, of August 8, 2016.

Pursuant to Communication “A” 6037, no settlement in the local exchange market is required for the repayment of principal and interests, as long as it has been verified that the reporting system has been complied with in accordance with Communication “A” 3602. Additionally, the payment may only proceed if the funds disbursed remain in Argentina for at least 120 calendar days, in accordance with Decree No. 616/2005.

Direct Investment Reporting System

Direct Investments made in Argentina by nonresidents

Under Communication “A” 4237, the Central Bank established a reporting system in connection with direct investments and real estate investments made by nonresidents in Argentina and by residents abroad.

Nonresidents must comply every semester with the above mentioned reporting system if the amount of the investment in Argentina reaches or exceeds US$500,000. If such amount is not reached, the reporting system is optional.

Direct investments made outside Argentina by Argentine residents

Argentine residents are required to meet the reporting system set forth in Communication “A” 4237 every year if the value of their investments abroad reaches or exceeds US$1.0 million and it’s under US$5.0 million, and every semester if it reaches or exceeds US$5.0 million. If the value of such investments abroad does not reach US$1.0 million, compliance with the reporting system is optional.

Sales of foreign exchange to nonresidents

Access to local exchange market shall be given as well to non residents for them to transfer to their own foreign accounts the payments collected in the country. Specific documentation that backs up the cause of the payment may be required by the Central Bank.

For further details regarding the exchange regulations applicable in Argentina, investors should consult their professional advisers and read the full text of Decree No. 616/2005, and Communication “A” 6037 of the Central Bank. Interested parties may consult such regulations through the website of the Ministry of Economy and Public Finance (http://www.infoleg.gob.ar) or the Central Bank (http://www.bcra.gob.ar).

Money Laundering

Argentine Law No. 25,246, as amended by Laws Nos. 26,118, 26,268 and 26,683, categorizes money laundering as a crime, which is defined as the exchange, transfer, management, sale or any other use of money or other assets obtained through a crime, by a person who did not take part in such original crime, with the potential result that such original assets (or new assets resulting from such original assets) have the appearance of having been obtained through legitimate means. In spite of the fact that there is a specific amount for the money laundering category (Ps.300,000), the crimes committed for a lower amount are also punished, but the prison sentence is reduced.

After the enactment of Law No. 26,683, money laundering was included in the Penal Code as an independent crime against economic and financial order and it was split from the title “Concealment” as originally disposed. Therefore, money laundering is a crime which may be prosecuted independently.

The money laundering law created the Financial Information Unit (UIF). UIF is in charge of the analysis, treatment and transmission of information to prevent and impede the money laundering originating from, among others:

a) Crimes related to the traffic and illegal commercialization of drugs (Law No. 23,737)

b) Crimes related to arms traffic (Law No. 22,415)

c) Crimes related to illegal association or terrorist association

d) Crimes committed by illegal associations organized to commit crimes for political or racial purposes;

e) Crimes against Public Administration

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f) Crimes of minor’s prostitution and child pornography

g) Crimes related to terrorism financing

The UIF analyzes the information received by entities that have the obligation to report suspicious activities or operations and, as the case may be, inform the Public Ministry to carry out the investigations that may be considered relevant or necessary.

The money laundering legal framework in Argentina also assigns information and control duties to certain private sector entities, such as banks, agents, non-profits organizations, stock exchanges, insurance companies, according to the regulations of the Financial Information Unit, and for financial entities, the Argentine Central Bank. These regulations apply to many Argentine companies, including us. These obligations consist mainly of: (i) maintaining internal policies and procedures aimed at money laundering prevention and financing of terrorism, especially through the application of the policy “know your client”; (ii) reporting any suspicious activity or operation and (iii) acting according the Money Laundering Law with respect to the confidentiality of the information obtained from the clients. For that purpose, each entity involved must appoint an officer responsible for the monitoring and control under the Money Laundering Law.

On May 8, 2009, and in its capacity as obliged subject under the rules enacted by UIF, the CNV issued Resolution No. 554 which incorporated within the exchange market many provisions aimed at comply with money laundering prevention pursuant to Law No. 25,246, as amended. In that regard, such resolution established that any entity subject to the supervision of CNV could only take part in securities transactions if they were ordered by parties that were registered or domiciled in jurisdictions not included in the list of tax havens detailed in Decree No. 1344/98. Furthermore, the Resolution provided that securities transactions made by parties registered or domiciled in jurisdictions that are not included in such list, but that act as intermediaries of securities’ markets under the supervision of an agency similar to the CNV, were allowed only if such agency has signed a memorandum of mutual understanding with the CNV.

On February 2, 2012, Resolution No. 554 was replaced by Resolution No. 602 so as to adapt and complement the instructions issued by UIF applying to the entities under the supervision of CNV, including some payment modalities and control proceedings for the reception and deliver of funds to the clients, fixing amounts and instruments to be used. Moreover, such resolution updated the reference to the Decree which referred to tax havens (No. 1,037).

As part of a more comprehensive modification of the rules that govern the scope of supervision of CNV, derive from the enactment of the Capital Markets Law and the CNV Rules, which stablished a new regime for the public offer of securities, CNV issued a new re-arranged text of its rules. Through the CNV Rules, the CNV incorporates a new chapter of Money Laundering and Terrorist Financing including dispositions related to the fulfillment of duties to be complied by “Agentes de Negociación”, “Agentes de Liquidación y Compensación”, “Agentes de Distribución y Colocación” and “Agentes de Administración de Productos de Inversión Colectiva”, considered as obliged subject under the terms of sections 4, 5 and 22 of article 20 of Law No. 25,246. Such agents are obliged to comply with any provision arising from Law No. 25,246 and its amendments, regulations enacted by UIF, including decrees of National Executive Power with reference to the decisions adopted by the United Nations Security Council, in the fight against terrorism and to comply with the resolutions issued by the Ministry of Foreign Affairs, International Trade and Religion. Furthermore, “Agentes de Custodia de Productos de Inversión Colectiva (Sociedades Depositarias de Fondos Comunes de Inversión”); “Agentes de corretaje”, “Agentes de depósito colectivo” and listed companies with respect to contribution, irrevocable contributions or indebtedness made by a shareholder or a third person to become a shareholder in the future, are also reached by the resolution.

Those subjects must send by internet (through the online application of CNV) their tax identification number. Additionally, in case of companies, it must be informed the personal data of the “Compliance Officer” (both regular and alternate).

The CNV Rules provide that the subjects under their jurisdiction, may only take action to transactions in the scope of public offering of securities, stipulated, future or optional contracts of any nature and other instruments and financial products when made or directed by registered, domiciled or domestic subjects or those who reside in dominions, jurisdictions, territories or associated states that appear included in the list of cooperating countries provided in article 2º, subsection b) of Decree No. 589/2013.

When those subjects are not included in the referred list and, in their origin jurisdictions, are only registered intermediates of an entity subject to control and supervision of a body that fulfills similar duties to those of the CNV, the transactions shall only have effect provided that the body in their origin jurisdiction has signed a memorandum of understanding, cooperation and exchange of information with the CNV.

With the purpose of strengthening the requirements in order to grant the authorization to operate in the exchange market, some new requisites were established in connection with: (i) competence and capacity; (ii) moral integrity and honesty and (iii) solvency. Such requisites are subject to the appraisal of CNV and must be fulfilled by managers, directors, auditors and any other individual who perform duties or activities within the company.

Pursuant to Decree 360/2016 dated February 16, 2016, the Argentine government created the “National Coordination Program for Combating Money Laundering and Terrorist Financing” within the purview of the Ministry of Justice and Human Rights. Its purpose is to rearrange, coordinate and strengthen the anti-money laundering and anti-terrorist financing system at national level, in light of the actual risks that could impact the Argentine territory and the global requirements to be met under the scope of the obligations and international recommendations of the United Nations and FATF standards.

Moreover, Law No. 27,260, which introduced certain tax modifications and a new regime for residents to disclose undeclared assets, established that the UIF would now be within the purview of the Ministry of Economy and Finances.

Some other measures are set forth related to listed companies or their shareholders or beneficial owners who had been convicted or condemned in connection with money laundering and/or terrorist financing activities or appeared in the list published by the United Nation Security Council.

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   E. Taxation

United States Taxation

The following summary describes the material United States federal income tax consequences of the ownership of common shares and ADSs 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 common shares or ADSs 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:

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a bank;

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a dealer in securities or currencies;

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a financial institution;

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a regulated investment company;

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a real estate investment trust;

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an insurance company;

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a tax exempt organization;

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a person holding the common shares or ADSs as part of a hedging, integrated or conversion transaction, constructive sale or straddle;

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a trader in securities that has elected the mark-to-market method of accounting for your securities;

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a person liable for alternative minimum tax;

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a person who owns or is deemed to own 10% or more of the voting stock of our company;

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a partnership or other pass –through entity for United States federal income tax purposes; or

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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 repealed, revoked or modified so as to result in United States federal income tax consequences different from those discussed below. This summary does not contain a detailed description of all the United States federal income tax consequences to you in light of your particular circumstances and does not address the Medicare tax on net investment income, or the effects of any state, local or non-United States tax laws. 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 ADSs, and all other related agreements, will be performed in accordance with their terms.

As used herein, the term “U.S. Holder” means a beneficial owner of common shares or ADSs 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, any state thereof or the District of Columbia;

●

an estate the income of which is subject to United States federal income taxation regardless of its source; or

●

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 have the 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 common shares or ADSs, 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 common shares or ADSs, you should consult your tax advisors.

IF YOU ARE CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF COMMON SHARES OR ADSS 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.

ADSs

In general, for United States federal income tax purposes, U.S. Holders of ADSs will be treated as the owners of the underlying common shares that are represented by the ADSs. Accordingly, deposits or withdrawals of common shares by U.S. Holders for ADSs will not be subject to United States federal income tax.

Distributions on Common Shares or ADSs

Subject to the discussion under “Passive Foreign Investment Company” below, the gross amount of distributions on the common shares or ADSs (including amounts withheld to reflect Argentine withholding taxes, if any) will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under United States federal income tax principles). Such income (including withheld taxes, if any) will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of common shares, or by the Depositary, in the case of ADSs. 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 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 common shares (or ADSs representing such shares) that are readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that our ADSs (which are listed on the NASDAQ), but not our common 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 common shares that are not represented by ADSs currently meet the conditions required for these reduced tax rates. 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

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“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 common shares, or by the Depositary, in the case of ADSs, 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.

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 common shares or ADSs will be treated as income from sources outside the United States and will generally constitute passive category income. Further, in certain circumstances, if you have held ADSs or common 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 ADSs or common 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 (including amounts withheld to reflect Argentine withholding taxes, if any) 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 common shares or ADSs, and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. 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” below, upon the sale, exchange or other disposition of common shares or ADSs, 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 common shares or ADSs, 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 common shares or ADSs 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 common shares or ADSs 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

Based on the current and projected composition of our income and the valuation of our assets, including goodwill, we do not believe we were a PFIC for United States federal income tax purposes for the taxable year ending June 30, 2016, 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. In addition, this determination is based on the interpretation of certain U.S. Treasury regulations relating to rental income, which regulations are potentially subject to differing interpretation.

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 and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person), 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.

If we are a PFIC for any taxable year during which you hold common shares or ADSs 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 common shares or ADSs, 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 common shares or ADSs. 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 common shares or ADSs 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 common shares or ADSs, (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.

If we are a PFIC for any taxable year during which you hold our common shares or ADSs and any of our non-United States subsidiaries is also a PFIC, you would be treated as owning a proportionate amount (by value) of the common shares of the lower tier PFIC for purposes of the application of these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.

In addition, non-corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from us, if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.

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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 ADSs because the ADSs are listed on the NASDAQ, which constitutes a qualified exchange under the regulations, although there can be no assurance that the ADSs will be regularly traded. You should note that only the ADSs and not the common shares are listed on the NASDAQ. The common 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 ADSs or common shares would also need to be regularly traded on such exchanges in order for the ADSs or common 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 common shares or ADSs, 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 that we are a PFIC as ordinary income, rather than capital gain, the excess, if any, of the fair market value of your common shares or ADSs at the end of the taxable year over your adjusted tax basis in the common shares or ADSs and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted basis of such common shares or ADSs over their fair market value at the end of each such 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 common shares or ADSs will be adjusted to reflect any such income or loss amounts. Any gain or loss on the sale of the common shares or ADSs 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 common shares or ADSs are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation of the election. Mark-to-market inclusions and deductions will be suspended during taxable years in which we are not a PFIC, but would resume if we subsequently become a PFIC. You are urged to consult your own tax advisor about the availability of making such a mark-to-market election.

Alternatively, a United States investor that owns common shares or ADSs 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 common shares or ADSs during any year that we are a PFIC must generally file IRS Form 8621.

You should consult your own tax advisors concerning the United States federal income tax consequences of holding the common shares or ADSs if we are considered a PFIC in any taxable year.

Argentine Personal Assets Tax

Amounts paid on account of the Argentine personal assets tax, 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 common shares or ADSs and to the proceeds of sale of a common share or ADS paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. Backup withholding may apply to such payments if you fail to provide a correct taxpayer identification number or certification of 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 Internal Revenue Service.

Argentine Taxation

The following discussion is a summary of certain Argentine tax considerations associated with an investment in, ownership or disposition of, the common 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, (iv) a permanent business establishment in Argentina owned by a foreign entity and (v) 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 annual report, 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.

Income tax

Law No. 26,893, enacted on September 12, 2013 and published in the Official Gazette on September 23, 2013, introduced several amendments to Income Tax Law No. 20,628 in connection with, among others, the taxation of dividend distributions and gains derived from transfers of common shares and other securities, including the derogation of Section 78 of Decree No. 2,284/1991, which provided that foreign holders with no permanent establishment in Argentina were exempt from paying income tax on the capital gains arising from the sale or other disposition of common shares or ADSs.

On February 7, 2014, the Executive Branch issued Decree No. 2,334/13, which regulates Law No. 26,893.

The changes introduced by Law No. 26,893 are effective from the date of publication of such law in the Official Gazette and are applicable to taxable events consummated from such date onwards.

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Taxation of Dividends

Until Law No. 26,893 became effective, dividends, whether in cash, in common shares or in kind, approved by our shareholders were not subject to income tax withholding except for the application of the “Equalization Tax” described below.

From the effectiveness of Law No. 26,893, dividends are subject to an income tax withholding (the “Dividend Tax”) at a 10% rate on the amount of such dividends in respect of both Argentine and non-Argentine resident shareholders. The “Dividend Tax” has been repealed by Law No. 27,260 for dividend payments since July 22, 2016.

An income tax withholding 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 “Equalization Tax”). 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. 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.

Dividend distributions made in kind (other than cash) will be subject to the same tax rules as cash dividends. Stock dividends on fully paid common shares are not subject to Equalization Tax.

Certain tax treaties contemplate the application of a ceiling tax rate on dividends (i.e. 10% on gross dividends).

Taxation of Capital Gains

From the effectiveness of Law No. 26,893 income from sale, exchange, disposition or transfer of common shares or ADSs is subject to income tax, irrespective of the person that obtains such income, exception made of transactions made by resident individuals involving common shares and other securities that are listed on securities exchanges or markets and/or authorized to be offered to the public.

Resident individuals

Capital gains obtained by resident individuals from the sale of common shares and other securities are subject to income tax at a 15% rate on net income, unless such securities were traded in stock markets and/or have public offering authorization, in which case an exemption applies. The amendments introduced by the implementing Decree No. 2,334/13 state that the exemption includes income derived from the sale of common shares and other securities made through a stock exchange market duly authorized by the CNV.

It is not clear whether the term “includes” (as used in the implementing Decree 2,334/2013) means that the exemption only refers to sales of securities made through a stock exchange market duly authorized by the CNV or whether the implementing Decree 2,334/2013 intended to clarify that such sales were just one of the possibilities that may be covered by the exemption (in addition to publicly offering authorized securities, as provided in the Argentine Income Tax Law). Certain qualified tax authorities have publicly opined that the exemption exclusively refers to sales of securities made through a stock exchange market duly authorized by the CNV.

Losses arising from the sale, exchange or other disposition of common shares or ADSs can be applied only to offset such capital gains arising from the sale, exchange or other disposition of these securities, for a five-year carryover period.

Foreign beneficiaries

Capital gains obtained by non-Argentine individuals or non-Argentine entities from the sale, exchange or other disposition of common shares are subject to income tax, as the abovementioned exemption for common shares is not applicable to non-Argentine beneficiaries. Therefore, the gain derived from the disposition of common shares by foreign beneficiaries is subject to Argentine income tax at a 15% rate on the net capital gain or at a 13.5% rate on the gross price at the seller´s election. However there is currently no regulation under Argentine law with respect to how this election is made. When both the seller and the buyer are non-residents, the person liable to pay the tax shall be the buyer of the shares, quotas, equity interests and other securities transferred. However, as of the date of this annual report, no regulations have been issued stipulating the withholding and payment mechanism that the non-resident buyer should follow. Notwithstanding the above, based on certain tax precedents, there may be support to argue that gains obtained by a non-resident from the disposal of ADSs should be regarded as foreign source income and, therefore, not subject to Argentine income tax. As this is a controversial issue, further analysis is required.

Argentine entities

Capital gains obtained by Argentine entities (in general 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 common shares or ADSs are subject to income tax at the rate of 35%.

Losses arising from the sale, exchange or other disposition of common shares or ADSs can be applied only to offset such capital gains arising from the sale, exchange or other disposition of these securities, for a five-year carryover period.

WE RECOMMEND PROSPECTIVE INVESTORS TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES CONCERNING THE SALE OR OTHER DISPOSITIONS OF COMMON SHARES AND ADSs.

Value Added Tax

The sale, exchange, disposition, or transfer of common shares or ADSs is not subject to Value Added Tax.

Personal Assets Tax

Argentine entities, such as us, have to pay the personal assets tax corresponding to Argentine and foreign domiciled individuals and foreign domiciled entities for the holding of our shares. The applicable tax rate for fiscal year 2016 is 0.25% and is levied on the proportional net worth value (valor patrimonial proporcional), or the book value, of the shares arising from the last balance sheet of the Argentine entity calculated under Argentine GAAP. Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to seek reimbursement of such paid tax from the applicable Argentine domiciled individuals and/or foreign domiciled shareholders.

Our shareholders approved the absorption of personal asset tax by us for the years 2002 to 2015. There can be no assurance that in the future this tax will be absorbed by us.

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Tax on Minimum Notional Income (Impuesto a la Ganancia Mínima Presunta, IGMP)

Entities 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, common shares and ADSs issued by entities subject to such tax are exempt from the IGMP.

Law No. 27,260 has repealed this tax for fiscal years commenced since January 1, 2019.

Turnover Tax

The gross turnover 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 common shares and ADSs, and/or the collection of dividends at an average rate of 6%, unless an exemption is applicable. In the particular case of the City of Buenos Aires, any transaction involving common 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

Stamp tax is a local tax that is generally levied on the formal execution of onerous transactions within a certain provincial jurisdiction or outside a certain provincial jurisdiction but with effects in such jurisdiction; therefore, the rules of the relevant provincial jurisdiction should be considered for the issuance of instruments which implement onerous transactions (including issuance, subscription, placement and transfer) involving the common shares or ADSs, executed in those jurisdictions, or with effects in those jurisdictions.

Notwithstanding, for the City of Buenos Aires, any instrument related to the transfer of common shares which public offering is authorised by Comisión Nacional de Valores is exempt from this tax.

Tax on Credits and Debits in Bank Accounts

Credits to and debits from bank accounts held at Argentine financial institutions, as well as certain cash payments, are subject to this tax, which is assessed at a general rate of 0.6%. There are also increased rates of 1.2% and reduced rates of 0.075%. Owners of bank accounts subject to the general 0.6% rate may consider 34% of the tax paid upon credits to such bank accounts as a tax credit while taxpayers subject to the 1.2% rate may consider 17% of all tax paid upon credits to such bank accounts as a credit. Such amounts can be utilized as a credit for income tax or tax on presumed minimum income.

Other Taxes

There are no Argentine federal inheritance or succession taxes applicable to the ownership, transfer or disposition of our common shares or ADSs. The provinces of Buenos Aires and Entre Ríos establish a tax on free transmission of assets, including inheritance, legacies, donations, etc. Free transmission of our shares could be subject to this tax. In the case of litigation regarding the shares before a court of the City of Buenos Aires, a 3% court fee would be charged, calculated on the basis of the claim.

Treaties to Avoid Double Taxation

Argentina has entered into treaties to avoid double taxation 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 and www.sec.gov. 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.irsacp.com.ar. You may request a copy of these filings at no cost, by writing to: ir@irsacp.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

In the normal course of business, we are exposed to foreign exchange risk, interest rate risks and other price risk, primarily related to changes in exchange rates and interest rates. We manage our exposure to these risks through the use of various financial instruments, none of which are entered into for trading purposes. We have established policies and procedures governing the use of financial instruments, specifically as they relate to the type and volume of such financial instruments. For further information on our market risks, please see Note 4 to our consolidated financial statements.

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ITEM 12. Description of Securities Other than Equity Securities

  A. Debt Securities

This item is not applicable

B. Warrants and Rights

This item is not applicable

C. Other Securities

This item is not applicable

D. American Depositary Shares

The Bank of New York Mellon, as depositary for the ADSs (the “Depositary”) collects its fees for delivery directly from investors depositing common shares or surrendering ADSs for the purpose of withdrawal. The depositary also collects taxes and governmental charges from the holders of ADSs. The depositary collects these fees and charges by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees (after attempting by reasonable means to notify the holder prior to such sale).

The Depositary has agreed to reimburse or pay on our behalf, certain reasonable expenses related to our ADS program and incurred by us in connection with the program (such as NASDAQ listing fees, legal and accounting fees incurred with preparation of Form 20-F and ongoing SEC compliance and listing requirements, distribution of proxy materials, investor relations expenses, etc).

The amounts the Depositary reimbursed or paid are not perforce related to the fees collected by the depositary from ADS holders.

We agree to pay the fees, reasonable expenses and out-of-pocket charges of the depositary and those of any registrar only in accordance with agreements in writing entered into between the Depositary and us from time to time. The Depositary shall present its statement for such charges and expenses to us once every three months. The charges and expenses of the custodian are for the sole account of the Depositary.

The following charges shall be incurred by any party depositing or withdrawing common shares or by any party surrendering receipts or to whom receipts are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange regarding the receipts or deposited securities or a distribution of receipts), whichever applicable: (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of common shares generally on the share register of the Company or foreign registrar and applicable to transfers of common shares to the name of the Depositary or its nominee or the custodian or its nominee on the making of deposits or withdrawals hereunder, (3) such cable, telex and fax transmission expenses as are expressly provided in the deposit agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency (5) a fee of US$5.00 or less per 100 ADS (or portion), (6) a fee of US$0.02 or less per ADS (or portion) for any cash distribution made pursuant to the deposit agreement including, but not limited to, and (7) a fee for the distribution of securities, such fee being in an amount equal to the fee for the execution and delivery of ADS referred to above which would have been charged as a result of the deposit of such securities, but which securities are instead distributed by the Depositary to owners.

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  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. Controls and procedures

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, 2016. 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 2016.

B. Management’s Annual Report on Internal Control Over Financial Reporting

The management of IRSA Commercial Properties 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 our internal control over financial reporting as of June 30, 2016. 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 (2013). Based on this assessment and the criteria set forth in Internal Control–Integrated Framework, management concluded that, as of the end of fiscal year 2016, our internal control over the financial reporting was effective.

C. Attestation Report of the Registered Public Accounting Firm

The effectiveness of the Company´s internal control over financial reporting as of June 30, 2016, has been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina -member firm of PricewaterhouseCoopers International Limited-, an independent registered public accounting firm,  as stated in their report included herein. See “Report of Independent Registered Public Accounting Firm”.

    D. Changes in Internal Control Over Financial Reporting

During the period covered by this annual report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16. A. Audit Committee Financial Expert

In our annual ordinary shareholders’ meeting held on October 31, 2003, our audit committee´s plan was unanimously approved. Pursuant to this plan, our Board of Directors shall appoint the members of our audit committee. The Audit Committee focuses 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. Also, our board of directors may request the audit committee to render its opinion on the conditions of a related party transactions and if it´s considered adequate according to normal market conditions.

On February 5, 2016, our board of directors officially appointed Leonardo Fernández, Enrique Antonini and Marcos Barylka, 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 significant corporate experience, as of the date of this annual report, the Board of Directors has 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 has not designated a financial expert on the audit committee. We believe the designation of a financial expert is not necessary because all members of the audit committee have had significant corporate experience, with exposure to various financial and accounting matters.

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 the auditors’ independence. One of the main tasks of the Audit Committee is to give its 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 audit services and other special services that could be not included in the audit services previously mentioned.

· Take notice of any strategy proposed by of the external auditors and review it in accordance with the reality of other businesses 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;

· Evaluate the performance of external auditors and their opinion regarding the Financial Statements.

B. Code of Ethics

We have adopted a code of ethics that applies to our directors, officers and employees. Our code of ethics is posted in our website www.irsacp.com.ar. On July 25, 2005, our Code of Ethics was amended by our board of directors. The amendment was disclosed in a report on Form 6-K filed with the SEC on August 1, 2005.

If we make any substantive amendment to our code of ethics or grant any waivers, including any implicit waiver to any of its provisions, we will disclose the nature of such amendment or waiver in a report on Form 6-K or in our next annual report and we will post it on our website.

C. Principal Accountant Fees and Services.

Audit Fees

During fiscal years ended June 30, 2016 and 2015, we were billed for a total amount of Ps. 5.4 million and Ps. 3.1 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.

Audit-Related Fees

During the fiscal year ended June 30, 2016 and 2015, no such audit-related services were provided.

Tax Fees

During the fiscal years ended June 30, 2016 and 2015, no such services were provided.

All Other Fees

As of June 30, 2015, we were billed for a total amount of Ps. 2.6 million for other professional services rendered by our principal accountants. During the fiscal years ended June 30, 2015, no such services were provided.

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 common 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 2013, 2014 and 2015.

F. Change in Registrant´s Certifying Account.

This section is not applicable.

113

  G. Corporate Governance.

Compliance with NASDAQ Listing Standards on Corporate Governance

Significant differences between our corporate governance practices and U.S. companies’ practices under NASDAQ Rules:

Our corporate governance practices are governed by the applicable Argentine law; particularly, the Business Companies Law, the Capital Markets Law and the Standards of the Comisión Nacional de Valores, as well as by our bylaws. We have securities that are registered with the Securities and Exchange Commission 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).

Pursuant to NASDAQ Rule 5615(a)(3), NASDAQ-listed non-U.S. companies that are categorized as “Foreign Private Issuers” may follow home country corporate governance practices in lieu of certain of the corporate governance requirements provided in NASDAQ Rules, provided that the foreign private issuer complies with certain mandatory sections of NASDAQ Rules, discloses each requirement that it does not follow and describes the home country practice followed in lieu of such requirement. The requirements of the NASDAQ Rules and the Argentine corporate governance practices that we follow in lieu thereof are described below:

NASDAQ Standards for U.S. companies	IRSA Commercial Properties’ Corporate Practices
Rule 5250(d) - Distribution of Annual and Interim Reports.	In lieu of the requirements of Rule 5250(d), 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 theCNV and the stock exchange in which its securities are listed, within 70 calendar days of the end of the company’s fiscal year. Interim reports must be filed with theCNV and the Stock exchange in which its securities are listed within 42 calendar days of the end of each fiscal quarter. 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. 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, 22 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).
Rule 5605(b)(1) - Majority of Independent Directors.	In lieu of the requirements of Rule 4605(b)(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 us 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 CNV.
Rule 5605(b)(2) - Executive Sessions of the Board of Directors.	In lieu of the requirements of Rule 5605(b)(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 our actions under Argentine law and the conformity thereof with its by-laws.

Rule 5605(d)(B) - Compensation of Officers.	In lieu of the requirements of Rule 5605(d)(B), 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 our directors or managers.
Rule 5605(e) - Nomination of Directors.	In lieu of the requirements of Rule 5605(e), 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.
Rule 5605(c)(1) - Audit Committee Charter.	In lieu of the requirements of Rule 5605(c)(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 our 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 5605(c)(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, we have 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. In addition, we have 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 5620(c) - Quorum.	In lieu of the requirements of Rule 4350(f), we follow Argentine law and our bylaws, which distinguish between ordinary meetings and extraordinary meetings and both of them can be celebrated using teleconference technology, as long as the regulations related to accreditation, registration and quorum are complied with and the simultaneity of the shareholders and immediately of the process of verbal communication and issuance of the vote is guaranteed. The audit committee shall state the regularity of the resolutions adopted. The board of directors shall establish the rules and technical matters related to remote participation pursuant to the current rules and in conformity with the National Exchange Commission regulations. Shareholders physically present at the time and those using teleconference technologies will be taken into consideration for the quorum. In connection with ordinary meetings, a quorum consists 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 or communicated through teleconference technologies, regardless of their number, constitute a quorum. Resolutions may be adopted by an absolute majority of the votes present or communicated through teleconference technologies. 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 or communicated through teleconference technologies. In both ordinary and extraordinary meetings, decisions are adopted by an absolute majority of votes present at the meeting or communicated through teleconference technologies, except for certain fundamental matters (such as mergers and spin-offs (when we are not the surviving entity and the surviving entity is not listed on any stock exchange), anticipated liquidation, change in its domicile outside of 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 5620(b) - Solicitation of Proxies.	In lieu of the requirements of Rule 5620(b), we follow 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 Supervisory Committee, 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 5630(s) - Conflicts of Interest	In lieu of the requirements of Rule 5630(a), we follow 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. 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 our interests. 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.

H. Mine Safety Disclosures

This section is not applicable.

114

PART III

ITEM 17. Financial Statements

We have responded to Item 18 in line of responding to this Item.

ITEM 18. Financial Statements

Reference is made to pages F-1 through F-158.

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.
1.3**********	Amended and restated English translation of the bylaws.
1.4***********	Amended and restated English translation of the bylaws.
2.1*	Form of Deposit Agreement among us, 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 our 14.875% Notes due 2005.
2.5	Indenture, dated March 23, 2016, between us as Issuer, The Bank of New York Mellon 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, with respect to our US$500,000,000 Global Note Program, pursuant to which US$360,000,000 000 aggregate principal amount of our 8.750% Notes due 2023, Series No. 2, were issued.
2.6	First Supplemental Indenture, dated March 23, 2016, between us as Issuer and The Bank of New York Mellon, as Trustee, Co-Registrar, Principal Paying Agent and Transfer Agent, The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg Paying Agent and Luxembourg Transfer Agent and Banco Santander Río S.A., as Registrar, Paying Agent, Transfer Agent and Representative of the Trustee in Argentina to the Indenture, dated March 23, 2016, between us as Issuer, The Bank of New York Mellon 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, with respect to our US$500,000,000 Global Note Program, pursuant to which US$360,000,000 000 aggregate principal amount of our 8.750% Notes due 2023, Series No. 2, were issued.
4.1**	Agreement for the exchange of Corporate Service between us, IRSA and Cresud dated June 30, 2004.
4.2****	English translation of the Amendment to the Agreement for the exchange of Corporate Service between us, IRSA and Cresud dated August 23, 2007
4.3*****	English translation of the Second Agreement for the Implementation of the Amendment to the Corporate Services Master Agreement, dated August 14, 2008.
4.4******	English translation of the Third Agreement for the Implementation of the Amendment to the Corporate Services Master Agreement, dated November 27, 2009.
4.5*******	English translation of the Amendment to the Agreement for the exchange of Corporate Service between us, IRSA and Cresud, dated March 12, 2010.
4.6********	English translation of the Amendment to the Agreement for the exchange of Corporate Service between us, IRSA and Cresud, dated July 11, 2011.
4.7*********	English translation of the Fifth Agreement for the implementation of Amendments to the Corporate Services Master Agreement, October 15, 2012
4.8**********	English translation of the Sixth Agreement for the Implementation of the Amendment to the Corporate Services Master Agreement dated November 12, 2013.
4.9**********	English translation of the Second Amendment to the Exchange of Operating Services Agreement between the Company, Cresud and Alto Palermo dated February 24, 2014.
4.10***********	English translation of the Seventh Agreement for the Implementation of the Amendment to the Corporate Services Master Agreement dated February 18, 2015.
4.11	English translation of the Eighth Agreement for the Implementation of the Amendment to the Corporate Services Master Agreement dated November 12, 2015.
8.1	List of Subsidiaries
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.
****	Incorporated herein by reference to the annual report on Form 20-F (File No. 128 0-30982) filed with the SEC on December 27, 2007.
*****	Incorporated herein by reference to the annual report on Form 20-F (File No. 128 0-30982) filed with the SEC on December 30, 2008.
******	Incorporated herein by reference to the annual report on Form 20-F (File No. 1280-30982) filed with the SEC on December 30, 2009.
*******	Incorporated herein by reference to the annual report on Form 20-F (File No. 1280-30982) filed with the SEC on December 30, 2010.
********	Incorporated herein by reference to the annual report on Form 20-F (File No. 1280-30982) filed with the SEC on December 28, 2011.
*********	Incorporated herein by reference to the annual report on Form 20-F (File No. 1280-30982) filed with the SEC on October 26, 2012.
**********	Incorporated herein by reference to the annual report on Form 20-F (File No. 1280-30982) filed with the SEC on October 31, 2014.
***********	Incorporated herein by reference to the annual report on Form 20-F (File No. 1280-30982) filed with the SEC on October 23, 2015.

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.

	IRSA Propiedades Comerciales S.A.
Date: October 21, 2016	By:	/s/ Matias I. Gaivironsky
		Name Matias I. Gaivironsky
		Title Chief Financial and Administrative Officer

115

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

IRSA PROPIEDADES COMERCIALES S.A.
	Page
Report of Independent Registered Public Accounting Firm.......................................	F - 2
Consolidated Statements of Financial Position as of June 30, 2016 and 2015...........	F - 3
Consolidated Statements of Comprehensive Income for the fiscal years ended June 30, 2016, 2015 and 2014…………………………………………………………….	F - 4
Consolidated Statements of Changes in Shareholders’ Equity for the fiscal years ended June 30, 2016, 2015 and 2014....................................................................	F - 5
Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2016, 2015 and 2014.............................................................................................................	F - 8
Notes to the Consolidated Financial Statements.........................................................	F - 9

 

F - 1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

IRSA Propiedades Comerciales S.A.

In our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of comprehensive income, of changes in shareholders´ equity and of cash flows present fairly, in all material respects, the financial position of IRSA Propiedades Comerciales S.A. and its subsidiaries at June 30, 2016 and June 30, 2015, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2016 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2016, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in accompanying Management’s Annual Report on Internal Control Over Financial Reporting under Item 15 ..

Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s 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 generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

	PRICE WATERHOUSE & Co. S.R.L.
Buenos Aires, Argentina	By:	/s/ Eduardo A. Loiácono
		Eduardo A. Loiácono
		Partner
October 21, 2016

F - 2

IRSA PROPIEDADES COMERCIALES S.A.

Consolidated Statements of Financial Position

as of June 30, 2016 and 2015

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Note	06.30.16	06.30.15
ASSETS
Non-current assets
Investment properties	10	3,908,178	4,156,025
Property, plant and equipment	11	116,111	109,394
Trading properties	12	14,189	8,567
Intangible assets	13	67,139	69,015
Investments in associates and joint ventures	8,9	229,695	181,918
Deferred income tax assets	26	59,781	51,631
Income tax credit		249	249
Trade and other receivables	16	488,198	90,431
Investments in financial assets	17	312,425	253,546
Total non-current assets		5,195,965	4,920,776
Current assets
Trading properties	12	-	3,154
Inventories	14	18,202	15,347
Income tax credit		345,815	1,635
Trade and other receivables	16	1,934,134	808,016
Investments in financial assets	17	1,772,323	292,320
Cash and cash equivalents	19	33,049	303,499
Total current assets		4,103,523	1,423,971
TOTAL ASSETS		9,299,488	6,344,747
SHAREHOLDERS’ EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital		126,014	126,014
Inflation adjustment of share capital		69,381	69,381
Share premium		444,226	444,226
Legal reserve		39,078	39,078
Special reserve		15,802	15,802
Changes in non-controlling interest		(19,770)	(19,770)
Retained earnings		816,600	283,582
Total capital and reserves attributable to equity holders of the parent		1,491,331	958,313
Non-controlling interest		180,784	184,834
TOTAL SHAREHOLDERS’ EQUITY		1,672,115	1,143,147
LIABILITIES
Non-current Liabilities
Trade and other payables	20	326,069	247,812
Borrowings	23	5,266,576	3,322,488
Deferred income tax liabilities	26	186,368	107,102
Provisions	22	26,286	9,392
Total non-current liabilities		5,805,299	3,686,794
Current liabilities
Trade and other payables	20	963,931	802,151
Income tax liabilities		114,624	123,077
Payroll and social security liabilities	21	107,382	94,693
Borrowings	23	626,492	471,255
Derivative financial instruments	18	2,857	-
Provisions	22	6,788	23,630
Total current liabilities		1,822,074	1,514,806
TOTAL LIABILITIES		7,627,373	5,201,600
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES		9,299,488	6,344,747

The accompanying notes are an integral part of these Consolidated Financial Statements.

F - 3

IRSA PROPIEDADES COMERCIALES S.A.

Consolidated Statements of Comprehensive Income

for the fiscal years ended June 30, 2016, 2015 and 2014

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Note	06.30.16	06.30.15	06.30.14
Income from sales, rents and services	29	2,674,873	1,924,176	1,445,190
Income from expenses and collective promotion fund	29	1,183,627	833,905	667,824
Costs	30	(1,680,192)	(1,183,068)	(956,238)
Gross profit		2,178,308	1,575,013	1,156,776
Gain from disposal of investment properties	10	175,963	126,686	308
General and administrative expenses	31	(218,142)	(138,599)	(101,445)
Selling expenses	31	(162,221)	(117,683)	(76,854)
Other operating results, net	33	(39,319)	(97,042)	(27,387)
Profit from operations		1,934,589	1,348,375	951,398
Share of (loss) / profit of associates and joint ventures	8,9	(17,334)	14,585	(13,535)
Profit from operations before financing and taxation		1,917,255	1,362,960	937,863
Finance income……………………………………………………	34	512,555	105,138	124,495
Finance cost	34	(2,938,476)	(603,883)	(499,901)
Other financial results	34	1,714,702	47,215	74,730
Financial results, net	34	(711,219)	(451,530)	(300,676)
Profit before income tax		1,206,036	911,430	637,187
Income tax expense	26	(294,336)	(290,815)	(226,700)
Profit for the year		911,700	620,615	410,487
Total comprehensive income for the year		911,700	620,615	410,487
Attributable to:
Equity holders of the parent		816,598	581,269	377,003
Non-controlling interest		95,102	39,346	33,484
Profit per share attributable to equity holders of the parent during the year (Note 35):
Basic		0.65	0.46	0.30
Diluted		0.65	0.46	0.30

The accompanying notes are an integral part of these Consolidated Financial Statements.

F - 4

 

IRSA PROPIEDADES COMERCIALES S.A.

Consolidated Statements of Changes in Shareholders’ equity

for the fiscal years ended June 30, 2016, 2015 and 2014

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Attributable to equity holders of the parent
	Share capital	Inflation adjustment of share capital	Share premium	Legal  Reserve	Special reserve (1)	Changes in non-controlling interest	Retained earnings	Subtotal	Non- controlling interest	Total Shareholders' equity
Balance at June 30, 2015	126,014	69,381	444,226	39,078	15,802	(19,770)	283,582	958,313	184,834	1,143,147
Comprehensive income for the year	-	-	-	-	-	-	816,598	816,598	95,102	911,700
Dividends distribution – Shareholders’ meeting as of October 30, 2015 (Note 28)	-	-	-	-	-	-	(283,580)	(283,580)	-	(283,580)
Dividends distribution to non-controlling interest	-	-	-	-	-	-	-	-	(99,029)	(99,029)
Reduction of capital contribution of non-controlling interest	-	-	-	-	-	-	-	-	(123)	(123)
Balance at June 30, 2016	126,014	69,381	444,226	39,078	15,802	(19,770)	816,600	1,491,331	180,784	1,672,115

(1)Related to CNV General Resolution N° 609/12. See Note 28.

The accompanying notes are an integral part of these Consolidated Financial Statements.

F - 5

IRSA PROPIEDADES COMERCIALES S.A.

Consolidated Statements of Changes in Shareholders’ equity

for the fiscal years ended June 30, 2016, 2015 and 2014

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Attributable to equity holders of the parent
	Share capital	Inflation adjustment of share capital	Share premium	Legal  Reserve	Special reserve (1)	Changes in non-controlling interest	Retained earnings	Subtotal	Non- controlling interest	Total Shareholders' equity
Balance at June 30, 2014	126,014	69,381	444,226	39,078	15,802	(19,707)	138,693	813,487	192,102	1,005,589
Comprehensive income for the year	-	-	-	-	-	-	581,269	581,269	39,346	620,615
Dividends distribution – Shareholders’ meeting as of October 31, 2014 (Note 28)	-	-	-	-	-	-	(138,693)	(138,693)	-	(138,693)
Advanced dividends distribution – Shareholders’ meeting as of March 26, 2015 (Note 28)	-	-	-	-	-	-	(298,500)	(298,500)	-	(298,500)
Reimbursement of expired dividends (Note 28)	-	-	-	-	-	-	813	813	-	813
Capital contribution of non-controlling interest	-	-	-	-	-	-	-	-	122	122
Dividends distribution to non-controlling interest	-	-	-	-	-	-	-	-	(46,719)	(46,719)
Changes in non-controlling interest	-	-	-	-	-	(63)	-	(63)	(17)	(80)
Balance at June 30, 2015	126,014	69,381	444,226	39,078	15,802	(19,770)	283,582	958,313	184,834	1,143,147

(1)

Related to CNV General Resolution N° 609/12. See Note 28.

 The accompanying notes are an integral part of these Consolidated Financial Statements.

F - 6

IRSA PROPIEDADES COMERCIALES S.A.

Consolidated Statements of Changes in Shareholders’ equity

for the fiscal years ended June 30, 2016, 2015 and 2014

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Attributable to equity holders of the parent
	Share capital	Inflation adjustment of share capital	Share premium	Reserve for share-based compensation	Legal reserve	Reserve for new developments	Special reserve (1)	Changes in non-controlling interest	Retained earnings	Subtotal	Non- controlling interest	Total Shareholders' equity
Balance at June 30, 2013	126,014	69,381	444,226	6,607	39,074	3,302	15,802	(19,707)	164,224	848,923	161,892	1,010,815
Comprehensive income for the year	-	-	-	-	-	-	-	-	377,003	377,003	33,484	410,487
Distribution to legal reserve – Shareholders’ meeting as of October 31, 2013	-	-	-	-	4	-	-	-	(4)	-	-	-
Reversal of reserve for new developments – Shareholders’ meeting as of October 31, 2013……....................................	-	-	-	-	-	(3,302)	-	-	3,302	-	-	-
Dividends distribution – Shareholders’ meeting as of October 31, 2013 (Note 28)	-	-	-	-	-	-	-	-	(167,522)	(167,522)	-	(167,522)
Reimbursement of expired dividends (Note 28)	-	-	-	-	-	-	-	-	1,690	1,690	-	1,690
Reserve for share-based compensation (Note 25)……	-	-	-	(6,607)	-	-	-	-	-	(6,607)	-	(6,607)
Dividends distribution to non-controlling interest	-	-	-	-	-	-	-	-	-	-	(3,274)	(3,274)
Advanced dividends distribution –Shareholders’ meeting as of June 13, 2014 (Note 28)	-	-	-	-	-	-	-	-	(240,000)	(240,000)	-	(240,000)
Balance at June 30, 2014	126,014	69,381	444,226	-	39,078	-	15,802	(19,707)	138,693	813,487	192,102	1,005,589

(1)

Related to CNV General Resolution N° 609/12. See Note 28.

The accompanying notes are an integral part of these Consolidated Financial Statements.

F - 7

IRSA PROPIEDADES COMERCIALES S.A.

Consolidated Statements of Cash Flows

for the fiscal years ended June 30, 2016, 2015 and 2014

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Note	06.30.16	06.30.15	06. 30.14
Operating activities:
Cash generated from operations	19	1,589,228	1,483,867	1,161,870
Income tax paid		(575,855)	(226,290)	(240,406)
Net cash generated from operating activities		1,013,373	1,257,577	921,464
Investing activities:
Acquisition and capital contribution of associates	9	(71,000)	(31,985)	(13,040)
Sale of equity interest in associates		-	19,140	-
Acquisition of investment properties from parent company		-	(89,789)	-
Capital contributions in joint ventures	8	(2,000)	(6,600)	(1,222)
Acquisition of investment properties	10	(167,666)	(248,846)	(244,824)
Proceeds from sale of investment properties		357,244	365,189	493
Proceed from barters		-	124	-
Acquisition of property, plant and equipment	11	(13,747)	(26,152)	(11,278)
Advance payments		(6,596)	(13,995)	(29,647)
Acquisition of intangible assets	13	(1,583)	(467)	(2,165)
Increase in financial assets		(9,916,383)	(1,554,810)	(1,285,519)
Decrease in financial assets		8,453,545	1,033,306	1,296,369
Loans granted to related parties		(533,525)	(38,507)	(268,459)
Loans repayment received from related parties		-	76,817	29,110
Collection of financial assets interests		37,156	102,344	12,330
Net cash used in investing activities		(1,864,555)	(414,231)	(517,852)
Financing activities:
Issuance of non-convertible notes		5,411,199	-	-
Payment of non-convertible notes		(1,686,393)	-	-
Acquisition of non-controlling interest		-	(80)	-
Borrowings obtained		1,043,553	329,763	365,367
Borrowings obtained from related parties		-	9,000	50
Capital contribution of non-controlling interest		-	121	-
Repayment of borrowings		(1,328,439)	(509,605)	(348,215)
Repayment of borrowings to related parties		(3,715,480)	-	-
Payments of financial leasing		(2,678)	(2,430)	(1,871)
Proceeds from derivative financial instruments		1,831,621	102	61,732
Payment of derivative financial instruments		(580,828)	(16,054)	(37,959)
Payment of seller financing		-	(105,861)	(1,640)
Dividends paid	28	(37,019)	(148,515)	(405,940)
Interest paid		(278,279)	(213,438)	(140,987)
Dividends paid to non-controlling interest		(77,587)	(3,946)	(7,443)
Net cash generated from (used in) financing activities		579,670	(660,943)	(516,906)
Net (Decrease) Increase in cash and cash equivalents		(271,512)	182,403	(113,294)
Cash and cash equivalents at beginning of year	19	303,499	116,706	223,385
Foreign exchange gain on cash and cash equivalents		1,062	4,390	6,615
Cash and cash equivalents at end of year	19	33,049	303,499	116,706

The accompanying notes are an integral part of these Consolidated Financial Statement.

F - 8

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

1.

Group´s business and general information

IRSA PROPIEDADES COMERCIALES S.A. (formerly Alto Palermo S.A., “IRSA Propiedades Comerciales” or “the Company”) is an Argentine real estate company mainly engaged in holding, leasing, managing, developing, operating and acquiring shopping malls and office buildings and holds a predominant position within the argentine market. IRSA Propiedades Comerciales was incorporated in 1889 under the name SAMAP and until 1984 operated the major fresh foodstuff market in the Autonomous City of Buenos Aires. The core asset was the historical building of Mercado de Abasto, which served as seat of the market from 1889 until 1984, when a sizable part of its operations was interrupted.

Since the Company was acquired by IRSA Inversiones y Representaciones Sociedad Anónima (hereinafter, IRSA) in 1994, it have been growing through a series of acquisitions and development projects that resulted in a corporate reorganization giving rise to the previous organizational structure and company name Alto Palermo S.A..

On December 22, 2014, the Company acquired from IRSA, 83,789 square meters of its premium office portfolio including the buildings República, Bouchard 710, Della Paolera 265, Intercontinental Plaza and Suipacha 652 and the “Intercontinental II” plot of land in order to consolidate a vehicle which main corporate purpose is to develop and operate commercial properties in Argentina. Furthermore, the consolidation of different assets of the Company was supplemented by launching the brand “IRSA Propiedades Comerciales” and by the change of corporate name of ALTO PALERMO S.A. (APSA) for IRSA PROPIEDADES COMERCIALES S.A. as continuation entity, such change of corporate name having been approved by the Special General Shareholders’ Meeting held on February 5, 2015.

On December 18, 2014 the Group inaugurated "Distrito Arcos" Shopping Center. Distrito Arcos, situated in Palermo neighborhood, in the Autonomous City of Buenos Aires, is a premium outlet stretching over a gross rental area of roughly 11,170 square meters, housing 60 stores and 37 stands.

Additionally, on March 17, 2015, the Group opened “Alto Comahue” Shopping Center in the city of Neuquén, in the Argentine Patagonia. Alto Comahue extends over a total area of 35,000 square meters and 9,889.6 square meters of gross rental space, with nearly 1,000 parking spaces – indoor and outdoor – and a big entertaining space including 6 movie theaters and a thematic restaurant that will begin to operate in the coming months. The building is composed of three levels: the underground level housing the parking and service area; the ground level, containing 5,100 square meters of shopping offers, and the first level, containing 720 square meters of restaurant space and 2,700 square meters of stores. The project is part of a mixed use complex that also homes a supermarket in operation and 2 additional plots of land. One of them is intended for the construction of a hotel and the other one – 18,000 square meters, owned by the Company – is intended for future housing development.

F - 9

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

1.

Group´s business and general information (Continued)

As of the end of these financial statements, the Company held 16 shopping centers, operating 333,155 square meters in 15 of them, 79,048 square meters in 6 premium offices and 1 extensive land reserve for future commercial developments; we are operators and hold a majority interest in a portfolio of fourteen shopping centers in Argentina, seven of which are located in the Autonomous City of Buenos Aires (Abasto, Alcorta Shopping, Alto Palermo, Patio Bullrich, Buenos Aires Design, Dot Baires Shopping and Distrito Arcos, inaugurated on December 18, 2014), two in Buenos Aires province (Alto Avellaneda and Soleil) and the rest are situated in different provinces (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera in the City of Córdoba and Alto Comahue in the City of Neuquén, inaugurated on March 17, 2015 and operates, through a joint venture La Ribera Shopping, in the City of Santa Fe) and is owner of the historic building of the Patio Olmos Shopping Center, in the province of Córdoba, operated by a third party.

The Company’s stocks are traded in the Buenos Aires Stock Exchange (MERVAL: IRCP) and in United States of America’s NASDAQ (NASDAQ: IRCP).

IRSA Propiedades Comerciales and its subsidiaries are hereinafter referred to jointly as "the Group". See Notes 2.3 and 6 for further description of the Group´s companies and segments. Our main shareholder is IRSA.

These Consolidated Financial Statements have been approved by the Board of Directors to be issued on August 31, 2016.

2.

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1.

Basis of preparation of the consolidated financial statements

(a)

Basis of preparation

These Consolidated Financial Statements have been prepared in accordance with and in compliance with International Financial Reporting Standards (“IFRS”), issued by International Accounting Standards Board (“IASB”) and interpretations from International Financial Reporting Interpretation Committee (“CINIIF” as per its Spanish acronym) (“IFRIC” as per its English acronym and known before as the Standards Interpretation Committee “SIC” as per its English acronym). All IFRS applicable as of the date of these consolidated financial statements have been applied.

F - 10

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

Under  IAS 29 “Financial Reporting in Hyperinflationary Economies”, the financial statements of an entity whose functional currency belongs to a hyperinflationary economy, regardless of whether they apply historic cost or current cost methods, should be stated at the current unit of measure on the balance sheet date. For such purpose, in general, inflation is to be computed in non-monetary items from the acquisition or revaluation date, as applicable. In order to determine whether an economy is to be considered hyperinflationary, the standard lists a set of factors to be taken into account, including an accumulated inflation rate near or above 100% over a three year period.

 As of June 30, 2016, it is not possible to compute the accumulated inflation rate for the three year period ending on that date based on the official statistics of the INDEC (Argentina Statistics Office), because in October 2015, the INDEC ceased to compute the Wholesale Domestic Price Index, and started to compute it again as from January 2016.

As of the date of these Consolidated Financial Statements, the Argentine peso does not meet the conditions to be treated as the currency of a hyperinflationary economy, pursuant to the guidelines set forth by IAS 29. Therefore, these consolidated financial statements have not been restated in constant currency.

However, over the last years, certain macroeconomic variables affecting the Company’s business, such as payroll costs, input prices and service rates, have experience significant annual changes. This factor should be taken into consideration in assessing and interpreting the financial condition and results of operations of the Company in these consolidated financial statements.

(b)

Current and non-current classification

The Group presents current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position according with the operating cycle of each activity.

The operating cycle for activities related to the Group’s investment property is 12 months. Therefore, current assets and current liabilities include the assets and liabilities that are either realized or settled within 12 months from the end of the fiscal year. The operating cycle of activities related to the Group’s investment property for sale depends on each specific project, and thus cannot be clearly defined. In general, assets and liabilities classified as investment property for sale are realized or discharged over many fiscal years, ranging between one and three years or, in exceptional cases, over a longer period. As a result, and for purposes of classification, the Group has assumed the operating cycle of investment property for sale to be 12 months.

F - 11

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

All other assets and liabilities are classified as non-current. Current and deferred tax assets and liabilities (income tax payable), are presented separately from each other and from other assets and liabilities as current and non-current, respectively.

(c)

Presentation currency

The consolidated financial statements are presented in thousands of Argentine Pesos. Unless otherwise stated or the context otherwise requires, references to ‘Peso amounts’ or ‘Ps.’, are to Argentine Pesos, and references to ‘USD’ or ‘US dollars’ are to United States dollars.

(d)

End of the fiscal year

The fiscal year begins on July 1 and ends on June 30 every year.

(e)

Accounting conventions

The consolidated financial statements have been prepared under the deemed cost convention, as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and share-based compensation at fair value.

(f)

Cash flows

The Group reports cash flows from operating activities using the indirect method. Interest paid is presented within financing cash flows. Interest received is presented within investing activities. The acquisitions and disposals of investment properties are disclosed as cash flows from investing activities because this most appropriately reflects the Group’s business activities. Cash flows in respect to trading properties are disclosed as cash flows from operating activities because these assets are sold in the ordinary course of business.

(g)

Use of estimates

The preparation of financial statements at a certain date requires the Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these financial statements. The most significant judgments made by Management in applying the Group’s accounting policies and the major estimates and significant judgments are described in Note 5.

F - 12

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

2.2.

New accounting standards

The following standards, amendments and interpretations have been published by the IASB and by the IFRIC. Below we outline the standards, amendments and interpretations that may potentially have an impact on the Group at the time of application.

IFRS 16 "Leases". Will supersede IAS 17 currently in force (and associated interpretations) and its scope includes all leases, with a few specific exceptions. Under the new standard, lessees are required to account for leases under one single model in the balance sheet that is similar to the one used to account for financial leases under IAS 17. There are two exceptions to this rule: to recognize the lease of low-cost assets (for example, personal computers) and short-term leases (for instance, leases for a 12 month or shorter term). As regards the lease commencement date, the lessee shall recognize the obligation to make rental payments (for instance, leases payable) and an asset that represents the right to use the leased asset during the term of the lease agreement (rights of use). There is almost no changes to lessor accounting. Becomes effective for fiscal years beginning on January 1, 2019, that is, in the case of the Group for the fiscal year ended on June 30, 2020. It may be applied earlier if IFRS 15 is also adopted. The Group is currently assessing the potential impact of the amendments on its financial statements.

Amendments to IAS 7 "Disclosure initiative". Amendments provide that the entity shall disclose information so that users of the financial statements may assess the changes in liabilities resulting from financing activities, including both cash-flow and non-cash-flow derivatives. Becomes effective for fiscal years beginning on January 1, 2017, that is, in the case of the Group for the fiscal year ended on June 30, 2018. Comparative information for prior fiscal years is not mandatory. It may be applied earlier. The Group is currently assessing the potential impact of the amendments on its financial statements.

Amendments to IAS 12 "Recognition of deferred tax assets for unrealized losses". The amendments clarify the accounting of deferred income tax assets in the case of unrealized losses on instruments measured at fair value. Becomes effective for fiscal years beginning on January 1, 2017, that is, in the case of the Group for the fiscal year ended on June 30, 2018. It may be applied earlier. The Group is currently assessing the potential impact of the amendments on its financial statements.

F - 13

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

Amendments to IAS 1 "Presentation of Financial Statements". The amendments establish guidance on grouping significant items, provides for the disclosure of relevant information for certain items and disclosures that are to be included in relation to accounting policies adopted by each entity and other additional disclosures in financial statements. Becomes effective for fiscal years beginning on January 1, 2016, that is, in the case of the Group for the fiscal year ended on June 30, 2017. It may be applied earlier. The Group is currently assessing the potential impact of the amendments on its financial statements.

Cycle of annual improvements 2014. IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”: A new classification category has been established for these assets and the amendment adds guidance on how to treat changes to disposal plans for those assets classified as held for sale. Becomes effective for fiscal years beginning on January 1, 2016, that is, in the case of the Group for the fiscal year ended on June 30, 2017. The Group is currently assessing the potential impact of the amendments on its financial statements.

Cycle of annual improvements 2014. IFRS 7 “Financial Instruments: Disclosures”: It clarifies that amendments established in December 2011 on offsetting financial assets and liabilities, and amendments established in September 2014 will be of retroactive application to annual fiscal years as from January 1, 2013, in the first case, and January 1, 2016 in the second case. In addition, it sets forth the specific disclosure requirements related to servicing contracts related to financial assets transferred. Becomes effective for fiscal years beginning on January 1, 2016, that is, in the case of the Group for the fiscal year ended on June 30, 2017. The Group is currently assessing the potential impact of the amendments on its financial statements.

IAS 27 Revised “Separate financial statements”. On August 12, 2014 the IASB has released an amendment to IAS 27 “Equity method in separate financial statements”. The amendment reinstates the equity method as an option to account for investments in subsidiaries, joint ventures and associates in separate financial statements. The amendment becomes effective for fiscal years beginning on or after January 1, 2016, that is, in the case of the Group for the fiscal year ended on June 30, 2017. It may be applied earlier. The Group is currently assessing the potential impact of the amendments on its financial statements.

IFRS 9 “Financial Instruments”. This version adds a new impairment model based on expected losses and introduces some minor amendments to the classification and measurement of financial assets. The new standard replaces all previous versions of IFRS 9 and becomes effective for fiscal years starting on or after January 1, 2018 that is, in the case of the Group for financial statements ended on June 30, 2019. The Group is currently assessing the potential impact of the amendments on its financial statements.

F - 14

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

IFRS 15 “Revenue from contracts with customers”. Replaces IAS 11 “Construction Contracts”, IAS 18 “Revenue”, IFRIC 13 “Customer Loyalty Programs”, IFRIC 15 “Agreements for the Construction of Real Estate”, IFRIC 18 “Transfer of Assets from Customers” and SIC-31 “Revenue – Barter Transactions Involving Advertising Services”. Provides the new revenue recognition model derived from contracts with customers. The core principle underlying the model is satisfaction of obligations assumed with customers. Applies to all contracts with customers, other than those covered by other IFRSs, such as leases, insurance and financial instruments contracts. The standard does not address recognition of interest or dividend income. IFRS 15 becomes effective for all fiscal years beginning as from January 1, 2017, that is financial statements ending June 30, 2018, and may be adopted earlier. Application is retroactive. As of the date of these Consolidated Financial Statements, the Group is assessing the impact that this standard shall have on its financial position and the results of operations.

Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”. The amendments provide further guidance on the calculation of depreciation and amortization. Becomes effective for fiscal years beginning on or after January 1, 2016; hence, in the case of the Group, they become effective for the fiscal year ended June 30, 2017. It may be applied earlier. The Group is currently assessing the potential impact of the amendments on its financial statements.

Modification to IFRS 11 “Joint Arrangements”. The amendments clarify accounting for acquisitions where the business involves joint operations. Amendment becomes effective for fiscal years beginning on or after January 1, 2016; hence, in the case of the Group, they become effective for the fiscal year ended June 30, 2017. It may be applied earlier. The Group is currently assessing the potential impact of the amendments on its financial statements.

On the issue date of these financial statements there are no other standards, amendments and interpretations issued by the IASB and IFRIC that are yet to become effective and that are expected to have a material effect on the Group.

2.3.

Scope of consolidation

(a)

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group also analyze whether there is control when it does not hold more than 50% of the voting rights of an entity, but does have capacity to define its relevant activities because of de-facto control.

F - 15

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

There may be de-facto control where the relative size of voting rights held by the Group in an entity in relation to the size and dilution of other shareholders gives the Group power to define the relevant activities of such entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

IFRS 3 “Business Combination” allows up to 12 months to finalize the accounting for a business combination. Where the accounting for a business combination is not complete by the end of the reporting period in which the business combination occurred, the Group reports provisional amounts.

The Group has elected to recognize acquisition of assets or group of assets carried out between entities under common control who also qualify as “Business Combination” according to IFRS 3, using acquisition method.

The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquirer’s net assets. The Group chooses the method to be used on case by case bases.

The excess of the sum of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the income statement as “Bargain purchase gains”.

Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group. The majority of subsidiaries have the same year-end as the Group’s, however, a small number of subsidiaries have non-coterminous year-ends. In these circumstances, special-purpose financial statements prepared as of June 30 of each year are used for purposes of the Group consolidation.

F - 16

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

The Group conducts its business through several operating and holding subsidiaries. Unless otherwise stated, the subsidiaries listed below have share capital consisting solely of ordinary shares, which are held directly by the Group and the proportion of ownership interests held equals to the voting rights held by the Group. The country of incorporation or registration is also their place of business. Subsidiaries are shown in alphabetical order.

			June 30, 2016		June 30, 2015		June 30, 2014
Name of the entity	Place of business / Country of incorporation	Principal activities	% of ownership interest held by the Group	% of ownership interest held by Non-controlling interest	% of ownership interest held by the Group	% of ownership interest held by Non-controlling interest	% of ownership interest held by the Group	% of ownership interest held by Non-controlling interest
Direct equity interest of IRSA Propiedades Comerciales S.A.:
Arcos del Gourmet S.A.	Argentina	Real estate	90%	10%	90%	10%	90%	10%
Emprendimiento Recoleta S.A.	Argentina	Real estate	53.68%	46.32%	53.68%	46.32%	53.68%	46.32%
Fibesa S.A.	Argentina	Real estate	100%	-	100%	-	100%	-
Panamerican Mall S.A.	Argentina	Real estate	80%	20%	80%	20%	80%	20%
Shopping Neuquén S.A.	Argentina	Real estate	99.14%	0.86%	99.14%	0.86%	99.07%	0.93%
Torodur S.A.	Uruguay	Investment	100%	-	100%	-	100%	-
Conil S.A.	Argentina	Real estate	-	-	-	-	100%	-

The Group takes into account both quantitative and qualitative aspects in order to determine which non-controlling interests in subsidiaries are considered significant. In quantitative terms, the Group considers significant those investments that individually represent at least 20% of the total equity attributable to non-controlling interest in subsidiaries at the each year end. Therefore, in qualitative terms, are considered, among other factors, the specific risks to which each company is exposed to, their returns and the importance that each of them has for the Group.

Summarized financial information on subsidiaries with material non-controlling interests and other information are included in Note 7.

(b)

Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is to say, as transactions with the owners in their capacity as owners. The amount recorded is the difference between the fair value of any consideration paid and/or collected and the relevant share acquired and/or transferred of the carrying value of net assets of the subsidiary.

F - 17

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

(c)

Disposal of subsidiaries with loss of control

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

(d)

Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and less than 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognized in the income statement, and its share of post- acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to “share of profit / (loss) of an associate and joint ventures” in the statement of comprehensive income.

F - 18

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognized in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

For purposes of including the earnings of associates by applying the equity method, the Group uses financial statements of the associates as of the same date or a or a later date, provided the difference between the reporting date of the associate and that of the Group cannot be longer than three months. In these cases, the Group assesses and adjusts the results of such associates for material transactions or other material events occurred during the interim period.

The Group takes into account both quantitative and qualitative aspects in order to determine which non-controlling interests in associates are considered significant.In quantitative terms, the investments that individually represent at least 20% of equity in earnings of joint ventures in the consolidated income statement and, simultaneously, at least 20% of all investments in joint ventures total equity attributable to non-controlling interest in associates at the each year end are considered significant. Therefore, in qualitative terms, are considered, among other factors, the specific risks to which each company is exposed to, their returns and the importance that each of them has for the Group.

Summarized financial information and other information for associates are included in Note 9.

(e)

Joint arrangements

Joint arrangements are arrangements of which the Group and other party or parties have joint control bound by a contractual arrangement. Under IFRS 11, investments in joint arrangements are classified as either joint ventures or joint operations depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.

Investments in joint ventures are accounted for under the equity method.

F - 19

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

Under the equity method of accounting, interests in joint ventures are initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition of profits or losses and movements in other comprehensive income in the income statement and in other comprehensive income respectively.

When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

The Group determines at each reporting date whether there is any objective evidence that the investment in the joint ventures is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognizes the amount adjacent to ‘share of profit/ (loss) of an associate and joint ventures’ in the statement of comprehensive income.

Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

The Group takes into account both quantitative and qualitative aspects in order to determine which non-controlling interests in joint ventures are considered significant.In quantitative terms, the investments that individually represent at least 20% of equity in earnings of joint ventures in the consolidated income statement and, simultaneously, at least 20% the total equity attributable to non-controlling interest in joint ventures at the each year end are considered significant. Therefore, in qualitative terms, are considered, among other factors, the specific risks to which each company is exposed to, their returns and the importance that each of them has for the Group.

Summarized financial information and other information for significant joint ventures are included in Note 8.

2.4.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) the Group´s Executive Committee. The CODM is responsible for allocating resources and assessing performance of the operating segments. The operating segments are described in Note 6.

F - 20

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

2.5.

Foreign currency translation

(a)

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Argentine Pesos, which is the Group’s presentation currency.

(b)

Transactions and balances in foreign currency

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the profit or loss for the year.

Foreign exchange gains and losses are presented in the statement of comprehensive income within finance income and finance costs, as appropriate, unless they are capitalized as explained in Note 2.19..

2.6.

Investment properties

Investment properties are those properties owned by the Group that are held either to earn long-term rental income or for capital appreciation and that are not occupied by The Group for its own operations. Properties occupied by associates or joint ventures are accounted for as investment properties in the consolidated financial statements. Investment property also includes properties that is being constructed or developed for future use as investment property. The Group also classifies land whose future use has not been determined yet as investment property.

When a property is partially owner-occupied, with the rest being held for rental income or capital appreciation, the Group accounts for the portions separately. The portion that is owner-occupied is accounted for as property, plant and equipment under IAS 16 “Property, Plant and Equipment” and the portion that is held for rental income or capital appreciation, or both, is treated as investment property under IAS 40 “Investment Property”.

The Group’s investment properties primarily comprise the Group’s portfolio of shopping centers and offices, certain property under development and other undeveloped land.

F - 21

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

Investment property is measured initially at cost. Cost comprises the purchase price and directly attributable expenditures, such as legal fees, certain direct taxes, commissions and in the case of properties under construction, the capitalization of financial costs.

For properties under development, capitalization of costs includes not only financial costs, but also all costs directly attributable to works in process, from commencement of construction until it is completed and property is in conditions to start operating. Capitalized costs include mainly the part attributable to third-party service costs, as well as the materials necessary for construction. Capitalization of such costs ceases when the property reaches the operating conditions indicated above. 

Direct expenses related to lease contract negotiation (as well as payment to third parties for services rendered and certain specific taxes related to execution of such contracts are capitalized as part of the book value of the relevant investment properties and amortized over the term of the lease.

Borrowing costs associated with properties under development or undergoing major refurbishment are capitalized. The finance cost capitalized is calculated using the Group’s weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amount capitalized is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Finance cost is capitalized as from the commencement of the development work until the date of practical completion. The capitalization of finance costs is suspended if there are prolonged periods when development activity is interrupted. Finance cost is also capitalized on the purchase cost of land or property acquired specifically for redevelopment in the short term but only when activities necessary to prepare the asset for redevelopment are in progress.

The Group has adopted the cost model for all of its investment properties. Therefore, at the date of each statement of financial position, investment properties are carried at amortized cost, less impairment losses, if any. Under the cost model, an investment property is impaired if its carrying amount exceeds its recoverable amount. Where individual components of an item of investment property have different useful lives, they are accounted for as separate items, which are depreciated separately. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. These costs may include the cost of improving or replacing parts that are eligible for capitalization. The carrying amount of the replaced part is derecognized. Repairs and maintenance are charged to the income statement as incurred.

F - 22

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment at the commencement of owner occupation. An item of owner-occupied property is reclassified to investment property when its use has changed and owner-occupation ceases. Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to trading properties.

Transfers in and out of the respective categories as described above do not change the carrying amount of the properties transferred, and they do not change the cost of the properties for measurement or disclosure purposes.

Land and property under constructions are not depreciated. Depreciation of the remaining investment properties is calculated, based on a component approach, using the straight-line method over the estimated useful life of each component. The remaining useful life as of June 30, 2016 is as follows:

Shopping centers portfolio	Between 11 and 30 years
Office and other rental properties portfolio	Between 8 and 28 years

As of each year-end an evaluation is performed to determine the existence of indicators of any decrease in recoverable value or useful life of assets. If there are any indicators, the recoverable amount and/or residual useful life of impaired asset(s) is estimated, and an impairment adjustment is made, if applicable. As of each year-end, the residual useful life of assets is estimated and adjusted, if necessary.

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount (see Note 2.10.).

Asset transfers, whether assets classified under investments properties are reclassified under other items or vice-versa, may only be carried out when there is a change of use evidenced by: a) commencement of occupation of real property by the owner, where investment property is transferred to property, plant and equipment; b) commencement of development activities for sale purposes, where investment property is transferred to property for sale; c) the end of owner occupation, where it is transferred from Property, plant and equipment to investment properties; or d) commencement of an operating lease transactions with a third party, where properties for sale is transferred to investment property.

F - 23

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

The Group may sell its investment property when it considers they are not core to its ongoing rental business activities. Investment properties are derecognized when they are disposed of or when they are permanently withdrawn from use and no future economic benefits are expected to arise from their disposals. Gains or losses on disposals or retirements of investment properties are determined by comparing the net disposal proceeds and their carrying amounts at the date of disposal. The gains or losses are recognized in the statement of comprehensive income and disclosed separately under the line item “Gains from disposal of investment property”. Gains from the sale of such property are recognized when the significant risks and rewards have been transferred to the buyer. As for unconditional agreements, proceeds are recognized for generally when legal title to property passes to the buyer and the buyer intends to make the respective payment therefor. In the case of conditional agreements, the sale is accounted for where such conditions have been met. Where consideration receivable for the sale of the properties is deferred, it is discounted to present. The difference between the discounted amount and the amount receivable is treated as interest income and recognized over the period using the effective interest method.

2.7.            Property, plant and equipment

This category primarily comprises buildings or portions of a building used for administrative purposes, machines, computers and other equipment, motor vehicles, furniture, fixtures and fittings and improvements to the Group’s corporate offices.

All property, plant and equipment (“PPE”) are stated at historical cost less depreciation and accumulated impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items. For properties under development, capitalization of costs includes not only financial costs, but also all costs directly attributable to works in process, from commencement of construction until it is completed and property is in conditions to start operating. Capitalized costs include mainly the part attributable to third-party service costs, as well as the materials necessary for construction. Capitalization of such costs ceases when the property reaches the operating conditions indicated above. 

Borrowing costs are directly attributable incurred for the purpose of acquiring, constructing or producing a qualifying PPE are capitalized as part of its cost. A qualifying PPE is an asset that necessarily takes a substantial period of time to get ready for its intended use. Borrowing costs are capitalized during the period of construction or production of the eligible asset; such capitalization ceases once the necessary activities for the asset to have the intended use have been completed, or else capitalization is suspended while construction activity is suspended.

F - 24

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2. Summary of significant accounting policies (Continued)

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Such costs may include the cost of improvements and replacement of parts as they meet the conditions to be capitalized the carrying amount of those parts that are replaced is derecognized. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation, based on a component approach, is calculated using the straight-line method to allocate the cost over the assets’ estimated useful lives. As of June 30, 2016 useful lives are as follows:

Other buildings and facilities	Between 5 and 23 years
Furniture and fixtures	10 years
Machinery and equipment	Between 3 and 10 years
Vehicles	5 years
Others	3 years

As of each period-end an evaluation is performed to determine the existence of indicators of any decrease in recoverable value or useful life of assets. If there are any indicators, the recoverable amount and/or residual useful life of impaired asset(s) is estimated, and an impairment adjustment is made, if applicable. As of each year-end, the residual useful life of assets is estimated and adjusted, if necessary.

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount (see Note 2.10.).

Gains from the sale of these assets are recognized when the significant risks and rewards have transferred to the buyer. This will normally take place on unconditional exchange, generally when legal title passes to the buyer and it is probable that the buyer will pay. For conditional exchanges, sales are recognized when these conditions are satisfied.

Gains and losses on disposals are determined by comparing the proceeds, net of direct expenses related to those proceeds, with carrying amount at the date of each transaction. Gains and losses from the disposal of property, plant and equipment items are recognized within “Other operating results, net” in the statement of comprehensive income.

2.8.

Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement.

F - 25

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

A Group company is the lessor:

Operating lease – properties leased out to tenants under operating leases are included in “Investment properties” in the statement of financial position. See Note 2.25. for the recognition of rental income.

Finance lease – the Group does not have any assets leased out under finance leases.

A Group company is the lessee:

Operating lease – leases in which substantially all risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Significant leases where the Group acts as lessee under operating leases mainly include principal offices.

Finance lease - leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the commencement of the lease at the lower of the fair value of the property and the present value of the minimum lease payments. Capitalized lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. The finance charges are charged over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Liabilities corresponding to finance leases, measured at discounted value, are included in current and non-current borrowings. Significant leases where the Group acts as lessee under finance leases include machinery and computer equipment.

2.9.

Intangible assets

(a)

Goodwill

Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognized by the Group on an acquisition. Goodwill is initially measured as the difference between the fair value of the consideration transferred, plus the amount of non-controlling interest in the acquisition and, in business combinations achieved in stages, the acquisition-date fair value of the previously held equity interest in the acquisition; and the net fair value of the identifiable assets and liabilities assumed on the acquisition date.

F - 26

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

At acquisition goodwill is allocated to those cash generating units expected to benefit from the acquisition for the purpose of impairment (see Note 2.10.). Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill arising on the acquisition of subsidiaries is included within “Intangible assets” on the statement of financial position.

Goodwill may also arise upon investments in associates and joint ventures, being the surplus of the cost of investment over the Group’s share of the fair value of the net identifiable assets. Such goodwill is recorded within investments in associates or joint ventures.

Goodwill is not amortized but tested for impairment on an annual basis, or more frequently if there is an indication of impairment.

(b)

Software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives of 3 years.

Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met: (i) it is technically feasible to complete the software product so that it will be available for use; (ii) management intends to complete the software product and use or sell it; (iii) there is an ability to use or sell the software product; (iv) it can be demonstrated how the software product will generate probable future economic benefits; (v) adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and (vi) the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalized as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

Computer software development costs recognized as assets are amortized over their estimated useful lives, which does not exceed 3 years.

F - 27

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

(c)

Rights of use

The Group acquired certain rights to develop a plot of land and facilities. These rights primarily comprise the right to develop the land and attached buildings and facilities known as Distrito Arcos (“Arcos”).

The Arcos land and attached facilities is owned by Administration of Railway Infrastructure (“ADIF”, as per its Spanish acronym), a governmental agency created for the management of certain State´s properties, particularly assets pertaining to the railway system. The Arcos are the old warehouse and adjacent spaces below the tracks of the San Martin railway lines. The right was acquired as part of the Arcos acquisition and is carried at acquisition cost less accumulated amortization. Amortization is calculated using the straight-line method over the period in which the economic benefits of use accrue. The Group must pay ADIF a fee on a monthly basis.

(d)

Right to receive future units under barter agreements

The Group also enters into barter transactions where the Group normally exchanges undeveloped parcels of land with third-party developers for future property to be constructed on the bartered land. The Group generally receives monetary assets as part of the transactions and/or a right to receive future units to be constructed by developers. Such rights are initially recognized at cost (which is the fair value of the land assigned) and such rights are not adjusted later, unless there is any sign of impairment.

2.10.

Impairment of assets

(a)

Goodwill

For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. In order to determine whether any impairment loss should be recognized, the book value of cash-generating units or cash generating unit groups is compared against its recoverable value. Net book value of cash-generating units and cash generating unit groups include goodwill and assets with limited useful life (such as, investment properties, property, plant and equipment, intangible assets and working capital net).

F - 28

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses recognized for goodwill are included in the statement of comprehensive income and are not reversed in a subsequent period.

Recoverable amount of the cash-generating unit is the higher of fair value less costs-to-sell and value-in-use. The fair value is the amount at which a cash-generating unit may be sold in a current transaction between unrelated, willing and duly informed parties. Value-in-use is the present value of all estimated future cash flows expected to be derived from cash-generating units or cash-generating unit groups.

(b)Property, plant and equipment, investment properties and limited-duration intangible assets

At the date of each statement of financial position, the Group reviews the carrying amounts of its property, plant and equipment, investment properties and limited-duration intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. When the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of comprehensive income.

Assets or cash-generating units that have suffered an impairment loss are revised as of each year-end date to assess a potential reversal of such impairment. The impairment loss recognized in prior fiscal years may only be reversed if there has been a change in the estimates used to assess the recoverable value of assets or the cash-generating unit since the recognition of the impairment loss.

Where an impairment loss subsequently reverses the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined if no impairment loss had been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in the statement of comprehensive income.

F - 29

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

2.11.

Trading properties

Trading properties comprises those properties either intended for sale or in the process of construction for sale. Trading properties are carried at the lower of cost and net realizable value. Where there is a change in use of investment properties evidenced by the commencement of development with a view to sale, the properties are reclassified as trading properties at their cost, which is the carrying value at the date of change in use. They are subsequently carried at the lower of cost and net realizable value.

Cost comprises all direct costs of purchase, costs of conversion and other costs incurred in bringing the trading properties to their present location and condition.

Borrowing costs incurred for the purpose of acquiring, constructing or producing a qualifying trading property are capitalized as part of its cost. A qualifying trading property is an asset that necessarily takes a substantial period of time to get ready for its intended use. Borrowing costs are capitalized while acquisition, construction or production is actively underway and cease once the asset is substantially complete or suspended if the development of the asset is suspended.

Net realizable value is the estimated selling price in the ordinary course of business less costs to complete redevelopment and selling expenses. If the net realizable value is lower than the carrying amount, a write-down is recognized for the amount by which the carrying amount exceeds its net realizable value. Write-downs are reversed when circumstances that caused the write-down cease to exist, or when net realizable value increases.

2.12.

Inventories

Inventories mainly include materials, supplies or other assets required to offer different services.

Supplies and the rest of materials and assets classified in this category are measured at the lower of cost or net realizable value. The cost of supplies, materials and other assets is determined using the weighted average cost method.

F - 30

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

2.13.

Financial instruments

(a)

Classification

Accordingly with previous versions to the IFRS 9 (see Note 2.2), the Group classifies its financial assets in the following categories: those to be measured at fair value and those to be measured at amortized cost. This classification depends on whether the financial asset is a debt or an equity instrument.

Debt instruments

(i)

Financial assets at amortized cost

A debt instrument is classified as ‘amortized cost’ only if both of the following criteria are met: (i) the objective of the Group’s business model is to hold the asset to collect the contractual cash flows; and (ii) the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in the debt instrument are considered in determining whether the cash flows of the instrument are solely payment of principal and interest on the principal outstanding and are not accounted for separately.

At year-end, the Group’s financial assets at amortized cost comprise items of cash, trade and other receivables.

(ii)

Financial assets at fair value through profit or loss

If either of the two criteria above is not met, the debt instrument is classified as “fair value through profit or loss”. The Group has not designated any debt investment as measured at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch.

Changes in fair values and gains from disposal of financial assets at fair value through profit or loss are recorded within “Financial results, net” in the statement of comprehensive income.

At year-end, the Group’s financial assets at fair value through profit or loss comprise mutual funds, government bonds, non-convertible notes and public companies.

F - 31

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

Equity instruments

All equity instruments, which are not subsidiaries associate companies and joint venture of the Group, are measured at fair value. Equity investments that are held for trading are measured at fair value through profit or loss. For all other equity investments, the Group can make an irrevocable election at initial recognition to recognize changes in fair value through other comprehensive income rather than profit or loss.

The Group decided to recognize changes in fair value of equity instruments through changes in profit or loss.

Changes in fair values and results from disposal of equity investments at fair value through profit or loss and dividends income are recorded within ”Financial results, net” in the statement of comprehensive income.

(b)

Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date–the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the statement of comprehensive income.

Results on debt instruments measured at amortized cost and not identified for hedging purposes are charged to income where the financial assets are derecognized or an impairment loss is recognized and during the amortization process under the effective interest method.

All equity investments, which are not subsidiaries associate companies and joint venture of the Group, are measured at fair value.

The Group is required to reclassify all affected investments in debt instruments when and only when its business model for managing those assets changes.

F - 32

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

(c)

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets measured at amortized cost is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) the can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulties, defaults or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a measurable decrease in the estimated future cash flows.

The amount of the impairment is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated income statement. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the reversal of the previously recognized impairment loss is recognized in the consolidated statement of comprehensive income.

(d)

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

2.14.

Derivative financial instruments and hedging activities

Derivatives financial instruments are initially recognized at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group manages exposures to various risks using hedging instruments that provide the appropriate economic outcome. The Group does not use derivative financial instruments for speculative purposes. To date, the Group has used future and forwards contracts, as deemed appropriate.

F - 33

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

The Group’s policy is to apply hedge accounting to hedging relationships where it is both permissible under IFRS 9, practical to do so and its application reduces volatility, but transactions that may be effective hedges in economic terms may not always qualify for hedge accounting under IFRS 9. To date the Group has not applied hedge accounting to any of its derivative financial instruments. Trading derivatives are classified as a current asset or liability on the statement of financial position. Gains and losses on other derivatives are classified in “Financial results, net”, in the statement of comprehensive income.

The fair values of financial instruments that are traded in active markets are computed by reference to market prices. The fair value of derivative financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

2.15.

Trade and other receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

A provision of doubtful accounts is recorded when there is objective evidence that the Group may not be able to collect all receivables within their original payment term. Indicators of doubtful accounts include significant financial distress of the debtor, the debtor potentially filing a petition for reorganization or bankruptcy, or any event of default or past due account.

In the case of larger non-homogeneous receivables, the Group generally measures the impairment provision on an individual basis. When assessed individually, the Group records a provision for impairment which amounts to the difference between the value of the discounted expected future cash flows of the receivable and its carrying amount, taking into account the existing collateral, if any. This provision takes into consideration the financial situation of the debtor, the resources, payment track-record and, if applicable, the value of collateral.

The Group collectively evaluates for impairment smaller-balance homogeneous receivables, which are grouped on the basis of similar risk characteristics, taking into account asset type, collateral type, past-due status and other relevant factors. The Group applies allowance factors, which in the judgment of management represent the expected losses over the life of the receivables. In determining those factors, the Group considers the following: (i) delinquencies of the credits, (ii) loss history and the general behavior of clients, (iii) trends in volume and terms of receivables, (iv) the experience and depth of the debtors’ management, (v) national and local economic trends, (vi) concentrations of credit by individual credit size and by class of receivable, and (vii) the effect of other external factors.

F - 34

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

The amount of the provision of doubtful accounts is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the statement of income within “Selling expenses”. Subsequent recoveries of amounts previously written off are credited against “Selling expenses” in the statement of comprehensive income.

2.16.

Trade and other payables

Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method.

2.17.

Tenant deposits

The Group generally obtains deposits from tenants as a guarantee for returning the property at the end of the lease term in a specified good condition or for the lease payments for a period of generally 3 years. The deposits are generally equivalent to one month of lease rentals. Such deposits are treated as both a financial assets and a financial liability in accordance with IFRS 9, and they are initially recognized at fair value. The difference between fair value and cash received is considered to be part of the minimum lease payments received for the operating lease (refer to Note 2.25. for the recognition of rental income). The deposits are subsequently measured at amortized cost.

2.18.

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized as finance cost over the period of the borrowings using the effective interest method.

2.19.

Borrowing costs

General and specific borrowing costs (interest and foreign exchange differences) directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

F - 35

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

The Group capitalizes borrowing costs on qualifying investment properties, property, plant and equipment and trading properties.

2.20.

Provisions

Provisions are recognized when: (i) the Group has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. Provisions are not recognized for future operating losses.

The amount of its accruals is based on up-to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity.

Provisions are measured at the present value of the cash flows expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized in the statement of comprehensive Income.

2.21.

Employee benefits

(a)

Pension plans obligations

The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognized as employee benefit expense in the statement of comprehensive income when they are due.

(b)

Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.

F - 36

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

(c)

Bonus plans

The Group recognizes a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the Company’s shareholders after certain adjustments. The Group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.22.

Share-based payments

The Group operates an incentive plan, under which certain selected employees, directors and top management of IRSA Propiedades Comerciales S.A., IRSA and Cresud have a right to matching shares of IRSA and Cresud, although they must hold their purchased shares and remain with the employer entity for a certain period of time.

The fair value of the equity settled awards is measured at the date of grant. Management measures the fair value using the valuation technique that it considers to be the most appropriate to value each class of award. Methods used may include Black-Scholes calculations or other models as appropriate. The valuations take into account factors such as non-transferability, exercise restrictions and behavioral considerations.

The fair value of the share-based payment will be recognized in the statement of comprehensive income under the straight-line method over the vesting period in which the right to the shares of IRSA and Cresud becomes irrevocable (“vesting period”); such value shall be based on the best available estimate of the number of shares expected to vest. Such estimate shall be revised provided subsequent information available indicates that the number of shares expected to vest differs from original estimates.

2.23.

Current and deferred income tax

Tax expense for the year comprises the charge for tax currently payable and deferred taxation. Tax is recognized in the statement of income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity, in which case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. The Group establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

F - 37

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Entities in Argentina are subject to the Minimum Presumed Income Tax (“MPIT”). Pursuant to this tax regime, an entity is required to pay the greater of the income tax or the MPIT. The MPIT provision is calculated on an individual entity basis at the statutory asset tax rate of 1% and is based upon the taxable assets of each company as of the end of the year, as defined by Argentine law. Any excess of the MPIT over the income tax may be carried forward and recognized as a tax credit against future income taxes payable over a 10-year period. When the Group assesses that it is probable that it will use the MPIT payment against future taxable income tax charges within the applicable 10-year period, the Group recognizes the MPIT as a current or non-current receivable, as applicable, within “Trade and other receivables” in the statement of financial position.

2.24.

Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less. Do not include bank overdrafts.

F - 38

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

2.25.Revenue recognition

Revenue of Group´s activities principally derived from business activities carried out in shopping centers and buildings for rental and mainly include rental income from shopping center properties and offices leased under operating leases, admission rights, commissions and revenue from several services provided to the Group’s lessees.

Revenue from the sale of properties is recognized when: (a) material risks and benefits derived from title to property have been transferred; (b) the company does not retain any management function on the assets sold nor does it have any control whatsoever on such assets; (c) the amount of revenues and costs associated to the transaction may be measured on a reliable basis; and (d) the company is expected to accrue the economic benefits associated to the transaction.

Revenue from the provision of services is recognized when: (a) the amount of revenue and costs associated to the services may be measured on a reliable basis; (b) the company is expected to accrue the economic benefits associated to the transaction, and (c) the level of completion of services may be measured on a reliable basis.

●

Shopping centers portfolio

Primarily comprises rental income from shopping center properties lease out over operating leases, admission rights, commissions and revenue from several services provided to the Group’s lessees.

All lease agreements in Argentina are cancelable pursuant to Argentine Law 23,091 “Urban Real Estate” as amended by Law 24,808. Under this law, a lease is not cancelable within the first six months of the agreement, but provides that after that initial non-cancelable period, tenants may rescind agreements at any time upon giving prior written notice to lessors. Cancellations are subject to one-and-a-half month’s rent if rescinded during the first year of the lease and one month’s rent if rescinded after the first year of the lease.

The Group analyzed the definition of leasing term which IAS 17 provides that a non-cancelable lease is a lease that is cancelable only (a) upon the occurrence of some remote contingency, (b) with the permission of the lessor, (c) if the lessee enters into a new lease with the same lessor or (d) upon payment by the lessee of such an additional amount that, at inception of the lease, continuation of the lease is reasonably certain.

F - 39

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

The Group has determined that, in all operating leases, the lease term for accounting purposes matches the term of the contract. The Group concluded that, even though a lease is cancelable under the law, tenants would incur significant “economic penalties” if the leases are terminated prior to expiry. The Group considered that these economic penalties are of such amount that continuation of the lease contracts by tenants appears to be reasonably certain at the inception of the respective agreements. The Group reached this conclusion based on factors such as: (i) the strategic geographical location and accessibility to customers of the Group’s investment properties; (ii) the nature and tenure of tenants (mostly well-known local and international retail chains); (iii) limited availability of identical revenue-producing space in the areas where the Group’s investment properties are located; (iv) the tenants’ brand image and other competitive considerations; (v) tenants’ significant expenses incurred in renovation, maintenance and improvements on the leased space to fit their own image; (vi) the majority of the Group’s tenants only have stores in shopping centers with a few or none street stores.

Lessees of shopping centers are generally required to pay the higher of: (i) a base monthly rent (the “Base Rent”) and (ii) a specific percentage of gross monthly sales recorded by the Lessee (the “Contingent Rent”), which generally ranges between 3% and 12% of gross sales. Moreover, in accordance with agreements entered into for most locations, the Base Rent is subject to scheduled increases, typically between 18% and 28% per year over the term of the lease.

In addition, some lease contracts include provisions that set forth variable rent based on specific volumes of sales and other types of ratios.

Rental income from shopping center properties leased out under operating leases is recognized in the income statement on a straight-line basis over the term of the leases. When lease incentives are granted, they are recognized as an integral part of the net consideration for the use of the property and are therefore recognized on the same straight-line basis.

Contingent rents, being lease payments that are not fixed at the inception of a lease, are recorded as income in the periods in which they are known and can be determined. Rent reviews are recognized when such reviews have been agreed with tenants.

Tenants in the Group’s shopping centers are also generally charged a non-refundable admission right upon entering a lease contract or renewing an existing one. Admission rights are treated as additional rental income and recognized in the statement of income under a straight-line basis over the term of the respective lease agreement.

F - 40

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

The Group acts as its own leasing agent for arranging and closing lease agreements in its shopping center properties and consequently earns letting fees. Letting fees are paid by tenants upon the successful closing of an agreement. A transaction is considered successfully concluded when both parties have signed the related lease contract. Letting fees received by the Group are treated as additional rental income and are recognized in the statement of income on a straight-line basis over the term of the lease agreements.

Lease contracts also provide that common area maintenance (“CAM”) of the Group’s shopping centers are borne by the corresponding lessees, generally on a proportionally basis. These common area service charges (“CAM”) include all such expenses convenient and necessary for various purposes including, but not limited to, the operation, maintenance, management, safety, preservation, repair, supervision, insurance and enhancement of the shopping centers. The lessor is responsible for determining the need and suitability of incurring a common area service charge. The Group makes the original payment for such expenses, which are then reimbursed by the lessees. The Group has assessed the substance of the transactions and concluded that the Group is acting as a principal since it has exposure to the significant risks and rewards associated with the rendering of services.

Service charge income is presented separately from property operating expenses. Property operating expenses are expensed as incurred.

Under the lease contracts entered into, lessees also agree to participate in collective promotion funds (“CPF”) to be used in advertising and promoting the Group’s shopping centers. Each lessee’s participation is generally calculated as a percentage of the monthly rent accrued. Revenue so derived is also included under rental income and services segregated from advertising and promotion expenses. Such expenses are charged to income when incurred.

On the other hand, revenue includes income from managed operations and other services such as car parking lots. Those revenues are recognized on an accrual basis as services are provided.

●

Office and other rental properties portfolio

Rental income from office and other rental properties include rental income from office leased out under operating leases, income for services and expenses recovery paid by tenant.

Rental income from office and other rental properties leased out under operating leases is recognized in the income statement on a straight-line basis over the term of the leases (‘rent averaging’). When lease incentives are granted, they are recognized as an integral part of the net consideration for the use of the property and are therefore recognized on the same straight-line basis.

F - 41

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

Contingent rents, are recorded as income in the periods in which they are collected. Rent reviews are recognized when such reviews have been agreed with tenants.

Lease contracts also provide that common area service charges of the Group’s office and other rental properties are borne by the corresponding lessees, generally on a proportionally basis. These common area service charges include all such expenses convenient and necessary for various purposes including, but not limited to, the operation, maintenance, management, safety, preservation, repair, supervision, insurance and enhancement of the shopping centers. The Group acts as the management of rent properties. The Group makes the original payment for such expenses, which are then reimbursed by the lessees. The Group considered that it acts as a principal in these cases. The Group accrues reimbursements from tenants for recoverable portions of all these expenses as service charge revenue in the period the applicable expenditures are incurred and is presented separately from property operating expenses. Property operating expenses are expensed as incurred.

●

Sales and Development activities

Revenue from sale and developments of real estate properties primarily comprises the results from the sale of trading properties. Results from the sale of properties are recognized only when the significant risks and rewards have been transferred to the buyer. This normally takes place on unconditional exchange of contracts (except where payment or completion is expected to occur significantly after exchange). For conditional exchanges, sales are recognized when these conditions are satisfied.

The Group applies IFRIC 15 “Agreements for the Construction of Real Estate” IFRIC 15 gives guidance as to which standard applies when accounting for the construction of real estate; that is IAS 11 “Construction Contracts” or IAS 18 “Revenue”. IFRIC 15 interprets that an agreement meets the definition of a construction contract under IAS 11 when the buyer is able to specify the major structural elements of the design of the property either before or during construction. Furthermore, IFRIC 15 interprets that an agreement is for the sale of goods under IAS 18 when construction takes place independently of the agreement and the buyer has only a limited ability to influence the design. The Group has assessed the nature of its agreements and determined that they are within the scope of IAS 18. As a result, the Group recognizes revenue from the sale of open market private homes and commercial units entirely at the point of legal completion in accordance with IAS 18.

F - 42

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

The Group also enters into barter transactions where the Group normally exchanges undeveloped parcels of land with third-party developers for future property to be constructed on the bartered land. Sometimes, the Group also receives cash as part of the transactions. The legal entitle together with all risks and rewards of ownership to the land are transferred to the developer upon sale. The Group generally requires the developer to issue surety insurances or to mortgage the land in favor of the Group as performance guarantee. In the event the developer does not fulfill its obligations, the Group forecloses the land through the execution of the mortgage or the surety insurances, together with a cash penalty.

The Group determines that its barter transactions have commercial substance and that the conditions for revenue recognition on the transfer of land are met at the time the transaction takes place. Revenue is then recognized at the fair value of the goods delivered, adjusted by the amount of cash received, if any. In exchange for the land given up, the Group receives cash, if any, and an in-kind receivable. Such receivable is initially recognized at fair value but is not subsequently remeasured. In exchange for the land given up, the Group receives cash and/or a right to receive future units to be constructed in land under barter transactions. The in-kind receivable is initially recognized at cost (being the fair value of the transferred land) as intangible asset in the statement of financial position named “Right to receive future units” (Barter transactions). The mentioned intangible asset is not adjusted in subsequent years unless there is a sign of impairment.

The Group may sell the residential apartments to third-party homebuyers once they are finalized and transferred from the developer. In these circumstances, revenue is recognized when the significant risks and rewards are transferred to the buyer. This will normally take place when the deeds of title are transferred to the homebuyer.

However, the Group may market the residential apartments during construction or even before construction commences. In these situations, homebuyers generally surrenders a down payment to the Group with the remaining amount being paid when the developer completes the property and transfers it to the Group, and the Group in turn transfers it to the buyer. In these cases, revenue is not recognized until the apartments are completed and the transaction is legally completed, that is when the apartments are transferred to the homebuyers and deeds of title are executed. This is because in the event the residential apartments are not completed by the developer and consequently not delivered to the homebuyer, the Group is contractually obligated to return to the homebuyer any down payment received plus a penalty amount. The Group may then seek legal remedy against the developer for non-performance of its obligations under the agreement. The Group exercised judgment and considers that the most significant risk associated with the asset the Group holds (i.e. the right to receive the apartments) consisting of the unfulfillment of the developer's obligations (i.e. to complete the construction of the apartments) has not been transferred to the homebuyers upon reception of the down payment.

F - 43

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

2.26.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

When any of Group´s companies purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of tax) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. When such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

Instruments issued by the Group that will be settled by the Company delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash or another financial asset are classified as equity.

2.27.

Earnings per share

Earning per share is calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average of common shares outstanding during the year. Diluted earning per share is computed by dividing the profit for the year by the weighted average of common shares outstanding, and when dilutive, adjusted for the effect of all potentially dilutive shares, including share options, on an as-if converted basis.

In computing diluted earnings per share, income available to common shareholders used in the basic earnings per share calculation is adjusted to add back the after-tax amount of interest recognized in the year with respect to any debt convertible to common stock. 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 earning per share 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 earnings per share excludes potential common shares if their effect is anti-dilutive. See Note 35 for details.

2.28.

Dividend distribution

Cash dividend distribution to the Group’s shareholders is recognized as a liability in the period in which the dividends are approved.

F - 44

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

2.            Summary of significant accounting policies (Continued)

As indicated in Note 28, the Group has been refunded dividends deposited with the Caja de Valores. Such amounts have been recorded either under Retained Earnings, if already forfeited or under Trade and Other Payables, if not forfeited.

2.29.

Dividends income

Dividends earned are recorded when declared.

2.30.

Comparative Information

The comparative information as of June 30, 2015 and 2014 included in these Consolidated Financial Statements arises from the financial statements as of such dates. Certain reclassifications of prior year information have been made to conform to the current year presentation.

During the fiscal year ended June 30, 2016, there has been a devaluation of the Argentine peso in relation to the US Dollar and other currencies that accounted for approximately 65%. This situation affects the comparability of figures disclosed in these financial statements, arising mainly from the exchange rate impact on our revenues and costs of the “offices and others” segment, and our assets and liabilities in foreign currency.

3.

Acquisitions and disposals

Fiscal year ended as of June 30, 2016

Acquisitions

April 6, 2016: Building office to be constructed owned by IRSA

IRSA Propiedades Comerciales S.A. has acquired from its controlling company IRSA, 16,012 square meters corresponding to 14 floors (13 to 16 and 21 to 30) for purposes of long-term leasing and 142 parking spaces in the building to be built in the Catalina area in the City of Buenos Aires. The building to be constructed has a total gross leasing area of 35,468 square meters in 30 office floors and 316 parking lots in four undergrounds; possession is scheduled to be delivered in December 2019 and the conveyance deed is expected to be executed in December 2020.

The price of the transaction was established based on two components: a “Determined” part corresponding to the incidence of land on the square meters acquired by the Company in an amount of Ps. 455.7 million (approximately USD/square meter 1,600 + VAT) that were paid on the execution date and a “To Be Determined” part, where IRSA will shift the company only the real cost of the construction works per square meter.

F - 45

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

3. Acquisitions and disposals (Continued)

December 30, 2015: Plot of land adjoining Shopping Alto Avellaneda

On December 30, 2015, the Group signed a purchase agreement –granting possession– for the acquisition of a plot of land of approximately 3,822 square meters located in Avellaneda, Province of Buenos Aires, for a potential enlargement of the shopping center Alto Avellaneda. The transaction amounted to USD 2.0 million, out of which USD 1.3 million have been paid. The balance will be paid as follows: USD 0.2 million upon registration of the measurement plan and USD 0.5 million upon delivery of the deed conveying title to the property.

Disposals

February 2, 2016: Units of Intercontinental Plaza building

IRSA Propiedades Comerciales conveyed title to 851 square meters corresponding to an office and 8 parking lots in the Intercontinental Plaza building to an unrelated party. The Company still holds 6,308 square meters of the building. The total amount of the transaction was Ps. 41.5 million, which has already fully paid by the purchaser. The gross profit of the transaction amounts to Ps. 20.1 million.

September 10, 2015: Units of Intercontinental Plaza building

IRSA Propiedades Comerciales conveyed title to 5,963 square meters corresponding to 7 office floors, 56 parking lots and 3 storage units in the Intercontinental Plaza building to a unrelated party, with 7,159 square meters of the building being held by the Company. The total amount of the transaction was Ps. 324.5 million, which has already fully paid by the purchaser. The gross profit of the transaction amounted to Ps. 155.8 million.

Fiscal year ended as of June 30, 2015

Acquisitions

May 6, 2015: Plot of land in the province of Córdoba

The Group acquired a building located in Villa Cabrera, Córdoba. The price was agreed upon at Ps. 3.1 million which has already been paid.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

3. Acquisitions and disposals (Continued)

December 22, 2014: Office buildings to our controlling company IRSA

IRSA Propiedades Comerciales S.A. acquired from its Parent Company IRSA, 83,789 square meters of its premium office portfolio including the buildings República, Bouchard 710, Della Paolera 265, Intercontinental Plaza and Suipacha 652 and the “Intercontinental II” plot of land in order to consolidate a vehicle which main corporate purpose is to develop and operate commercial properties in Argentina.

The total amount of the transaction was USD 308 million, which have already been paid as of June 30, 2016.

Considering that the transaction has been carried out between entities under common control, the Group has chosen – as indicated in Note 2.3.a – to record this transaction under the acquisition method provided by IFRS 3 “Business Combinations”.

The following chart shows the consideration paid and the net assets acquired as of the acquisition date.

	Amount (in millions of USD)	Amount (in millions of Ps.)
Consideration paid:
Cash	10.5	89.8
Assignment of receivables between related parties	21.3	182.2
Cancellation of loan agreement with IRSA	14.7	125.7
Transfer of IRSA non-convertible notes 2020 and 2017	5.1	43.6
Transfer of IRSA Propiedades Comerciales S.A. non-convertible notes Class I due 2017	10.0	85.7
Loan agreements with IRSA (due 2017)	150.0	1,284.1
Loan agreements with IRSA (due 2020)	96.4	825.4
Total consideration paid	308.0	2,636.5
Recognized balances of acquired identifiable assets:
Investment properties (Note 10)	300.9	2,575.3
Property, plant and equipment (Note 11)	7.1	61.2
Total net identifiable assets	308.0	2,636.5

As of June 30, 2015 acquisition cost of assets was recognized in other operating results, net in the statement of comprehensive income for an amount of Ps. 58.6 million.

Income generated by the portfolio of real property acquired as from December 22, 2014 has been included in the statement of comprehensive income amounted to Ps. 141.0 million and have been recorded in the statement of comprehensive income under the line income from sales, rents and services.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

3. Acquisitions and disposals (Continued)

If the acquisition had occurred at the beginning of the fiscal year 2015, consolidated Pro-Forma revenue and profit for the year ended June 30, 2015 would have been Ps. 2,884.0 million and Ps. 632.6 million, respectively.

Disposals

June 30, 2015: Functional units in Intercontinental Plaza building

On May 5, 2015 the Company signed a bill of sale to transfer to a unrelated party, 8,470 square meters corresponding to 9 offices floors and 72 parking units of Intercontinental Plaza building. The amount of the transaction was Ps. 376.4 million, which has already been paid in full by the purchaser.

On June 30, 2015, the title deed and conveyance of ownership of the units mentioned before was executed. The gross profit before tax of the transaction amounted to Ps. 123.7 million. 

September 2, 2014: Equity interest in Avenida Inc.

On July 18, 2014, the Group - through Torodur S.A., exercised the warrant held associated to this investment and consequently its interest in Avenida Inc. increased to 6,172,840 shares or 35.46% of its capital stock. However, simultaneously, the Group's holding was reduced to 23.01% as a result of the acquisition of 35.12% interest in the Company by a new investor.

Subsequently, on September 2, Torodur S.A. sold 1,430,000 shares representing 5% of the Avenida Inc.’s capital stock in the amount of Ps. 19.1 million (USD 2.3 million), thus reducing the equity interest to 17.68% of its share capital. Such transaction generated a gain of Ps. 8.8 million included in "Other operation results, net" in the statement of comprehensive income.

As a result of the sale of the interest, the Group has ceased to have significant influence in the Company and, as a result, has ceased to recognize the equity interest in Avenida Inc. as investment in associates and has considered as a financial asset at fair value in the financial statements since June 30, 2015.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

3. Acquisitions and disposals (Continued)

Fiscal year ended as of June 30, 2014

Acquisitions

May 22, 2014: Building next to Shopping Alto Palermo

IRSA Propiedades Comerciales S.A. acquired commercial premises with an area of 40 square meters, next to our shopping Alto Palermo, located on the ground floor of the building located in Av. Santa Fe 3255/57/59 in an amount of USD 3.8 million.

September 16, 2013: Purchase Option Agreement for Arcos del Gourmet S.A.

IRSA Propiedades Comerciales S.A. entered into an agreement with Messrs. Eduardo Giana, Pablo Bossi and Patricio Tobal (non-controlling shareholders of Arcos del Gourmet S.A.), whereby the latter grant to IRSA Propiedades Comerciales S.A. an exclusive and irrevocable option to purchase 10% of the equity interest of Arcos del Gourmet S.A., which can be executed up to December 31, 2018. In the event the option is exercised, IRSA Propiedades Comerciales S.A. should pay the amount of USD 8.0 million.

Furthermore, in the mentioned agreement a fixed amount of Ps. 2.0 million was arranged, which was cancelled, and a variable amount payable monthly, which results from applying 4.5% on the amounts accrued in each previous calendar month for rental and right of admission, net of certain expenses, during 5 years from the opening of the shopping mall, in relation to the assignment of rights to earn dividends of Arcos during such period.

August 29, 2013: Subscription of shares of Avenida Inc.

The Group, through Torodur S.A., subscribed 3,703,704 shares of Avenida Inc., a Company incorporated in Delaware, United States, representing 24.79% of its outstanding capital. Upon acquisition this Company had no activity or significant assets. Additionally, the Group acquires a warrant to increase such equity interest up to 37.04% of the company. The amount of the transaction was Ps. 13.0 million, which has already been paid in full. After the acquisition Avenida Inc. incorporated Avenida Compras S.A. in Argentina, a Company engaged in e-commerce. As of June 30, 2015 Torodur owns 17.68% of Avenida Inc. and Avenida Inc. owns 100% of Avenida Compras S.A..

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

3. Acquisitions and disposals (Continued)

Pending transactions and/or authorizations

Paraná plot of land

On June 30, 2009, the Group, through IRSA Propiedades Comerciales S.A., subscribed a Letter of Intent by which it stated its intention to acquire from Wal-Mart Argentina S.A. a plot of land of about 10,022 square meters located in Paraná, Province of Entre Ríos, to be used to build, develop and operate a shopping center or mall.

On August 12, 2010, the agreement of purchase was executed. The purchase price stood at USD 0.5 million to be paid as follows: i) USD 0.05 million had been settled as prepayment on July 14, 2009, ii) USD 0.1 million was settled upon executing such agreement, and iii) USD 0.35 million will be paid upon executing the title deed. The mentioned payments were recorded as an advance under Trade receivables and other receivables line.

On December 29, 2011, possession of the real estate was granted, and a minute was signed in which the parties agreed that the deed transferring ownership would be granted on June 30, 2012, or within sixty (60) consecutive days as from the date in which the selling party evidences with a certified copy before the buying party that the real estate is not subject to any encumbrance, burden, limit or restriction to the ownership, except for the electroduct administrative easement in favor of EDEER S.A..

On June 29, 2012, the parties have agreed to extend the term for the execution of the title conveyance deed, which shall be executed within sixty (60) days as from the date the seller provides reliable notification to the buyer that the property is not subject to any levy, encumbrance, restrictions on ownership, except for the right of way already mentioned. As of the date of these Consolidated Financial Statements, evidence of such notice has not been provided.

Acquisition of a commercial center goodwill

The Group through IRSA Propiedades Comerciales S.A. has signed an offering letter for acquiring, building and running a commercial center in a real estate owned by INC S.A., located in the City of San Miguel de Tucumán, Province of Tucumán. The price of this transaction was USD 1.3 million. Out of this total, were paid USD 0.05 million. The mentioned payment was recorded as an advance under Trade receivables and other receivables line.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

3. Acquisitions and disposals (Continued)

This transaction was subject to certain conditions precedent, among which the Group through IRSA Propiedades Comerciales S.A. should acquire from INC S.A. the goodwill constituted by the commercial center operating in Soleil Factory. Having complied with such condition on July 1, 2010, IRSA Propiedades Comerciales S.A. should have started the works: i) 12 months after complying with such conditions, or ii) on May 2, 2011, whichever earlier. However, before starting with the works, INC S.A. should have: i) granted the title deeds to IRSA Propiedades Comerciales S.A.'s future units to IRSA Propiedades Comerciales S.A., and ii) transferred to IRSA Propiedades Comerciales S.A. the rights to the registered architectural project and the effective permissions and authorizations to be carried out in IRSA Propiedades Comerciales S.A.'s future units. As of June 30, 2016, the two conditions have not been fulfilled.

Antitrust Law

Law N° 25,156, known as "Antitrust Law" as amended, prevents anticompetitive practices and requires administrative authorization for transactions that according to the Antitrust Law would lead to market concentration. According to this law, such transactions include mergers, acquisitions and/or transfers either of businesses or assets by which the acquirer controls or substantially influences another party. Transactions completed by entities with an annual sales volume of more than Ps. 200.0 million must be submitted to the Comisión Nacional de Defensa de la Competencia (hereinafter referred to as the "Antitrust Commission") for authorization. Certain exceptions apply. Submissions may be filed either prior to the transaction or within a week after its completion. The Antitrust Commission may (i) authorize the transaction, (ii) condition the transaction to the accomplishment of certain acts, or (iii) reject the authorization.

In general, acquisitions effected by the Group are within the scope of the Antitrust Law. . In these cases, the Group directly requests authorization. In other cases, the Group may request the Commission to issue a prior statement about whether a particular transaction should be either notified or submitted authorization by the Group.

As of June 30, 2016, the following cases are pending resolution by the Commission:

i.     Purchase of Arcos shares: On December 3, 2009 the Group requested that the CNDC issued a ruling on the notification requirement. The CNDC confirmed that the transaction had to be notified; as a result, notice was served in December 2010 and as of June 30, 2016 it is still pending.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

3. Acquisitions and disposals (Continued)

ii.     Acquisition of shares in Entertainment Holdings SA (EHSA): On December 7, 2012, the Group informed the CNDC of the acquisition of shares in EHSA, which indirectly owns 50% of La Rural S.A. – a company that operates a convention center known as Predio Ferial de Palermo. As of the date of these Consolidated Financial Statements, the transaction is pending approval.

After June 30, 2016, the equity interest held by the Group as a result of subsequent purchases-sales amounts to 70%, which was duly reported to the CNDC. See Note 41.

4.

Financial Risk Management

Risk management principles and procedures

The risk management function within the Group is carried out in respect of financial risks. Financial risks are risks arising from financial instruments to which the Group is exposed during or at the end of the reporting period. Financial risk comprises market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, liquidity risk and capital risk.

The Group’s diverse activities are exposed to a variety of financial risks in the normal course of business. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize the Group’s capital costs by using suitable means of financing and to manage and control the Group’s financial risks effectively. The Group uses financial instruments to hedge certain risk exposures when deemed appropriate based on its internal management risk policies.

The Group’s principal financial instruments comprise cash and cash equivalents, receivables, payables, interest bearing assets and liabilities, other financial liabilities, other investments and derivative financial instruments. The Group manages its exposure to key financial risks in accordance with the Group’s risk management policies.

The Group’s risk management policies are established to all its subsidiaries companies in order to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group’s management framework includes policies, procedures, limits and allowed types of derivative financial instruments. The Group has established a Risk Committee, comprising Senior Management and a member of the Audit Committee of Cresud (IRSA’s parent company), which reviews and oversees management’s compliance with these policies, procedures and limits and has overall accountability for the identification and management of risk across the Group.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4. Financial Risk Management (Continued)

This section provides a description of the principal risks and uncertainties that could have a material adverse effect on the Group’s strategy, performance, results of operations and financial condition. The principal risks and uncertainties facing the businesses, set out below, do not appear in any particular order of potential materiality or probability of occurrence.

(a)

Market risk management

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group’s market risks arise from open positions in foreign currencies, interest-bearing assets and liabilities and equity securities price risks, to the extent that these are exposed to general and specific market movements. The Group sets limits on the exposure to these risks that may be accepted, which are monitored on a regular basis.

The examples of sensitivities to market risks included below are based on a change in one factor while holding all other factors constant. In practice this is unlikely to occur, and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates.

Foreign exchange risk and associated derivative financial instruments

The Group publishes its consolidated financial statements in Argentine Pesos but conducts business in many foreign currencies. As a result, the Group is subject to foreign currency exchange risk due to exchange rate movements, which affect the Group’s transaction costs. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency, that is, Argentine Pesos.

The real estate activities of the Group’s subsidiaries are primarily located in Argentina where the Argentine Peso is the functional currency. A significant majority of the Group’s business activities is conducted in the respective functional currencies of the subsidiaries (the Argentine Peso), thus not exposing the Group to foreign exchange risk. However, in the ordinary course of business, the Group transacts in currencies other than the respective functional currencies of the subsidiaries. These transactions are primarily denominated in US dollars. The Group’s net financial position exposure to the US dollar is managed on a case-by-case basis, by entering into different derivative instruments and/or by borrowing in foreign currencies. Exposure to other foreign currencies has not been significant to date.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4. Financial Risk Management (Continued)

Financial instruments are only considered sensitive to foreign exchange rates where they are not in the functional currency of the entity that holds them. The following table shows the US dollar-denominated net carrying amounts of the financial instruments for the years ended June 30, 2016 and 2015. All amounts are presented in Argentine Pesos, the presentation currency of the Group:

	Net monetary position Liability	Net monetary position Liability
	June 30,  2016	June 30,  2015
Borrowing position with third parties	(4,588,748)	(589,215)
Lending / (Borrowing) position with related parties	1,258,392	(2,136,764)
	(3,330,356)	(2,725,979)

The Group estimates that, other factors being constant, a 10% appreciation of the US dollar against the Argentine Peso at year-end would decrease profit before income tax in an amount of Ps. 333,036 and Ps. 272,598 for the years ended June 30, 2016 and 2015, respectively. A 10% depreciation of the US dollar against the functional currencies would have an equal and opposite effect on the statement of income.

This sensitivity analysis provides only a limited, point-in-time view of the sensitivity of the foreign exchange risk associated with Group’s financial instruments. The actual impact of the foreign exchange rate changes on the Group’s financial instruments may differ significantly from the impact shown in the sensitivity analysis.

Furthermore, the Group also uses derivative instruments, such as foreign currency forward contracts, to manage exposure to foreign exchange risk. As of June 30, 2016 there are foreign-currency forward contracts in the amount of Ps. 2,857, while as of June 30, 2015 there were no foreign currency forward contracts (see Note 18).

Interest rate risk

The Group is exposed to interest rate risk on its investments in debt instruments, short-term and long-term borrowings and derivative financial instruments.

The primary objective of the Group’s investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, the Group diversifies its portfolio in accordance with the limits set by the Group. The Group maintains a portfolio of cash equivalents and short-term investments in a variety of securities, including both government and corporate obligations and money market funds.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4. Financial Risk Management (Continued)

Investments in both fixed rate and floating rate instruments carry varying degrees of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates. In general, longer dated securities are subject to greater interest rate risk than shorter dated securities. While floating rate securities are generally subject to less interest rate risk than fixed rate securities, floating rate securities may produce less income than expected if interest rates decrease. Due in part to these factors, the Group’s investment income may fall short of expectations or the Group may suffer losses in principal if securities that have declined in market value due to changes in interest rates are sold.

As the Group’s investments on this type of financial instruments subject to this risk are not significant, changes in market interest rates do not have any significant direct effect on the Group’s income.

The Group’s interest rate risk principally arises from long-term borrowings (Note 23). Borrowings issued at variable rates expose the Group to the risk that the actual cash flows differ from those expected. Borrowings issued at fixed rates expose the Group to the risk that the fair values of these differ from those expected. The Group manages this risk by maintaining an appropriate mix between fixed and floating rate interest bearing liabilities. These activities are evaluated regularly to determine that the Group is not exposed to interest rate movements that could adversely impact its ability to meet its financial obligations and to comply with its borrowing covenants.

The interest rate risk policy is approved by the Management. The Group analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated, taking into consideration refinancing, renewal of existing positions and alternative financing sources. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing positions. Trade payables are normally interest-free and have settlement dates within one year. The simulation is done on a regular basis to verify that the maximum potential loss is within the limits set by management.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4. Financial Risk Management (Continued)

The following table shows a breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination (excluding finance leases) for the years ended June 30, 2016 and 2015. All amounts are shown in thousands of Argentine Pesos, the Group’s presentation currency:

	June 30, 2016	June 30, 2015
Borrowings per rate and currency denomination
Fixed rate:
Argentine Peso	44,502	96,074
US Dollar	5,345,204	3,313,726
Subtotal fixed-rate borrowings	5,389,706	3,409,800
Variable rate:
Argentine Peso	452,532	277,712
US Dollar	-	892
Subtotal variable rate borrowings	452,532	278,604
Accrued interest and expenses	46,788	102,742
Total borrowings as per analysis	5,889,026	3,791,146
Finance leases	4,042	2,597
Total borrowings as per statement of financial position	5,893,068	3,793,743

The Group estimates that, other factors being constant, a 1% increase in floating rates at year-end would decrease profit before income tax for the year ended June 30, 2016 and 2015 in Ps. 4.5 million and Ps. 2.8 million, respectively. A 1% decrease in the floating interest rate would have an equal and opposite effect on the income statement.

This sensitivity analysis provides only a limited, point-in-time view of this market risk sensitivity of certain of the Group’s financial instruments. The actual impact of rate changes on the Group’s financial instruments may differ significantly from the impact shown in the sensitivity analysis.

Other price risk

The Group is exposed to price risk inherent in equity investments, which are classified on the consolidated statement of financial position at fair value through profit or loss. The Group regularly reviews the prices evolution of these equity securities in order to identify significant movements.

As of June 30, 2016 and 2015 the total value of the investment in equity securities issued by other companies equals to Ps. 312.4 million and Ps. 173.8 million, respectively.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4. Financial Risk Management (Continued)

The Group estimates that, other factors being constant, a 10% decrease in equity indexes at year-end would decrease profit before income tax for the years ended June 30, 2016 and 2015 in Ps. 31.2 million and Ps. 17.4 million respectively. A 10% increase in equity indexes would have an equal and opposite effect on the statement of income.

This sensitivity analysis provides only a limited, point-in-time view of the price risk sensitivity of certain of the Group’s equity securities. The actual impact of changes in equity indexes may differ significantly from the impact shown in the sensitivity analysis.

(b)

Credit risk management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Group. Credit limits have been established to ensure that the Group deals only with approved counterparties and that counterparty concentration risk is addressed and the risk of loss is mitigated. Counterparty exposure is measured as the aggregate of all obligations of any single legal entity or economic entity to the Group.

The Group is subject to credit risk arising from deposits with banks and financial institutions, investments of surplus cash balances, the use of derivative financial instruments and from outstanding receivables. Credit risk is managed on a country-by-country basis. Each local entity is responsible for managing and analyzing the credit risk.

The Group’s policy is to manage credit exposure to deposits, short-term investments and other financial instruments by maintaining diversified funding sources in various financial institutions. All the institutions that operate with the Group are well known because of their experience in the market and high credit quality. The Group places its cash and cash equivalents, investments, and other financial instruments with various high credit quality financial institutions, thus mitigating the amount of credit exposure to any one institution. The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents and short-term investments in the statement of financial position.

The Group’s primary objective for holding derivative financial instruments is to manage currency exchange rate risk and interest rate risk. The Group generally enters into derivative transactions with high-credit-quality counterparties and, by policy, limits the amount of credit exposure to each counterparty. The amounts subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which counterparty’s obligations exceed the obligations that the Group has with that counterparty. The credit risk associated with derivative financial instruments is representing by the carrying value of the assets positions of these instruments.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4. Financial Risk Management (Continued)

The Group’s policy is to manage credit risks associated with trade and other receivables within defined trading limits. All Group’s significant counterparties have internal trading limits.

Trade receivables from investment and development property activities are primarily derived from leases and services from shopping centers, office and other rental properties; receivables from the sale of trading properties and investment properties (primarily undeveloped land and non-retail rental properties). The Group has a large customer base and is not dependent on any single customer.

Trade receivables related to leases and services provided by the Group represent a diversified tenant base and account for 98.3% and 97.8% of the Group’s total trade receivables as of June 30, 2016 and 2015, respectively. The Group has specific policies to ensure that rental contracts are transacted with counterparties with appropriate credit quality. The majority of the Group’s shopping center, office and other rental properties’ tenants are well recognized retailers, diversified companies, professional organizations, and others. Owing to the long-term nature and diversity of its tenancy arrangements, the credit risk of this type of trade receivables is considered to be low. Generally, the Group has not experienced any significant losses resulting from the non-performance of any counterpart to the lease contracts. As a result, the allowance for doubtful accounts balance is low. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Group, as applicable. If customers are independently rated, these ratings are used. If there is no independent rating, risk control assesses the credit quality of the customer, taking into account its past experience, financial position, actual experience and other factors. Based on the Group’s analysis, the Group determines the size of the deposit that is required from the tenant at inception. Management does not expect any losses from non-performance by these counterparties. See Note 16 for details.

On the other hand, property receivables related to the sale of trading properties represent 0.1% of the Group’s total trade receivables as of June 30, 2016 and 2015. Payments on these receivables have generally been received when due. These receivables are generally secured by mortgages on the properties. Therefore, the credit risk on outstanding amounts is considered very low.

Trade receivables related to the Group’s consumer financing residual activities represent 1.7% and 2.1% of the Group’s total trade receivables as of June 30, 2016 and 2015, respectively.

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4.            Financial Risk Management (Continued)

(c)

Liquidity risk management

The Group is exposed to liquidity risks, including risks associated with refinancing borrowings as they mature, the risk that borrowing facilities are not available to meet cash requirements, and the risk that financial assets cannot readily be converted to cash without loss of value. Failure to manage liquidity risks could have a material impact on the Group’s cash flow and statement of financial position. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding its existing and prospective debt requirements by maintaining diversified funding sources with adequate committed funding lines from high quality lenders.

The Group monitors its current and projected financial position using several key internally generated reports: cash flow; debt maturity; and interest rate exposure. The Group also undertakes sensitivity analysis to assess the impact of proposed transactions, movements in interest rates and changes in property values on the key profitability, liquidity and balance sheet ratios.

The Group’s debt and derivative positions are continually reviewed to meet current and expected debt requirements. The Group maintains a balance between longer-term and shorter-term financings. Short-term financing is principally raised through bank facilities and overdraft positions. Medium- to longer-term financing comprises public and private bond issues, including private placements. Financing risk is spread by using a variety of types of debt. The maturity profile is managed, by spreading the repayment dates and extending facilities.

The tables below analyze the Group´s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the tables are the contractual undiscounted cash flows and as a result, they do not reconcile to the amounts disclosed on the statement of financial position. However, undiscounted cash flows in respect of balances due within 12 months generally equal their carrying amounts in the statement of financial position, as the impact of discounting is not significant. The tables include both interest and principal flows.

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4.            Financial Risk Management (Continued)

Where the interest payable is not fixed, the amount disclosed has been determined by reference to the conditions existing at each reporting date.

At June 30, 2016	Less than 1 year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 4 years	More than 4 years	Total
Trade and other payables	403,329	2,153	1,420	8,917	744	416,563
Borrowings (excluding finance leases liabilities)	1,217,484	479,468	474,957	473,760	6,708,028	9,353,697
Finance leases	1,661	1,260	645	476	-	4,042
Derivative financial instruments	2,857	-	-	-	-	2,857
Total	1,625,331	482,881	477,022	483,153	6,708,772	9,777,159

At June 30, 2015	Less than 1 year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 4 years	More than 4 years	Total
Trade and other payables	386,772	2,644	1,606	1,269	7,238	399,529
Borrowings (excluding finance leases liabilities)	756,178	1,361,977	192,917	190,339	2,436,496	4,937,907
Finance leases	1,381	608	608	-	-	2,597
Total	1,144,331	1,365,229	195,131	191,608	2,443,734	5,340,033

(d)

Capital risk management

The capital structure of the Group consists of shareholders’ equity and short-term to long-term net borrowings. The type and maturity of the Group’s borrowings are analyzed further in Note 23. The Group’s equity is analyzed into its various components in the statement of changes in equity.

Capital is managed so as to promote the long-term success of the business and to maintain sustainable returns for shareholders.

The Group seeks to manage its capital requirements to maximize value through the mix of debt and equity funding, while ensuring that Group entities continue to operate as going concerns, comply with applicable capital requirements and maintain strong credit ratings.

The Group assesses the adequacy of its capital requirements, cost of capital and gearing (i.e. debt/equity mix) as part of its broader strategic plan. The Group continuously reviews its capital structure to ensure that (i) sufficient funds and financing facilities are available to implement the Group’s property development and business acquisition strategies, (ii) adequate financing facilities for unforeseen contingencies are maintained, and (iii) distributions to shareholders are maintained within the Group’s dividend distribution policy. The Group also protects its equity in assets by taking out insurance.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4.            Financial Risk Management (Continued)

The Group’s strategy is to maintain key financing metrics (namely, net debt to total equity ratio (gearing) and loan-to-value ratio (LTV) in order to ensure that asset level performance is translated into enhanced returns for shareholders whilst maintaining an appropriate risk reward balance to accommodate changing financial and operating market cycles.

The following table details a number of the Group’s key metrics in relation to managing its capital structure. The ratios are within the ranges previously established by the Group’s strategy.

	June 30, 2016	June 30, 2015
Gearing ratio (i)	77.90%	76.84%
Debt ratio (ii)	23.53%	20.46%

(i)

Calculated as total current and non-current borrowings divided by total current and non-current borrowings plus equity.

(ii)

Calculated as total current and non-current borrowings divided by total properties at fair value (including trading properties, property, plant and equipment, investment properties and units to receive under barter agreements).

4.1

Other non-financial risks

Property risk:

There are several risks affecting the Group’s property investments. The composition of the Group’s property portfolio including asset concentration and lot size may impact liquidity and relative property performance. The Group has a large multi-asset portfolio and monitors its concentration and average property lot size.

A change in trends and economic conditions causes shifts in customer demands for properties with impact on new lettings, renewal of existing leases and reduced rental growth. Also changes increase risk of tenant insolvencies. The Group conducts several actions to mitigate some of these risks whenever possible. The variety of asset types and geographical spread as well as a diversified tenant base, with monitoring of tenant concentration, helps mitigating these risks.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

4.            Financial Risk Management (Continued)

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, the level of sales of each shopping center rental unit, the increasing competition from internet sales, the amount of rent collected from each shopping center rental unit and the fluctuations in their 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 Group if its tenants are unable to pay their higher rent obligations due to the increase in expenses. Argentine Law N° 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 month rent if the tenant rescinds during the first year of the lease, and one-month rent if the tenant rescinds during the second year of the lease. The exercise of such rescission rights could materially and adversely affect the Group.

Risks associated with development properties activities include the following: the potential abandonment of development opportunities; construction costs exceeding original estimates, possibly making a project uneconomical; occupancy rates and rents at newly completed projects may be insufficient to make the project profitable; the Group’s inability to obtain financing on favorable terms for the development of the project; construction and lease-up may not be completed on schedule, resulting in increased debt service expense and construction costs; the Group’s inability to obtain, or the delays in obtaining, all necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations; preconstruction buyers may default on their purchase contracts or units in new buildings may remain unsold upon completion of constructions; prices for residential units may be insufficient to cover development costs. The Group also takes several actions to monitor these risks and respond appropriately whenever it is under its control. The Group has in-house property market research capability and development teams that monitor development risks closely. The Group generally adopts conservative assumptions on leasing and other variables and monitors the level of committed future capital expenditure on development programs relative to the level of undrawn facilities.

5.

Critical accounting estimates, assumptions and judgments

The Group’s significant accounting policies are stated in Note 2 above. Not all of these significant accounting policies require management to make difficult subjective or complex judgments or estimates. The following section is intended to provide an understanding of the policies that management considers critical because of the level of complexity, judgment or estimation involved in their application and their impact on the consolidated financial statements. These judgments involve assumptions or estimates in respect of future events. Actual results may differ from these estimates.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

5.            Critical accounting estimates, assumptions and judgments (Continued)

(a)

Business combinations – purchase price allocation

Business combinations are accounted for using the acquisition method. Accounting for business combinations requires the determination of the fair value of the various assets and liabilities of the acquired business. The Group uses all available information to make these fair value determinations, and for major acquisitions, may hire an independent appraisal firm to assist in making fair value estimates. In some instances, assumptions with respect to the timing and amount of future revenues and expenses associated with an asset might have to be used in determining its fair value. These assumptions may differ materially from those initial estimates, and if the timing is delayed significantly or if the net cash flows decline significantly, the asset could become impaired.

(b)           Impairment testing of goodwill and other non-current assets and calculation of fair value

As of the end of each year ended June 30, the Group reviews the carrying amounts of property, plant and equipment, intangible assets and investment property in order to identify if there are events or circumstances that indicate a decline in the recoverable amount of these assets. The indications that must be taken into account in the analysis are, among other points, physical damage or significant changes to the manner in which the asset is used, worse than expected economic performance or a drop in revenues. When the asset does not generate independent cash flows from others assets, the Group estimates the recoverable value of the cash-generating unit to which the asset relates.

Goodwill is not amortized but it is tested for impairment on an annual basis, or more frequently if there is an indication of impairment. For the purposes of the impairment testing, goodwill is to be allocated since acquisition among each of the cash generating units or groups of cash generating units that are expected to benefit from the synergies of the respective business combinations, regardless of the allocation of other assets or liabilities owned by the acquired entity to these cash-generating units or groups of cash-generating units.

An asset or CGU´s carrying amount, is written down immediately to its recoverable amount if the asset or CGU’s carrying amount is greater than its estimated recoverable amount. An impairment loss is recognized immediately in the statement of comprehensive income.

Given the nature of its assets and activities, most of the Group’s individual assets do not generate independent cash flows that are independent of those from CGUs. Therefore, the Group estimates the recoverable value of the CGU for the purposes of the impairment test. In general, each business center, office building and undeveloped property is generally considered as an independent CGU.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

5.            Critical accounting estimates, assumptions and judgments (Continued)

As of June 30, 2016 and 2015, given the injunction order and the concession status of Arcos del Gourmet S.A. (see Note 7), circumstances that were deemed to be potential proof of impairment and, therefore, the Group carried out relevant analysis on consolidated net assets in this transaction. To such end, the Group has determined the recoverable value of such assets using the discounted cash flow valuation method upon weighing various scenarios. The main inputs used in the model include projected operating income and a discount rate in line with the business. Each revenue and cost scenario was assigned an occurrence probability rate based on information available at the time of conducting the analysis. The Company concluded that it is not necessary to record any impairment of its related assets.

The following table shows the amounts of goodwill and non-current assets other than goodwill of the CGUs where goodwill was allocated and/or an intangible asset, for each of the years ended June 30, 2016 and 2015.

CGU	Country	Segment	June 30, 2016	June 30, 2015
Arcos del Gourmet (i)	Argentina	Shopping Centers (intangible asset)	27,127	30,261
Arcos del Gourmet	Argentina	Shopping Centers (investment property)	279,107	229,800
Total assets allocated to CGUs			306,234	260,061

(i) Upon completion of the shopping center, the amortization of the intangible started.

The Group carried out the impairment test on this CGU on the basis of the use value model and concluded that no impairment should be recognized for the assets for any of the years reported.

The Group uses the fair value of investment properties estimated by independent appraisers as required by Resolution N° 576/10 of the National Securities Commission of Argentina.

For purposes of calculating the fair value for impairment tests and/or to disclose it in a note to the financial statements the Group uses various valuation techniques: discounted cash flows, capitalization method and market comparables, depending on the type of ownership involved, as indicated below.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

5.            Critical accounting estimates, assumptions and judgments (Continued)

Under the cash flows or discounted cash flows model, independent appraisers estimate net future cash flows, based on the specific features of each property (including but not limited to location, sales, occupation, turnout and useful life), the agreements in force, market information and future forecasts as of the valuation date. Net income forecasts and revenues growth rates are among the most important assumptions used in the valuation. This estimate also considers the discount rates that reflect the risk of each business. Any inaccuracy in the assumptions used by the appraisers may result in differences in the fair value of the Group’s property.

The Group uses the cap rate valuation methodology to calculate the fair value of its shopping centers.

This methodology involves designing simulation models whereby the current annual operating income flow of a given asset is considered to be a stabilized low in perpetuity, and is divided by a capitalization rate derived from market comparables; the rate is adjusted considering its major features (size, location and condition of asset) to determine its fair value. The Group considers that the new methodology reflects more reliably the fair market value of its shopping centers for it is based on the current annual net operating income of various assets and uses market information to determine the capitalization rate; as such, it is a more transparent method internationally recognized in the industry. Additionally, it is the same methodology used to value the shopping center segments in other similar companies, hence, it is more useful to make comparisons against such valuations.

As of June 30, 2016 and 2015 fair value of investment properties was computed using a weighted average capitalization rate of 10.9% and 12%, respectively (a 9.8% to 13.3% range was considered for fiscal year 2016 and 10% to 15% for fiscal year 2015).

Generally, an increase in the annual flow of operating income will lead to an increase in the fair value of investment properties, whereas an increase in the capitalization rate will lead to a decline in the fair value of investment properties.

For those assets that are not currently operating and where it is not possible to identify annual net operating income flows, the discounted cash flow or market comparable valuation methodology is used.

Under the comparative sale method (or comparable market), the sale price of comparable properties located nearby is adjusted by the differences in the most significant features of such property, such as, size and condition. The most relevant data included in this method is the price per square meter.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

5.            Critical accounting estimates, assumptions and judgments (Continued)

The following table details the models used for each segment:

	2016	2015
Operating Shopping Centers	Capitalization	Capitalization
Shopping Centers (Concession)	Discounted cash flows	Discounted cash flows
Offices and others	Market comparable	Market comparable

Management views these assumptions as conservative and does not believe that any reasonable change in the assumptions would cause the carrying value of these CGUs to exceed the recoverable amount.

(c) 

Fair value of derivatives and other financial instruments

Fair values of derivative financial instruments are computed with reference to quoted market prices on trade exchanges, when available. The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are based on market conditions existing at statement of financial position.

(d) 

Allowance for trade receivables

As described on Note 2.15., the Group makes some estimation in order to calculate the allowance for trade receivables. If the amount estimated differs to the present value, actual write-offs might be higher/lower than expected.

(e)  Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the overall provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Management assesses the realizability of deferred tax assets, by considering whether it is probable that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. See Note 26 for details.

F - 66

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6.

Segment reporting

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) such function is carried out by the Group’s Executive Committee in deciding how to allocate resources and in assessing performance, without prejudice of the powers and responsibilities of the Board of Directors. The CODM evaluates the business based on the differences in the nature of its products, operations and risks. The amount reported for each segment item is the measure reported to the CODM for these purposes and later to the Board of Directors. In turn, the Board of Directors’ management is assessed by the Shareholders’ Meeting, which is the governance body.

Operating segments identified are disclosed as reportable segments if they meet any of the following quantitative thresholds:

●

The operating segment’s reported revenue, including both sales to external customers and inter-segment sales or transfers, is ten per cent or more of the combined revenue, internal and external, of all operating segments.

●

The absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of:

o

the combined reported profit of all operating segments that do not report a loss; and

o

the combined reported loss of all operating segments that report a loss.

●

Its assets are 10% or more of the combined assets of all operating segments.

As well as this, the operating segments that do not meet any of the quantitative thresholds could be considered as reportable segments if the management estimates that this information could be useful for the users of the financial statements.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6.            Segment reporting (Continued)

If, after determining reportable segments in accordance with the preceding quantitative thresholds, the total external revenue attributable to those segments amounts to less than 75% of the total Group’s consolidated external revenue, additional segments are identified as reportable segments, even if they do not meet the thresholds described above, until at least 75% of the Group’s consolidated external revenue is included in reportable segments. Once the 75% of the Group’s consolidated external revenue is included in reportable segments, the remaining operating segments are aggregated in the “Other segments” column.

Segment information has been prepared and classified according to different types of businesses in which the Group conducts its activities. The Group´s Investment and Development Properties business is comprised of the following segments:

●

The “Shopping Centers” Segment includes the operating results of the Group’s Shopping Centers portfolio principally comprised of lease and service revenues from tenants.

●

The “Offices and others” Segment includes the operating results of the Group’s lease and service revenues of office space and other non-retail building properties principally comprised of lease and service revenue from tenants.

●

The “Sales and Developments” Segment includes the operating results of sales of Undeveloped parcels of land and/or trading properties, as the results related with its development and maintenance. Also included in this segment are the results of the sales of real property intended for rent.

●

The “Financial operations and others” segment primarily includes the financial activities carried out by the associate Tarshop S.A., the residual financial operations of its subsidiary Apsamedia S.A. (currently merged with IRSA CP). The e-commerce activities conducted through the associate Avenida Inc. are also included until the first quarter of the fiscal year ended June 30, 2015, then it has been considered as an investment in a financial asset.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6.            Segment reporting (Continued)

Below is a summarized analysis of the lines of business of the Group for the fiscal years ended June 30, 2016, 2015 and 2014:

	Fiscal year ended June 30, 2016
	Urban properties			Investments	Total urban properties and investments
	Shopping Centers	Offices and others	Sales and developments	Financial operations and others
Revenue (i)	2,409,082	284,137	2,679	1,013	2,696,911
Costs	(370,589)	(115,502)	(5,720)	(77)	(491,888)
Gross Profit / (Loss)	2,038,493	168,635	(3,041)	936	2,205,023
Gain from disposal of investment properties	-	-	175,963	-	175,963
General and administrative expenses	(178,643)	(19,870)	(20,296)	-	(218,809)
Selling expenses	(145,278)	(12,824)	(4,264)	(1,835)	(164,201)
Other operating results, net	(41,133)	(1,377)	980	(18)	(41,548)
Profit / (Loss) from operations	1,673,439	134,564	149,342	(917)	1,956,428
Share in profit / (loss) of associates and joint ventures	-	14,478	-	(31,447)	(16,969)
Segment Profit / (Loss) Before Financing and Taxation	1,673,439	149,042	149,342	(32,364)	1,939,459
Investment properties	1,722,467	2,090,154	201,543	-	4,014,164
Property, plant and equipment	49,053	67,656	-	-	116,709
Trading properties	-	-	14,189	-	14,189
Goodwill	1,323	3,911	-	-	5,234
Right to receive units ("Barters")	-	-	38,281	-	38,281
Inventories	18,560	-	-	-	18,560
Investments in associates and joint ventures	-	30,925	-	75,487	106,412
Operating assets (ii)	1,791,403	2,192,646	254,013	75,487	4,313,549

(i)

The Group’s revenues are entirely originated in Argentina.

(ii)

All of the Group’s assets included in the segment are located in Argentina.

F - 69

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6.

Segment reporting (Continued)

	Fiscal year ended June 30, 2015
	Urban properties			Investments	Total urban properties and investments
	Shopping Centers	Offices and others	Sales and developments	Financial operations and others
Revenue (i)	1,778,310	160,132	6,616	147	1,945,205
Costs	(264,771)	(74,752)	(4,947)	(56)	(344,526)
Gross Profit	1,513,539	85,380	1,669	91	1,600,679
Gain from disposal of investment properties	-	-	126,686	-	126,686
General and administrative expenses	(136,151)	(2,960)	-	-	(139,111)
Selling expenses	(112,824)	(5,505)	(254)	(380)	(118,963)
Other operating results, net	(48,565)	(58,340)	-	8,759	(98,146)
Profit from Operations	1,215,999	18,575	128,101	8,470	1,371,145
Share of (loss) / profit of associates and joint ventures	-	(2,563)	-	10,740	8,177
Segment profit Before Financing and Taxation	1,215,999	16,012	128,101	19,210	1,379,322
Investment properties	1,703,344	2,368,155	194,782	-	4,266,281
Property, plant and equipment	48,345	61,649	-	-	109,994
Trading properties	-	-	11,721	-	11,721
Goodwill	1,323	3,911	-	-	5,234
Right to receive units ("Barters")	-	-	38,281	-	38,281
Inventories	15,711	-	-	-	15,711
Investments in associates and joint ventures	-	20,746	-	35,934	56,680
Operating assets (ii)	1,768,723	2,454,461	244,784	35,934	4,503,902

(i)

The Group’s revenues are entirely originated in Argentina.

(ii)

All of the Group’s assets included in the segment are located in Argentina.

F - 70

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6.

Segment reporting (Continued)

	Fiscal year ended June 30, 2014
	Urban properties			Investments	Total urban properties and investments.
	Shopping Centers	Offices and others	Sales and developments	Financial operations and others
Revenue (i)	1,383,008	27,569	51,917	574	1,463,068
Costs	(267,728)	(9,753)	(10,916)	(373)	(288,770)
Gross Profit	1,115,280	17,816	41,001	201	1,174,298
Gain from disposal of investment properties	-	-	308	-	308
General and administrative expenses	(101,538)	(253)	-	(55)	(101,846)
Selling expenses	(73,427)	(817)	(3,851)	110	(77,985)
Other operating results, net	(43,743)	-	13,390	54	(30,299)
Profit from Operations	896,572	16,746	50,848	310	964,476
Share of loss of associates and joint ventures	-	(885)	-	(18,500)	(19,385)
Segment profit Before Financing and Taxation	896,572	15,861	50,848	(18,190)	945,091
Investment properties	1,655,241	166,288	35,572	-	1,857,101
Property, plant and equipment	20,455	3,196	-	-	23,651
Trading properties	-	-	9,539	-	9,539
Goodwill	1,829	3,911	-	-	5,740
Right to receive units ("Barters")	9,264	-	23,608	-	32,872
Inventories	10,625	-	-	-	10,625
Investments in associates and joint ventures	-	23,208	-	33,680	56,888
Operating assets (ii)	1,697,414	196,603	68,719	33,680	1,996,416

(i) The Group’s revenues are entirely originated in Argentina.

(ii) All of the Group’s assets included in the segment are located in Argentina.

Group´s shopping centers, offices and other rental properties, and trading properties, are located in Argentina.

F - 71

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6. Segment reporting (Continued)

The CODM evaluates performance of business segments based on segment profit, defined as profit or loss from operations before financing and taxation. The measurement principles for the segment reporting structure are based on the IFRS principles adopted in the consolidated financial statements, except for:

●The operating income from the joint ventures Nuevo Puerto Santa Fe S.A. and Quality Invest S.A. are reported under the proportional consolidation method. Under this method, the income/loss generated by joint ventures is reported in the income statement line-by-line, rather than in a single item as required by IFRS. Management believes that the proportional consolidation method provides more useful information to understand the business return, because the assets and income/loss generated by consolidated operations are similar to the assets and income/loss booked under the equity method. This is due to the fact that under the proportional consolidation method, revenues and expenses are reported separately, instead of offsetting and reporting them as a single item in the income statement. Therefore, the proportional consolidation method is used by the CODM to assess and understand the return and the results of operations of these businesses as a whole.

Operating results of Entertainment Holding S.A. joint venture is accounted for under the equity method. Management believes that, in this case, this method provides more adequate information for this type of investment, where the main asset consists of an indirect interest of 25% of la Rural S.A..

●Operating results does not include the amounts pertaining to building administration expenses and collective promotion funds, and so does it exclude total recovered costs, whether by way of building administration expenses or other concepts included under financial results (for example default interest and other concepts) and not analyzed to assess the operating performance of the segment. The CODM examines the net amount from both concepts (total surplus or deficit between building administration expenses and collective promotion funds and recoverable expenses).

These costs and income are presented now for reconciliation of all segments and their respective consolidating operating income.

Revenues generated and goods and services exchanged between segments are calculated on the basis of market prices. Intercompany transactions between segments, if any, are eliminated.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6.            Segment reporting (Continued)

The following tables present a reconciliation between the total results of operations corresponding to segment information and the results of operations as per the statement of income. The adjustments are related to the presentation of the results of joint ventures on an equity-accounted basis under IFRS and the expenses and collective promotion fund.

	Fiscal year ended June 30, 2016
	Total Segment reporting	Adjustment for expenses and collective promotion fund	Adjustment for share of profit / (loss) of joint ventures	Adjustment for inter-segment eliminations	Total as per Statement of Comprehensive Income
Revenues	2,696,911	1,183,627	(22,038)	-	3,858,500
Costs	(491,888)	(1,201,305)	13,001	-	(1,680,192)
Gross Profit	2,205,023	(17,678)	(9,037)	-	2,178,308
Gain from disposal of investment properties	175,963	-	-	-	175,963
General and administrative expenses	(218,809)	-	667	-	(218,142)
Selling expenses	(164,201)	-	1,980	-	(162,221)
Other operating results, net	(41,548)	-	2,229	-	(39,319)
Profit from Operations	1,956,428	(17,678)	(4,161)	-	1,934,589
Share of loss of associates and joint ventures	(16,969)	-	(365)	-	(17,334)
Segment Profit before Financing and Taxation	1,939,459	(17,678)	(4,526)	-	1,917,255

	Fiscal year ended June 30, 2015
	Total Segment reporting	Adjustment for expenses and collective promotion fund	Adjustment for share in profit / (loss) of joint ventures	Adjustment for inter-segment eliminations	Total as per Statement of Comprehensive Income
Revenues	1,945,205	833,905	(21,029)	-	2,758,081
Costs	(344,526)	(847,980)	9,438	-	(1,183,068)
Gross Profit	1,600,679	(14,075)	(11,591)	-	1,575,013
Gain from disposal of investment properties	126,686	-	-	-	126,686
General and administrative expenses	(139,111)	-	404	108	(138,599)
Selling expenses	(118,963)	-	1,280	-	(117,683)
Other operating results, net	(98,146)	-	1,212	(108)	(97,042)
Profit from Operations	1,371,145	(14,075)	(8,695)	-	1,348,375
Share of profit of associates and joint ventures	8,177	-	6,408	-	14,585
Segment Profit before Financing and Taxation	1,379,322	(14,075)	(2,287)	-	1,362,960

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6.            Segment reporting (Continued)

	Fiscal year ended June 30, 2014
	Total Segment reporting	Adjustment for expenses and collective promotion fund	Adjustment for share in profit / (loss) of joint ventures	Adjustment for inter-segment eliminations	Total as per Statement of Comprehensive Income
Revenues	1,463,068	667,824	(17,518)	(360)	2,113,014
Costs	(288,770)	(675,226)	7,398	360	(956,238)
Gross Profit	1,174,298	(7,402)	(10,120)	-	1,156,776
Gain from disposal of investment properties	308	-	-	-	308
General and administrative expenses	(101,846)	-	293	108	(101,445)
Selling expenses	(77,985)	-	1,131	-	(76,854)
Other operating results, net	(30,299)	-	3,020	(108)	(27,387)
Profit from Operations	964,476	(7,402)	(5,676)	-	951,398
Share of loss of associates and joint ventures	(19,385)	-	5,850	-	(13,535)
Segment Profit before Financing and Taxation	945,091	(7,402)	174	-	937,863

Total segment assets are allocated based on the operations of the segment and the physical location of the assets. In line with the discussion above, assets assigned to each segment include the proportionate share of the assets of the joint ventures. The statement of financial position under IFRS shows the net investment in these joint ventures as a single item.

The total operating segment assets as per the segment information are reconciled to the total consolidated assets as per the statement of financial position as follows.

	June 30, 2016	June 30, 2015	June 30, 2014
Total operating segment assets as per segment information	4,313,549	4,503,902	1,996,416
Less:
Proportionate share in reportable operating segment assets of certain joint ventures (***)	(112,176)	(116,454)	(109,199)
Plus:
Investments in joint ventures (*)	123,283	125,238	114,956
All other non-reportable assets (**)	4,974,832	1,832,061	1,494,046
Total Consolidated Assets as per the Statement of financial position	9,299,488	6,344,747	3,496,219

(*) Represents the equity-accounted amount of those joint ventures, which were proportionate-consolidated for segment information purposes.

(**) Includes deferred income tax, income tax credit, trade and other receivables, investments in financial assets, cash and cash equivalent and intangible assets except for goodwill and right to receive units.

(***) Below is a detail of the proportionate share in assets by segment of joint ventures included in the information reported by segment:

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

6. Segment reporting (Continued)

	June 30, 2016	June 30, 2015	June 30, 2014
Investment properties	105,986	110,256	103,609
Goodwill	5,234	5,234	5,234
Property, plant and equipment	598	600	99
Inventories	358	364	257
Total proportionate share in assets per segment of joint ventures	112,176	116,454	109,199

The Group’s revenues for each of its reporting segments derive from a large and diverse client base and, therefore, there is no revenue concentration in any particular segment.

7.

Information about subsidiaries

General information

The Group conducts its business through several operating and holding subsidiaries. See the Group’s shareholding structure, percentages of interest, materiality criteria and other relevant information on the Group’s subsidiaries in Note 2.3.a).

See Note 3 for information about acquisitions and disposals of subsidiaries made during the fiscal years ended June 30, 2016, 2015 and 2014.

Restrictions, commitments and other matters in respect of subsidiaries

According to Law N° 19,550 in which the Group operates, 5% of the profit of the year is separated to constitute a legal reserve until they reach legal capped amounts (20% of total capital). This legal reserve is not available for dividend distribution and can only be released to absorb losses. The Group has not reached the legal limit of this reserve. Dividends are paid out across the Group’s subsidiaries based on their individual accounting statements.

Arcos del Gourmet

Injunction order

In December 2013, the Judicial Branch confirmed an injunction order that suspended the opening of the Shopping Center on the grounds that it did not have certain government permits in the context of two legal proceedings, where a final decision has been rendered for the company.

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

7. Information about subsidiaries (Continued)

The plaintiff filed a petition for the continuation of the preliminary injunction by means of an extraordinary appeal of unconstitutionality which was denied by the lower and appellate courts; consequently, it filed an appeal with the Supreme Court of Justice of the Autonomous City of Buenos Aires, which so far, has not rendered a decision.

Nowadays, the Shopping Center Distrito Arcos is open to the public and operating normally.

Concession Status

The National State issued Executive Order 1723/2012, whereby several plots of land located in prior rail yards of Palermo, Liniers and Caballito rail stations ceased to be used for rail purposes, in order to be used for development of integral urbanization projects.

In this respect and as part of several measures related to other licensed persons and/or concessionaires, we have notified, in the file of proceedings, of the corresponding Resolution 170/2014 revoking of the Contract for Readjustment of the Concession of Rights of use and Development number AF000261 issued by the Agencia de Administración de Bienes del Estado (State Assets Administration Office, or AABE in Spanish).

It should further be pointed out that such measure:

(i) has not been adopted due to non-compliance of the company;

(ii) to date has not involved the interruption of the commercial development or operation of the shopping center, which continues to operate under normal conditions;

Notwithstanding the foregoing, Arcos del Gourmet S.A. has filed the relevant administrative resources (appeal) and has also filed a judicial action requesting that the revocation of such concession be overruled.

Furthermore, it has started a so-called “juicio de consignación”, that is an action where the plaintiff deposits with the court sums of money that the defendant refuses to accept. Under this legal action, the company has deposited in due time and form all rental payments under the Contract for Reformulation of the Concession of Rights of Use and Development, which the Company considers to have been unduly revoked.

Information on subsidiaries with material non-controlling interests

As mentioned in Note 2.3.a), the following non-controlling interests are considered significant to the Group:

	Equity attributable to non-controlling interest
Subsidiary	June 30, 2016	June 30, 2015
Panamerican Mall S.A.	142,083	134,838

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

7. Information about subsidiaries (Continued)

The non-controlling interests for the remaining subsidiaries aggregate Ps. 38,701 and Ps. 49,996 as of June 30, 2016 and 2015, respectively. None of these subsidiaries have non-controlling interests which are individually considered material to the Group.

Below is the summarized financial information on subsidiaries with material non-controlling interests:

Summarized statement of financial position

	Panamerican Mall S.A. (PAMSA)
	June 30, 2016	June 30, 2015
ASSETS
Total non-current assets	452,256	517,465
Total current assets	484,841	487,492
TOTAL ASSETS	937,097	1,004,957
LIABILITIES
Total non-current liabilities	32,003	20,791
Total current liabilities	194,677	309,978
TOTAL LIABILITIES	226,680	330,769
NET ASSETS	710,417	674,188

Summarized statement of comprehensive income

	PAMSA
	June 30, 2016	June 30, 2015	June 30,  2014
Revenue	424,498	333,292	262,273
Profit before income tax	427,253	225,004	168,211
Income tax expense	(147,572)	(78,794)	(58,888)
Profit for the year	279,681	146,210	109,323
Total Comprehensive Income for the year	279,681	146,210	109,323
Profit attributable to non-controlling interest	55,936	29,242	21,865
Dividends distribution to non-controlling interest	48,690	42,772	-

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

7. Information about subsidiaries (Continued)

Summarized statements of cash flows

	PAMSA
	June 30, 2016	June 30, 2015	June 30, 2014
Net cash generated from (used in) operating activities	171,429	119,826	(23,749)
Net cash (used in) generated from investing activities	(144,114)	(154,008)	60,871
Net cash used in financing activities	(37,514)	(116)	(4,301)
Net (decrease) / increase in cash and cash equivalents	(10,199)	(34,298)	32,821
Cash and cash equivalents at beginning of the year	10,553	44,387	11,416
Foreign exchange gain on cash and cash equivalents	60	464	150
Cash and cash equivalents at end of the year	414	10,553	44,387

The information above is the amount before inter-company eliminations.

Reconciliation of the summarized financial information presented to the carrying amount of the Group’s interest in subsidiaries with material non-controlling interests is as follows:

	PAMSA
	June 30, 2016	June 30, 2015
Net assets at the beginning of the year	674,188	741,840
Profit for the year	279,681	146,210
Dividend distribution	(243,452)	(213,862)
Net assets at the end of the year	710,417	674,188
Net assets at the participating interest	80%	80%
Interests in subsidiaries	568,334	539,350
Financial costs capitalized	90,598	94,352
Book value at the end of the year	658,932	633,702

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8.

Interests in joint ventures

General information

The accounting policy used by the Group to value its interest in joint ventures, materiality criteria and other relevant information concerning these investments are described in Note 2.3.e).

See Note 3 for information about acquisitions and disposals of joint ventures made during the fiscal years ended June 30, 2016, 2015 and 2014.

The table below lists the Group’s investments and the values of interests in joint ventures for the fiscal years ended June 30, 2016 and 2015, as well as the Group’s interest in comprehensive income of such companies as of June 30, 2016, 2015 and 2014:

F - 79

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8. Interests in joint ventures (Continued)

						Value of Group´s interest in equity		Group´s interest in comprehensive income			% of ownership interest held
						June 30,		June 30,			June 30,					Last financial statements issued
Name of the entity	Place of business / country of incorporation	Main Activity	Nature of the relationship	Common shares 1 vote		2016	2015	2016	2015	2014	2016	2015		2014		Share capital (nominal value)	Income / (loss) for the year	Equity
Entertainment Holdings S.A. (1)	Argentina	Real estate	(2)	22,395,574		30,904	20,736	14,467	(2,632)	(838)	50%		50%		50%	44,791	7,046 (7)	61,809 (7)
Quality Invest S.A. (1)	Argentina	Real estate	(3)	76,814,342		90,721	96,435	(7,715)	1,849	976	50%		50%		50%	153,629	(14,998)	135,935
Nuevo Puerto Santa Fe S.A. (1)	Argentina	Real estate	(4)	138,750	(6)	32,562	28,803	7,350	4,559	4,874	50%		50%		50%	27,750	15,048 (7)	55,216 (7)
Entretenimiento Universal S.A.	Argentina	Event organization and others	(5)	300		21	10	11	69	(47)	2.5%		2.5%		2.5%	12	576 (7)	837 (7)
						154,208	145,984	14,113	3,845	4,965

(1)

Considered to be material to the Group.

(2)

Entertainment Holdings S.A (“EHSA”) is an investment company that holds indirectly 25% of La Rural S.A., engaged in the operation of the exhibition grounds in Buenos Aires. See Note 41.

(3)

Quality Invest S.A. (“Quality”) is a company engaged in the operation of the San Martín premises (formerly owned by Nobleza Piccardo S.A.I.C. y F.).

(4)

Nuevo Puerto Santa Fe S.A. ("NPSF") is a Company that owns the right to use and operate a shopping center in the city of Santa Fe, Province of Santa Fe (“La Ribera Shopping”).

(5)

Entrenimiento Universal S.A. is a company engaged in event organization, shows and food services.

(6)

 Nominal value per share Ps. 100.

(7)

Include the necessary adjustments to get to the balances in accordance with the international financial reporting standards.

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8. Interests in joint ventures (Continued)

The shares in these joint ventures are not publicly traded so they have no listed market price available.

Evolution of the Group’s investments in joint ventures for the fiscal years ended June 30, 2016 and 2015 were as follows:

	June 30, 2016	June 30, 2015
Beginning of the year	145,984	138,164
Share of profit, net	14,113	3,845
Capital contributions	2,000	6,600
Dividends distributed	(3,592)	(2,625)
Goodwill written off	(4,297)	-
End of the year	154,208	145,984

Restrictions, commitments and other matters in respect of joint ventures

According to Law N° 19,550, 5% of the profit of the year is separated to constitute a legal reserve until they reach legal capped amounts (20% of total capital). This legal reserve is not available for dividend distribution and can only be released to absorb losses. The Group’s joint ventures have not reached the legal limit of this reserve.

Quality Invest S.A.

In March 2011, Quality subscribed an agreement of purchase for the property of an industrial plant owned by Nobleza Piccardo S.A.I.C. y F. (hereinafter “Nobleza”) located in San Martin, Province of Buenos Aires. The facilities have the necessary features and scales for multiple uses. The purchase price was agreed on USD 33.0 million. At the same time, Quality subscribed a lease agreement with Nobleza, by means of which Nobleza will rent the property for a maximum term of 3 years. On March 2, 2015, an Agreement Letter has been signed for the completion of lease agreement and restitution of San Martín plant. On April 2011, Quality requested the National Antitrust Commission to issue an advisory opinion on the obligation to notify the operation or not. Later, the Court of Appeals confirmed the CNDC’s decision regarding the obligation to serve notice and consequently, therefore, on February 23, 2012 local Form F1 was filed. On March 8, 2016 the CNDC resolves to authorize the economic concentration transaction involving the acquisition of the industrial plant by Quality Invest S.A.

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8. Interests in joint ventures (Continued)

As authorized by the relevant Ordinance, on January 20, 2015 Quality Invest S.A. entered into an Urbanization Agreement with the Municipality of San Martín which governs several regulatory aspects and sets forth a binding assignment of meters in exchange for cash contributions subject to the formalization of certain administrative milestones included in the rezoning process. The Agreement contemplates a monetary compensation to the City Council totaling Ps. 40.0 million, payable in two installments of Ps. 20.0 million each. The first of such installments was actually paid on June 30, 2015.

On January 5, 2016 the Official Bulletin of the Province of Buenos Aires published the Order of Provincial Ratification (of the Municipal Ordinance), whereby the urban parameters originally requested entered into full force, thus concluding the legislative enactment process.

Even though validation is a condition precedent to the Agreement’s effectiveness, the obligation to pay the second installment will not become in force until the first drawing is registered with the Dirección de Geodesia (Geodesy Office) of the province of Buenos Aires. Quality is assessing several alternatives in order to file the plan with the final project.

Entertainment Holdings S.A.

During November 2012, IRSA Propiedades Comerciales acquired shares of common stock, representing 50% of EHSA’s capital stock and votes and, as a consequence, IRSA Propiedades Comerciales, holds a jointly indirect interest in La Rural S.A. (LRSA) of 25% which operates the fairground Predio Ferial de Buenos Aires.

In connection with the Fairground, as publicly known, in December 2012 the National Executive Branch issued Executive Order 2552/12 that annulled an executive order dated 1991 which had approved the sale of the Fairground to the Sociedad Rural Argentina (SRA); the effect of this new order was to revoke the sale transaction. Subsequent, on March 21, 2012, the National Executive Branch notified the SRA of said executive order and further ordered that the property be returned to the Federal Government within 30 subsequent days. Then, the SRA issued a press release publicly disclosing the initiation of legal actions. Furthermore, as it has become publicly known, on August 21, 2013, the Supreme Court of Justice rejected the appeal filed by the National State against the interim measure timely requested by the SRA.

Neither has IRSA Propiedades Comerciales been served notice formally nor is it a party involved in the legal actions brought by the SRA.

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8. Interests in joint ventures (Continued)

Given the potential dimension of the dispute, as it has been known to the public, we estimate that if Executive Order 2552/12 was found to be unconstitutional, such order shall have no legal effects either in EHSA or in the acquisition by IRSA Propiedades Comerciales of an equity interest in EHSA. However, should the opposite happen, that is, a court order declaring the nullity of Executive Order 2699/91, could have a real impact on acquired assets. In this scenario, the judicial decision may render the purchase of the Plot of Land by SRA null and void , and all acts executed by SRA in relation to the Plot of Land, including the right of use currently held by the entity where EHSA has an indirect equity interest, through vehicle entities, would also become null and void.

On June 1, 2015, a ruling was issued in case 4573/2012 SOCIEDAD RURAL ARGENTINA vs. NATIONAL STATE – EXECUTIVE POWER ON DECLARATORY ACTION, whereby the injunction staying the effects of Executive Order 2552/12 was lifted.

On June 2, 2015 the SRA filed a writ of appeals against the ruling indicated above and on that same date the appeal was admitted with staying effects. While a decision on the appeal filed with the Court is pending, the motion to lift the injunction filed by the National State will have no effect.

On September 17, 2015, the Court of Appeals, second chamber, decided to reject the lifting of the injunction. Against this resolution the National Government filed an Extraordinary Appeal. In November 2015, the Court of Appeals dismissed the extraordinary appeal filed by the National Government.

There are no contingent liabilities relating to the Group´s interest in joint ventures, and there are no contingent liabilities of the joint ventures themselves, other those previously the mentioned above.

On March 11, 2016 La Rural S.A. was summoned as third party in the case referred to above, and filed an answer to such summons on April 6, 2016.

Information about significant joint ventures

Set out below is the summarized financial information for the joint ventures considered to be material to the Group:

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8. Interests in joint ventures (Continued)

Summarized statements of financial position

	June 30, 2016
	QUALITY	NPSF	EHSA
ASSETS
Total non-current assets	146,444	43,428	63,250
Total current assets	6,669	38,904	89
Total assets	153,113	82,332	63,339
LIABILITIES
Total non-current liabilities	1,220	2,473	-
Total current liabilities	15,958	24,643	1,530
Total liabilities	17,178	27,116	1,530
Net assets	135,935	55,216	61,809

	June 30, 2015
	QUALITY	NPSF	EHSA
ASSETS
Total non-current assets	150,042	46,279	55,974
Total current assets	4,477	32,485	61
Total assets	154,519	78,764	56,035
LIABILITIES
Total non-current liabilities	1,563	5,551	-
Total current liabilities	6,023	25,862	1,272
Total liabilities	7,586	31,413	1,272
Net assets	146,933	47,351	54,763

Summarized statements of comprehensive income

	QUALITY
	June 30, 2016	June 30, 2015	June 30, 2014
Revenues	4,344	15,920	16,476
(Loss) / Profit before income tax	(15,336)	3,947	587
Income tax expense	338	182	1,796
(Loss) / Profit for the year	(14,998)	4,129	2,383
Total Comprehensive (loss) / income for the year	(14,998)	4,129	2,383
Dividends paid	-	-	-

F - 84

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8. Interests in joint ventures (Continued)

	NPSF
	June 30, 2016	June 30, 2015	June 30, 2014
Revenues	61,207	39,950	30,167
Profit before income tax	23,153	14,568	15,596
Income tax expense	(8,105)	(5,100)	(5,472)
Profit for the year	15,048	9,468	10,124
Total Comprehensive income for the year	15,048	9,468	10,124
Dividends paid	7,183	5,249	-

	EHSA
	June 30, 2016	June 30, 2015	June 30, 2014
Revenues	-	-	-
Profit / (Loss) before income tax	7,046	14,603	(1,702)
Income tax expense	-	-	-
Profit / (Loss) for the year	7,046	14,603	(1,702)
Total Comprehensive income (loss) for the year	7,046	14,603	(1,702)
Dividends paid	-	-	-

The information above reflects the amounts presented in the financial statements of the joint ventures (and not the Group’s share of those amounts) adjusted for differences in accounting policies. EHSA and NPSF present their financial statements in accordance with argentinian professional accounting standards and apply IFRSs for purposes of preparing these consolidated financial statements.

Reconciliation of the summarized financial information presented to the carrying amount of the Group’s interest in material joint ventures is as follows:

	QUALITY
	June 30,  2016	June 30, 2015
Net assets at the beginning of the year	146,933	129,804
Increases in capital / Irrevocable contributions	4,000	13,000
(Loss) / Profit for the year	(14,998)	4,129
Net assets at the end of the year	135,935	146,933
% of ownership interest	50%	50%
Interests in joint ventures	67,968	73,466
Goodwill	3,911	3,911
Fair value adjustment on acquisition	18,842	19,058
Book amount at the end of the year	90,721	96,435

F - 85

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

8. Interests in joint ventures (Continued)

	NPSF
	June 30,  2016	June 30, 2015
Net assets at the beginning of the year	47,351	43,132
Dividends distribution	(7,183)	(5,249)
Profit for the year	15,048	9,468
Net assets at the end of the year	55,216	47,351
% of ownership interest	50%	50%
Interests in joint ventures	27,608	23,676
Goodwill	1,323	1,323
Fair value adjustment on acquisition	3,631	3,804
Book amount at the end of the year	32,562	28,803

	EHSA
	June 30,  2016	June 30, 2015
Net assets at the beginning of the year	54,763	40,060
Increases in capital / Irrevocable contributions	-	100
Profit for the fiscal year	7,046	14,603
Net assets at the end of the year	61,809	54,763
% of ownership interest	50%	50%
Interests in joint ventures	30,904	27,382
Goodwill	-	26,648
Impairment	-	(10,102)
Fair value adjustment on acquisition	-	(23,192)
Book amount at the end of the year	30,904	20,736

9.

Interests in associates

General information

The accounting policy used by the Group to value its interest in associates, materiality criteria and other relevant information concerning these investments are described in Note 2.3.(d).

During the year ended June 30, 2014 the Group acquired shares in associate Avenida Inc.. Later, on September 2, 2014, the Group reduced its equity interest in Avenida Inc., as a result of which it changed its valuation method to fair value (see Note 3). Consequently, as of June 30, 2016 the only investment in associates is Tarshop S.A..

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Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

9.            Interests in associates (Continued)

Below is the value of the ownership interest in the Group's associates and its interest in comprehensive income:

				Value of Group´s interest in equity		Group´s interest in comprehensive income			% of ownership interest held
				June 30,		June 30,			June 30,			Last financial statements issued
Name of the entity	Place of business / country of incorporation	Main Activity	Common shares 1 vote	2016	2015	2016	2015	2014	2016	2015	2014	Share capital (nominal value)	Loss for the year	Equity
Tarshop S.A. (1)	Argentina	Consumer financing	48,759,288	75,487	35,934	(31,447)	(8,650)	(16,556)	20%	20%	20%	243,796	(3) (158,839)	377,432
Avenida Inc. (2)	United States	Investment	-	-	-	-	19,390	(1,944)	-	-	24.79%	-	-	-
				75,487	35,934	(31,447)	10,740	(18,500)

(1)

Tarshop S.A. is primarily engaged in credit card and loan origination activities.

(2)

Avenida Inc. is primarily engaged in investing activities. On September 2, 2014, the Group reduced its equity interest in Avenida Inc., as a result of which it changed its valuation method to fair value.

(3)

Corresponds to the result of the twelve-month period beginning July 1, 2015 and ended June 30, 2016.

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IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

9.            Interests in associates (Continued)

The shares in these associates are not publicly traded so they have no listed market price available.

Changes in the Group’s interest in associates for the fiscal years ended June 30, 2016 and 2015 were as follows:

	June 30,  2016	June 30, 2015
Beginning of the year	35,934	33,680
Acquisitions	-	9,985
Capital contributions	71,000	22,000
Investment at fair value	-	(30,089)
Sale of equity interest in associates	-	(10,382)
Share of (loss) / profit, net	(31,447)	10,740
End of the year	75,487	35,934

Restrictions, commitments and other matters in respect of associates

According to Law N° 19,550 in which the Group operates, 5% of the profit of the year is separated to constitute a legal reserve until they reach legal capped amounts (20% of total capital). This legal reserve is not available for dividend distribution and can only be released to absorb losses. The Group’s associate has not reached the legal limit of this reserve.

Changes to the regulatory framework, economic context and its consequences in Tarshop S.A.

Over the past fiscal years, the BCRA modified certain aspects of the regulatory framework of the business activity carried out by Tarshop S.A.. Based on such changes, our associate is now undergoing a realignment of their operations.

In addition, during October 2014, Banco Hipotecario S.A. and IRSA Propiedades Comerciales S.A. (Tarshop S.A.’s shareholders) approved a gradual capitalization plan to be carried out pro rata their holdings; the first amounted to Ps. 110 million, and was capitalized on December 15, 2014; for the second, Ps. 355.0 million have already been disbursed.

F - 88

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

9.            Interests in associates (Continued)

There are no contingent liabilities in relation to the Group’s interests in associate.

No-competition agreement for the sale of the equity interest in Tarshop S.A.

Due to the sale assignment and transfer of the 80% of the equity interest in Tarshop S.A. to Banco Hipotecario S.A., made during the fiscal year ended June 30, 2011, the Group committed itself to not competing for 5 years in the credit card and/or consumer loan business in which Tarshop S.A. has a presence.

Information about significant associates

Set out below is the summarized financial information of associate considered significant to the Group as of June 30, 2016 and 2015:

Summarized statement of financial position

	TARSHOP
	June 30, 2016	June 30, 2015
ASSETS
Total non-current assets	770,384	283,805
Total current assets	3,792,376	1,460,979
Total assets	4,562,760	1,744,784
LIABILITIES
Total non-current liabilities	587,888	107,318
Total current liabilities	3,597,440	1,456,195
Total liabilities	4,185,328	1,563,513
Net assets	377,432	181,271

Summarized statements of comprehensive income

	TARSHOP
	June 30, 2016	June 30, 2015	June 30, 2014
Net income from financing	307,181	143,030	230,849
Net income from services	612,813	488,252	233,197
Uncollectible write-offs net of recoveries	(269,052)	(70,317)	(111,624)
Income tax expense	43,871	30,541	30,003
Loss for the year	(158,839)	(46,377)	(85,940)
Total comprehensive operations for the year	(158,839)	(46,377)	(85,940)

F - 89

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

9.            Interests in associates (Continued)

The information above reflects the amounts presented in the financial statements of the associate (and not the Group’s share of those amounts) adjusted for differences in Group´s accounting policies and fair value adjustments made at the time of the acquisition.

Reconciliation of the summarized financial information presented to the carrying amount of the Group’s interest in material associates is as follows:

	TARSHOP
	June 30, 2016	June 30, 2015
Net assets at beginning of the year	181,271	117,648
Irrevocable contributions	355,000	110,000
Loss for the year	(158,839)	(46,377)
Net assets at the end of the year	377,432	181,271
% of ownership interest	20%	20%
Interest in associates	75,487	36,254
Unrealized results related to an intercompany transaction	-	(320)
Book amount at the end of the year	75,487	35,934

F - 90

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

10.

Investment properties

Changes in the Group’s investment properties for the years ended June 30, 2016 and 2015 were as follows:

	Shopping centers	Office and Other rental properties	Undeveloped parcels of land	Properties under development	Total
At June 30, 2014
Costs	2,432,975	183,654	80,528	357,766	3,054,923
Accumulated depreciation	(1,273,860)	(27,571)	-	-	(1,301,431)
Net book amount	1,159,115	156,083	80,528	357,766	1,753,492
Year ended June 30, 2015
Opening net book amount	1,159,115	156,083	80,528	357,766	1,753,492
Additions (iii)	60,377	2,486,720	90,589	186,459	2,824,145
Transfers to property, plant and equipment	(140)	-	-	(8,779)	(8,919)
Transfers to trading properties	(3,107)	-	-	-	(3,107)
Transfers (ii)	484,958	23,080	25,331	(533,369)	-
Disposals (iv)	(114)	(239,787)	(1,666)	(2,077)	(243,644)
Depreciation charge (i) (Note 31)	(97,855)	(68,087)	-	-	(165,942)
Closing net book amount	1,603,234	2,358,009	194,782	-	4,156,025
At June 30, 2015
Costs	2,974,949	2,453,667	194,782	-	5,623,398
Accumulated depreciation	(1,371,715)	(95,658)	-	-	(1,467,373)
Net book amount	1,603,234	2,358,009	194,782	-	4,156,025
Year ended June 30, 2016
Opening net book amount	1,603,234	2,358,009	194,782	-	4,156,025
Additions	147,467	12,974	55	7,170	167,666
Transfers	(187)	187	-	-	-
Transfers to property, plant and equipment	-	(15,224)	-	-	(15,224)
Transfers to trading properties	(3,868)	-	-	-	(3,868)
Disposals (iv)	(2,762)	(181,266)	(464)	-	(184,492)
Depreciation charge (i) (Note 31)	(118,436)	(93,493)	-	-	(211,929)
Book amount at year end	1,625,448	2,081,187	194,373	7,170	3,908,178
At June 30, 2016
Costs	3,115,599	2,270,338	194,373	7,170	5,587,480
Accumulated depreciation	(1,490,151)	(189,151)	-	-	(1,679,302)
Net book amount	1,625,448	2,081,187	194,373	7,170	3,908,178

(i)

As of June 30, 2016 and 2015, depreciation charges were included in “Costs” in the Statements of Comprehensive Income (Note 31).

(ii)

Includes transfers due to the opening of Alto Comahue and Distrito Arcos Shopping Centers.

(iii)

Includes additions due to the acquisition of assets to IRSA. See Note 3.

(iv)

As of June 30, 2016 and 2015, includes disposals due to sale of functional units of Intercontinental Building.

F - 91

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

10.

Investment properties (Continued)

Properties under development comprise works in a building office to be constructed.

The following amounts have been recognized in the statement of comprehensive income:

	June 30, 2016	June 30, 2015	June 30, 2014
Rental and service income	2,672,701	1,917,413	1,392,699
Expenses and collective promotion fund	1,183,627	833,905	667,824
Costs of property operations	(1,674,397)	(1,178,065)	(944,949)
Gain from disposal of investment properties	175,963	126,686	308

Borrowing costs incurred as of June 30, 2015 and 2014 of Ps. 12,957 and Ps. 22,376, respectively, were capitalized at the rate of the Company’s general borrowings, which amounts to 15%. Such costs correspond to Alto Comahue. The capitalization of finance costs has ceased since the completion of the shopping mall, therefore, no finance costs were capitalized as of June 30, 2016.

Certain of the Group’s investment properties have been mortgaged or otherwise restricted to secure some of the Group’s borrowings and other liabilities. The net book value of those properties as of June 30, 2016 and 2015 is as follows:

	June 30,  2016	June 30,  2015
Córdoba Shopping (i)	40,352	48,566
Total	40,352	48,566

(i)

A portion of the Córdoba Shopping center property is encumbered with an antichresis right as collateral for an advance rent received from NAI International II Inc. amounting to Ps. 17.7 million and Ps. 3.3 million, as of June 30, 2016 and 2015, respectively. The debt is included in “Trade and other payables” in the statement of financial position.

As of June 30, 2016 and 2015 the fair value of investment properties amounts to Ps. 24,657.84 million and Ps. 18,211.3 million respectively. The fair values are based on comparable values of certain qualified external appraisers (Level 2 of fair value hierarchy) except in the case of shopping centers, where fair value is based on the market capitalization valuation (Level 3 of the fair value hierarchy). In the first case, sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant premise being the square meter. In the second case, the capitalization rates used also take into account specific aspects of each property.

F - 92

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

10. Investment properties (Continued)

The following is a summary of the Group´s investment properties by type as of June 30, 2016:

		Initial Costs		Subsequent costs	Cost at year end
Name	Encumbrances	Plot of land	Buildings, facilities and improvements (i)	Improvements / Additions / Disposals / Transfers	Plot of land	Buildings, facilities and improvements	Total	Accumulated depreciation	Net book amount	Date of construction	Date of acquisition	Useful life as of 06.30.16
Shopping Centers portfolio:
Abasto	-	9,753	251,247	15,831	9,753	267,078	276,831	(172,171)	104,660	nov-98	jul-94	16
Alto Palermo Shopping	-	8,694	424,322	13,567	8,694	437,889	446,583	(370,831)	75,752	oct-90	nov-97	14
Alto Avellaneda	-	18,089	186,584	30,613	18,089	217,197	235,286	(183,331)	51,955	oct-95	dec-97	11
Alcorta Shopping	-	8,006	101,992	16,330	8,006	118,322	126,328	(88,195)	38,133	jun-92	jun-97	15
Alto Noa	-	227	46,336	8,075	227	54,411	54,638	(38,942)	15,696	sep-94	mar-95	13
Buenos Aires Design	-	-	53,083	9,047	-	62,130	62,130	(57,893)	4,237	nov-93	nov-97	2
Patio Bullrich	-	9,814	163,711	10,878	9,814	174,589	184,403	(123,392)	61,011	sep-88	oct-98	16
Alto Rosario	-	25,686	74,743	21,176	25,686	95,919	121,605	(44,146)	77,459	nov-04	nov-04	18
Mendoza Plaza	-	10,546	126,413	12,101	10,546	138,514	149,060	(96,228)	52,832	jun-94	dec-94	15
Dot Baires Shopping	-	84,890	364,359	95,580	84,890	459,939	544,829	(153,763)	391,066	may-09	nov-06	24
Córdoba Shopping	Antichresis	1,141	98,714	713	1,141	99,427	100,568	(60,216)	40,352	mar-90	dec-06	14
Distrito Arcos	-	-	-	304,503	-	304,503	304,503	(25,396)	279,107	-	nov-09	15
Alto Comahue	-	1,143	4,467	327,957	1,143	332,424	333,567	(19,208)	314,359	-	may-06	30
Patio Olmos	-	11,532	21,417	626	11,532	22,043	33,575	(8,586)	24,989	may-95	sep-07	17
Soleil Premium Outlet	-	23,267	55,905	37,976	23,267	93,881	117,148	(36,762)	80,386	-	jul-10	14
Ocampo parking space	-	3,201	21,137	207	3,201	21,344	24,545	(11,091)	13,454	-	sep-06	22
Shopping centers portfolio		215,989	1,994,430	905,180	215,989	2,899,610	3,115,599	(1,490,151)	1,625,448
Office and Other rental properties portfolio:
Abasto offices		-	-	15,059	-	15,059	15,059	(5,813)	9,246	mar-13	jul-94	16
Alto Palermo Shopping Annex	-	-	36,578	-	-	36,578	36,578	(7,597)	28,981	-	jun-06	8
Dot building	-	13,346	68,446	56,078	13,346	124,524	137,870	(22,078)	115,792	sep-10	nov-06	28
Anchorena 545 (Chanta IV)	-	812	4,495	-	812	4,495	5,307	(3,530)	1,777	-	aug-08	15
Anchorena 665		2,206	8,821	-	2,206	8,821	11,027	(1,325)	9,702	-	aug-08	18
Zelaya 3102	-	1,442	-	-	1,442	-	1,442	-	1,442	-	jul-05	16
Suipacha 664	-	40,916	87,885	1,745	40,916	89,630	130,546	(18,810)	111,736	jun-94	dec-14	8
Bouchard 710	-	337,222	180,599	1,562	337,222	182,161	519,383	(24,522)	494,861	-	dec-14	24
Intercontinental Plaza	-	13,548	226,150	(73,937)	13,548	152,213	165,761	(43,345)	122,416	jun-96	dec-14	23
República building	-	391,506	316,686	1,318	391,506	318,004	709,510	(38,787)	670,723	-	dec-14	24
Bank Boston tower	-	295,682	239,114	451	295,682	239,565	535,247	(23,174)	512,073	-	dec-14	25
Paseo del Sol		-	2,608	-	-	2,608	2,608	(170)	2,438	-	jul-15	17
Office and Other rental properties portfolio		1,096,680	1,171,382	2,276	1,096,680	1,173,658	2,270,338	(189,151)	2,081,187
Undeveloped parcels of land:
Building annexed to DOT	-	25,336	-	-	25,336	-	25,336	-	25,336	-	nov-06	-
Luján plot of land	-	41,861	-	(298)	41,563	-	41,563	-	41,563	-	may-12	-
Caballito – Ferro	-	36,890	-	-	36,890	-	36,890	-	36,890	-	nov-97	-
Intercontinental plot of land Tower B	-	90,584	-	-	90,584	-	90,584	-	90,584	-	dec-14	-
Undeveloped parcels of land		194,671	-	(298)	194,373	-	194,373	-	194,373
Properties under development
PH Office Park		-	-	7,170	-	7,170	7,170	-	7,170			-
Total Properties under development		-	-	7,170	-	7,170	7,170	-	7,170			-
Total		1,507,340	3,165,812	914,328	1,507,042	4,080,438	5,587,480	(1,679,302)	3,908,178

F - 93

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

11.

Property, plant and equipment

Changes in the Group’s property, plant and equipment for the years ended June 30, 2016 and 2015 were as follows:

	Other buildings and facilities	Furniture and fixtures	Machinery and equipment	Vehicles	Others	Total
At June 30, 2014
Costs	13,809	12,438	84,986	291	56	111,580
Accumulated depreciation	(10,624)	(8,344)	(68,769)	(291)	-	(88,028)
Net book amount	3,185	4,094	16,217	-	56	23,552
Year ended June 30, 2015
Opening net book amount	3,185	4,094	16,217	-	56	23,552
Additions (ii)	61,192	2,586	22,687	2,863	-	89,328
Transfers from investment properties	-	3,618	5,301	-	-	8,919
Disposal of unused assets	-	(46)	-	-	-	(46)
Depreciation charge (i) (Note 31)	(2,801)	(1,110)	(7,971)	(477)	-	(12,359)
Closing net book amount	61,576	9,142	36,234	2,386	56	109,394
At June 30, 2015
Costs	75,001	18,596	112,974	3,154	56	209,781
Accumulated depreciation	(13,425)	(9,454)	(76,740)	(768)	-	(100,387)
Net book amount	61,576	9,142	36,234	2,386	56	109,394
Year ended June 30, 2016
Opening net book amount	61,576	9,142	36,234	2,386	56	109,394
Additions	-	3,987	11,612	-	-	15,599
Transfers from investment properties	15,224	-	-	-	-	15,224
Depreciation charge (i) (Note 31)	(9,286)	(1,564)	(12,683)	(573)	-	(24,106)
Book amount at year end	67,514	11,565	35,163	1,813	56	116,111
At June 30, 2016
Costs	90,225	22,583	124,586	3,154	56	240,604
Accumulated depreciation	(22,711)	(11,018)	(89,423)	(1,341)	-	(124,493)
Net book amount	67,514	11,565	35,163	1,813	56	116,111

(i) As of June 30, 2016 and 2015, depreciation charges were included in “Costs” for Ps. 19,402 and Ps. 9,838, in “General and administrative expenses” for Ps. 4,473 and Ps. 2,392 and in “Selling expenses” for Ps. 231 and Ps. 129 respectively, in the Statement of Comprehensive Income (Note 31).

(ii) 

Includes additions due to acquisition of assets to IRSA. See Note 3.

F - 94

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

11.            Property, plant and equipment (Continued)

As of June 30, 2016 and 2015 there are no Properties under development included in this item.

During the fiscal years ended June 30, 2016 and 2015 borrowing costs were no capitalized.

None of the Group’s items of property, plant and equipment have been mortgaged to secure some of the Group’s borrowings.

The Group leases computer equipment under non-cancellable finance lease agreements. The lease terms are between 3 and 5 years and ownership of the assets lie within the Group (Note 27). Book amount of these equipment, included in class “Machinery and equipment” is as follows:

	June 30, 2016	June 30, 2015
Costs – capitalized finance leases	8,709	6,857
Accumulated depreciation	(6,245)	(4,749)
Net book amount	2,464	2,108

12.

Trading properties

Changes in trading properties for the fiscal years ended June 30, 2016 and 2015 were as follows:

	Completed properties	Undeveloped sites	Total
At June 30, 2014	2,712	6,827	9,539
Transfers from investment properties	-	3,107	3,107
Disposals / Sales (i)	(925)	-	(925)
At June 30, 2015	1,787	9,934	11,721
Transfers from investment properties	-	3,868	3,868
Disposals / Sales (ii)	(1,400)	-	(1,400)
At June 30, 2016	387	13,802	14,189

(i)

Corresponds to the sale of functional units (apartments and parking spaces) of Condominios I and II.

(ii)Corresponds to the sale of the apartment located at Entre Ríos 465/9.

During the fiscal years ended June 30, 2016 and 2015 no borrowing costs were capitalized.

F - 95

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

12.            Trading properties (Continued)

None of the Group’s trading properties have been mortgaged or otherwise restricted to secure Group’s borrowings and other payables.

Breakdown of current and non-current Company’s trading properties is as follow:

	June 30, 2016	June 30, 2015
Non-current	14,189	8,567
Current	-	3,154
	14,189	11,721

The following is a summary of the Group's trading properties by type as of June 30, 2016 and 2015:

	Net book amount
Description	June 30,  2016	June 30, 2015	Date of acquisition
Undeveloped sites:
Air space Coto	6,024	6,024	sep-97
Córdoba Plot of land	3,107	3,107	may-15
Córdoba Plot of land (Shopping) (1)	3,868	-	-
Residential project Neuquén	803	803	may-06
Total undeveloped sites	13,802	9,934
Completed properties:
Condominios I	21	21	apr-11
Condominios II	366	366	nov-13
Entre Ríos 465/9 apartment	-	1,400	-
Total completed properties	387	1,787
Total	14,189	11,721

(1)See Note 39.

F - 96

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

13.

Intangible assets

Changes in the Group’s intangible assets for the fiscal years ended June 30, 2016 and 2015 were as follows:

	Goodwill	Software	Rights of use (ii)	Right to receive units (Barters) (iii)	Others	Total
At June 30, 2014
Costs	506	14,779	20,873	32,872	11,861	80,891
Accumulated amortization	-	(14,283)	-	-	(854)	(15,137)
Net book amount	506	496	20,873	32,872	11,007	65,754
Year ended June 30, 2015
Opening net book amount	506	496	20,873	32,872	11,007	65,754
Additions	-	467	-	5,409	-	5,876
Disposals	(506)	-	-	-	-	(506)
Amortization charge (i) (Note 31)	-	(490)	(471)	-	(1,148)	(2,109)
Closing net book amount	-	473	20,402	38,281	9,859	69,015
At June 30, 2015
Costs	-	15,246	20,873	38,281	11,861	86,261
Accumulated amortization	-	(14,773)	(471)	-	(2,002)	(17,246)
Net book amount	-	473	20,402	38,281	9,859	69,015
Year ended June 30, 2016
Opening net book amount	-	473	20,402	38,281	9,859	69,015
Additions	-	1,583	-	-	-	1,583
Amortization charge (i) (Note 31)	-	(325)	(943)	-	(2,191)	(3,459)
Closing net book amount	-	1,731	19,459	38,281	7,668	67,139
At June 30, 2016
Costs	-	16,829	20,873	38,281	11,861	87,844
Accumulated amortization	-	(15,098)	(1,414)	-	(4,193)	(20,705)
Net book amount	-	1,731	19,459	38,281	7,668	67,139

(i)

As of June 30, 2016 and 2015, amortization charge is included in “Costs” in the Statements of Comprehensive Income (Note 31). There are no impairment charges for any of the reported years.

(ii)

Corresponds to Distrito Arcos. Depreciation began in January 2015, upon delivery of the shopping mall.

(iii)

Corresponds to in-kind receivables representing the right to receive residential apartments in the future under barter transactions (Note 39).

F - 97

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

14.

Inventories

Group’s inventories as of June 30, 2016 and 2015 were as follows:

	June 30, 2016	June 30, 2015
Current
Materials and others items of inventories	18,202	15,347
Total inventories	18,202	15,347

15.

Financial instruments by category

The following tables show the carrying amounts of financial assets and liabilities by category and a reconciliation to the corresponding line item in the statements of financial position, as appropriate. Since the line items “Trade and other receivables” and “Trade and other payables” contain both financial instruments and non-financial assets or liabilities (such as advances, credits, trade payables in-kind and tax payables), the reconciliation is shown in the columns headed “Non-financial assets” and “Non-financial liabilities”.

Financial assets and financial liabilities as of June 30, 2016 were as follows:

	Financial assets at amortized cost	Financial assets at fair value through profit or loss	Subtotal financial assets	Non-financial assets	Total
June 30, 2016
Assets as per statement of financial position
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 16)	1,757,371	-	1,757,371	758,493	2,515,864
Investments in financial assets (Note 17)	-	2,084,748	2,084,748	-	2,084,748
Cash and cash equivalents (Note 19)	29,842	3,207	33,049	-	33,049
Total	1,787,213	2,087,955	3,875,168	758,493	4,633,661

	Financial liabilities at amortized cost	Financial liabilities at fair value through profit or loss	Subtotal financial liabilities	Non-financial liabilities	Total
Liabilities as per statement of financial position
Trade and other payables (Note 20)	415,591	-	415,591	874,409	1,290,000
Derivative financial instruments (Note 18)	-	2,857	2,857	-	2,857
Borrowings (excluding finance leases liabilities) (Note 23)	5,889,026	-	5,889,026	-	5,889,026
Total	6,304,617	2,857	6,307,474	874,409	7,181,883

F - 98

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

15.            Financial instruments by category (Continued)

Financial assets and financial liabilities as of June 30, 2015 were as follows:

	Financial assets at amortized cost	Financial assets at fair value through profit or loss	Subtotal financial assets	Non-financial assets	Total
June 30, 2015
Assets as per statement of financial position
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 16)	666,968	-	666,968	316,147	983,115
Investments in financial assets (Note 17)	109,831	436,035	545,866	-	545,866
Cash and cash equivalents (Note 19)	301,499	2,000	303,499	-	303,499
Total	1,078,298	438,035	1,516,333	316,147	1,832,480

	Financial liabilities at amortized cost	Financial liabilities at fair value through profit or loss	Subtotal financial liabilities	Non-financial liabilities	Total
Liabilities as per statement of financial position
Trade and other payables (Note 20)	402,258	-	402,258	647,705	1,049,963
Borrowings (excluding finance leases liabilities) (Note 23)	3,791,146	-	3,791,146	-	3,791,146
Total	4,193,404	-	4,193,404	647,705	4,841,109

Financial liabilities carried at amortized cost also include liabilities under finance leases where the Group is the lessee and which therefore have to be measured in accordance with IAS 17 “Leases”. Finance leases are excluded from the scope of IFRS 7 “Financial Instruments: Disclosures”. Therefore, finance leases have been shown separately.

F - 99

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

15.            Financial instruments by category (Continued)

Results on derivative financial instruments are included in “Financial results, net” in the statement of comprehensive income (Note 34) and can be assigned to the following categories:

	Financial assets / (liabilities) at amortized cost	Financial assets / (liabilities) at fair value through profit or loss	Total
June 30, 2016
Interest income	94,541	7,628	102,169
Interest expense	(612,486)	-	(612,486)
Foreign exchange losses, net	(1,815,553)	-	(1,815,553)
Fair value gains of financial assets at fair value through profit or loss	-	466,328	466,328
Gain from derivative financial instruments	-	1,248,374	1,248,374
Other finance costs	(100,051)	-	(100,051)
Net result	(2,433,549)	1,722,330	(711,219)

	Financial assets / (liabilities) at amortized cost	Financial assets / (liabilities) at fair value through profit or loss	Total
June 30, 2015
Interest income	57,860	11,447	69,307
Interest expense	(329,170)	-	(329,170)
Foreign exchange losses, net	(210,162)	-	(210,162)
Fair value gains of financial assets at fair value through profit or loss	-	50,176	50,176
Loss from derivative financial instruments	-	(2,961)	(2,961)
Other finance costs	(41,677)	-	(41,677)
Net result	(523,149)	58,662	(464,487)

	Financial assets / (liabilities) at amortized cost	Financial assets / (liabilities) at fair value through profit or loss	Total
June 30, 2014
Interest income	44,292	15,732	60,024
Interest expense	(151,092)	-	(151,092)
Foreign exchange losses, net	(277,258)	-	(277,258)
Fair value gains of financial assets at fair value through profit or loss	-	62,216	62,216
Gain from derivative financial instruments	-	12,514	12,514
Other finance costs	(29,456)	-	(29,456)
Net result	(413,514)	90,462	(323,052)

F - 100

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

15.            Financial instruments by category (Continued)

Determination of fair values

IFRS 9 defines the fair value of a financial instrument as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 7. This valuation hierarchy provides for three levels.

In the case of Level 1, valuation is based on quoted prices in active markets for identical financial assets or liabilities that the Group can refer to at the date of the statement of financial position. A market is deemed active if transactions take place with sufficient frequency and in sufficient quantity for price information to be available on an ongoing basis. Since a quoted price in an active market is the most reliable indicator of fair value, this should always be used if available. The financial instruments the Group has allocated to this level mainly comprise equity investments, mutual funds, bonds and non-convertible notes for which quoted prices in active markets are available. In the case of shares, the Group allocates them to this level when either a stock market price is available or prices are provided by a price quotation on the basis of actual market transactions.

In the case of Level 2, fair value is determined by using valuation methods based on inputs directly or indirectly observable in the market. The financial instruments the Group has allocated to this level comprise foreign-currency forward contracts.

In the case of Level 3, the Group uses valuation techniques not based on inputs observable in the market. This is only permissible insofar as no observable market data are available. The inputs used reflect the Group’s assumptions regarding the factors which any market player would consider in their pricing. The Group uses the best available information for this, including internal company data. The Group has determined that the investment in Avenida Inc. and Arcos del Gourmet S.A.’s stock option are Level 3 financial instruments, with a fair value of Ps. 172,319 and zero at the end of the year, respectively.

F - 101

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

15.            Financial instruments by category (Continued)

The following tables present the Group’s financial assets and financial liabilities that are measured at fair value as of June 30, 2016 and 2015 and their allocation to the fair value hierarchy:

	June 30, 2016
	Level 1	Level 2	Level 3	Total
Assets
Investments in financial assets:
- Investment in equity securities TGLT	140,106	-	-	140,106
- Investment in equity securities Avenida Inc.	-	-	172,319	172,319
- Mutual funds	372,925	-	-	372,925
- ETF funds	98,882	-	-	98,882
- Government bonds	968,859	-	-	968,859
- Bonds issued by Banco Macro	2,988	-	-	2,988
- Non-convertible notes related parties	328,669	-	-	328,669
Cash and cash equivalents:
- Mutual funds	3,207	-	-	3,207
Total Assets	1,915,636	-	172,319	2,087,955

Liabilities
Derivative financial instruments:
- Foreign-currency forward contracts	-	2,857	-	2,857
Total Liabilities	-	2,857	-	2,857

	June 30, 2015
	Level 1	Level 2	Level 3	Total
Assets
Investments in financial assets:
- Investment in equity securities TGLT	71,470	-	-	71,470
- Investment in equity securities Avenida Inc.	-	-	102,316	102,316
- Mutual funds	105,977	-	-	105,977
- Government bonds	79,555	-	-	79,555
- Bonds issued by Banco Macro	1,789	-	-	1,789
- Non-convertible notes related parties	74,928	-	-	74,928
Cash and cash equivalents:
- Mutual funds	2,000	-	-	2,000
Total Assets	335,719	-	102,316	438,035

F - 102

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

15.            Financial instruments by category (Continued)

When no quoted prices in an active market are available, fair values are based on recognized valuation methods. The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments, details of which may be obtained from the following table:

Description	Pricing model	Pricing method	Parameters
Foreign-currency contracts	Present value method	Theoretical price	Money market curve; Interest curve; Foreign exchange curve.
Arcos del Gourmet S.A. purchase option	Discounted cash flow	-	Projected revenues and discount rate
Avenida Inc.	Cap rate valuation	Theoretical price	Comparable market multiple (EV/GMV ratio)

F - 103

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

16.

Trade and other receivables

The following table shows the amounts of Trade and other receivables as of June 30, 2016 and 2015:

	June 30, 2016	June 30, 2015
Non-current
Leases and services receivables	4,900	3,000
Averaging of scheduled rent escalation	73,895	53,044
Properties sales receivables	10	192
Less: allowance for doubtful accounts	(2,208)	(2,208)
Total non-current trade receivables	76,597	54,028
Prepayments	12,088	11,274
Loans	132	-
VAT receivables	22,778	23,568
Others	-	1,561
Total non-current other receivables	34,998	36,403
Related parties (Note 36)	376,603	-
Total non-current trade and other receivables	488,198	90,431
Current
Leases and services receivables	302,294	253,514
Averaging of scheduled rent escalation	107,655	85,674
Post-dated checks	358,253	233,312
Properties sales receivables	645	537
Consumer financing receivables	15,380	14,620
Debtors under legal proceedings	63,427	60,919
Less: allowance for doubtful accounts	(91,159)	(82,295)
Total current trade receivables	756,495	566,281
Prepayments	80,107	92,481
Expenses to be recovered	2,347	-
VAT receivables	2,851	1,853
Loans	9,276	10,750
Other tax receivables	21,628	4,867
Advance payments	60,888	43,386
Others	1,715	11,197
Less: allowance for other receivables	(165)	(165)
Total current other receivables	178,647	164,369
Related parties (Note 36)	998,992	77,366
Total current trade and other receivables	1,934,134	808,016
Total trade and other receivables	2,422,332	898,447

As of June 30, 2016, all non-current receivables are due within 7 years from the end of the fiscal year.

F - 104

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

16.

Trade and other receivables (Continued)

The fair values of current trade and other receivables approximate their respective carrying amounts because, due to their short-term nature, the impact of discounting is not considered significant. Fair values are based on discounted cash flows.

Trade receivables are generally presented in the statement of financial position net of allowances for doubtful accounts. Impairment policies and procedures by type of receivables are discussed in detail in Note 2.15..

Movements on the Group’s allowance for doubtful accounts and other receivables are as follows:

	June 30, 2016	June 30, 2015
Beginning of the year	84,668	73,807
Additions (1) (Note 31)	35,391	22,653
Unused amounts reversed (Note 31)	(23,396)	(10,489)
Used during the year	(3,131)	(1,303)
End of the year	93,532	84,668

(1)The waiver charge amounts to Ps. 10 as of June 30, 2016.

The allowance for doubtful accounts’ additions and unused amounts reversed have been included in “Selling expenses” in the statement of comprehensive income (Note 31). Amounts charged to the allowance account are generally written off, when no recovery is expected.

The Group’s trade receivables comprise: shopping leases and services, leases office and services, consumer financing and sale of properties. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables (Note 4).

The Group has also receivables with related parties. Neither of which are due nor impaired.

Due to the distinct characteristics of each type of receivable, an aging analysis of past due unimpaired and impaired receivables are shown by type and class as of June 30, 2016 and 2015 (includes not past due receivables to reconcile with the amounts in the statements of financial position):

F - 105

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

16.            Trade and other receivables (Continued)

	Past due
Type of receivables	Up to 3 months	3 to 6 months	Over 6 months	To mature	Allowed	Total
Shopping leases and services	50,015	5,178	3,407	773,073	77,957	909,630
Office leases and services	96	124	512	32	30	794
Consumer financing	-	-	-	-	15,380	15,380
Sale of properties	113	33	314	195	-	655
Total as of June 30, 2016	50,224	5,335	4,233	773,300	93,367	926,459
Shopping leases and services	39,119	10,438	13,986	555,035	69,848	688,426
Office leases and services	969	24	-	9	35	1,037
Consumer financing	-	-	-	-	14,620	14,620
Sale of properties	64	63	277	325	-	729
Total as of June 30, 2015	40,152	10,525	14,263	555,369	84,503	704,812

Leases and services receivables from investment properties:

Trade receivables related to leases and services from the shopping centers and offices represent 98.3% and 97.8% of the Group’s total trade receivables as of June 30, 2016 and 2015, respectively. The Group has a large customer base and is not dependent on any single customer. Leases and services receivables that are not due and for which no allowance has been recorded relate to a wide and varied number of customers for whom there is no external credit rating available. Most of these customers have reached a minimum period of six months and have no previous non-compliance records. New customers with less than six months are regularly monitored. At the end of the year, the Group has not experience credit issues with these new customers.

As of June 30, 2016 and 2015 the Group provided for profit net with respect to leases and services receivables for an amount of Ps. 11,235 and Ps. 12,405, respectively.

Consumer financing receivables:

Trade receivables related to the residual activities of the Group represent only 1.7% and 2.1% of the Group’s total trade receivables as of June 30, 2016 and 2015, respectively.

F - 106

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

16.            Trade and other receivables (Continued)

As of June 30, 2016 and 2015, the Group provided for recorded net gains (losses) on impairment / (recovery) of consumer financing receivables for an amount of Ps. 760 and Ps. (241), respectively. The estimation of the credit risk is complex and requires the use of rating and scoring models which are essential to measure default risk. In measuring the consumption credit risks of credit purchases made through credit cards and cash advances, the Company considers two components: (i) the probability of default by client or counterparty, and (ii) the likeable recovery rate of obligations in arrears. The models are reviewed regularly to check their effectiveness with respect to actual performance and, where necessary, to enhance them.

Receivables from the sale of properties:

Trade receivables related to the sale of properties represent 0.1% of the Group’s total trade receivables as of June 30, 2016 and 2015. Payments on these receivables are generally received when due and are generally secured by mortgages on the properties, thus credit risk on outstanding amounts is considered low.

During the fiscal year there are no impaired receivables from the sale of properties.

F - 107

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

17.

Investments in financial assets

The following table shows the amounts of investments in financial assets as of June 30, 2016 and 2015:

	June 30, 2016	June 30, 2015
Non-current
Financial assets at fair value through profit or loss
Investment in equity securities in TGLT	140,106	71,470
Investment in equity securities in Avenida Inc.	172,319	102,316
Financial assets at amortized cost
Non-convertible notes related parties (Note 36)	-	79,760
Total non-current	312,425	253,546
Current
Financial assets at fair value through profit or loss
Mutual funds	372,925	105,977
ETF funds	98,882	-
Non-convertible notes related parties (Note 36)	328,669	74,928
Bonds issued by Banco Macro	2,988	1,789
Government bonds (i)	968,859	79,555
Financial assets at amortized cost
Non-convertible notes related parties (Note 36)	-	30,071
Total current	1,772,323	292,320
Total investments in financial assets	2,084,748	545,866

(i) Includes bonds in foreign-currency “Bonad Dollar Link” and other bonds in local-currency “Lebacs”.

Financial assets at fair value through profit or loss are denominated in Argentine pesos. The maximum exposure to credit risk at the reporting date is the carrying value of these assets.

18.

Derivative financial instruments

The following table shows the derivative financial instruments as of June 30, 2016 and 2015:

	June 30,  2016	June 30,  2015
Liabilities
Current
Foreign-currency forward contracts	2,857	-
Total current derivative financial instruments	2,857	-
Total derivative financial instruments	2,857	-

F - 108

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

18.

Derivative financial instruments (Continued)

As of June 30, 2016 and 2015, foreign currency forward contracts outstanding are indicated below:

Forwards	Amount (USD)	Due date	June 30,  2016	June 30,  2015
Banco Galicia	8,000	10/31/2016	(1,109)	-
Banco ICBC	10,000	10/31/2016	(1,368)	-
Banco SBS	1,000	02/24/2017	(255)	-
Banco SBS	1,000	10/31/2016	(125)	-
Total	20,000		(2,857)	-

Accrued gains (losses) from future exchanges contracts during the fiscal years ended June 30, 2016, 2015 and 2014 were as follows:

Future / Forwards	Amount (USD)	June 30,  2016	June 30,  2015	June 30,  2014
Banco ICBC	10,000	2,624	(1,098)	(4,373)
Banco Galicia	10,000	44,319	(1,098)	(16,238)
Banco Hipotecario	-	-	(549)	30,896
Banco Itaú	-	-	-	2,207
Compañía Inversora Bursatil	58,000	385,492	-	-
Banco SBS	80,000	765,002	-	-
Banco Cohen	7,000	26,242	-	-
Balanz Capital	12,000	24,240	-	-
Total	177,000	1,247,919	(2,745)	12,492

Accrued gains (losses) from interest rate swaps during the fiscal years ended June 30, 2016, 2015 and 2014 were as follows:

Interest rate swaps	Amount (USD)	June 30,  2016	June 30,  2015	June 30,  2014
Banco Galicia	10,000	-	(216)	22
Banco Galicia	50,000	455	-	-
Total	60,000	455	(216)	22

19.

Cash and cash equivalents information

The following table shows the amounts of cash and cash equivalents as of June 30, 2016 and 2015:

	June 30, 2016	June 30, 2015
Cash at bank and on hand	29,842	301,499
Mutual funds	3,207	2,000
Total cash and cash equivalents	33,049	303,499

F - 109

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

19.            Cash flow and cash equivalent information (Continued)

Following is a detailed description of cash flows generated by the Group’s operations for the fiscal years ended June 30, 2016, 2015 and 2014.

	Note	June 30, 2016	June 30, 2015	June 30, 2014
Net income for the year		911,700	620,615	410,487
Adjustments:
Income tax expense	26	294,336	290,815	226,700
Amortization and depreciation	31	239,494	180,410	121,014
Loss / (Gain) from disposal of trading properties		241	(5,691)	(44,258)
Gain from disposal of investment properties		(175,963)	(126,686)	(308)
Written off unused property, plant and equipment	11	-	46	36
Written off unused investment properties	10	3,226	114	35
Goodwill written off	8	4,297	-	-
Loss on intangible assets retired	13	-	-	116
Averaging of scheduled contract escalation	29	(42,832)	(27,454)	(14,631)
Loss from disposal of equity interest	9	-	(8,758)	-
Provision for directors’ fees	36	27,700	40,558	12,169
Share-based payments	25	16,359	21,360	58,071
(Gain) / Loss from derivative financial instruments	34	(1,248,374)	2,961	(12,514)
Fair value gains of financial assets at fair value through profit or loss	34	(466,328)	(50,176)	(62,216)
Financial results, net	34	2,413,912	531,311	424,517
Doubtful accounts, net	31	11,995	12,164	6,311
Provisions, net	33	3,402	9,861	9,179
Share of profit / (loss) of associates and joint ventures	8,9	17,334	(14,585)	13,535
Unrealized foreign exchange on cash and cash equivalents		(1,062)	(4,390)	(6,615)
Changes in operating assets and liabilities:
Increase in inventories	14	(2,855)	(4,979)	(472)
Decrease in trading properties	12	1,159	5,481	51,917
Increase in trade and other receivables	16	(606,342)	(262,246)	(55,258)
Increase in trade and other payables	20	178,490	251,070	40,718
Increase (Decrease) in payroll and social security liabilities	21	12,689	23,879	(14,629)
Uses in provisions	22	(3,350)	(1,813)	(2,034)
Net cash generated from operating activities before income tax paid		1,589,228	1,483,867	1,161,870

F - 110

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

19.            Cash and cash equivalents information (Continued)

The following table shows a detail of non-cash transactions occurred in the years ended June 30, 2016, 2015 and 2014:

	June 30, 2016	June 30, 2015	June 30, 2014
Repayment of related party borrowings through the decrease in financial assets	372,203	-	-
Offsetting of loans against dividends receivable	3,591	2,625	-
Transfer of investment properties to property, plant and equipment	15,224	8,919	-
Transfer of investment properties to trading properties	3,868	3,107	803
Financed purchase of property, plant and equipment	1,852	1,984	651
Dividends distribution to non-controlling interest not yet paid	64,209	42,772	-
Dividends distribution compensated with a decrease in trade and other receivables and financial assets	253,663	284,776	-
Expired dividends	-	813	1,690
Payment of interests with financial assets	-	6,995	-
Transfer of intangible assets to trading properties	-	-	7,351
Transfer of investment properties to intangible assets	-	1,666	-
Acquisition of intangible assets	-	-	8,954
Share-based incentive plan	-	-	6,607
Assignment of bonds to the parent company	-	-	16,825
Payment of trade and other payables with the delivery of trading properties	-	1,135	-
Dividend distribution, not yet paid	-	4,594	3,474
Collection of trade receivables and other receivables against delivery of trading properties	-	-	1,400
Change in the measurement criteria of equity interest in Avenida Inc.	-	30,089	-

Acquisition of real property to IRSA

Assets acquired
Investment properties	-	2,575,299	-
Property, plant and equipment,	-	61,192	-
Total assets acquired	-	2,636,491	-
Trade and other receivables	-	(307,893)	-
Investments in financial assets	-	(43,633)	-
Borrowings	-	(2,195,176)	-
Cash	-	(89,789)	-
Total consideration	-	(2,636,491)	-

F - 111

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

20.

Trade and other payables

The following table shows the amounts of trade and other payables as of June 30, 2016 and 2015:

	June 30, 2016	June 30, 2015
Non-current
Rent and service payments received in advance	89,021	61,715
Admission rights	199,688	146,036
Tenant deposits	5,688	6,044
Total non-current trade payables	294,397	213,795
Tax payment plans	18,077	20,606
Other income to be accrued	6,925	7,420
Others	6,438	5,953
Total non-current other payables	31,440	33,979
Related parties (Note 36)	232	38
Total non-current trade and other payables	326,069	247,812
Current
Trade payables	77,367	65,912
Accrued invoices	110,390	92,251
Customer advances	15,528	4,493
Rent and service payments received in advance	216,958	185,991
Admission rights	187,446	142,709
Tenant deposits	24,085	13,283
Total current trade payables	631,774	504,639
VAT payables	46,306	39,615
Withholdings payable	50,224	25,070
Other tax payables	8,870	9,373
Other income to be accrued	495	495
Tax payment plans	34,871	4,182
Dividends	64,209	50,147
Others	6,968	3,692
Total current other payables	211,943	132,574
Related parties (Note 36)	120,214	164,938
Total current trade and other payables	963,931	802,151
Total trade and other payables	1,290,000	1,049,963

The fair values of current trade and other payables approximate their respective carrying amounts due to their short-term nature, the impact of discounting is not considered significant. Fair values are based on discounted cash flows.

F - 112

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

21.

Payroll and social security liabilities

The following table shows the amounts of payroll and social security liabilities as of June 30, 2016 and 2015:

	June 30,  2016	June 30,  2015
Current
Provision for vacation, bonuses and others	89,804	77,049
Social security payable	17,144	15,899
Others	434	1,745
Total payroll and social security liabilities	107,382	94,693

22.

Provisions

The Group is subject to several Argentine laws, regulations and business practices. In the ordinary course of business, the Group is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, labor and social security, administrative and civil and other matters. The Group accrues liabilities when it is probable that future costs will be incurred and it can reasonably estimate them. The Group bases its accruals on up-to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity.

The following table shows the movements in the Group's provisions for other liabilities categorized by type of provision:

	Labor, legal and other claims	Investments in joint ventures (*)	Total
As of July 1, 2014	24,974	59	25,033
Increases (Note 33)	19,774	-	19,774
Recovery (Note 33)	(9,913)	-	(9,913)
Used during the year	(1,813)	-	(1,813)
Share of loss of joint ventures	-	(59)	(59)
As of June 30, 2015	33,022	-	33,022
Increases (Note 33)	13,549	-	13,549
Recovery (Note 33)	(10,147)	-	(10,147)
Used during the year	(3,350)	-	(3,350)
As of June 30, 2016	33,074	-	33,074

(*)           Correspond to equity interests in joint ventures with negative equity

F - 113

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

22. Provisions (Continued)

Breakdown of current and non-current provisions is as follows:

	June 30, 2016	June 30, 2015
Non-current	26,286	9,392
Current	6,788	23,630
	33,074	33,022

Included in the item are certain amounts in respect of which the Group set up a provision for different legal cases, none of which is considered significant.

In addition, the Group is a party to several legal proceedings, including tax, work, civil, administrative and other kinds of litigations, and therefore, has not set up any provision based on the information assessed as of this date. In Management’s opinion, the ultimate resolution in any pending or potential matters, whether individually or collectively, will not have any material adverse effect on the consolidated financial situation and the results of the operations of the Group. Below is a description of the primary matters pending:

Acquisition of the building known as ex- escuela Gobernador Vicente de Olmos (City of Córdoba)

On November 20, 2006, the Group through IRSA Propiedades Comerciales acquired the building known as edificio ex-escuela Gobernador Vicente de Olmos, located in the City of Córdoba through a public bidding in the amount of Ps. 32,522. As explained in Note 27, this property is affected to a concession contract.

After the title deed was made, the government of the province of Córdoba declared the property to be of public use and subject to partial expropriation in order to be used exclusively for the Libertador San Martín Theater.

IRSA Propiedades Comerciales has answered a complaint in an action and to challenge the law that declared such public interest on unconstitutional grounds. In the alternative, it has challenged the appraisal made by the plaintiff and, additionally, it has claimed damages not included in the appraisal and resulting immediately and directly from expropriation.

At June 30, 2016, the property is recorded under Investment Properties.

F - 114

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

23.

Borrowings

The following table shows the Company's borrowings as of June 30, 2016 and 2015:

						Book value
	Secured / unsecured	Currency	Rate	Effective interest rate %	Capital Nominal value	June 30, 2016	June 30, 2015
Non-current
NCN Series I due 2017 (Note 36)	Unsecured	USD	Fixed	7.875%	-	-	1,073,831
NCN Class II due 2023	Unsecured	USD	Fixed	8.750%	360,000	5,261,871	-
Finance leases (v)	Secured	USD	Fixed	(v)	300	2,381	1,216
Citibank N.A loan (iv)	Unsecured	Ps.	Fixed	(iv)	8,252	2,324	8,158
Related parties (vi) (Note 36)	Unsecured	USD	Fixed	8.50%	-	-	2,239,283
Non-current borrowings						5,266,576	3,322,488
Current
NCN Series I due 2017 (Note 36)	Unsecured	USD	Fixed	7.875%	-	-	11,067
NCN Class I due 2017 (vii)	Unsecured	Ps.	Fixed/ Floating	26.5% Badlar + 400 BP	407,260	409,091	-
NCN Class II due 2023	Unsecured	USD	Fixed	8.750%	360,000	127,652	-
Banco Provincia de Buenos Aires loans (ii)	Unsecured	Ps.	Fixed	(ii)	36,250	36,074	6,468
Syndicated loans (i)	Unsecured	Ps.	Fixed	(i)	-	-	75,485
Citibank N.A loan (iv)	Unsecured	Ps.	Fixed	(iv)	8,252	5,837	5,855
Bank overdrafts (iii)	Unsecured	Ps.	Floating	(iii)	-	39,792	274,348
Finance leases (v)	Secured	USD	Fixed	(v)	300	1,661	1,381
Related parties (vi) (Note 36)	Unsecured	Ps. / USD	Fixed/ Floating	(vi)	5,511	6,385	96,651
Total current borrowings						626,492	471,255
Total borrowings						5,893,068	3,793,743

(i)

On November 16, 2012, the Group subscribed a syndicated loan agreement In the amount of Ps. 118,000. Principal is payable in nine quarterly consecutive installments and accrued interest at a 15.01% rate. In November 2015, the last installment was settled. On June 12, 2013, the Group subscribed a new syndicated loan in the amount of Ps. 111,000. Principal is payable in nine quarterly consecutive installments and accrued interest at a 15.25% rate. Both loans have been entered into with various banking institutions, one of which is Banco Hipotecario with a one-year grace period to start repayment (Note 36).

(ii)

On December 12, 2012, the Group subscribed a loan with Banco Provincia de Buenos Aires in the amount of Ps. 29 million. Principal was payable in nine quarterly consecutive installments starting in December 2013 with a one-year grace period to start repayment. In December 2015, the last principal installment was settled. On September 30, 2015, the Group subscribed a new loan with Banco Provincia de Buenos Aires in the amount of Ps. 145 million. Principal is payable in twelve monthly consecutive installments and interest is accrued at a 23% rate.

(iii)

Granted by diverse financial institutions. They accrue interest rates ranging from 22% to 39% annually, and are due within a maximum term of three months from each year end.

(iv)

On December 23, 2013, the Group subscribed a loan with Citibank N.A. of Ps. 5.9 million, which accrues interest at a 15.25% rate. Principal is payable in nine quarterly consecutive installments starting in December 2014. Additionally, on December 30, 2014, the Group subscribed a new loan with Citibank N.A. in the amount of Ps. 10 million, which accrues interest at a rate of 26.50%. Principal is payable in nine quarterly consecutive installments starting in December 2015.

(v)

They accrue interest rates ranging from 3.2% to 14.3% annually.

(vi)

It includes credit lines with Nuevo Puerto Santa Fe and IRSA that bear interest at Badlar and at a fixed rate of 8.50%, respectively. Loan with IRSA was fully paid in at year end.

(vii) 

On September 18, 2015, the Group. issued non-convertible notes Class I in the amount of Ps. 407.3 million, which pay a combined rate and have a maturity of 18 months. During the first three months, interest will be accrued at a fixed rate of 26.5 % and, from the fourth month until maturity, the Badlar rate plus 400 basis points will be applied. Interest will be paid on a quarterly basis and principal will be repaid in a lump sum at maturity.

F - 115

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

23. Borrowings (Continued)

As of June 30, 2016 and 2015, the Company does not hold collateralized liabilities (seller financing and long-term borrowings, excluding finance leases).

Borrowings also include liabilities under finance leases where the Group is the lessee and which therefore have to be measured in accordance with IAS 17 “Leases”. Information regarding liabilities under finance leases is disclosed in Note 27.

The maturity of the Group's borrowings (excluding obligations under finance leases) and the Group's classification related to interest rates is as follows:

	June 30, 2016	June 30, 2015
Fixed rate:
Less than one year	42,163	88,016
Between 1 and 2 years	1,141	1,080,163
Between 2 and 3 years	1,198	2,338
Between 4 and 5 years	-	2,239,283
More than 5 years	5,345,204	-
	5,389,706	3,409,800
Floating rate:
Less than one year	452,532	278,604
	452,532	278,604
Accrued interest and expenses:
Less than one year	130,136	103,254
Between 1 and 2 years	(8)	(485)
Between 2 and 3 years	(7)	(27)
More than 5 years	(83,333)	-
	46,788	102,742
	5,889,026	3,791,146

The fair value of current borrowings at fixed-rate and current and non-current borrowings at floating-rate approaches its carrying amount, as the effect of discounting is not significant The fair value of all debts that are not quoted in the market are valued at their technical value, that is, nominal value plus accrued interest.

F - 116

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

23.            Borrowings (Continued)

The fair value of non-current borrowings at fixed rate (excluding obligations under finance leases) is as follows:

	June 30, 2016	June 30, 2015
NCN Series I due 2017	-	1,091,287
NCN Class II due 2023	5,921,907	-
Bank loans	6,901	16,213
Related parties	-	2,327,131
	5,928,808	3,434,631

Purchase offers and requests for consent of IRSA CP’s Series I Corporate Notes

On March 3, 2016, IRSA CP announced that it would launch an offer to buy in cash any and all of its outstanding 7.875% Series I Corporate Notes maturing in 2017.

Along with the Purchase Offer, IRSA CP asked the holders of Corporate Notes to give their consent to certain proposed changes to the trust agreement dated May 11, 2007, including the elimination of substantially all covenants, and the amendment or elimination of certain events of breach and other provisions of the Corporate Notes Trust Agreement.

Below is a detail of certain information on the main payment terms of the Purchase Offer and Request for Consent:

Existing Corporate Notes	CUSIP Numbers	ISINs	Outstanding Nominal Value	Purchase price	Payment for Early Offer	Payment for Consent	Total Consideration
Non-convertible  7.875% Corporate Notes maturing in 2017	02151PAB3 / P0245MAC3	US02151PAB31 / USP0245MAC30	USD 120,000,000	USD 974.50	USD 30.00	N/A	USD 1,004.50

The purchase offer was subject to certain conditions, including (i) the execution of a simultaneous offering of new corporate notes in the international capital markets in order to fund the purchase offer; (ii) the payment of the outstanding purchase price balance of USD 240.0 million to IRSA for the acquisition of office buildings and reserves of land made in December 2014; (iii) securing all Required Consents and maintaining them in full force and effect, and (iv) the general conditions (any significant political, economic or financial change in the conditions, among others).

F - 117

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

23.            Borrowings (Continued)

On April 4, 2016, IRSA CP announced the final outcome of the purchase offer and request for consent, as summarized in the following table:

Existing Corporate Notes	CUSIP Numbers	ISINs	Outstanding Nominal Value	Approximate Amount of Existing Corporate Notes Offered for sale	Approximate Percentage of Existing Corporate Notes Offered for sale	Approximate Percentage of Consents Received
Non-convertible 7.875% Corporate Notes maturing in 2017	02151PAB3 / P0245MAC3	US02151PAB31 / USP0245MAC30	USD 120,000,000	USD 59,504,000	49.59%	49.59%

The Meeting of IRSA’s 2017 Corporate Notes holders scheduled for March 23, 2016 could not be held for the required quorum was not gathered.

On March 28, 2016 and April 8, 2016, IRSA CP bought the nominal principal amount of USD 59,152,000 and USD 352,000, respectively, of 7.875% Series I Corporate Notes maturing in 2017, and ordered the Trustee to settle USD 59,504,000 of the nominal principal amount of the Corporate Notes on such dates. Following such settlements, the nominal outstanding principal amount of 7.875% Series I Corporate Notes maturing in 2017 issued by IRSA CP was USD 60,496,000.

On April 4, 2016, IRSA CP’s Board of Directors decided to approve the payment of USD 60,496,000, the remaining outstanding amount of IRSA CP’s Series I Corporate Notes. Such payment was made on May 4, 2016.

Such payments were accounted for as a cancellation of debt.

Such transaction generated a loss of Ps.33,393.

Issuance of IRSA CP’s 8.75% Class II Corporate Notes maturing in 2023.

On March 23, 2016, IRSA CP issued corporate notes for an aggregate nominal amount of USD 360 million under its Global Corporate Note Program. Class II Corporate Notes accrue interest on a half-yearly basis, at an annual fixed rate of 8.75% and are repayable at maturity on March 23, 2023. The issue price was 98.722% of face value.

IRSA CP’s Corporate Notes maturing in 2023 are subject to certain Commitments, Events of Breach and Limitations, including Limitations on Additional Indebtedness, Limitations on Restricted Payments, Limitations on Transactions with Affiliates, Limitations on the Merger, Take-over Merger and Limitations on the Sale of all or a substantial portion of the company’s Assets.

F - 118

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

23.            Borrowings (Continued)

In order to borrow additional debt, IRSA CP shall have to meet the additional debt Consolidated Interest Coverage ratio, which shall be higher than 2.00. The Consolidated Interest Coverage ratio is defined as Consolidated EBITDA divided by consolidated net interest. Consolidated EBITDA is defined as operating income (loss) plus depreciation and amortization, and other consolidated non-monetary charges.

Class II Corporate Notes are subject to certain financial commitments pursuant to which IRSA CP may not declare or pay dividends in cash or in kind, unless the following conditions are met at the time of payment:

a)an Event of Default does not occur or persist,

b)IRSA CP may incur at least USD 1.00 worth of additional debt pursuant to the “Restriction on Additional Borrowing”; and

c)the amount of such Restricted payment exceeds the sum of:

(i)

100% of the accumulated EBITDA for the period (considered as one single accounting period) from July 1, 2015 to the last day of the last fiscal quarter ended before the date of such Restricted Payment, less an amount equal to 150% of net consolidated interest for such period; and

(ii)

any debt reduction by the Issuer or its Subsidiaries after the Issue Date (other than Debt due by the Subsidiaries to the Issuer) through a swap or exchange of shares of the Issuer or its Subsidiaries.

24.

Employee benefits

The Group holds a defined contribution plan (the “Plan”) covering key managers in Argentina. The Plan became effective as from January 1, 2006. Participants may make contributions to the Plan of up to 2.5% of their monthly salary (“Base Contributions”) and contributions of up to 15% of their annual bonus (“Extraordinary Contributions”). Under the Plan, the Group matches employee contributions to the plan at a rate of 200% for Base Contributions and 300% for Extraordinary Contributions.

All contributions are invested in funds administered outside of the Group. Participants or their assignees, as the case may be, may have access to the 100% of the Company contributions under the following circumstances:

(i)

ordinary retirement in accordance with applicable labor regulations;

(ii)

total or permanent incapacity or disability;

(iii)

death.

F - 119

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

24.

Employee benefits (Continued)

In case of resignation or termination without good cause, the manager will received the Group’s contribution only if the employee has participated in the Plan for at least 5 years.

Contributions made by the Group under the Plan amount to Ps. 10,311, Ps. 5,141 and Ps. 2,276 for the fiscal years ended June 30, 2016, 2015 and 2014, respectively.

25.

Share-based payments

Equity Incentive Plan

The Group holds an equity incentive plan, under which certain selected employees, directors and top management of the Group, IRSA and Cresud (the “Participants”). Engagement is voluntary and by invitation of the Board of Directors.

This plan was effectively established on September 30, 2011 and is administered by the Board of Directors of the Group, IRSA and Cresud, as appropriate, or a committee appointed by the Board of Directors of the respective companies.

Initially, the Incentive Plan established that Participants would be entitled to receive shares (“Contributions”) of IRSA Propiedades Comerciales, IRSA and Cresud, based on a percentage of the annual bonus, on condition that they keep holding the acquired shares and remain an employee of the Company for at least 5 years, among other conditions required to qualify for such Contributions. Due to the small number of transactions in the market it was not possible to fulfill the formal aspects of the plan and as established by the Shareholders’ Meeting the Board of IRSA Propiedades Comerciales decided to modify certain conditions, including, delivery of IRSA and Cresud shares (upon transfer of funds by IRSA Propiedades Comerciales) to replace the shares of IRSA Propiedades Comerciales, IRSA and Cresud.

Consequently, shares shall be under the ownership of IRSA and Cresud, and as the conditions established by the Plan are verified, such contributions shall be transferred to the Participants.

Additionally, IRSA Propiedades Comerciales’s Board of Directors resolved to include a special one-off bonus composed of unrestricted shares issued by IRSA for the fiscal year ended on June 30, 2014, to employees with 2 or more years of service.

F - 120

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

25.

Share-based payments (Continued)

A reserve has been set up in the Shareholders’ Equity to reflect this plan. As a result of the amendments described above, the reserve was reversed against Trade and other payables. As of June 30, 2016, IRSA CP holds a credit in the amount of Ps. 23.5 million and IRSA CP´s subsidiaries a debt in the amount of Ps. 12.9 million. The amount accrued for the plans as of June 30, 2016 amounts to Ps. 64.2 million, while as of June 30, 2015 the debt recognized as a result of this Incentive Plan amounted to Ps. 78.5 million, based on the market value of the shares to be granted pertaining to the Group’s contributions, proportionately to the period already elapsed for the vesting of shares in the Incentive Plan and adjusted for the probability that any beneficiary should leave the Group before the term and/or the conditions required to qualify for the benefits of the plan are met at fiscal year-end.

For the fiscal years ended June 30, 2016, 2015 and 2014, the Group has incurred in a charge related to the Incentive Plan and the extraordinary gratification of Ps. 16.4 million, Ps. 21.4 million and Ps. 58.1 million, respectively, while the total cost not yet recognized given that the vesting period has not yet elapsed is Ps. 17.4 million, Ps. 36.5 million and Ps. 41.5 million, respectively, for each fiscal year. This cost is expected to be recognized over an average period of 2 years.

26.

Current and deferred income tax

The Group’s income tax has been calculated on the estimated taxable profit for each year at the rates prevailing in the respective tax jurisdictions. The subsidiaries of the Group in the jurisdictions where the Group operates are required to calculate their income taxes on a separate basis; thus, they are not permitted to compensate subsidiaries’ losses against other subsidiaries income.

The details of the provision for the Group’s income tax are as follows:

	June 30,  2016	June 30,  2015	June 30, 2014
Current income tax	223,220	302,796	223,860
Deferred income tax	71,116	(11,981)	2,914
Minimum presumed income tax (MPIT)	-	-	(74)
Income tax expense	294,336	290,815	226,700

F - 121

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

26. Current and deferred income tax (Continued)

The statutory tax rates in the countries where the Group operates for all of the years presented are:

Tax jurisdiction	Income tax rate
Argentina	35%
Uruguay	0%

Deferred tax assets and liabilities of the Group as of June 30, 2016 and 2015 will be recovered as follows:

	June 30, 2016	June 30, 2015
Deferred income tax asset to be recovered after more than 12 months	130,402	87,046
Deferred income tax asset to be recovered within 12 months	103,412	273,509
Deferred income tax assets	233,814	360,555
Deferred income tax liabilities to be recovered after more than 12 months	316,103	305,813
Deferred income tax liabilities to be recovered within 12 months	44,298	110,213
Deferred income tax liabilities	360,401	416,026

Deferred income tax (broken down into assets and liabilities) during the fiscal years ended June 30, 2016 and 2015, without considering offsetting balances within the same tax jurisdiction, is the following:

Deferred income tax assets	Tax loss carry-forwards	Trade and other payables	Trading properties	Other	Total
As of June 30, 2014	19,801	101,222	-	20,685	141,708
Charged / (Credited) to the statement of comprehensive income	(3,484)	220,058	6,275	(4,002)	218,847
As of June 30, 2015	16,317	321,280	6,275	16,683	360,555
(Credited) / Charged to the statement of comprehensive income	3,035	(134,256)	(8,438)	12,918	(126,741)
As of June 30, 2016	19,352	187,024	(2,163)	29,601	233,814

Deferred income tax liabilities	Investment properties	Investments	Trade and other receivables	Other	Total
As of June 30, 2014	(101,990)	(52,870)	(47,808)	(6,492)	(209,160)
(Credited) / Charged to the statement of comprehensive income	(171,458)	(20,051)	(19,843)	4,486	(206,866)
As of June 30, 2015	(273,448)	(72,921)	(67,651)	(2,006)	(416,026)
Charged / (Credited) to the statement of comprehensive income	123,342	(18,609)	(20,334)	(28,774)	55,625
As of June 30, 2016	(150,106)	(91,530)	(87,985)	(30,780)	(360,401)

F - 122

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

26. Current and deferred income tax (Continued)

Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefits through future taxable profits is probable. Tax loss carry-forwards may have expiration dates or may be permanently available for use by the Group depending on the tax jurisdiction where the tax loss carry forward is generated. Tax loss carry forwards in Argentina and Uruguay generally expire within 5 years.

In order to fully realize the deferred income tax asset, the Group will need to generate taxable income in the countries where the net operating losses were incurred. Based upon the level of historical taxable income and projections for future over the years in which the deferred income tax assets are deductible, management believes that as the end of the present year it is probable that the Group will realize all of the deferred income tax assets in Argentina and Uruguay.

As of June 30, 2016, the tax loss carry-forwards of the Group and the jurisdictions which generated them are as follows:

Jurisdiction	Tax loss carry-forward	Date of generation	Date of expiration
Argentina	67	2013	2018
Argentina	6,708	2014	2019
Argentina	3,638	2015	2020
Argentina	44,879	2016	2021
	55,292

The Group did not recognize deferred income tax assets of Ps. 16 and Ps. 1,646 as of June 30, 2016 and 2015, respectively, related to certain businesses which are still in their development stage. Although management estimates that, once operational, the business will generate sufficient income, pursuant to IAS 12, management has determined that, as a result of the recent loss history and the lack of verifiable and objective evidence due to the subsidiary’s limited operating history, there is sufficient uncertainty as to the generation of sufficient income to be able to offset the losses within a reasonable timeframe, therefore, no deferred tax asset is recognized in relation to these losses.

The Group did not recognize deferred income tax liabilities of Ps. 170.8 million and Ps. 34.0 million as of June 30, 2016 and 2015, respectively, related to the potential dividends distribution of its investments in foreign subsidiaries, Torodur S.A.. In addition, the withholdings and/or similar taxes paid at source may be creditable against the Group’s potential final tax liability.

F - 123

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

26. Current and deferred income tax (Continued)

Below there is a reconciliation between income tax recognized and that which would result applying the prevailing tax rate on the Profit Before Income Tax for the years ended June 30, 2016, 2015 and 2014:

	June 30,  2016	June 30,  2015	June 30,  2014
Profit for the year before income tax at the prevailing tax rate (i)	284,233	283,222	224,191
Tax effects of:
Unrecognized tax losses	16	1,646	-
Share of profit of associates and joint ventures	6,067	1,682	4,737
Other non-deductible / non-taxable items	4,020	4,265	(2,228)
Income tax expense	294,336	290,815	226,700

(i)

It does not include Uruguayan-source income for Ps. 393,941, Ps. 102,226 and Ps. (3,360) as of June 30, 2016, 2015 and 2014, respectively.

27.

Leases

The Group as lessee

Operating leases:

The Group leases two properties that use as a shopping center. These agreements provide for fixed monthly payments. Rent expense for the years ended June 30, 2016 and 2015 amounted to Ps. 5,222 and Ps. 2,972, respectively.

Furthermore, the Group also leases office space under an operating lease with companies related to the Chairman and Director of the Group (Note 36).

The future minimum payments that the Group must pay off under non-cancellable operating leases are as follows:

	June 30, 2016	June 30, 2015
Not later than 1 year	7,781	8,556
Later than 1 year and not later than 5 years	14,050	15,502
More than 5 years	44,800	34,800
	66,631	58,858

F - 124

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

27. Leases (Continued)

Finance leases:

The Group leases certain computer equipment under various finance leases for an average term of three years. The book value of these assets under financial leases is included in Note 11.

At the commencement of the lease term, the Group recognizes a lease liability equal to the carrying amount of the leased asset. In subsequent periods, the liability decreases by the amount of lease payments made to the lessors using the effective interest method. The interest component of the lease payments is recognized in the statement of comprehensive income. The book value of these liabilities under finance leases is included in Note 23.

Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

The future minimum payments that the Group must pay off under financial leases are as follows:

	June 30,  2016	June 30,  2015
Not later than 1 year	1,798	1,486
Later than 1 year and not later than 5 years	2,574	1,344
	4,372	2,830
Future - financial charges on finance leases	(330)	(233)
Present value of finance lease liabilities	4,042	2,597

The fair value of finance lease liabilities is as follows:

	June 30, 2016	June 30, 2015
Not later than 1 year	1,661	1,381
Later than 1 year and not later than 5 years	2,381	1,216
Present value of finance lease liabilities	4,042	2,597

Under the terms of these agreements, no contingent rents are payable. The inherent interest rate is fixed at the contract date for all of the lease term. The average interest rate on financial leases payables as of June 30, 2016 and 2015 was 14.40% and 10.66%, respectively.

F - 125

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

27. Leases (Continued)

The Group as lessor

Operating leases:

●

Leases of shopping centers, office and other buildings

The Group enters into cancellable operating leases agreements relating to shopping centers. The agreements have an average term raging from three to five years. Some leases related to anchor stores have terms of ten years, which are usually extendable. Tenants normally pay a rent which consists of the higher of (i) the base rent; and (ii) the percentage rent (which generally ranges between 3% and 12% of the tenants’ gross sales). Furthermore, pursuant to one rent escalation clause in most lease arrangements, the tenants’ base rent generally increases between 18% and 28% each year during the agreement term. Regarding the supplementary rental, because this item is not known until the end of the period, it falls within the definition of contingency rental under IAS 17 "Leases". Accordingly, rental income will be recognized once the contingent rent is known.

The book value of assets and their accumulated amortization for such leases are described in Note 10.

For the fiscal years ended June 30, 2016, 2015 and 2014, the base and contingent rental income of the Group’s shopping centers amounted to Ps. 1,264,289, Ps. 929,063 and Ps. 746,666, and to Ps. 587,630, Ps. 461,394 and Ps. 329,258, respectively, and are included under “Income from sales, rents and services” in the statement of comprehensive income.

Additionally, the Group, through IRSA Propiedades Comerciales S.A., owns a shopping center property known as "Patio Olmos" in the Province of Córdoba, Argentina. The Group leases this property to a third party shopping center operator under an operating lease agreement expiring in 2032. The lease provides for fixed monthly payments, adjusted pursuant to a rent escalation clause. Rental income for the years ended June 30, 2016, 2015 and 2014 amounted to Ps. 4,196, Ps. 181 and Ps. 151, respectively, and is included in the line item “Income from sales, rents and services” in the statement of comprehensive income.

The Group also enters into cancellable operating leases agreements relating to offices and other buildings. These agreements have an average term raging from three to five years. The tenants are charged a base rent on a monthly basis.

F - 126

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

27. Leases (Continued)

Office and other buildings leases amount to Ps. 279,728, Ps. 142,436 and Ps. 17,459 for the fiscal years ended June 30, 2016, 2015 and 2014, respectively, and are included within “income from sales, rents and services” in the statement of comprehensive income.

The book value of assets and their accumulated amortization for such leases are described in Note 10.

The future minimum proceeds under non-cancellable operating leases from Group´s shopping centers, offices and other buildings are as follows:

	June 30, 2016	June 30, 2015
2016	-	945,714
2017	930,991	659,327
2018	731,165	320,050
2019	405,510	83,190
Later than 2019	130,687	23,989
	2,198,353	2,032,270

Finance leases:

The Group does not act as a lessor in connection with finance leases.

28.

Shareholders’ Equity

Share capital and premium

The share capital of IRSA Propiedades Comerciales was originally represented by common shares with a nominal value of Ps. 0.1 per share and one vote each. On December 18, 2012, the Superintendence of Corporations registered an amendment to the Company’s by-laws whereby it increased the nominal value of its shares from Ps. 0.1 to Ps. 1 each. This amendment, which was notified through the CNV, was registered under number 20,264 of Stock Companies Book 62 T°.The request for Transfer of Public Offering and Listing has been submitted and is still pending approval in the CNV for the increase in nominal value of shares from Ps. 0.1 to Ps. 1 each.

There have been no changes to capital accounts as of June 30, 2016 and 2015.

F - 127

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

28. Shareholders’ Equity (Continued)

As of June 30, 2016, the capital stock consisted of 1,260,140,508 common shares with a par value of Ps. 0.1 per share entitled to one vote each and was as follows:

Status	Par Value	Approved by		Date of record with the Public Registry of Commerce
		Body	Date
Subscribed, Issued and Paid up	1	Extraordinary Shareholders’ Meeting	10.29.87	12.29.87
Subscribed, Issued and Paid up	1	Extraordinary Shareholders’ Meeting	10.26.88	12.29.88
Subscribed, Issued and Paid up	38	Extraordinary Shareholders’ Meeting	10.25.89	02.05.90
Subscribed, Issued and Paid up	9,460	Ordinary and Extraordinary Shareholders’ meeting	08.31.95	03.15.96
Subscribed, Issued and Paid up	16,000	Ordinary and Extraordinary Shareholders’ meeting	10.29.96	05.15.98
Subscribed, Issued and Paid up	38,000	Ordinary and Extraordinary Shareholders’ meeting	03.10.98	10.21.99
Subscribed, Issued and Paid up	6,500	Ordinary and Extraordinary Shareholders’ meeting	08.06.99	05.07.02
Subscribed, Issued and Paid up	8,206	(*) Board of Directors meeting	06.28.04	05.04.05
Subscribed, Issued and Paid up	47,755	(**) Board of Directors meeting	11.16.10	03.02.11
Subscribed, Issued and Paid up	28	(***) Board of Directors meeting	09.22.11	01.04.12
Subscribed, Issued and Paid up	25	(****) Board of Directors meeting	03.13.13	01.16.15
	126,014

(*) Capital subscribed in connection with the conversion of convertible notes made until August, 2006. Such conversions have been registered.

(**) Capital subscribed in connection with the conversion of convertible notes made on October 7, 2010.

(***) Capital subscribed in connection with the conversion of convertible notes made on September 21, 2011.

(****) 

Capital subscribed in connection with the conversion of convertible notes made on March 13, 2013.

Inflation Adjustment of Share Capital

Under Argentine GAAP, the Group’s financial statements were previously prepared on the basis of general price-level accounting which reflected changes in the purchase price of the Argentine Peso in the historical financial statements through February 28, 2003. The inflation adjustment related to share capital was appropriated to an inflation adjustment reserve that formed part of shareholders' equity. The balance of this reserve could be applied only towards the issuance of common stock to shareholders of the Company. Resolution 592/11 of the CNV requires that at the transition date to IFRS certain equity accounts, such as the inflation adjustment reserve, are not adjusted and are considered an integral part of share capital.

F - 128

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

28. Shareholders’ Equity (Continued)

Legal reserve

According to Law N° 19,550, 5% of the profit of the year is destined to constitute legal reserves until they reach legal capped amount (20% of share capital). This legal reserve is not available for dividend distribution and can only be released to absorb losses. The Group has reached the legal limit of these reserves.

Reserve for new developments

The Company and subsidiaries may separate portions of their profits of the year to constitute voluntary reserves according to company law and practice. These special reserves may be for general purposes or for specific uses such as new developments. The voluntary reserves may be released for dividend distribution.

Special Reserve

Pursuant to CNV General Ruling N° 609/12, the Company set up a special reserve reflecting the positive difference between the balance of retained earnings disclosed in the first closing of the last financial statements prepared in accordance with previously effective accounting standards. This reserve may not be used to make distributions in kind or in cash, and may only be reversed to be capitalized to absorb potential negative balances in Retained Earnings.

Dividends

The dividends paid for the year ended June 30, 2016, 2015 and 2014 amounts to Ps. 283,580 (Ps. 0.23 per share), Ps. 437,193 (Ps. 0.35 per share) and Ps. 407,522 (or Ps. 0.32 per share), respectively.

Expired dividends

During the year do not expired dividends not yet paid from prior years. Furthermore, during the years ended June 30, 2015 and 2014 expired Ps. 813 and Ps. 1,690, respectively.

F - 129

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

29.

Revenues

For fiscal years ended June 30, 2016, 2015 and 2014:

	June 30,  2016	June 30,  2015	June 30,  2014
Base rent	1,548,213	1,071,680	764,276
Contingent rent	587,630	461,394	329,258
Admission rights	207,190	156,438	126,495
Parking fees	153,213	111,900	81,292
Averaging of scheduled rent escalation	42,832	27,454	14,631
Letting fees	84,815	48,339	42,458
Property management fees	41,213	29,029	22,706
Others	7,595	11,179	11,583
Total revenues from rentals and services	2,672,701	1,917,413	1,392,699
Sale of trading properties	1,159	6,616	51,917
Total revenues from sale of properties	1,159	6,616	51,917
Other revenues	1,013	147	574
Other revenues	1,013	147	574
Total revenues from sales, rentals and services	2,674,873	1,924,176	1,445,190
Expenses and collective promotion fund	1,183,627	833,905	667,824
Total revenues from expenses and collective promotion funds	1,183,627	833,905	667,824
Total revenues	3,858,500	2,758,081	2,113,014

30.

Costs

For fiscal years ended June 30, 2016, 2015 and 2014:

	June 30,  2016	June 30,  2015	June 30,  2014
Service expenses and other operating costs	1,674,397	1,178,065	944,949
Total cost of property operations	1,674,397	1,178,065	944,949
Cost of sale of trading properties	5,718	4,947	10,916
Total cost of sale of properties	5,718	4,947	10,916
Other costs	77	56	373
Total other costs	77	56	373
Total Group costs (Note 31)	1,680,192	1,183,068	956,238

F - 130

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

31.

Expenses by nature

The Group presented the statement of comprehensive income classified according to their function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”.

The following tables provide the additional disclosure required on the nature of expenses and their relationship to the function within the Group.

For the year ended June 30, 2016:

	Costs
	Service expenses and other operating costs	Cost of sale of trading properties	Other costs from consumer financing	General and administrative expenses	Selling expenses	Total
Salaries, social security costs and other personnel administrative expenses (Note 32)	515,022	-	-	53,448	20,911	589,381
Maintenance, security, cleaning, repairs and other	441,585	3,239	-	4,428	503	449,755
Advertising and other selling expenses	284,935	-	-	-	22,077	307,012
Amortization and depreciation	234,768	22	-	4,473	231	239,494
Taxes, rates and contributions	126,586	775	-	1,957	101,833	231,151
Directors' fees	-	-	-	113,673	-	113,673
Leases and expenses	46,633	240	-	3,077	375	50,325
Fees and payments for services	8,891	40	77	28,562	3,481	41,051
Traveling, transportation and stationery	14,041	2	-	2,597	805	17,445
Allowance for doubtful accounts and other receivables (additions and unused amounts reversed)	-	-	-	-	12,005	12,005
Other expenses	1,936	-	-	5,927	-	7,863
Cost of sales of properties	-	1,400	-	-	-	1,400
Total expenses by nature	1,674,397	5,718	77	218,142	162,221	2,060,555

F - 131

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

 

31.            Expenses by nature (Continued)

For the year ended June 30, 2015:

	Costs
	Service expenses and other operating costs	Cost of sale of trading properties	Other costs from consumer financing	General and administrative expenses	Selling expenses	Total
Salaries, social security costs and other personnel administrative expenses (Note 32)	391,949	-	-	24,526	13,697	430,172
Maintenance, security, cleaning, repairs and other	292,287	2,525	9	2,553	198	297,572
Amortization and depreciation	177,888	1	-	2,392	129	180,410
Advertising and other selling expenses	173,262	-	-	-	18,684	191,946
Taxes, rates and contributions	102,497	483	-	2,036	68,387	173,403
Directors' fees	-	-	-	80,095	-	80,095
Fees and payments for services	8,438	381	47	18,614	3,807	31,287
Leases and expenses	17,388	630	-	2,110	178	20,306
Traveling, transportation and stationery	11,646	2	-	2,291	439	14,378
Allowance for doubtful accounts and other receivables (additions and unused amounts reversed)	-	-	-	-	12,164	12,164
Other expenses	2,710	-		3,982	-	6,692
Cost of sales of properties	-	925	-	-	-	925
Total expenses by nature	1,178,065	4,947	56	138,599	117,683	1,439,350

F - 132

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

31.            Expenses by nature (Continued)

For the year ended June 30, 2014:

	Costs
	Service expenses and other operating costs	Cost of sale of trading properties	Other costs from consumer financing	General and administrative expenses	Selling expenses	Total
Salaries, social security costs and other personnel administrative expenses (Note 32)	347,443	-	-	21,950	7,831	377,224
Maintenance, security, cleaning, repairs and others	207,669	1,948	3	1,356	152	211,128
Amortization and depreciation	120,402	-	-	524	88	121,014
Advertising and other selling expenses	145,331	-	-	-	11,926	157,257
Taxes, rates and contributions	66,497	270	-	743	48,064	115,574
Directors' fees	-	-	-	54,354	-	54,354
Fees and payments for services	25,126	25	368	15,708	2,181	43,408
Leases and expenses	17,948	1,011	-	1,688	187	20,834
Traveling, transportation and stationery	7,158	3	2	1,506	110	8,779
Allowance for doubtful accounts and other receivables (additions and unused amounts reversed)	-	-	-	-	6,311	6,311
Other expenses	7,375	-	-	3,616	4	10,995
Cost of sales of properties	-	7,659	-	-	-	7,659
Total expenses by nature	944,949	10,916	373	101,445	76,854	1,134,537

F - 133

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

32.

Employee costs

For fiscal years ended June 30, 2016, 2015 and 2014:

	June 30, 2016	June 30, 2015	June 30, 2014
Salaries, bonuses and social security costs	504,902	358,958	282,983
Shared-based compensation	31,239	33,327	63,933
Other expenses and benefits	53,240	37,887	30,308
Employee costs	589,381	430,172	377,224

33.

Other operating results, net

For fiscal years ended June 30, 2016, 2015 and 2014:

	June 30, 2016	June 30, 2015	June 30, 2014
Lawsuits (Note 22)	(3,402)	(9,861)	(9,179)
Income from sale of associates	-	8,758	-
Expenses related to transfers of real properties	-	(58,626)	-
Donations	(38,889)	(33,587)	(30,781)
Others	2,972	(3,726)	12,573
Total other operating results, net	(39,319)	(97,042)	(27,387)

34.

Financial results, net

For fiscal years ended June 30, 2016, 2015 and 2014:

	June 30, 2016	June 30, 2015	June 30, 2014
Finance income:
- Interest income	102,169	69,307	60,024
- Foreign exchange	410,386	35,831	64,471
Finance income	512,555	105,138	124,495
Finance costs:
- Interest expense	(612,486)	(329,170)	(151,092)
- Foreign exchange	(2,225,939)	(245,993)	(341,729)
- Other finance costs	(100,051)	(41,677)	(29,456)
Subtotal finance costs	(2,938,476)	(616,840)	(522,277)
Less: Capitalized finance costs	-	12,957	22,376
Finance costs	(2,938,476)	(603,883)	(499,901)
Other financial results:
- Gain / (Loss) on derivative financial instruments	1,248,374	(2,961)	12,514
- Fair value gains of financial assets and liabilities at fair value through profit or loss	466,328	50,176	62,216
Other financial results	1,714,702	47,215	74,730
Total financial results, net	(711,219)	(451,530)	(300,676)

F - 134

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

35.

Earnings per share

(a)

Basic

Basic earnings per share amounts are calculated in accordance with IAS 33 "Earning per share" by dividing the profit attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the year (Note 28).

On December 18, 2012, the Superintendence of Corporations registered an amendment to the Company’s by-laws whereby it increased the nominal value of its shares from Ps. 0.1 to Ps. 1 each. This amendment, which was notified through the CNV, was registered under number 20,264 of Stock Companies Book 62 T°.The request for Transfer of Public Offering and Listing has been submitted and is still pending approval in CNV.

	June 30, 2016	June 30, 2015	June 30, 2014
Profit attributable to equity holders of the Parent	816,598	581,269	377,003
Weighted average number of ordinary shares in issue (thousands)	1,260,140	1,260,140	1,260,140
Basic earnings per share	0.65	0.46	0.30

(b)

Diluted

Diluted earnings per share amounts are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential shares. As of June 30, 2016, 2015 and 2014 the Group has no convertible instruments. The diluted earnings per share is equal to basic earnings per share.

36.

Related Party transactions

During the normal course of business, the Group conducts transactions with different entities or parties related to it. An individual or legal entity is considered a related party where:



An entity, individual or close relative of such individual or legal entity exercises control, or joint control, or significant influence over the reporting entity, or is a member of the Board of Directors or the Senior Management of the entity or its controlling company.



An entity is a subsidiary, associate or joint venture of the entity or its controlling or controlled company.

F - 135

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.            Related Party transactions (Continued)

The following section provides a brief description of the main transactions conducted with related parties which are not described in other notes of these consolidated financial statements:

1.

Remuneration of the Board of Directors

The Law N° 19,550 provides that the remuneration of the Board of Directors, where it is not set forth in the Company’s by-laws, shall be fixed by the Shareholders' Meetings. The maximum amount of remuneration that the members of the Board are allowed to receive, including salary and other performance-based remuneration of permanent technical-administrative functions, may not exceed 25% of the profits.

Such maximum amount will be limited to 5% where no dividends are distributed to the Shareholders, and will be increased proportionately to the distribution, until reaching such cap where the total of profits is distributed.

Some of our Directors are hired under the Employment Contract Act N° 20,744. This Act rules on certain conditions of the work relationship, including remuneration, salary protection, working hours, vacations, paid leaves, minimum age requirements, workmen protection and forms of suspension and contract termination.

The remuneration of directors for each fiscal year is based on the provisions established by the Law N° 19,550, taking into consideration whether such directors perform technical-administrative functions and depending upon the results recorded by the Company during the fiscal year. Once such amounts are determined, they should be approved by the Shareholders’ Meeting.

2.

Senior Management remuneration

The members of the Senior or Top Management are appointed and removed by the Board of Directors, and perform functions in accordance with the instructions delivered by the Board itself.

The Group’s Senior Management is composed of as follows:

Name	Date of birth	Position	In the position since
Alejandro G. Elsztain	03/31/1966	General Manager	2002
Daniel R. Elsztain	12/22/1972	Operating Manager	2011
Matias Gaivironsky	02/23/1976	Financial and Administrative Manager	2011
Juan José Martinucci	01/31/1972	Commercial Manager	2013

F - 136

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.            Related Party transactions (Continued)

The remuneration earned by Senior Management for their functions consists of an amount that is fixed taking into account the manager's backgrounds, capacity and experience, and an annual gratification which varies according to their individual performance and the Group's results. Members of the senior management participate in defined contribution and share-based incentive plans that are described in Notes 24 and 25, respectively.

3.

Corporate Service Agreement with Cresud and IRSA

In due course, given that the Group, IRSA and Cresud have operating areas with certain characteristics of affinity, the Board of Directors considered it was convenient to implement alternatives that allows to reduce certain fixed costs, with the aim of reducing their incidence on the operating results, building on and enhancing the individual efficiencies of each of the companies in the different areas that form part of operating administration.

To such end, on June 30, 2004, a Master Agreement for the Exchange of Corporate Services (“Frame Agreement") was entered into between IRSA Propiedades Comerciales S.A., IRSA and Cresud, which was amended several times to bring it in line with the current context. The agreement has a term of 24 months, is renewable automatically for equal periods, unless it is terminated by any of the parties upon prior notice.

Under the current Master Agreement corporate services are provided in the following areas: Human Resources, Finance, Institutional Relations, Administration and Control, Insurance, Security, Agreements, Technical Tasks, Infrastructure and Services, Procurement, Architecture and Design, Development and Works, Real Estate, Hotels, Board of Directors, Board of directors of Real Estate Business, General Manager Office, Board Safety, Audit Committee, Real Estate Business Management, Human Resources of Real Estate Business, Fraud Prevention, Internal Audit and Agricultural Investment Management.

Pursuant to this agreement, the companies hired an external consulting firm to review and evaluate half-yearly the criteria used in the process of liquidating the corporate services, as well as the basis for distribution and source documentation used in the process indicated above, by means of a half-yearly report.

It should be noted that the operations indicated above allows both Group IRSA and Cresud to keep our strategic and commercial decisions fully independent and confidential, with cost and profit apportionment being made on the basis of operating efficiency and equity, without pursuing individual economic benefits for any of the companies.

4.

Legal services

The Group hires legal services from Estudio Zang, Bergel & Viñes, from which Saúl Zang is a partner and sits at the Board of Directors of the Group companies.

F - 137

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.            Related Party transactions (Continued)

5.

Donations granted to Fundación IRSA and Fundación Museo de los Niños

Fundación IRSA is a non-profit charity institution that seeks to support and generate initiatives concerning education, the promotion of corporate social responsibility and the entrepreneurial spirit of the youth. It carries out corporate volunteering programs and fosters donations by the Group’s employees. The main members of Fundación IRSA's Board of Administrators are: Eduardo S. Elsztain (Chairman); Saul Zang (Vice Chairman I), Alejandro Elsztain (Vice Chairman II) and Mariana C. de Elsztain (secretary). It finances its activities with the donations made by IRSA Propiedades Comerciales S.A., IRSA, Cresud and others Group’s companies.

Fundación Museo de los Niños is a non-profit association, created by the same founders of Fundación IRSA and its Management Board is formed by the same members as Fundación IRSA’s.

On October 31, 1997, IRSA Propiedades Comerciales S.A. entered into an agreement with Fundación IRSA whereby 3,800 square meters of the constructed area at the Abasto shopping center was granted under a gratuitous bailment agreement for a term of 30 years. Subsequently, on October 29, 1999, Fundación IRSA assigned free of cost all the rights of use over such store and its respective obligations to Fundación Museo de los Niños.

On November 29, 2005, IRSA Propiedades Comerciales S.A. signed another agreement with Fundación Museo de los Niños granting under gratuitous bailment 2,670.11 square meters of the constructed area at Alto Rosario shopping center for a term of 30 years.

Fundación Museo de los Niños has used these spaces to set up "Museo de los Niños, Abasto” and “Museo de los Niños, Rosario", two interactive learning centers intended for children and adults. Both agreements establish the payment of common expenses and direct expenses related to the services performed by these stores should be borne by Fundación Museo de los Niños.

6.Offices and Shopping centers spaces leases

IRSA and Cresud rent office space for their central offices located at the Intercontinental Plaza tower at Moreno 877 in the Autonomous City of Buenos Aires, which we own since December 2014. They also rent space that we own in the Abasto Shopping Center.

The offices of our president are located at 108 Bolivar, in the Autonomous City of Buenos Aires. The property has been rented to Isaac Elsztain e Hijos S.A., a company controlled by Eduardo Sergio Elsztain, our president, and some of his family members and to Hamonet S.A., a company controlled by Fernando A. Elsztain, one of our directors, and some of its family members.

F - 138

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.            Related Party transactions (Continued)

In addition, Tarshop, Bacs Banco de Crédito y Securitización S.A., BHN Sociedad de Inversión S.A., BHN Seguros Generales S.A. and BHN Visa S.A. rent offices owned by us in different buildings. In addition, we also let various spaces in our Shopping Centers (stores, stands, storage space or advertising space) to third parties and related parties such as Tarshop S.A. and Banco Hipotecario S.A..

Lease agreement entered into with these related parties include clauses and values in line with those agreed upon with unrelated parties.

7.Special reimbursement programs with several means of payment

The Group carries out diverse commercial actions and promotions intended to promote larger number of visitors and consumption inside its shopping centers.

Some promotions are offered on specific dates or periods, different types of discounts to clients and/or interest-free financing plans. To this end, the Group enters into agreements with various third party financial entities and/or related parties, such as Banco Hipotecario S.A. and Tarshop S.A..

These agreements usually establish different refund percentages for those clients that make purchases at all the participating stores using the means of payment specific of each financial entity and, on occasions, additional financing plans with interest-free installments. The cost of the refunds granted to the clients is generally distributed as a percentage among the lessors of the shopping centers and the financial entities, while the cost of interest-free financing is borne, in general, by the latter. The Group acts as an intermediary and is in charge of the lessors’ engagement and the advertising of these promotions. This activity results in no money flows or transfer of revenues or costs between the Group and its related parties.

8.

Hospitality Services

On certain occasions, the Group hires hospitality and event venue rental services from Nuevas Fronteras S.A., Hoteles Argentinos S.A. and Llao Llao Resorts S.A., all subsidiaries of our parent company IRSA.

9.Transfer of tax credits

Sociedad Anónima Carnes Pampeanas S.A. (a company controlled by Cresud) and Cresud, assigned credits upon the Group corresponding to Value Added Tax export refunds related to such companies’ business activity.

F - 139

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

10.Property purchase - sale

The Group in the course of business operations may acquire or sell to or from other related parties certain real estate properties used for rental purposes. See Note 3.

11.

Borrowings

In the normal course of its activities, the Group enters into diverse loan agreements or credit facilities between the group’s companies and/or other related parties. These loans accrue interest at market rates.

12. Financial and service operations

The Group works with several financial entities in the Argentine market for operations including, but not limited to, credit, investment, purchase and sale of securities and financial derivatives. Such entities include Banco Hipotecario S.A. and its subsidiaries. Furthermore, Banco Hipotecario S.A. and BACS Banco de Crédito y Securitización S.A. usually act as underwriters in Capital Market transactions for the Group.

13. Purchase of financial assets

The Group usually invests excess cash in several instruments that may include those issued by related companies, acquired at issuance or from unrelated third parties through secondary market deals.

14.Investment in investment funds managed by BACS Administradora de Activos

The Group invests its liquid funds in mutual funds managed by BACS Administradora de Activos S.A.S.G.F.C.I. among other entities.

15.

Credit line granted to IRSA

On June 25, 2014 the Group increased the existing credit line expiring on June 25, 2015 to USD 60 million, which is priced at one-year LIBOR rate plus 3.0%. Under this credit line, the Group will be Lenders and IRSA and/or its subsidiaries (not our subsidiaries) will be the Borrower. In June 2015, the line of credit was renewed for an additional year until June 24, 2016. In addition, on July 5, 2016 the credit line was increased by up to USD 120,000,000 at an annual rate of 9% and expires on June 24, 2017.

F - 140

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.

Related Party transactions (Continued)

The following is a summary of the balances with related parties as of June 30, 2016:

Related party	Description of Transaction	Investments in financial assets current	Trade and other receivables non-current	Trade and other receivables current	Trade and other payables non-current	Trade and other payables current	Borrowings non-current	Borrowings current
Direct parent company
IRSA Inversiones y Representaciones Sociedad	Reimbursement of expenses	-	-	8,560	-	(394)	-	-
Anónima (IRSA)	Corporate services	-	-	20,400	-	-	-	-
	Leases’ collections	-	-	366	-	-	-	-
	Advertising space	-	-	-	-	(141)	-	-
	Advance payment	-	376,603	-	-	-	-	-
	Other receivables	-	-	2,243	-	-	-	-
	Equity incentive plan	-	-	21,791	-	(12,934)	-	-
	Leases and/or rights of spaces’ use	-	-	1,236	-	-	-	-
	Borrowings	-	-	65,806	-	-	-	-
Total direct parent company		-	376,603	120,402	-	(13,469)	-	-
Direct parent company of IRSA
Cresud S.A.C.I.F. y A.	Reimbursement of expenses	-	-	-	-	(25,310)	-	-
	Equity incentive plan	-	-	1,709	-	-	-	-
	Corporate services	-	-	-	-	(43,780)	-	-
	Leases and/or rights of spaces’ use	-	-	873	-	-	-	-
	Non-Convertible Notes	328,669	-	-	-	-	-	-
Total direct parent company of IRSA		328,669	-	2,582	-	(69,090)	-	-
Associates of IRSA Propiedades Comerciales
Tarshop S.A.	Reimbursement of expenses	-	-	1,206	-	-	-	-
	Leases and/or rights of spaces’ use	-	-	-	(209)	(861)	-	-
Total Associates of IRSA Propiedades Comerciales		-	-	1,206	(209)	(861)	-	-

F - 141

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.

Related Party transactions (Continued)

Related party	Description of Transaction	Investments in financial assets current	Trade and other receivablesnon-current	Trade and other receivables current	Trade and other payables non-current	Trade and other payables current	Borrowings non-current	Borrowings current
Joint ventures of IRSA Propiedades Comerciales
Nuevo Puerto Santa Fe S.A.	Reimbursement of expenses	-	-	2,055	-	-	-	-
	Leases’ collections	-	-	2	-	-	-	-
	Advertising space	-	-	201	-	-	-	-
	Leases and/or rights of spaces’ use	-	-	-	-	(308)	-	-
	Management fees	-	-	4,075	-	-	-	-
	Borrowings	-	-	-	-	-	-	(6,385)
Quality Invest S.A.	Reimbursement of expenses	-	-	1	-	-	-	-
	Management fees	-	-	223	-	-	-	-
Entretenimiento Universal S.A.	Reimbursement of expenses	-	-	116	-	-	-	-
	Borrowings	-	-	96	-	-	-	-
Entertainment Holdings S.A.	Reimbursement of expenses	-	-	150	-	-	-	-
	Borrowings	-	-	87	-	-	-	-
Total Joint ventures of IRSA Propiedades Comerciales		-	-	7,006	-	(308)	-	(6,385)
Subsidiaries of IRSA
Llao Llao Resorts S.A.	Hotel services	-	-	1	-	-	-	-
Nuevas Fronteras S.A	Reimbursement of expenses	-	-	30	-	-	-	-
	Hotel services	-	-	-	-	(30)	-	-
Baicom Networks S.A.	Reimbursement of expenses	-	-	2	-	-	-	-
IRSA International LLC	Reimbursement of expenses	-	-	187	-	-	-	-
E-Commerce Latina S.A.	Reimbursement of expenses	-	-	89	-	-	-	-
Tyrus S.A.	Dividends	-	-	-	-	(272)	-	-
Real Estate Investment Group V LP (i)	Borrowings	-	-	860,576	-	-	-	-
Total subsidiaries of IRSA		-	-	860,885	-	(302)	-	-
Subsidiaries of Cresud
Futuros y Opciones.Com S.A.	Reimbursement of expenses	-	-	171	-	-	-	-
Sociedad Anónima Carnes Pampeanas S.A.	Other liabilities	-	-	-	-	(1,089)	-	-
	Reimbursement of expenses	-	-	135	-	-	-	-
	Other receivables	-	-	52	-	-	-	-
	Transfer of tax credits	-	-	-	-	(6,370)	-	-
FyO Trading S.A.	Reimbursement of expenses	-	-	20	-	-	-	-
Total subsidiaries of Cresud		-	-	378	-	(7,459)	-	-

(i) It corresponds to a credit line amounting USD 55.9 million, which accrues interest at a 9% rate and becomes due in June 2017.

F - 142

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.

Related Party transactions (Continued)

Related party	Description of Transaction	Investments in financial assets current	Trade and other receivables non-current	Trade and other receivables current	Trade and other payables non-current	Trade and other payables current	Borrowings non-current	Borrowings current
Associates of IRSA
Banco Hipotecario S.A.	Reimbursement of expenses	-	-	176	-	-	-	-
	Leases and/or rights of spaces’ use	-	-	23	(11)	(17)	-	-
	Advances	-	-	-	-	(2)	-	-
	Commissions per stands	-	-	63	-	-	-	-
Banco de Crédito y Securitización	Reimbursement of expenses	-	-	929	-	-	-	-
Total associates of IRSA		-	-	1,191	(11)	(19)	-	-
Joint venture of IRSA
Cyrsa S.A.	Reimbursement of expenses	-	-	-	-	(3)	-	-
Total joint venture of IRSA		-	-	-	-	(3)	-	-
Other related parties
Boulevard Norte S.A.	Reimbursement of expenses	-	-	813	-	-	-	-
	Other payables	-	-	-	-	(677)	-	-
	Borrowings	-	-	6	-	-	-	-
Consultores Asset Management S.A. (CAMSA)	Reimbursement of expenses	-	-	222	-	-	-	-
La Rural S.A.	Leases and/or rights of spaces’ use	-	-	222	-	-	-	-
Avenida Compras S.A.	Advertising space	-	-	792	-	-	-	-
	Leases and/or rights of spaces’ use	-	-	73	-	-	-	-
Avenida Inc.	Advertising space	-	-	538	-	-	-	-
Ogden Argentina S.A.	Reimbursement of expenses	-	-	124	-	-	-	-
	Borrowings	-	-	901	-	-	-	-
Estudio Zang, Bergel & Viñes	Legal services	-	-	-	-	(311)	-	-
Fundación Museo de los Niños	Reimbursement of expenses	-	-	231	-	-	-	-
	Leases and/or rights of spaces’ use	-	-	1,346	-	-	-	-
Austral Gold	Reimbursement of expenses	-	-	20	-	-	-	-
Fundación IRSA	Reimbursement of expenses	-	-	54	-	-	-	-
Total other related parties		-	-	5,342	-	(988)	-	-
Directors
Directors	Fees	-	-	-	-	(27,700)	-	-
	Reimbursement of expenses	-	-	-	-	(15)	-	-
	Guarantee deposits	-	-	-	(12)	-	-	-
Total Directors		-	-	-	(12)	(27,715)	-	-
Total		328,669	376,603	998,992	(232)	(120,214)	-	(6,385)

F - 143

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

The following is a summary of the balances with related parties as of June 30, 2015:

Related party	Description of Transaction	Investments in financial assets non-current	Investments in financial assets current	Trade and other receivables current	Trade and other payables non-current	Trade and other payables current	Borrowings non-current	Borrowings current
Direct parent company
IRSA Inversiones y Representaciones Sociedad	Reimbursement of expenses	-	-	13,795	-	(600)	-	-
Anónima (IRSA)	Corporate services	-	-	12,558	-	-	-	-
	Non-Convertible Notes	-	74,928	-	-	-	(35,862)	(390)
	Sale of properties	-	-	-	-	-	(2,239,283)	(88,825)
	Equity incentive plan	-	-	-	-	(60,150)	-	-
	Leases and/or rights of spaces’ use	-	-	765	-	-	-	-
	Borrowings	-	-	38,291	-	-	-	-
Total direct parent company		-	74,928	65,409	-	(60,750)	(2,275,145)	(89,215)
Direct parent company of IRSA
Cresud S.A.C.I.F. y A.	Reimbursement of expenses	-	-	-	-	(5,584)	-	-
	Equity incentive plan	-	-	-	-	(16,575)	-	-
	Corporate services	-	-	-	-	(35,106)	-	-
	Leases and/or rights of spaces’ use	-	-	264	-	-	-	-
	Non-Convertible notes	79,760	30,071	-	-	-	-	-
Total direct parent company of IRSA		79,760	30,071	264	-	(57,265)	-	-
Associates of IRSA Propiedades Comerciales
Tarshop S.A.	Reimbursement of expenses	-	-	1,790	-	-	-	-
	Leases and/or rights of spaces’ use	-	-	-	(26)	(686)	-	-
Total Associates of IRSA Propiedades Comerciales		-	-	1,790	(26)	(686)	-	-

F - 144

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.

Related Party transactions (Continued)

Related party	Description of Transaction	Investments in financial assets non-current	Investments in financial assets current	Trade and other receivables current	Trade and other payables non-current	Trade and other payables current	Borrowings non-current	Borrowings current
Joint ventures of IRSA Propiedades Comerciales
Nuevo Puerto Santa Fe S.A.	Reimbursement of expenses	-	-	543	-	-	-	-
	Leases’ collections	-	-	-	-	(4)	-	-
	Leases and/or rights of spaces’ use	-	-	-	-	(597)	-	-
	Management fees	-	-	2,644	-	-	-	-
	Borrowings	-	-	-	-	-	-	(7,826)
Quality Invest S.A.	Reimbursement of expenses	-	-	29	-	-	-	-
	Management fees	-	-	22	-	-	-	-
Entretenimiento Universal S.A.	Reimbursement of expenses	-	-	115	-	-	-	-
	Borrowings	-	-	80	-	-	-	-
Entertainment Holdings S.A.	Reimbursement of expenses	-	-	211	-	-	-	-
	Borrowings	-	-	72	-	-	-	-
Total Joint ventures of IRSA Propiedades Comerciales		-	-	3,716	-	(601)	-	(7,826)
Subsidiaries of IRSA
Llao Llao Resorts S.A.	Hotel services	-	-	5	-	-	-	-
Nuevas Fronteras S.A	Reimbursement of expenses	-	-	2	-	(3)	-	-
	Hotel services	-	-	-	-	(22)	-	-
Baicom Networks S.A.	Reimbursement of expenses	-	-	2	-	-	-	-
IRSA International LLC	Reimbursement of expenses	-	-	113	-	-	-	-
E-Commerce Latina S.A.	Reimbursement of expenses	-	-	101	-	-	-	-
Total subsidiaries of IRSA		-	-	223	-	(25)	-	-
Subsidiaries of Cresud
Futuros y Opciones.Com S.A.	Reimbursement of expenses	-	-	115	-	-	-	-
Sociedad Anónima Carnes Pampeanas S.A.	Other liabilities	-	-	-	-	(3,064)	-	-
FyO Trading S.A.	Reimbursement of expenses	-	-	1	-	-	-	-
Total subsidiaries of Cresud		-	-	116	-	(3,064)	-	-

F - 145

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36.

Related Party transactions (Continued)

Related party	Description of Transaction	Investments in financial assets non-current	Investments in financial assets current	Trade and other receivables current	Trade and other payables non-current	Trade and other payables current	Borrowings non-current	Borrowings current
Associates of IRSA
Banco Hipotecario S.A.	Reimbursement of expenses	-	-	-	-	(62)	-	-
	Leases and/or rights of spaces’ use	-	-	762	-	-	-	-
	Borrowings	-	-	-	-	-	-	(15,783)
	Advances	-	-	-	-	(1,428)	-	-
	Commissions per stands	-	-	68	-	-	-	-
Banco de Crédito y Securitización	Reimbursement of expenses	-	-	1,766	-	-	-	-
Total associates of IRSA		-	-	2,596	-	(1,490)	-	(15,783)
Joint venture of IRSA
Cyrsa S.A.	Reimbursement of expenses	-	-	-	-	(12)	-	-
Total joint venture of IRSA		-	-	-	-	(12)	-	-
Other related parties
Boulevard Norte S.A.	Reimbursement of expenses	-	-	881	-	-	-	-
	Borrowings	-	-	5	-	-	-	-
Consultores Asset Management S.A. (CAMSA)	Reimbursement of expenses	-	-	131	-	-	-	-
Ogden Argentina S.A.	Reimbursement of expenses	-	-	250	-	-	-	-
	Borrowings	-	-	724	-	-	-	-
Estudio Zang, Bergel & Viñes	Legal services	-	-	377	-	(472)	-	-
Fundación Museo de los Niños	Reimbursement of expenses	-	-	94	-	-	-	-
	Leases and/or rights of spaces’ use	-	-	750	-	-	-	-
Austral Gold	Reimbursement of expenses	-	-	3	-	-	-	-
Fundación IRSA	Reimbursement of expenses	-	-	37	-	-	-	-
Total other related parties		-	-	3,252	-	(472)	-	-
Directors
Directors	Fees	-	-	-	-	(40,558)	-	-
	Reimbursement of expenses	-	-	-	-	(15)	-	-
	Guarantee deposits	-	-	-	(12)	-	-	-
Total Directors		-	-	-	(12)	(40,573)	-	-
Total		79,760	104,999	77,366	(38)	(164,938)	(2,275,145)	(112,824)

F - 146

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

The following is a summary of the results and transactions with related parties for the year ended June 30, 2016:

Related party	Corporate services	Fees	Financial operations	Donations	Leases and/or rights of use	Letting fees
Direct parent company
IRSA Inversiones y Representaciones Sociedad Anónima	19,165	-	(1,491,911)	-	(375)	76
Total direct parent company	19,165	-	(1,491,911)	-	(375)	76
Direct parent company of IRSA
Cresud S.A.CI.F. y A.	(88,517)	-	84,980	-	1,417	-
Total direct parent company of IRSA	(88,517)	-	84,980	-	1,417	-
Associates of IRSA Propiedades Comerciales
Tarshop S.A.	-	-	-	-	11,802	265
Total associates of IRSA Propiedades Comerciales	-	-	-	-	11,802	265
Other related parties
Estudio Zang, Bergel & Viñes	-	(2,940)	-	-	-	-
Fundación IRSA	-	-	-	(96)	-	-
Boulevard Norte S.A.	-	-	1	-	-	-
Ogden S.A.	-	-	177	-	-	-
La Rural S.A.	-	-	-	-	169	-
Hamonet S.A.	-	-	-	-	(240)	-
Isaac Elsztain e Hijos S.A.	-	-	-	-	(457)	-
Total other related parties	-	(2,940)	178	(96)	(528)	-
Directors
Directors	-	(113,673)	-	-	-	-
Senior Management	-	(6,246)	-	-	-	-
Total Directors	-	(119,919)	-	-	-	-
Joint ventures of IRSA Propiedades Comerciales
Quality Invest S.A.	-	216	-	-	-	-
Nuevo Puerto Santa Fe S.A.	-	3,619	(1,716)	-	(385)	-
Entretenimiento Universal S.A.	-	-	16	-	-	-
Entertainment Holding S.A.	-	-	15	-	-	-
Total Joint ventures of IRSA Propiedades Comerciales	-	3,835	(1,685)	-	(385)	-

F - 147

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

Related party	Corporate services	Fees	Financial operations	Donations	Leases and/or rights of use	Letting fees
Associate of IRSA
Banco Hipotecario S.A.	-	-	-	-	3,110	222
Banco de Crédito y Securitización S.A.	-	-	-	-	6,493	-
Total associates of IRSA	-	-	-	-	9,603	222
Subsidiaries of IRSA
Tyrus S.A.	-	-	4,734	-	-	-
Nuevas Fronteras S.A.	-	-	-	-	(4)	-
Subsidiaries of IRSA	-	-	4,734	-	(4)	-
Total	(69,352)	(119,024)	(1,403,704)	(96)	21,530	563

F - 148

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

The following is a summary of the results and transactions with related parties for the year ended June 30, 2015:

Related party	Corporate services	Fees	Financial operations	Donations	Leases and/or rights of use	Letting fees
Direct parent company
IRSA Inversiones y Representaciones Sociedad Anónima	15,702	-	(113,296)	-	(5,236)	44
Total direct parent company	15,702	-	(113,296)	-	(5,236)	44
Direct parent company of IRSA
Cresud S.A.CI.F. y A.	(63,414)	-	(1,066)	-	681	-
Total direct parent company of IRSA	(63,414)	-	(1,066)	-	681	-
Associates of IRSA Propiedades Comerciales
Tarshop S.A.	-	-	-	-	6,679	72
Total Associates of IRSA Propiedades Comerciales	-	-	-	-	6,679	72
Other related parties
Estudio Zang, Bergel & Viñes	-	(2,138)	-	-	-	-
Fundación IRSA	-	-	-	(1,723)	-	-
Boulevard Norte S.A.	-	-	1	-	-	-
Ogden S.A.	-	-	20	-	-	-
Hamonet S.A.	-	-	-	-	(83)	-
Isaac Elsztain e Hijos S.A.	-	-	-	-	(159)	-
Total other related parties	-	(2,138)	21	(1,723)	(242)	-
Directors
Directors	-	(80,095)	-	-	-	-
Senior Management	-	(3,568)	-	-	-	-
Total Directors	-	(83,663)	-	-	-	-
Joint ventures of IRSA Propiedades Comerciales
Quality Invest S.A.	-	216	-	-	-	-
Nuevo Puerto Santa Fe S.A.	-	2,164	(1,400)	-	(712)	-
Entretenimiento Universal S.A.	-	-	13	-	-	-
Entertainment Holding S.A.	-	-	12	-	-	-
Total joint ventures of IRSA Propiedades Comerciales	-	2,380	(1,375)	-	(712)	-

F - 149

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

Related party	Corporate services	Fees	Financial operations	Donations	Leases and/or rights of use	Letting fees
Associate of IRSA
Banco Hipotecario S.A.	-	-	(549)	-	1,437	5
Banco de Créditos y Securitización	-	-	-	-	2,458	-
Total associate of IRSA	-	-	(549)	-	3,895	5
Subsidiaries of Cresud
Sociedad Anónima Carnes Pampeanas S.A.	-	-	133	-	-	-
Total subsidiaries of Cresud	-	-	133	-	-	-
Subsidiaries of IRSA
Tyrus S.A.	-	-	11,904	-	(4)	-
Total subsidiaries of IRSA	-	-	11,904	-	(4)	-
Total	(47,712)	(83,421)	(104,228)	(1,723)	5,061	121

F - 150

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

The following is a summary of the results and transactions with related parties for the year ended June 30, 2014:

Related party		Corporate services		Fees		Financial operations		Donations		Leases and/or rights of use	Letting fees
Direct parent company
IRSA Inversiones y Representaciones Sociedad Anónima	-		-		14,128		-		(7,025)		(19)
Total direct parent company	-		-		14,128		-		(7,025)		(19)
Direct parent company of IRSA
Cresud S.A.CI.F. y A.	(67,408)		-		6,251		-		9		-
Total direct parent company of IRSA	(67,408)		-		6,251		-		9		-
Associates of IRSA Propiedades Comerciales
Tarshop S.A.	-		(239)		-		-		2,918		165
Total associates of IRSA Propiedades Comerciales	-		(239)		-		-		2,918		165
Other related parties
Estudio Zang, Bergel & Viñes	-		(2,216)		-		-		-		-
Fundación IRSA	-		-		-		(3,241)		-		-
Hamonet S.A.	-		-		-		-		(129)		-
Isaac Elsztain e Hijos S.A.	-		-		-		-		(253)		-
Total other related parties	-		(2,216)		-		(3,241)		(382)		-
Directors
Directors	-		(54,354)		-		-		-		-
Senior Management	-		(7,915)		-		-		-		-
Total Directors	-		(62,269)		-		-		-		-
Joint ventures of IRSA Propiedades Comerciales
Quality Invest S.A.	-		216		-		-		-		-
Nuevo Puerto Santa Fe S.A.	-		1,124		(21)		-		(632)		-
Entretenimiento Universal S.A.	-		-		6		-		-		-
Total joint ventures of IRSA Propiedades Comerciales	-		1,340		(15)		-		(632)		-
Associates of IRSA
Banco Hipotecario S.A.	-		-		26,453		-		560		133
Total associates of IRSA	-		-		26,453		-		560		133

F - 151

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

36. Related Party transactions (Continued)

Related party	Corporate services	Fees	Financial operations	Donations	Leases and/or rights of use	Letting fees
Subsidiaries of Cresud
Sociedad Anónima Carnes Pampeanas S.A.	-	-	134	-	-	-
Total subsidiaries of Cresud	-	-	134	-	-	-
Subsidiaries of IRSA
Tyrus S.A.	-	-	225	-	-	-
Total subsidiaries of IRSA	-	-	225	-	-	-
Total	(67,408)	(63,384)	47,176	(3,241)	(4,552)	279

F - 152

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

37.

CNV General Resolution N° 622

As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622/13, below there is a detail of the notes to the Consolidated Financial Statements that disclosure the information required by the Resolution in Exhibits.

Exhibit A - Property, plant and equipment	Note 10 - Investment properties
	Note 11 - Property, plant and equipment
Exhibit B - Intangible assets	Note 13 - Intangible assets
Exhibit C - Equity investments	Note 8 - Interest in joint ventures
	Note 9 - Interest in associates
Exhibit D - Other investments	Note 15 - Financial instruments by category
	Note 17 - Investments in financial assets Note 18- Derivative financial instruments
	Note 19 - Cash and cash equivalents
Exhibit E – Provisions	Note 16 - Trade and other receivables
	Note 22 - Provisions
Exhibit F – Cost of sales and services provided	Note 12 - Trading properties
	Note 30 - Costs
Exhibit G - Foreign currency assets and liabilities	Note 38 - Foreign currency assets and liabilities

F - 153

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

38.

Foreign currency assets and liabilities

Book amounts of foreign currency assets and liabilities are as follows:

Items (*)	Amount of foreign currency (1)	Prevailing exchange rate (2)	Total as of 06.30.16	Amount of foreign currency	Prevailing exchange rate (2)	Total as of 06.30.15
Asset
Trade and other receivables
Uruguayan Pesos	33	0.489	16	12	0.334	4
US Dollar	2,624	14.940	39,199	5,626	8.988	50,569
Receivables with related parties:
US Dollar	61,836	15.040	930,017	4,694	9.088	42,660
Total Trade and other receivables			969,232			93,233
Investments in financial assets
US Dollar	60,033	14.940	896,897	19,402	8.988	174,388
Investments with related parties:
US Dollar	21,853	15.040	328,669	20,330	9.088	184,759
Total investments in financial assets			1,225,566			359,147
Cash and cash equivalents
Uruguayan Pesos	2	0.489	1	3	0.334	1
US Dollar	864	14.940	12,905	30,563	8.988	274,698
Pounds	2	19.763	30	1	14.134	21
Euros	13	16.492	222	14	10.005	138
Total cash and cash equivalents			13,158			274,858
Total Assets as of 06.30.16			2,207,956			-
Total Assets as of 06.30.15			-			727,238
Liabilities
Trade and other payables
Uruguayan Pesos	35	0.491	17	-	-	-
US Dollar	3,887	15.040	58,456	4,006	9.088	36,406
Payables from related parties:
US Dollar	20	15.040	294	5	9.088	50
Total trade and other payables			58,767			36,456
Borrowings
US Dollar	364,321	15.040	5,479,395	115,816	9.088	1,052,537
Borrowings from related parties
US Dollar	-	15.040	-	260,138	9.088	2,364,133
Total Borrowings			5,479,395			3,416,670
Provisions
US Dollar	10	15.040	150	10	9.088	91
Total Provisions			150			91
Total Liabilities as of 06.30.16			5,538,312			-
Total Liabilities as of 06.30.15			-			3,453,217

(*) The Company uses some complementary financial instruments with the purpose of reducing its expose to exchange rate movements. See Note 18.

(1)

Considering foreign currencies those that differ from each one of the Group´s companies´ functional currency at each year-end.

(2)

Exchange rate as of June 30, 2016 and 2015 according to Banco Nación Argentina.

F - 154

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

39.

Barter transactions

The Group generally enters into barter transactions with third-party developers in the ordinary course of business. By virtue of these transactions, the Group generally exchanges undeveloped plots of land for units to be constructed and received in the future. Following is a description of pending transactions that have not yet been perfected by the third parties as of June 30, 2016:

Beruti

On October 13, 2010, the Group and TGLT, entered into an agreement to barter a plot of land located at Beruti 3351/59 in the city of Buenos Aires for cash and future residential apartments to be constructed by TGLT on the mentioned land. The transaction, which was subject to certain precedent conditions including the completion by TGLT of its initial public offering, was agreed upon at USD 18.8 million. TGLT plans to construct an apartment building with residential and commercial parking space. In consideration, TGLT will transfer to IRSA Propiedades Comerciales S.A. (i) a number of apartments to be determined representing 17.33% of total square meters of residential space; (ii) a number of parking spaces to be determined representing 15.82% of total square meters of parking space; (iii) all spaces reserved for commercial parking in the future building and (iv) the amount of USD 10.7 million payable upon delivering the deeds of title on the land. TGLT completed its initial public offering in the Buenos Aires Stock Exchange on October 29, 2010 and therefore the precedent condition for the transaction was fulfilled on that date. TGLT paid the mentioned USD 10.7 million on November 5, 2010. On December 16, 2010, the title deed to the Beruti plot of land was executed. To secure performance of obligations assumed by TGLT under the deed of sale, a mortgage was granted in favor of IRSA Propiedades Comerciales.

An association named Asociación Amigos Alto Palermo presented an injunction requesting that the construction is prohibited and obtained a suspension interim measure for this purpose. Later, the Court of Appels from the Autonomous City of Buenos Aires ordered the lifting of such interim measure. On December 4, 2013 the delivery terms for committed units were extended for 11 months and on November 4, 2014 a new 11 month extension was signed. On June 11, 2015 final judgment was rendered in favor of IRSA CP and TGLT.

F - 155

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

 

39. Barter transactions (Continued)

Conil

On November 5, 2014, the Group executed a conveyance deed evidencing a barter and mortgage transaction in favor of Darío Palombo (acting as Trustee of “Fideicomiso Esquina Guemes”) to convey title on four plots of land located in Avellaneda district. The agreement provides for the development by the Trust of two building construction undertakings. In consideration for such work, the compensation agreed included the amount of USD 0.01 million and delivery, within 24 months as from such agreement execution, of two functional units for commercial purposes and one functional unit for office purposes (the non-monetary compensation was valued at USD 0.7 million).

Coto Residential Project

The Group is owner of an air space of approximately 23,000 square meters area on top of Hipermercado Coto near the Abasto Shopping Center at the heart of the Autonomous City of Buenos Aires. On September 24, 1997, the Group and Coto Centro Integral de Comercialización S.A. (Coto) granted a title deed by which the Group acquired the rights to receive the parking spaces and the rights to increase the height of the building located between the Agüero, Lavalle, Guardia Vieja and Gallo streets, in the Abasto neighborhood.

On June 2016, a conditional Exchange Agreement was executed for a one year term, to be later formalized through the execution of a conveyance deed. The project will be a residential development for a consideration of apartments covering an area of 3,621 square meters plus USD 1 million. The consideration will be delivered no later than June 2021 for Tower I, and no later than September 2022 for Tower II. The value in the bill of sale was set at USD 7.5 million.

Córdoba Shopping Project

The Group owns a plot of land next to Córdoba Shopping, with building capacity of approximately 17,300 square meters, at the heart of Cordoba City.

In May 2016, an Exchange Agreement was executed for a building capacity of 13,500 square meters, subject to conditions for a term of one year, after which it may be formalized through a title conveyance deed. The project will be a mixed development, combining residential and office space, and the consideration will include apartments covering 2,160 square meters, parking space, and procedures to obtain permits, combinations and subdivisions of 3 plots of land. Delivery of the consideration will take place no later than May 2021 for Tower I and no later than July 2023 for Tower II. The Exchange Value was set at USD 4 million.

F - 156

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

39. Barter transactions (Continued)

The two mentioned contracts that are part of the Coto residential project and the Córdoba Shopping exchange project include conditions precedent and/or suspensive clauses. Since suspensive clauses have not materialized yet, the real property involved is classified as trading properties.

40. CNV General Ruling N° 629/14 – Storage of documentation

On August 14, 2014, the Argentine Securities Exchange Commission (CNV) issued General Resolution N° 629 whereby it introduced amendments to rules related to storage and conservation of corporate books, accounting books and commercial documentation. In this sense, it should be noted that the Group has entrusted the storage of certain non-sensitive and old information to the following providers:

Documentation storage provider	Home location
Iron Mountain Argentina S.A.	Av. Amancio Alcorta 2482, C.A.B.A.
Iron Mountain Argentina S.A.	Pedro de Mendoza 2143, C.A.B.A.
Iron Mountain Argentina S.A.	Saraza 6135, C.A.B.A.
Iron Mountain Argentina S.A.	Azara 1245, C.A.B.A. (i)
Iron Mountain Argentina S.A.	Polígono Industrial Spegazzini, Au Ezeiza-Cañuelas KM 45
Iron Mountain Argentina S.A.	Cañada de Gómez 3825, C.A.B.A.

(i) On February 5, 2014 there was a widely known fire in Iron Mountain’s warehouse. To the date of these financial statements, the Group has not been notified whether the documentation submitted has been actually affected by the fire and its condition after the accident. Nevertheless, based on the internal review carried out by the Group, duly reported to the CNV on February 12, 2014, the information kept at the warehouse that were on fire do not appear to be sensitive or capable of affecting normal business operations.

It is further noted that a detailed list of all documentation held in custody by providers, as well as documentation required in section 5 a.3) of section I, Chapter V, Title II of the RULES (2013 as amended) are available at the registered office.

41. Subsequent events

Acquisition of equity interest in EHSA

On July, 2016, the Group through IRSA Propiedades Comerciales acquired from FEG Entretenimientos S.A. a 25% shareholding in Entertainment Holding S.A. (“EHSA”), a company where it already owned 50%. It also acquired a 1.25% interest in Entretenimiento Universal S.A. (“ENUSA”) from Marcelo Figoli. The transaction amount for the acquisition was set at Ps. 66.5 million: 50% of the amount has already been paid while the remaining balance will be paid down in two equal installments payable within 60 and 90 days.

F - 157

IRSA PROPIEDADES COMERCIALES S.A.

Notes to the Consolidated Financial Statements(Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

 

41. Subsequent events (Continued)

In addition, the Group sold a 5% of the shares of EHSA to Mr. Diego Finkelstein, where he already owned a 25% equity interest. The amount was fixed in the sum of Ps. 13.45 million. A 50% of that amount has already been paid, while the remaining balance will be paid down in two equal installments payable within 60 and 90 days.

As a result, the Company now holds 70% of the voting stock of EHSA and Mr. Diego Finkelstein holds the remaining 30%.

EHSA holds, both directly and indirectly, 100% of the shares of OGDEN Argentina S.A. (“OASA”) and 95% of the shares of ENUSA.

OASA holds 50% of the voting stock of La Rural S.A. (“LRSA”), a company that holds the right to commercially operate the emblematic “Predio Ferial de Palermo” in the Autonomous City of Buenos Aires, where the Sociedad Rural Argentina (“SRA”) holds the remaining 50%.

In addition, OASA manages LRSA pursuant to agreements entered into with SRA that include the right to appoint the Chairman— with casting vote on certain matters – and the general manager.

Furthermore, ENUSA is mainly engaged in organizing entertainment in the trade fair space.

The Group is analyzing the allocation of the price paid across net assets acquired.

Sale of units in Intercontinental Building

On July 29, 2016, the Group executed a bill of sale for 1,702 square meters corresponding to two office floors and 16 parking units in the Intercontinental Plaza building to an unrelated party. The transaction amount was agreed upon at USD 6.01 million: the sum of USD 1.60 million has already been paid, while the remaining balance will be paid upon execution of the deed of conveyance and delivery of possession.

              Shareholders‘ Meeting:

On September 28, 2016, the board of directors of IRSA PROPIEDADES COMERCIALES S.A. called a Regular and extraordinary General Shareholders´ Meeting to be held on October 31, 2016 and informed on some of the items to be transacted thereat, namely:

●

treatment and allocation of net income for the fiscal year ended June 30, 2016;

●

consideration of payment of a cash dividend for up to Ps.312 million;

●

treatment of amounts paid as personal assets tax levied on the shareholders;

●

renewal of delegation of powers conferred to the Board of Directors in order to determine the time and currency of issuance and further terms and conditions governing the issue of notes under the US$500,000,000 global note program currently in effect, as approved by the shareholders’ meetings dated October 31, 2011 and March 26, 2015 and its increase by an additional amount of US$100,000,000 as approved by the shareholders’ meeting dated October 30, 2015;

●

amendment to article eleven of the bylaws regarding the renewal of the Board of Directors by thirds. grant of indemnities to the Directors, Statutory Auditors and Managers who perform or have performed duties for the Company accessorily to the D&O policies, and

●

amendment to article eleven of the bylaws regarding the renewal of the Board of Directors by thirds.

F - 158

 

EX-2.5

EXHIBIT 2.5

EXECUTION VERSION

IRSA Propiedades Comerciales S.A.

as Issuer,

The Bank of New York Mellon

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 March 23, 2016

US$500,000,000 Global Note Program

For Notes Due No Less Than 30 Days

From Date of Original Issue

TABLE OF CONTENTS

Page

ARTICLE I GENERAL  2

ARTICLE II SECURITIES  22

Form of Trustee’s Certificate of Authentication.25

Maximum Aggregate Principal Amount of Securities; Terms of Securities.25

Registration, Transfer and Exchange of Securities.33

Mutilated, Defaced, Destroyed, Stolen and Lost Securities; Cancellation and Destruction of Securities.40

ARTICLE III COVENANTS OF IRSA PC  41

Appointment to Fill a Vacancy in Office of Trustee.42

Maintenance of Corporate Existence; Properties.47

Limitation on Incurrence of Additional Indebtedness.50

Limitation on Transactions with Affiliates.54

i

Section 3.20.                                Conduct of Business.                                                      55

ARTICLE IV DEFAULTS AND REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT  57

Restoration of Rights on Abandonment of Proceedings.61

Unconditional Right of Securityholders to Institute Certain Suits.62

Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default.62

ARTICLE V CONCERNING THE TRUSTEE  64

Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof.67

Trustee and Agents May Hold Securities; Collections, etc.67

Compensation and Indemnification of Trustee and Its Prior Claim.68

Right of Trustee to Rely on Officer’s Certificate, etc.68

Resignation and Removal; Appointment of Successor Trustee.69

Acceptance of Appointment by Successor Trustee.70

Merger, Conversion, Consolidation or Succession to Business of Trustee.71

Representative of the Trustee in Argentina.71

Application to Agents and to the Representative of the Trustee in Argentina.72

ARTICLE VI CONCERNING THE SECURITYHOLDERS73

Proof of Execution of Instruments and of Holding of Securities; Record Date.73

ii

Section 6.3.                                Holders to Be Treated as Owners.                                                                           73

Securities Owned by IRSA PC Deemed Not Outstanding.74

Preservation of Information; Communications to Holders.78

Rep orts by IRSA PC. 

ARTICLE VII SUPPLEMENTAL INDENTURES  78

Supplemental Indentures Without Consent of Securityholders.78

Supplemental Indentures With Consent of Securityholders.80

Notation on Securities in Respect of Supplemental Indentures.81

ARTICLE VIII MERGER, CONSOLIDATION, SALE OR CONVEYANCE  81

IRSA PC May Consolidate, etc., on Certain Terms.81

ARTICLE IX SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS  83

Application by Trustee of Funds Deposited for Payment of Securities.84

Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years.84

ARTICLE X REDEMPTION AND REPURCHASE OF SECURITIES  85

Notice of Redemption; Partial Redemptions.85

Payment of Securities Called for Redemption.86

Exclusion of Certain Securities from Eligibility for Selection for Redemption.87

Redemption at the Option of IRSA PC for Taxation Reasons.87

ARTICLE XI DEFEASANCE  88

IRSA PC’s Option to Effect Total Defeasance or Partial Defeasance.88

Conditions to Total Defeasance and Partial Defeasance.89

iii

Section 11.5.                                Deposit in Trust; Miscellaneous.                                                                           92

ARTICLE XII MISCELLANEOUS  93

Shareholders, Officers and Directors of IRSA PC Not Subject to Individual Liability.93

Provisions of Indenture for the Sole Benefit of Parties and Securityholders.93

Successors and Assigns of IRSA PC Bound by Indenture.93

Notices and Demands on IRSA PC, Trustee and Securityholders.93

Officer’s Certificates and Opinions of Counsel; Statements to Be Contained Therein.95

Governing Law; Consent to Jurisdiction; Waiver of Immunity; Currency Indemnity.97

iv

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

v

THIS INDENTURE, dated as of March 23, 2016 (this “Indenture”), among IRSA Propiedades Comerciales S.A., 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 (“IRSA PC”), 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 Mellon, 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 any other paying agents appointed by IRSA PC 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 IRSA PC 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”).

W I T N E S S E T H :

WHEREAS, IRSA PC has duly authorized, by resolution of its shareholders at meetings held on October 31, 2011, October 31, 2013, March 26, 2015 and October 30, 2015 and resolution of its Board of Directors at meetings held on July 23, 2012, March 17, 2014, July 28, 2015 and January 6, 2016, 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$500,000,000 (or its equivalent in other currencies) of debt securities (the “Securities”) in one or more series as may be determined by IRSA PC from time to time; provided, however, that the total amount of the Program and the maximum aggregate principal amount of Securities of all Series that may be Outstanding at any one time under this Indenture may be increased by a resolution of the shareholders of IRSA PC and without the consent of the Holders;

WHEREAS, the Program has been authorized by the Argentine Comisión Nacional de Valores (the “CNV”) (National Securities Commission) by its Resolution No. 17,375 dated June 18, 2014 and Resolution No. 17,775 dated August 21, 2015;

WHEREAS, the Securities will qualify as “obligaciones negociables simples no convertibles” under Argentine Law No. 23,576, as amended (the “Negotiable Obligations Law”), Argentine Law No. 26,831 (the “Capital Markets Law”) and the rules of the CNV;

WHEREAS, IRSA PC 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;

1

WHEREAS, the Trustee has agreed to act as Trustee under this Indenture on the following terms and conditions; 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, IRSA PC 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 1.1. 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 I have the meanings assigned to them in this Article I and include the plural as well as the singular.

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person merges or consolidates with IRSA PC or is assumed by IRSA PC 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 IRSA PC or at the time such Indebtedness is assumed by IRSA PC 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 of such Series that IRSA PC may create and issue from time to time without the consent of the Holders of the Securities of such Series; provided that: (i) the creation and issuance of such Additional Securities are permitted pursuant to the terms of such Series of Securities established pursuant to Section 2.3; (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, the date from which interest accrues and, if applicable, the first payment of interest); and provided further that: if the Additional Securities are not fungible for U.S. federal income tax purposes with the previously outstanding Securities of the relevant Series, such Additional Securities shall have a separate CUSIP number. Such Additional Securities shall be consolidated with and form a single Series with the previously outstanding Securities of such Series.

2

“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.

“Agent” or “Agents” means any Registrar, Co-Registrar, Transfer Agent, Paying Agent, Calculation Agent, Exchange Rate Agent or other agent appointed by IRSA PC pursuant to this Indenture.

“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 terms of such Security established as set forth in Section 2.3 hereto related to the Securities of such Series (compounded annually) and the issue price from (and including) the issue date to (but excluding) the Redemption Date (or, in the case of an early redemption for taxation reasons, the Redemption Date) 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 Redemption Date (which date may be required to be an Interest Payment Date if so specified in the terms of such Securities established as set forth in Section 2.3 hereto).

“Applicable Tax Law” has the meaning set forth in Section 3.1(b).

“Argentina” means the Republic of Argentina.

“Argentine Companies Law” means the Argentine Law No. 19,550, as amended and supplemented from time to time (Ley de Sociedades Comerciales).

“Argentine Taxes” has the meaning set forth in ‎Section 3.5.

“Argentine Discount Bonds” means the Discount Bonds due December 2033 denominated in U.S. dollars, euro and Pesos, issued by Argentina.

“Argentine Par Bonds” means the Par Bonds due December 2038 denominated in U.S. dollars, euro and Pesos, issued by Argentina.

“Asset Acquisition” means:

(1) an investment by IRSA PC or any Subsidiary in any other Person pursuant to which such Person becomes a Subsidiary, or is merged with or into IRSA PC or any Restricted Subsidiary; or

3

(2)           the acquisition by IRSA PC or any Subsidiary of the assets of any Person (other than a Subsidiary of IRSA PC) 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 IRSA PC or any Subsidiary of:

(a) any Capital Stock of any Subsidiary (but not Capital Stock of IRSA PC); or

(b) any property or assets (other than cash or cash equivalents or Capital Stock of IRSA PC) of IRSA PC or any Subsidiary;

Notwithstanding the foregoing, the following items will not be deemed to be Asset Sales:

(1)

the disposition of all or substantially all of the assets of IRSA PC 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 IRSA PC 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 of IRSA PC having a Fair Market Value of less than US$2,000,000 (or the equivalent thereof in another currency at the time of determination);

(5)

an issuance or sale of Capital Stock by a Subsidiary of IRSA PC that is offered on a pro rata basis to IRSA PC 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 IRSA PC 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;

4

a disposition of accounts receivable in connection with a Receivables Transaction; and

(9)

 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.

“Authorized Person” means (i) in the case of the execution of any Security on behalf of IRSA PC, a member of the Board of Directors and a member of the Supervisory Committee of IRSA PC, and (ii) in the case of any other action to be taken by or on behalf of IRSA PC pursuant hereto, any Officer of IRSA PC duly authorized in writing to take actions under this Indenture on behalf of IRSA PC and notified to the Trustee in writing.

“Board of Directors” means, as to IRSA PC, 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 Series of Securities, unless otherwise specified in the terms of such Securities established as set forth in Section 2.3 hereto related to the Securities of such Series, 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; and provided further, that, with respect to a LIBOR Note (as defined in Exhibit C hereto), “Business Day” shall also be a London Banking Day.

“Calculation Agent” means, with respect to any Securities of a Series, the Person specified in the terms of such Securities established as set forth in Section 2.3 hereto, and any successors and assigns thereto.

“Capital Markets Law” has the meaning set forth in the third recital to this Indenture.

“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;

5

with respect to any Person that is not a corporation, any and all partnership or other equity or ownership interests of such Person; and

(2)

any warrants, rights or options to purchase any of the instruments or interests referred to in clause (1) or (2) above.

“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 IFRS. 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 IFRS.

“Certificated Security” means a Security issued in certificated, non-global form, substantially in the form of Exhibit B hereto, or such other form as shall be established pursuant to Section 2.1 with respect to a particular Series of Securities.

“Change in Tax Law” has the meaning set forth in Section 10.4.

“Change of Control” shall be deemed to occur if any Person (as defined below) 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 IRSA PC and such other Person or Group is entitled to elect a majority of the Board of Directors of IRSA PC (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 be Beneficial Owners of 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.

“Change of Control Payment” has the meaning set forth under Section 3.21.

“Change of Control Payment Date” has the meaning set forth under Section 3.21.

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Decline.

“Clearstream” means Clearstream Banking, société anonyme.

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“CNV” has the meaning set forth in the second recital to this Indenture.

“Code” means the United States Internal Revenue Code of 1986, as amended as of the date hereof.

“Commodity or Raw Material 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 for 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” means a written statement, request or order of IRSA PC signed in its name by an Officer of IRSA PC, and delivered to the Trustee.

“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 and its Subsidiaries 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 and its Subsidiaries (to the extent deducted in determining consolidated operating income) for such period,

in each case, as determined in accordance with IFRS.

“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 and its Subsidiaries for the four most recent full fiscal quarters for which financial statements are available ending prior to 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

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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, and any repayment or redemption of any Indebtedness 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 Transactions, will be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements;

(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 IRSA PC to be the rate of interest implicit in such Capital Lease Obligation in accordance with IFRS; 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.

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“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, net of all interest income for such period, determined on a consolidated basis in accordance with IFRS.

“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 IFRS.

“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 IFRS, 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, in the case of the Trustee, is located on the date hereof at 101 Barclay Street, 7E, 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 Registrar may advise IRSA PC in writing.

“Covenant Suspension Event” has the meaning set forth in ‎Section 3.15.

“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 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 IRSA PC.

“Deeply Subordinated Indebtedness” means all Indebtedness of IRSA PC (1) which will not have the benefit of any negative pledge covenant, collateral or security

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interest, (2) the terms of which provide that, in the event that (a) an installment of interest with respect to such Indebtedness is not paid on the applicable interest payment date or (b) the principal of, or premium, if any, on any such Indebtedness is not paid on the stated maturity or other date set for redemption, then the obligation to make such payment on such interest payment date, maturity date or other redemption date will not be a default under such Indebtedness until after the maturity date of the Securities of any Series, and (3) the terms of which provide that no amount will be payable in bankruptcy, liquidation or any similar proceeding with respect to IRSA PC until all claims of senior creditors of IRSA PC, including, without limitation, the Holders of the Securities, admitted in such proceeding have been satisfied.

“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.

“Depositary” means any of DTC, Euroclear or Clearstream or any other depositary institution hereinafter appointed by IRSA PC that is a clearing agency registered under the Exchange Act or other applicable statute or legislation.

“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.

“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.

“Euro MTF” 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(i).

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“Exchange Rate Agent” means, with respect to a Series of Securities denominated or payable in a Specified Currency other than U.S. dollars, the Person specified in the terms of such Securities established as set forth in Section 2.3 hereto, 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 IRSA PC acting in good faith; and provided further that with respect to any asset having a price less than US$10,000,000 (or the equivalent thereof in another currency at the time of determination), only the good faith determination of IRSA PC’s senior management shall be required.

“FATCA” means (a) Sections 1471 to 1474 of the Code (including regulations and official guidance thereunder), (b) any successor version thereof that is substantially comparable and not materially more onerous to comply with, (c) any agreement entered into pursuant to Section 1471 (b) of the Code or (d) any law, regulation, rule or practice implementing an intergovernmental agreement entered into in connection with the implementation of such Sections of the Code.

“Fitch” means Fitch Ratings Ltd. and its successors and assigns.

“Fourth Quarter Period” has the meaning set forth in the definition of Consolidated Interest Coverage Ratio.

“Global Security” means a Security issued in global form and registered in the name of a Depositary or its nominee, substantially in the form of Exhibit A hereto, or such other form established pursuant to Section 2.1 with respect to a particular Series of Securities. The term “Global Security” includes any Rule 144A Global Security, Regulation S Global Security or Unrestricted Global Security (whether such Security is a DTC Global Security or an Euroclear/Clearstream Global Security).

“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 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 Transactions” means the obligations of any Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity or Raw Material Agreement.

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“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.

“IFRS” means International Financial Reporting Standards, as issued by the International Accounting Standards Board, as in effect from time to time.

“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, notes 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 IFRS; (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 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.

“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 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 IRSA PC’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 IFRS.

“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 hedging agreement (including, without limitation, interest rate swaps, caps, floors, collars,

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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.

“IRSA PC” has the meaning set forth in the preamble to this Indenture.

“Issue Date” means the first date of issuance of Securities under 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.

“MAE” means the Mercado Abierto Electrónico S.A.

“Merval” means the Mercado de Valores de Buenos Aires S.A.

“Moody’s” means Moody’s Investors Service, Inc. and its successors and assigns.

“Negotiable Obligations Law” has the meaning set forth in the third recital to this Indenture.

“Offering Memorandum” means (i) the Offering Memorandum dated March 17, 2016 and (ii) the Prospecto dated February 5, 2016 and prepared by IRSA PC in connection with the Program, as the same may be amended or supplemented from time to time by Pricing Supplements relating to specific Series of Securities or otherwise.

“Officer” means, when used in connection with any action to be taken by IRSA PC, the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, and any member of the Board of Directors of IRSA PC.

“Officer’s Certificate” means, when used in connection with any action to be taken by IRSA PC, a certificate signed by an Officer of IRSA PC and delivered to the Trustee.

“Opinion of Counsel” means an opinion in writing signed by legal counsel who, unless otherwise indicated, may be an employee of or counsel to IRSA PC, and who shall be reasonably acceptable to the Trustee.

“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.

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“Original Issue Discount Security” has the meaning set forth in Exhibit C hereto.

“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.

“Payment Date” means, with respect to each Series of Securities, each Interest Payment Date, the date on which payment of principal, interest or any other amount is due or any date fixed for redemption or repurchase of the Securities of such Series.

“Permitted Business” means any business or activity in which IRSA PC or any of its Subsidiaries or Affiliates is directly or indirectly engaged (including though the ownership of Capital Stock) on the Issue Date, any real estate or retail business or activity and/or any business or activity related, ancillary or complementary to any of the foregoing including, without limitation, any such activities outside of Argentina.

“Permitted Holders” means any one or more of (i) Eduardo S. Elsztain, Saúl Zang and Alejandro G. Elsztain and their respective parents, brothers, sisters, children and other family members and any of the descendants, heirs, legatees and successors and any spouses or former spouses of any of the foregoing, (ii) any estate, guardian, custodian and other legal representative of any of the foregoing and (iii) 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 ‎Section 3.16.

“Permitted Lien” means:

(a) any Lien existing on the Issue Date;

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(b) any landlord’s, workmen’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other Liens arising in the ordinary course of business;

(c) pledges or deposits under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts or leases, or deposits to secure public or statutory obligations or deposits of cash or government bonds to secure surety or appeal bonds, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(d) Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances or similar obligations issued in the ordinary course of business;

(e) encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of IRSA PC or to the ownership of its properties that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of IRSA PC;

(f) Liens securing Hedging Transactions otherwise permitted under this Indenture;

(g) leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) that do not materially interfere with the ordinary conduct of the business of IRSA PC;

(h) 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 IRSA PC or any of its Subsidiaries concurrently with or within 180 days after the acquisition or the completion of the construction or improvement thereof;

(i) any Lien in favor of IRSA PC or any of its Subsidiaries;

(j) any Lien on any asset or property (including Capital Stock) (1) existing thereon at the time of acquisition of such asset or property or (2) of any Person, at the time such Person is acquired by, or is merged or otherwise consolidated or combined with or into, IRSA PC or any of its Subsidiaries;

(k) any Lien securing an extension, renewal or refunding of Indebtedness secured by a Lien permitted hereunder; 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;

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(l) (1) any inchoate Lien for taxes, assessments or governmental charges or levies not yet due (including any relevant extensions) or contested in good faith, (2) any Lien arising or incurred in connection with judgments or assessments under circumstances not constituting an Event of Default or (3) any tax or statutory Lien or any Lien arising by operation of law;

(m) Liens arising in connection with Receivables Transactions; and

(n) any additional Lien; provided that on the date of the creation or assumption of such Lien, the Indebtedness secured by such Lien, together with all of IRSA PC’s Indebtedness secured by any Lien under this clause (n), will have an aggregate principal amount outstanding of no greater than 15% of IRSA PC’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 of a Series 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 IRSA PC 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 12.7.

“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

16

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 or more Rating Agencies.

“Rating Agency” means any one of Moody’s, S&P or Fitch, or their respective successors.

“Rating Decline” shall be deemed to have occurred if within ninety (90) days after the date of public notice of a Change of Control or, if earlier, of IRSA PC’s intention that any Person effect a Change of Control, one of the Rating Agencies assigns a rating to the Securities of a Series that is lower than the applicable rating of the Securities of such Series (domestically or internationally) immediately preceding the rating date; provided that such Rating Decline results from a Change of Control.

“Receivables Transaction” means any securitization, factoring, discounting or similar financing transaction or series of transactions that may be entered into by IRSA PC or any of its Subsidiaries in the ordinary course of business pursuant to which IRSA PC or any of its Subsidiaries may sell, convey or otherwise transfer to any Person, or may grant a security interest in, any receivables (whether existing as of the Issue Date or arising in the future) of IRSA PC or any of its Subsidiaries, and any assets related thereto, including all 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.

“Redemption Date” has the meaning set forth in ‎Section 10.1.

“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 IRSA PC or any Subsidiary issued to Refinance any other Indebtedness of IRSA PC 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

17

accrued but unpaid interest payable by IRSA PC 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 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 the Common Depositary (or its 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 and any successors and assigns thereto.

“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.

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“Restricted Payment” has the meaning set forth in Section 3.17.

“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, as notified by IRSA PC to the Trustee in writing.

“Restrictive Legend” has the meaning set forth in ‎Section 2.10.

“Reversion Date” has the meaning set forth in ‎Section 3.15.

“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, including any Additional Securities.

“Series” has the meaning set forth in ‎Section 2.3.

“Specified Currency” has the meaning set forth in ‎Section 2.3.

“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 terms of such Series of Securities, established as set forth in Section 2.3.

“Subordinated Indebtedness” means, with respect to IRSA PC, any Indebtedness of IRSA PC 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 in which such Person owns, directly or indirectly, more than 50% of the voting power of the other Person’s outstanding Voting Stock.

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“Supervisory Committee” means the Comisión Fiscalizadora of IRSA PC.

“Surviving Entity” has the meaning set forth under ‎Section 8.1.

“Suspended Covenants” has the meaning set forth under ‎Section 3.15.

“Suspension Period” has the meaning set forth under ‎Section 3.15.

“Taxes” has the meaning set forth in ‎Section 3.5.

“Transfer Agents” has the meaning set forth in the preamble to this Indenture and any successors and assigns thereto.

“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 or are not required to bear the Restrictive Legend.

“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.

“U.S. Government Obligations” has the meaning set forth in Section 11.4(a).

“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

(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.

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Agents.

 IRSA PC hereby appoints each of the Registrar, the Co-Registrar, the Transfer Agents and the Paying Agents 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 IRSA PC as IRSA PC and such Agent may hereafter agree in writing. By execution of this Indenture, each of the Agents accepts its appointment as agent of IRSA PC in relation to the Securities and shall comply with the provisions of this Indenture and the Securities applicable thereto.

Subject to ‎Section 3.2, IRSA PC 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 IRSA PC of such intention on its part, specifying the date on which its desired resignation shall become effective. In the event that IRSA PC 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 IRSA PC 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 IRSA PC.

IRSA PC 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, declared as such by a final decision, order or award of a competent court. 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.

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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.

IRSA PC 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 IRSA PC and such Agent for all services rendered by it hereunder. IRSA PC 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.

   Generally. The form of any Security to be authenticated hereunder shall be designated in the resolutions of the Board of Directors and an Officer’s Certificate or supplemental indenture hereto and the Trustee shall have no liability for IRSA PC’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 permitted by applicable law, the Securities may be issued as bearer Securities if in connection with the issuance thereof IRSA PC and the Trustee shall have entered into an indenture supplemental hereto providing for the issuance of bearer Securities. IRSA PC shall ensure that such supplemental indenture shall provide for compliance by IRSA PC 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 or bearer Securities 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 to

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be authenticated as specified in the relevant Company Order, 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 2.7. 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. In each case, Securities may be issued in such other form as shall be established by or pursuant to resolutions of the Board of Directors, 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 under this Indenture. 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 as evidenced by the execution 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.

IRSA PC agrees to cause the Securities to comply with Article 7 of the Negotiable Obligations Law.

(a)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 to the account of the Person(s) entitled thereto. Each DTC Global Security to be deposited with DTC or a custodian for DTC shall be registered in the name of Cede & Co, as DTC’s nominee, and shall bear legends substantially to the following effect:

“UNLESS (1) THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”) TO IRSA PROPIEDADES COMERCIALES S.A. 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

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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 Co-Registrar shall record Cede & Co., as DTC’s nominee, as the registered Holder of such DTC Global Security.

(b)Euroclear/Clearstream Global Securities. The Common Depositary 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 Person(s) entitled thereto. 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 and shall bear legends substantially to the following effect:

“UNLESS (1) THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF [NAME OF THE COMMON DEPOSITARY], OR ANY SUCCESSOR THERETO, AS COMMON DEPOSITARY (“COMMON DEPOSITARY”) FOR EUROCLEAR BANK S.A./N.V. (“EUROCLEAR”) AND CLEARSTREAM BANKING, SOCIÉTÉ ANONYME, LUXEMBOURG (“CLEARSTREAM”) TO IRSA PROPIEDADES COMERCIALES S.A. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, (2) ANY NOTE ISSUED IS REGISTERED IN THE NAME OF THE COMMON DEPOSITARY OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY AND (3) ANY PAYMENT IS MADE TO THE COMMON DEPOSITARY OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER HEREOF, THE COMMON DEPOSITARY, HAS AN INTEREST HEREIN.

TRANSFERS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO THE COMMON DEPOSITARY FOR EUROCLEAR AND CLEARSTREAM TO NOMINEES OF THE COMMON DEPOSITARY 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

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RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.”

Upon the issuance of any Euroclear/Clearstream Global Security, the Co-Registrar shall record the Common Depositary or its nominee as the registered Holder of such Euroclear/Clearstream Global Security.

(c)Certificated Securities. The Trustee shall deliver or make available each Certificated Security executed and authenticated as provided herein in accordance with the relevant Company Order. 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 available funds to IRSA PC in an amount equal to the issue price of the Securities less the applicable Dealer’s or Dealers’ commission. Under no circumstances shall the Trustee be responsible for any failures by the purchaser either to remit payment for the Securities or to return Securities to the Trustee in the event the purchaser fails to remit payment for such Securities. Upon the issuance of any Certificated Security, the Co-Registrar shall record the Person who is designated by IRSA PC in the Company Order 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 Mellon,as Trustee
By:
	Name:
	Title:

Section 2.3.Maximum Aggregate Principal Amount of Securities; Terms of Securities.

   The maximum aggregate principal amount of Securities of all Series that may be Outstanding at any one time under this Indenture is US$500,000,000 (which will include, in the case of Securities not denominated in U.S. dollars, the Dollar Equivalent of such Securities as determined by IRSA PC on the respective Original Issue Date thereof). The total amount of the Program and the maximum aggregate principal amount of Securities of all Series that may be Outstanding at any one time under this Indenture may be increased by a resolution of the shareholders of IRSA PC and without the consent of the Holders. 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) on the basis of the Exchange Rate Agent’s offer (U.S. dollar bid) quotation for such Specified Currency 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

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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 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. Neither the Trustee nor any Agent shall be liable or responsible for determining if the aggregate principal amount of Securities issued under this Indenture (together with any other notes issued pursuant to the Program) exceed the maximum amount of notes issuable pursuant to the Program. IRSA PC’s delivery of Securities to the Trustee for authentication from time to time pursuant to Section 2.4 shall constitute a representation and warranty by IRSA PC that the issuance and authentication of such Securities shall not cause the maximum aggregate principal amount of outstanding notes allowed under the Program to be exceeded.

(i)Securities may be issued from time to time hereunder by IRSA PC. 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 terms of a Series of Securities established pursuant to Section 2.3, IRSA PC 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, the date from which interest accrues and, if applicable, the first payment of interest); and provided further that if the Additional Securities are not fungible for U.S. federal income tax purposes with the previously outstanding Securities of the relevant Series, such Additional Securities shall have a separate CUSIP number. The Additional Securities shall be consolidated with and form a single Series with the previously outstanding Series of Securities.

(ii)There shall be established (i) in or pursuant to resolutions of the Board of Directors and set forth in an Officer’s Certificate 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;

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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), the date or dates from which such interest shall accrue, the date or dates on which such interest shall be payable, the Regular Record Dates for the determination of the Holders to whom interest shall be payable (if other than as set forth in Section 2.9) and the basis upon which interest shall be calculated if other than a 360-day year of twelve (12) 30-day months;

(3)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;

(4)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);

(5)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 IRSA PC, pursuant to any sinking fund or otherwise;

(6)the right or obligation, if any, of IRSA PC to redeem, repurchase or repay the Securities of such Series at the option of IRSA PC or 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;

(7)the denomination or denominations in which the Securities of such Series shall be issuable;

(8)the applicability, non-applicability, or variation, of ‎Article XI with respect to the Securities of such Series;

(9)any deletions from, modifications of or additions to the Events of Default or covenants, financial or otherwise, of IRSA PC with respect to the Securities of such Series;

(10)any trustees and any Agents with respect to the Securities of such Series (if other than as provided in ‎Section 3.2) and the identity of any Exchange Rate Agent, Calculation Agent or other Agent, as applicable;

(11)the form of the Securities of such Series and, if such Securities shall be Global Securities, the Depositary for such Securities;

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the terms and conditions, if any, upon which such Securities may be exchanged for or converted into other securities issued by IRSA PC or any other Person; and

(12)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, IRSA PC may deliver one or more Securities executed by IRSA PC to the Trustee for authentication together with the applicable documents referred to below in this Section 2.4, and the Trustee shall thereafter authenticate and deliver such Securities to or upon the order of IRSA PC (contained in the Company Order referred to below in this ‎Section 2.4). Such Company Order may provide written instructions or provide for further instructions from IRSA PC 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;

(2)any resolutions of the Board of Directors, 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) any resolutions of the Board of Directors or supplemental indentures pursuant to Sections ‎2.1 and ‎2.3, an Officer’s Certificate, prepared in accordance with ‎Section 12.5, setting forth the form or forms and terms of the Securities; and

(4)an Opinion or Opinions of Counsel, in accordance with ‎Section 12.5, 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 IRSA PC in the manner and subject to any conditions specified in such Opinion(s) of Counsel, will have been duly executed and delivered and will constitute valid and binding obligations of IRSA PC, enforceable against IRSA PC 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 2.4 if the Trustee, (x) being advised by counsel, and after having consulted with counsel to IRSA PC, determines that such action may not lawfully be taken, (y) acting in good faith through its board of directors or board of trustees,

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executive committee, or a trust committee of directors or trustees or a Responsible Officer 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 IRSA PC by each of a member of its Board of Directors and a member of its Supervisory Committee. Such signatures, in accordance with applicable laws and regulations, shall be the manual or facsimile signatures of 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 IRSA PC who shall have executed any of the Securities shall cease to be such Authorized Person before the Security so executed shall be authenticated and delivered by the Trustee or disposed of by or on behalf of IRSA PC, such Security nevertheless may be authenticated and delivered or disposed of as though the Person who executed such Security had not ceased to be such Authorized Person of IRSA PC; and any Security may be executed on behalf of IRSA PC by such Persons as, at the actual date of the execution of such Security, shall be proper Authorized Persons of IRSA PC, although at the date of the execution and delivery of this Indenture any such Person was not such an Authorized Person.

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 IRSA PC 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 IRSA PC, and IRSA PC shall deliver such Security to the Trustee for cancellation together with a written statement executed by an Authorized Person (which need not comply with ‎Section 12.5 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by IRSA PC, 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 a Depositary pursuant to this ‎Section 2.7 shall be exchanged for Certificated Securities only if such exchange complies with ‎Section 2.10 and in the case of a DTC Global Security, DTC notifies IRSA PC 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

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the Exchange Act, and a successor depositary so registered is not appointed by IRSA PC within ninety (90) days of such notice, in the case of a Euroclear/Clearstream Global Security, if the Depositary 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, an Event of Default has occurred and is continuing with respect to the Series of Securities represented by such Global Security or IRSA PC in its sole discretion notifies the Trustee in writing that Certificated Securities shall be delivered in exchange for such Global Security with respect to the Series of the Securities represented by such Global Security.

(b)If interests in any Global Security in whole or, from time to time, in part, 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 Depositary 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 Co-Registrar in such names as the relevant Depositary shall direct in writing in accordance with its records. Any Certificated Security delivered in exchange for any interest in any Rule 144A Global Security or Regulation S Global Security shall, except as provided by ‎Section 2.10, bear the applicable Restrictive Legend 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.

(d)None of the Trustee or any Agent shall have any responsibility or obligation to any beneficial owner of an interest in a Global Security, a member of, or a participant in, any Depositary or other Person with respect to the accuracy of the records of any Depositary or its nominee or of any participant member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other person (other than the relevant Depositary) of any notice (including any notice of redemption) or the payment of any amount or delivery of any Securities (or other security or property) under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the relevant Depositary or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the relevant Depositary subject to the applicable rules and procedures of such Depositary. The Trustee and each Agent may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

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

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terms of such Securities established pursuant to ‎Section 2.3. Each Security shall be dated the date of its authentication.

Section 2.9.Payments of Principal and Interest.

 (a) Interest (and principal, if any, payable other than at Stated Maturity or upon acceleration, redemption or repurchase) 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, redemption or repurchase shall be paid to the Person to whom principal will be payable; provided further that if and to the extent IRSA PC 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 IRSA PC by notice given by or on behalf of IRSA PC to the Holders of the Securities in accordance with Section 12.4 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 terms of Securities of a Series established as set forth in Section 2.3, 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 terms of Securities of a Series established as set forth in Section 2.3, the “Regular Record Date” with respect to any Security will be the date next preceding each Interest Payment Date, whether or not such date is a Business Day.

(b) 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, redemption or repurchase 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 wire transfer or 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 the applicable Depositary (or its nominee), as Holder of the Global Securities, shall be entitled to receive payments of interest by wire transfer of immediately available funds, a Holder of 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 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

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 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 premium, interest, Additional Amounts and other amounts on or in respect of such Security at Stated Maturity or upon redemption or repurchase in such Specified Currency, such payment, except in circumstances described in terms of the Securities of such Series established pursuant to Section 2.3, 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 relevant Payment Date by the Holder to the Trustee. Unless such designation is revoked in writing, 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.

(c) 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 IRSA PC’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 IRSA PC, 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.

(d) If so specified in the terms of a Series of Securities established pursuant to Section 2.3, 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 delivered in accordance with Section 12.4 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. 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.

(e) 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 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

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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.

(f) 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 such currency, the obligations of IRSA PC 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.

    The Co-Registrar will keep a register (the “Register”) in the English language at its office in New York City 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 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 Co-Registrar shall at all reasonable times during office hours make the Register available to IRSA PC or any Person authorized by IRSA PC in writing for inspection and for taking copies thereof or extracts therefrom, and at the expense and written direction of IRSA PC, the Co-Registrar shall deliver to such Persons all lists of Holders of Securities, their addresses and amounts of such holdings as IRSA PC may request.

The Registrar shall maintain a duplicate register at its office in the City of Buenos Aires, Argentina to the extent permitted by applicable Argentine law in written or electronic form in the Spanish language.

(i)Subject to Section 2.10(b)(ii) and such reasonable and customary regulations as IRSA PC may from time to time prescribe, transfers of any Certificated Security in whole or in part pursuant to this Section 2.10(a) must be made at the relevant office of the Co-Registrar or the relevant Transfer Agent that may be appointed by IRSA PC, 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 IRSA PC and the 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 authenticate and deliver or cause to be authenticated and delivered at the Corporate Trust Office or at the office of the 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

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aggregate principal amount as shall have been transferred. Subject to the minimum denomination requirements, if any, set forth in the terms of a particular Series of Securities established pursuant to Section 2.3, 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 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 an indenture supplemental hereto. Unless otherwise specified in the applicable resolution of the Board of Directors or an 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 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 Depositary specified by such Qualified Institutional Buyer. Except as specified in this paragraph and in Section 2.11, Certificated Securities will not be exchangeable for interests in Global Securities.

(ii)If IRSA PC notifies the Trustee in writing that Certificated Securities are 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(a)(ii)) or issued upon exchange of a Rule 144A Global Security pursuant to ‎Section 2.7, prior to the date which is one (1) year after the Original Issue Date of any such Security (or of such Rule 144A Global Security, as the case may be) (provided that IRSA PC or any affiliate thereof has not acquired such Security during such one (1) year period) or in the case of any other “restricted security” (as defined in Rule 144), the Co-Registrar, as Transfer Agent, shall not register the transfer or exchange of such Security (other than pursuant to Section 2.11) unless:

(1)either the registered Holder presenting such Security for transfer, or its attorney-in-fact, shall have advised the 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 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 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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either the registered Holder presenting such Security for transfer, or its attorney-in-fact, shall have advised the 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 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 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

(2)such Security is to be registered in the Register upon transfer in the name of a Dealer, its nominee or IRSA PC; or

(3)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 Co-Registrar has received the written consent of IRSA PC to the registration of such transfer, in which event the Co-Registrar shall register such transfer only in accordance with the conditions of such consent.

For purposes of this Section 2.10(a)(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.

None of the Trustee, the Co-Registrar or 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 Co-Registrar or any Transfer Agent shall register the transfer of or exchange any Securities previously called for redemption or tendered for repurchase.

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 IRSA PC, the Trustee, 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 IRSA PC, the Trustee, 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 DTC Global Security.

(iii)Global Securities — Euroclear and Clearstream Book Entry Provisions. Insofar as interests in any Euroclear/Clearstream Global Security are

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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 Euroclear/Clearstream Global Security. Notwithstanding the foregoing, nothing herein shall prevent IRSA PC, the Trustee, any Agent or any other agent hereunder from giving effect to any written certification, proxy or other authorization furnished by Euroclear or Clearstream or impair, as between Euroclear or Clearstream and their respective agent members, the operation of customary practices governing the exercise of the rights of a Holder of any Euroclear/Clearstream Global Security.

(iv)Transfers of Global Securities in Whole. Subject to the provisions of Section 2.10(c), 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(b)(iv), or (ii) transfers of a Euroclear/Clearstream Global Security in whole, but not in part, to the Common Depositary for Euroclear and Clearstream, nominees of the Common Depositary or to a successor to the Common Depositary or such successor’s nominee (including, without limitation, pursuant to Section 2.10(b)(v)).

(v)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 the Trustee or such Transfer Agent, as applicable, 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 IRSA PC (1) 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 (2) in the case of a total exchange, to cancel or arrange for the cancellation of the DTC Global Security.

(vi)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 the Common Depositary for Euroclear or Clearstream presents the

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Euroclear/Clearstream Global Security to the Trustee or the relevant Transfer Agent, as applicable, accompanied by a written instrument of transfer in form satisfactory to the Trustee or such Transfer Agent, executed by the Common Depositary for Euroclear and Clearstream, as the case may be, or by the Common Depositary’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 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 IRSA PC (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.

(e)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 a Depositary, 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(c) or Section 2.11.

(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 Depositary 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 in an amount equal to the beneficial interest in the Rule 144A Global Security of the same Series to be exchanged or transferred, such instructions to contain information regarding the participant account of DTC or, to the extent applicable, Euroclear or Clearstream, to be credited with such increase and information regarding the participant account with DTC to be debited with such decrease and (2) a certificate which:

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(I)           for transfers or 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 transfers or 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,

then 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 Depositary 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 given in accordance with the 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 Rule 144A Global Security in an amount 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

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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 or applicable Transfer Agent 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 to be so exchanged or transferred, 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.

(f)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 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, unless:

(i)in the case of Certificated Securities issued pursuant to Section 2.10(a)(ii), the provisions of clause (2) thereof shall have been satisfied; or

(ii)in any other case there is delivered to IRSA PC and the Trustee such evidence as shall be satisfactory to IRSA PC, which may include an opinion of New York counsel, as may be reasonably required by IRSA PC (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) above, the Trustee, at the written direction of IRSA PC, shall authenticate and deliver a Security that does not bear the Restrictive Legend. If the Restrictive Legend is removed from the face of a Security and such Security is subsequently held by IRSA PC or an Affiliate of IRSA PC and a Responsible Officer of the Trustee subsequently receives written notice from IRSA PC that such Security is a “restricted security” within the meaning of Rule 144, the Restrictive Legend shall be reinstated.

(g)Prior to satisfaction of the applicable requirements in this ‎Section 2.10 for registration of transfer, IRSA PC, the Trustee and each Agent may deem and treat the registered Holder as appears in the Register of any Security as the absolute

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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.

(h)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 exchanges.

(i)Neither the Trustee nor any Agent shall have any obligation or duty to monitor, determine or inquire as to compliance with any tax or securities laws with respect to any restrictions on transfer imposed under this Indenture or under applicable law (including any transfers between or among any Depositaries or any Depositary’s participant, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(j)All the provisions and undertakings set forth above concerning registration of ownership, exchange and transfer of Securities shall be exclusively performed by The Bank of New York Mellon, acting as Co-Registrar.

If the Registrar is required to perform any of the provisions and undertakings set forth above concerning registration of ownership, exchange and transfer of Securities, with the agreement of IRSA PC, the Registrar may delegate such duties to another entity acting in Argentina with legal capacity to carry out such activities in accordance with the provisions of this Indenture and applicable Argentine law. The Registrar shall promptly notify IRSA PC if it is required to undertake any such activities so that IRSA PC shall designate the entity to whom the Registrar shall delegate such duties. All costs related to the delegation of such activities shall be borne by the Registrar.

Once any such delegation is made, and is accepted by the delegated entity, the Registrar shall not be liable for the breach of any of the obligations assumed by such delegated entity pursuant to this Indenture and shall be indemnified by IRSA PC for and held harmless against, any and all losses, damages, liabilities, judgments, claims, causes of action, costs and expenses (including reasonable and documented fees and disbursements of legal counsel) incurred directly or indirectly, without negligence or bad faith on the part of the Registrar, arising out of or in connection with the performance of the duties assumed by the delegate Registrar under this Indenture.

For the avoidance of doubt, the obligations of the Registrar and Co-Registrar hereunder are several and not joint.

Section 2.11.Mutilated, Defaced, Destroyed, Stolen and Lost Securities; Cancellation and Destruction of Securities.

  IRSA PC shall execute and deliver to the

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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 IRSA PC that any Security was mutilated, defaced, destroyed, stolen or lost, together with such indemnity as the Trustee and IRSA PC 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 IRSA PC.

(c)Upon the issuance of any substitute Security, the Holder of such Security, if so requested by IRSA PC, 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 IRSA PC, 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.

 IRSA PC, its Affiliates 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.

ARTICLE III

COVENANTS OF IRSA PC

Section 3.1.Payment of Principal and Interest.

  IRSA PC 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 IRSA PC 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.

(a)In order to comply with applicable tax laws (inclusive of rules, regulations and interpretations promulgated by competent authorities) related to the Securities and this Indenture in effect from time to time (“Applicable Tax Law”) that a

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foreign financial institution, IRSA PC, the Trustee or any Paying Agent is or has agreed to be subject, IRSA PC hereby covenants with the Trustee and each Paying Agent that it will use commercially reasonable efforts to provide each of the Trustee and the Paying Agents with sufficient information so as to enable the Trustee and the Paying Agents to determine whether or not the Trustee or such Paying Agent, as applicable, has tax related obligations under Applicable Tax Law. The Trustee and each Paying Agent shall be entitled to make any withholding or deduction from payments to the extent necessary to comply with Applicable Tax Law for which the Trustee and each Paying Agent shall not have any liability.

Section 3.2.Offices for Payments, etc.

 So long as any of the Securities remain Outstanding, IRSA PC will maintain in New York City the following: an office or agency where the Securities may be presented for payment, where the Securities may be presented for exchange, transfer or registration of transfer as in this Indenture provided and where notices and demands to or upon IRSA PC (other than the type contemplated by Section 12.7) in respect of the Securities or of this Indenture may be served. Unless otherwise specified in accordance with ‎Section 2.3, IRSA PC 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 IRSA PC 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 IRSA PC 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 Euro MTF, the alternative market of the Luxembourg Stock Exchange (the “Euro MTF”), and the Luxembourg Stock Exchange so requires, IRSA PC will maintain a Paying Agent and a Transfer Agent in Luxembourg. As required by Argentine law and by the CNV, IRSA PC 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. IRSA PC will promptly give to the Trustee and the Holders (and, if so required, the CNV, the Luxembourg Stock Exchange, the Merval 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 any Agent.

Section 3.3.Appointment to Fill a Vacancy in Office of Trustee.

 IRSA PC, whenever necessary to avoid or fill a vacancy in the office of the Trustee, will appoint, in the manner provided in ‎Section 5.9, a Trustee, so that there shall, at all times, be a Trustee with respect to the Securities.

Section 3.4.Payments and Paying Agents.

  IRSA PC will, on or before 10:00 AM (New York City time) at least one (1) Business Day prior to each Payment

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Date deposit with the Trustee a sum sufficient to pay such principal, premium or interest (including Additional Amounts) so becoming due. IRSA PC shall request that the bank through which any such payment is to be made agrees 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.

(a)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 Officer’s Certificate, at least five (5) Business Days prior to each Payment Date of interest or principal thereafter, IRSA PC shall furnish the Trustee with an Officer’s Certificate instructing the Trustee as to any circumstances in which payments of principal of or interest on any Securities (including Additional Amounts) due on such Payment 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 IRSA PC therefore becomes liable to pay Additional Amounts pursuant to the terms of such Securities, then such Officer’s Certificate shall specify 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 IRSA PC shall pay in a timely manner such amount to be withheld to the appropriate governmental authority, and IRSA PC will pay to the Trustee such Additional Amounts as shall be required to be paid to such Holders. IRSA PC agrees to indemnify the Trustee and each Paying Agent for, and to hold each harmless against, any loss, claim, damage, cost 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 Officer’s Certificate furnished pursuant to this ‎Section 3.4(b) or the failure to furnish any such certificate. The obligations of IRSA PC 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.

(b)Each of the Paying Agents hereby agrees (and whenever IRSA PC 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 3.4:

(i)that it will hold all sums received by it as such agent for the payment of the principal of or interest due on any Securities (whether such sums have been paid to it by or on behalf of IRSA PC 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 IRSA PC (or by any other obligor on the Securities) to make any payment of the principal of or interest on any Securities (including Additional Amounts) and any other payments to be made by or on behalf of IRSA PC under this Indenture or such Securities when the same shall be due and payable, and

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that it will transfer 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.

IRSA PC 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 12.4, 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 IRSA PC to the Trustee pursuant to this Indenture, of the principal of and interest on the Securities (including Additional Amounts).

If IRSA PC shall act as its own paying agent with respect to any Securities, it will, on or before each Payment Date 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. IRSA PC will promptly notify the Trustee in writing of any failure to take such action.

Anything in this Section 3.4 to the contrary notwithstanding, IRSA PC 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 IRSA PC or any Paying Agent hereunder, as required by this Section 3.4, such sums to be held by the Trustee upon the trusts herein contained.

Anything in this Section 3.4 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.

Section 3.5.Taxation.

  All payments of principal, premium or interest by IRSA PC in respect of each Security shall be made without deduction or withholding for or on account of any present or future taxes, duties, assessments or other governmental charges of whatever nature (including penalties and interest related thereto) (“Taxes”), unless IRSA PC is compelled by law to deduct or withhold such Taxes. If any withholding or deduction from payments made with respect to the Securities is required for or on account of Taxes imposed or levied by or on behalf of Argentina, or any political subdivision thereof or any authority therein having power to tax (“Argentine Taxes”), IRSA PC shall pay such additional amounts (“Additional Amounts”) in respect of such Argentine Taxes as may be necessary to ensure that the net 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

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having a present or former connection with Argentina other than merely holding or beneficially owning such Security or enforcing 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 IRSA PC 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;

(vi)with respect to any Security presented for payment (where presentation is required) at an office of a Paying Agent in Argentina (provided the Securities can also be presented at an office of a Paying Agent outside of Argentina without any such withholding or deduction);

(vii)where such withholding or deduction is imposed on a payment and is required to be made pursuant to European Council Directive 2003/48/EC or any other directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 or any law implementing or complying with, or introduced in order to conform to, any such directive;

(viii)any taxes imposed under FATCA; or

(ix)for any combination of items ‎(i) through (viii) 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

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Security who is a fiduciary or partnership (including an entity treated as a partnership for United States federal income tax purposes) or limited liability company or any person other than the sole beneficial owner of such payment to the extent that a beneficiary or settlor with respect to such fiduciary or a member of such partnership or limited liability company or beneficial owner of such payment 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 3.5 with respect to such principal, premium or interest. IRSA PC 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 3.5 promptly upon IRSA PC’s payment thereof, and copies of such documentation will be made available by the Trustee to Holders upon written request to the Trustee.

(c)IRSA PC 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.

 IRSA PC will maintain books, accounts and records in accordance with IFRS.

Section 3.7.Status and Ranking.

  IRSA PC will ensure that its obligations under each Security will rank at least pari passu in right of payment with all other existing and future unsecured and unsubordinated indebtedness of IRSA PC (other than obligations preferred by statute or by operation of law, including, without limitation, tax and labor related claims).

(a)IRSA PC will ensure that each Security will at all times qualify as “obligaciones negociables simples no convertibles” under the Negotiable Obligations Law and will be entitled to the benefits set forth therein and subject to the procedural requirements thereof.

Section 3.8.Listing.

 IRSA PC 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 terms of a Series of Securities established pursuant to ‎Section 2.3, to be accepted for trading on the Merval and the MAE, as applicable. In connection with any Series of Securities to be listed on the Luxembourg Stock Exchange for trading on the Euro MTF, the Merval or on another securities exchange or securities exchanges, IRSA PC 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

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Securities of such Series are to be issued and sold (or as soon thereafter as possible in accordance with the requirements of such securities exchange or securities exchanges); and IRSA PC will use all reasonable efforts to cause such listing to be maintained 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, IRSA PC 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 IRSA PC would otherwise use to prepare its published financial information, IRSA PC may delist the Securities from trading on the Euro MTF 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 IRSA PC may decide.

Section 3.9.Maintenance of Corporate Existence; Properties.

 IRSA PC will, and will cause each of its Subsidiaries to, maintain in effect its corporate existence and all registrations necessary therefore (except for transactions not otherwise prohibited by ‎Article VIII), take all actions to maintain all rights, privileges, titles to property or franchises necessary in the normal conduct of its business and 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 IRSA PC to do so if in each case the Board of Directors of IRSA PC shall determine in good faith that the maintenance or preservation thereof is no longer necessary or desirable in the conduct of business of IRSA PC or the failure to so comply would not have a material adverse effect on the business, assets, operations or financial condition of IRSA PC and its Subsidiaries taken as a whole.

Section 3.10.Compliance with Law.

 IRSA PC 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 IRSA PC and its Subsidiaries taken as a whole.

Section 3.11.Reports to Holders.

 For so long as any Securities remain Outstanding, IRSA PC will:

(a)Provide the Trustee with copies of its (i) annual financial statements audited by an internationally recognized firm of independent public accountants within 135 days after the end of IRSA PC’s fiscal year (which, as of the date of this Indenture, is June 30 of each year) and (ii) quarterly financial statements (including a balance sheet, income statement and statement of cash flow for the fiscal quarter or quarters then ended and the corresponding fiscal quarter or quarters from the

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prior year) within 60 days of the end of each of the first three (3) fiscal quarters of each fiscal year. Such annual and quarterly financial statements will be accompanied by 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 IRSA PC and its Subsidiaries for the periods presented. English translations of the foregoing documents will be provided for any documents prepared in a language other than English; provided that IRSA PC will not be required to provide such copies of public filings which may be obtained from the SEC via EDGAR System or the CNV or their respective successors; and

(b)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 IRSA PC will not be required to provide such copies of public filings which may be obtained from the SEC via the EDGAR System or its successor or through the CNV via its Financial Information System (Autopista de Información Financiera), or its successor.

In addition, at any time when IRSA PC is not subject to Section 13 or 15(d) of the Exchange Act or is exempt from the reporting requirements thereunder pursuant to Rule 12g3-2(b) of the Exchange Act, IRSA PC will make available, upon request, to the Trustee the information required pursuant to Rule 144A(d)(4) under the Securities Act.

If the Securities of any Series are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, IRSA PC will make available the information specified in clause (b) above at the specified office of the Paying Agent in Luxembourg for the Securities of such Series.

Delivery of the above reports and the information described in this ‎Section 3.11to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including IRSA PC’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). The Trustee shall have no obligation to monitor IRSA PC’s compliance with its obligations under this ‎Section 3.11.

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, IRSA PC 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 beneficial interest therein who is a Qualified Institutional Buyer, or to the Trustee for delivery, at IRSA PC’s expense, to such Holder or beneficial owner or prospective purchaser, as the case may be, in connection with any sale thereof, in each

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case at the Holder’s written request to IRSA PC, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

Section 3.13.Notice of Default.

 IRSA PC will notify the Trustee in writing promptly after IRSA PC becomes aware of the occurrence and continuance of any Event of Default. Each notice pursuant to this Section 3.13 shall state that it constitutes a “notice of default” hereunder and shall be accompanied by an Officer’s Certificate signed by the Chief Executive Officer or the Chief Financial Officer of IRSA PC setting forth the details of such Event of Default and stating what action IRSA PC proposes to take with respect thereto.

Section 3.14.Further Actions.

 IRSA PC 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 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, to ensure that those obligations are legally binding and enforceable and 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 the Securities of any Series achieve Investment Grade Ratings from at least two of the three Rating Agencies and 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 the Securities of such Series, IRSA PC will not be subject to the provisions described under Sections ‎3.16, 3.17; and ‎3.19 (collectively, the “Suspended Covenants”).

In the event that IRSA PC and its Subsidiaries are 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 of Securities IRSA PC 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).

On the Reversion Date, all Indebtedness incurred during the Suspension Period will be classified to have been Incurred pursuant to the first paragraph of ‎Section 3.16(to the extent such Indebtedness would be permitted to be incurred thereunder as of the

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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 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 paragraph of ‎Section 3.16.

IRSA PC shall promptly notify the Trustee in writing of the occurrence of any Covenant Suspension Event pursuant to this ‎Section 3.15. In the absence of such notice, the Trustee shall assume that the Suspended Covenants are in full force and effect. IRSA PC shall promptly notify the Trustee in writing upon the reinstatement of the Suspended Covenants after a Reversion Date. In the absence of such notice, the Trustee shall assume that the Suspension Period continues to remain in effect. The Trustee will have no obligation to (i) independently determine or verify if any of the events described in this ‎Section 3.15 have occurred, (ii) make any determination regarding the impact of actions taken during the Suspension Period on IRSA PC’ s or any of its Subsidiary’s future compliance with their covenants or (iii) notify the Holders of the commencement of the Suspension Period or the Reversion Date.

Section 3.16.Limitation on Incurrence of Additional Indebtedness.

  IRSA PC will not Incur any Indebtedness, including Acquired Indebtedness, except that IRSA PC 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 IRSA PC is greater than 2.00 to 1, calculated as of the end of the most recent fiscal quarter ending prior to the date of such Incurrence.

(1)Notwithstanding clause ‎(1) above, IRSA PC may Incur the following Indebtedness (“Permitted Indebtedness”):

(a)Indebtedness in respect of the Securities, including Additional Securities;

(b)Guarantees of obligations permitted to be Incurred in accordance with this covenant;

(c)Hedging Transactions entered into in the ordinary course of business and not for speculative purposes, including, without limitation, Hedging Transactions in respect of the Securities;

(d)Indebtedness Incurred for the purpose of financing all or any part of the cost of constructing, acquiring or improving any asset used or useful in a Permitted Business of IRSA PC or a Subsidiary in an aggregate outstanding principal amount not to exceed 10% of total Consolidated Tangible Assets

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of IRSA PC, calculated as of the end of the most recent fiscal quarter ending prior to the date of such Incurrence;

(e)Indebtedness between or among IRSA PC, on the one hand, and any of its Subsidiaries, on the other hand;

(f)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;

(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 Business Days of its Incurrence;

(i)Refinancing Indebtedness in respect of:

(1)Indebtedness (other than Indebtedness owed to any Subsidiary of IRSA PC) Incurred pursuant to clause ‎(1) of this Section 3.16 (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), (d), ‎(f), (i) or (j) of this Section 3.16;

(j)Acquired Indebtedness if the Consolidated Interest Coverage Ratio for IRSA PC’s most recently completed four 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 IRSA PC 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

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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 IRSA PC in connection with such disposition;

(l)Indebtedness to the extent the net proceeds thereof are promptly used to redeem the Securities in full or deposited to defease or discharge the Securities, in each case in accordance with this Indenture;

(m)Deeply Subordinated Indebtedness;

(n)Indebtedness represented by working capital Indebtedness in an aggregate outstanding principal amount not to exceed US$40,000,000 (or the equivalent thereof in another currency at the time of determination); and

(o)Additional Indebtedness in an aggregate outstanding principal amount not to exceed 15.0% of consolidated total assets of IRSA PC, 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 IFRS. 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 Section 3.16; provided that any such outstanding additional Indebtedness paid in respect of Indebtedness Incurred pursuant to any provision of clause ‎(2) of this Section 3.16 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 Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (2)‎(a) through (2)(o) of this Section 3.16, or is entitled to be incurred pursuant to paragraph ‎(1) of this Section 3.16, IRSA PC 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 Section 3.16, the maximum amount of Indebtedness that IRSA PC may incur pursuant to this ‎Section 3.16 shall not be deemed to be exceeded as a result solely of fluctuations in exchange rates or currency values.

Section 3.17.Limitation on Restricted Payments.

 IRSA PC shall not take any of the following actions (each, a “Restricted Payment”):

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declare or pay any dividend or make any distribution, whether in cash or in kind, on or in respect of shares of Capital Stock of IRSA PC to holders of such Capital Stock (other than dividends or distributions payable in Capital Stock of IRSA PC); or

(a)purchase, redeem or otherwise acquire or retire for value any shares of Capital Stock of IRSA PC (other than any such shares held by IRSA PC or a Subsidiary);

unless, at the time of the Restricted Payment and immediately after giving effect thereto:

(i)no Event of Default shall have occurred and be continuing;

(ii)IRSA PC is able to Incur at least US$1.00 of additional Indebtedness pursuant to clause (1) of Section ‎3.16; and

(iii)The aggregate amount of such Restricted Payment and all other Restricted Payments made subsequent to the Issue Date (excluding those permitted to be made pursuant to the further provisions below) exceeds the sum of:

(A)100% of cumulative EBITDA for the period (treated as one accounting period) from July 1, 2015 through the last day of the last fiscal quarter ended prior to the date of such Restricted Payment minus an amount equal to 150% of cumulative Consolidated Interest Expense for such period; and

(B)any reductions of Indebtedness of IRSA PC or its Subsidiaries after the Issue Date (other than Indebtedness of Subsidiaries owed to IRSA PC) by conversion or exchange to Capital Stock of IRSA PC or its Subsidiaries.

Notwithstanding the preceding paragraph, this ‎Section 3.17 will not prohibit:

(1)the payment of any dividend or distribution or redemption within sixty (60) days after the date of declaration of such dividend or distribution or notice of redemption if such payment would have been permitted on the date of such declaration or notice;

(2)the purchase, redemption or other acquisition or retirement of any Capital Stock of IRSA PC made in exchange for or out of the proceeds of the issuance or sale of Capital Stock of IRSA PC;

(3)the purchase, redemption or other acquisition or retirement of any Capital Stock or other securities exercisable or convertible into Capital Stock from any current or former employees, officers, directors or consultants of IRSA PC or any of its Subsidiaries or their authorized representatives upon the death, disability or termination of employment or directorship of such employees, officers or directors, or the termination of retention of any such consultants;

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the purchase, redemption or other acquisition or retirement of any Capital Stock deemed to occur upon the exercise of stock options, warrants or similar rights if such Capital Stock represents a portion of the exercise price of those stock options, warrants or similar rights;

(4)the purchase, redemption or other acquisition or retirement of any fractional shares arising out of stock dividends, splits or combinations or business combinations;

(5)payments or distributions to dissenting stockholders of Capital Stock of IRSA PC or its Subsidiaries pursuant to applicable law in connection with a consolidation, merger or similar transaction that complies with the provisions of this Indenture;

(6)Restricted Payments in an amount not to exceed the sum of the aggregate net proceeds and the Fair Market Value of any property or other assets received by IRSA PC or any Subsidiary after the Issue Date from (i) contributions of capital or the issuance or sale of Capital Stock or (ii) the issuance of any Indebtedness of IRSA PC or any of its Subsidiaries that has been converted into or exchanged for Capital Stock after the Issue Date; or

(7)Restricted Payments in an aggregate amount taken together with all other Restricted Payments made subsequent to the Issue Date pursuant to this clause (8) not to exceed the greater of US$50.0 million (or the equivalent in other currencies) and 10% of the consolidated total assets of IRSA PC as of the last date of the most recent fiscal quarter of IRSA PC.

Section 3.18.Limitation on Liens.

 IRSA PC 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 3.19.Limitation on Transactions with Affiliates. IRSA PC 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 IRSA PC; provided that the foregoing limitation will not apply to:

(a)Affiliate Transactions with or among IRSA PC 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 IRSA PC or any Subsidiary as determined in good faith by IRSA PC’s Board of Directors;

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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);

(c)loans and advances to officers, directors and employees of IRSA PC or any Subsidiary in the ordinary course of business in an aggregate outstanding principal amount not exceeding US$1,000,000 (or the equivalent in other currencies); and

(d)transactions in which IRSA PC delivers to the Trustee a written opinion from an Independent Financial Advisor stating that such transaction or series of transactions is fair to IRSA PC from a financial point of view or stating that that the terms thereof are not materially less favorable to IRSA PC than those that could reasonably be expected to have been obtained by IRSA PC in a comparable transaction at the time of the Affiliate Transaction in arm’s length dealings with a Person who is not an Affiliate.

Section 3.20.Conduct of Business.

 IRSA PC and its Subsidiaries, taken as a whole, will remain primarily engaged in Permitted Businesses.

Section 3.21.Change of Control.

  Upon the occurrence of a Change of Control Triggering Event, each Holder will have the right to require that IRSA PC purchase all or a portion (in integral multiples of US$1,000 or in the minimum denominations of any Specified Currency) of the Holder’s Securities at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest thereon to (and excluding) the date of purchase (the “Change of Control Payment”).

(b)           Within thirty (30) days following the date upon which the Change of Control Triggering Event occurred, IRSA PC must deliver a notice to each Holder, with a copy to the Trustee, offering to purchase the Securities of each Series 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 given, other than as may be required by law (the “Change of Control Payment Date”).

(c)           On the Change of Control Payment Date, IRSA PC 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

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deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officer’s Certificate stating the aggregate principal amount of Securities or portions thereof being purchased by IRSA PC.

(d)           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.

(e)           IRSA PC will not be required to make a Change of Control Offer upon a Change of Control Triggering Event 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 IRSA PC 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 under ‎Section 10.1 unless and until there is a default in payment of the applicable redemption price.

(f)           In the event that Holders of not less than 95% of the aggregate principal amount of the Outstanding Securities of a Series accept a Change of Control Offer and IRSA PC or a third party purchases all of the Securities held by such Holders, IRSA PC 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 Change of Control Payment Date described above, to redeem all of the Securities of that Series 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 repurchase (subject to the right of Holders on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date).

(g)           Holders, by acceptance of the Securities, are deemed to acknowledge that other existing and future Indebtedness of IRSA PC 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 IRSA PC to repurchase the Securities upon a Change of Control Triggering Event 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 Triggering Event occurs, there can be no assurance that IRSA PC 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.

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(h)           Holders will not be entitled to require IRSA PC 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 Triggering Event.

(i)           IRSA PC 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 3.21, IRSA PC 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.

(j)           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 IRSA PC 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 IRSA PC to repurchase its Securities as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of IRSA PC 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.

 Unless otherwise specified in the terms of a Series of Securities established pursuant to ‎Section 2.3, as long as any of the Securities of a Series are Outstanding, if any of the following events (each an “Event of Default”) shall have occurred and be continuing with respect to the Securities of such Series:

(a)IRSA PC 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 accordance with the terms thereof, and such failure shall continue for a period of seven days (in the case of principal) or fourteen (14) days (in the case of interest or Additional Amounts, if any);

(b)IRSA PC shall fail duly to perform or observe any other covenant or obligation applicable to such Series under this Indenture or such Securities, and such failure shall continue for a period of ninety (90) days after written notice to that effect is received by IRSA PC or by IRSA PC and the Trustee from the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of such Series specifying such failure and requiring it to be remedied and stating that such notice constitutes a “notice of default” under this Indenture;

(c)IRSA PC shall fail to pay when due at the final scheduled maturity thereof principal of any of its Indebtedness in an aggregate past due principal amount of

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at least US$40,000,000 (or the 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$40,000,000 (or the equivalent thereof in another currency at the time of determination), and in each case such other event of default shall result in the acceleration of the final scheduled maturity thereof in an aggregate past due principal amount of at least US$40,000,000 (or the equivalent thereof at the time of determination);

(d)a court having jurisdiction enters a final decree or order for (1) relief in respect of IRSA PC 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) the appointment under any applicable bankruptcy, insolvency or other similar law of an administrator, receiver or trustee for IRSA PC for all or substantially all of the property of IRSA PC and, in each case, such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

(e)IRSA PC (1) commences a voluntary case under the Bankruptcy Law or any other applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or (2) consents to the appointment under any applicable bankruptcy, insolvency or other similar law of or taking possession by an administrator, receiver, trustee or intervenor for IRSA PC for all or substantially all of the properties of IRSA PC;

then the Trustee shall, upon the request of the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of such Series, by written notice to IRSA PC, 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) 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 IRSA PC 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 in this Indenture.

At any time after a declaration of acceleration has been made with respect to the Securities of any Series, the Holders of a majority in aggregate principal amount of the Outstanding Securities of such Series, by written notice to IRSA PC and the Trustee, may rescind and annul such declaration and its consequences if the rescission would not conflict with any judgment or decree; IRSA PC has paid or deposited with the Trustee a sum sufficient to pay all overdue installments of interest on the Securities of such Series, the principal of (and premium, if any, on) any Securities of such

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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, 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 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 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.

 IRSA PC covenants that 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 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, IRSA PC will pay to the Trustee for the benefit of the Holders of any such Security the whole amount that then shall have become due 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, IRSA PC 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 IRSA PC 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 IRSA PC or other obligor upon the Securities of such Series and collect in the manner provided by law out of the property of IRSA PC 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

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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 IV 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 noting) 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 its own negligence or willful misconduct;

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

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(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 IRSA PC 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 IRSA PC, the Holders and the Trustee shall, subject to any determination in such proceeding and to applicable law, be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of IRSA PC, the Trustee and the Securityholders shall continue as though no such proceedings had been taken.

Section 4.6.Limitations on Suits by Securityholders.

 Except as provided in ‎Section 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 (i) such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof with respect to the Securities of such Series, (ii) 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 and/or security satisfactory to the Trustee as it may require against the costs, expenses and liabilities to be incurred therein or thereby, (iii) the Trustee for ninety (90) days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and (iv) 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 Holder of Securities of such Series shall have any right in any manner

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whatever by virtue 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 due 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.

Section 4.9.Control by Securityholders.

 Subject to Section 5.1(e), 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.

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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 a 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, IRSA PC, 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 4.10.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 or the relevant Holders that the principal amount of all the Securities of such Series is due and payable immediately, the Trustee may by notice in writing: to IRSA PC 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 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 4.11.Notice of Events of Default.

 If an Event of Default occurs and is continuing with respect to the Securities of any Series of which the Trustee is deemed to have knowledge in accordance with ‎Section 5.2, the Trustee shall give to Holders of such Series of Securities a notice of the Event of Default in accordance with Section 12.4 within ninety (90) days after the Trustee is deemed to have knowledge 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.

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CONCERNING THE TRUSTEE

Section 4.12.Duties and Responsibilities of the Trustee.

  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 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;

(f)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 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.

(g)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 Section 5.1(a);

(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

(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

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believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(h)Whether or not herein 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 this‎Article V.

(i)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 and/or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred thereby.

Section 4.13.Certain Rights of the Trustee.

(a)The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution of the Board of Directors, Officer’s 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 IRSA PC 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 IRSA PC.

(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 of a Series 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 IRSA PC or, if paid by the Trustee or any predecessor trustee, shall be repaid by IRSA PC promptly upon demand.

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The Trustee may consult with counsel at IRSA PC’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.

(e)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.

(f)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.

(g)Anything in this Indenture to the contrary notwithstanding, in no event shall the Trustee or any Agent be liable under or in connection with this Indenture and the Securities for indirect, special, incidental, punitive or consequential losses or damages of any kind whatsoever, including but not limited to lost profits, whether or not foreseeable, even if the Trustee or such Agent has been advised of the possibility thereof and regardless of the form of action in which such damages are sought.

(h)The Trustee shall not be deemed to have notice of any Event of Default with respect to the Securities unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture.

(i)The Trustee may at any time request, and IRSA PC shall, deliver an Officer's Certificate setting forth the specimen signatures and the names of individuals and/or titles of Officers and Authorized Persons authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any Person authorized to sign an Officer's Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded.

(j)Notwithstanding any provision herein to the contrary, in no event shall the Trustee be liable for any failure or delay in the performance of its obligations under this Indenture because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, strikes or work stoppages for any reason, embargo, government action, including any laws, ordinances, regulations or the like which restrict or prohibit the providing of the services contemplated by this Indenture, inability to obtain material, equipment, or communications or computer facilities, or the failure of equipment or interruption of communications or

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computer facilities, and other causes beyond its control whether or not of the same class or kind as specifically named above.

(k)Neither the Trustee nor any Agent shall have any liability or responsibility with respect to, or obligation or duty to monitor, determine or inquire as to IRSA PC’s compliance with any covenant under this Indenture (other than the covenant to make payment on the Securities).

(l)Any resolutions of the Board of Directors of IRSA PC required to be delivered to the Trustee pursuant to this Indenture or any Series of Securities may be in Spanish and need not be accompanied by an English translation and the Trustee shall have not duty or obligation to review such resolutions or otherwise inquire as to or confirm the content thereof, and the Trustee may conclusively rely upon the receipt of any such Board Resolutions as to the requisite authority for the action relating to purpose for which they were delivered.

(m)To the extent that the consent or authorization of the CNV or any other Argentine governmental or regulatory authority or compliance with the Negotiable Obligations Law is required for IRSA PC's, the Trustee's or any Agent's performance under the Securities or this Indenture, none of the Trustee or any Agent shall have any duty or obligation to determine whether such approval, consent or authorization or compliance is required or any duty or obligation to obtain any consent, approval or authorization or ensure such compliance. IRSA PC shall notify the Trustee and the Agents, as applicable, in writing if the approval, consent or authorization of the CNV or such other Argentine governmental or regulatory authority or compliance with the Negotiable Obligations Law, as applicable, is required for IRSA PC's or the Trustee's performance under the Securities or this Indenture and, if applicable, whether or not such consent has been obtained by IRSA PC.

Section 4.14.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, shall be taken as the statements of IRSA PC, 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, or any offering materials (including the Offering Memorandum and any Pricing Supplement) or of the Securities. The Trustee shall not be accountable for the use or application by IRSA PC of any of the Securities or of the proceeds thereof.

Section 4.15.Trustee and Agents May Hold Securities; Collections, etc.

 The Trustee or any agent of IRSA PC 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 IRSA PC and receive, collect, hold and retain collections from IRSA PC 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, the Trustee shall either eliminate such interest or resign, to the extent and in the

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manner provided by this Indenture. 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 4.16.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 for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. None of the Trustee, any Agent or any other agent of IRSA PC or the Trustee shall be under any liability for interest on or investment of any moneys received by it hereunder.

Section 4.17.Compensation and Indemnification of Trustee and Its Prior Claim.

 IRSA PC covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such amount as shall have been agreed in writing by IRSA PC and the Trustee (such compensation not to be limited by any provision of law in regards to the compensation of a trustee of an express trust) and 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.

IRSA PC also covenants to indemnify and defend the Trustee for, and to hold it harmless against, any loss, damage, claim, cost liability or expense (including, without limitation, 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 IRSA PC under this Section 5.6 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 IRSA PC’s obligations under this Indenture, 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.

When the Trustee incurs expenses or renders services after an Event of Default specified in ‎Section 4.1(d) or ‎(e) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any bankruptcy law.

Section 4.18.Right of Trustee to Rely on Officer’s 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

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specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer’s Certificate delivered to the Trustee, and such certificate, in the absence of bad faith 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 4.19.Persons Eligible for Appointment as Trustee.

 The Trustee for each Series of the Securities issued hereunder shall at all times be a Person that has a combined capital and surplus of at least US$50,000,000, is authorized under the laws of the jurisdiction in which it is doing business to exercise corporate trust powers, and is 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 5.8, 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.

Section 4.20.Resignation and Removal; Appointment of Successor Trustee.

   Subject to ‎Section 5.9(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 IRSA PC. If at any time the Trustee shall cease to be eligible in accordance with the provisions of ‎Section 5.8, it shall resign immediately in the manner and with the effect hereinafter specified in this ‎Section 5.9. Upon receiving such notice of resignation, IRSA PC 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 Outstanding 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.

(a)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 5.8 and shall fail to resign after written request therefor by or on behalf of IRSA PC 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;

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then, in any such case, (i) IRSA PC may, by a resolution of the Board of Directors and written notice to the Trustee, 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 Outstanding 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.

(b)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 IRSA PC the evidence provided for in ‎Section 6.1 of the action in that regard taken by such Securityholders.

(c)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 5.9 shall not become effective prior to acceptance of appointment by the successor trustee as provided in ‎Section 5.10.

Section 4.21.Acceptance of Appointment by Successor Trustee.

 Any successor trustee appointed as provided in ‎Section 5.9 shall execute and deliver to IRSA PC 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 IRSA PC 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, IRSA PC 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.

If a successor trustee is appointed with respect to the Securities of one or more (but not all) Series, IRSA PC, the predecessor Trustee and each successor trustee with respect to the Securities of any applicable Series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any Series as to which the predecessor Trustee is not withdrawing shall continue to be vested in the predecessor Trustee, and shall add to

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or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures.

Upon acceptance of appointment by any successor trustee as provided in this ‎Section 5.10, IRSA PC shall give, at its expense, notice thereof to the Securityholders as specified in ‎Section 12.4 and the CNV, which notice shall include the name of the successor trustee and the address of its Corporate Trust Office. If IRSA PC 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 IRSA PC.

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 V, to the extent operative.

Section 4.22.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 5.8.

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 as if such successor to the Trustee had itself authenticated such Securities; 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.

Section 4.23.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 Argentina 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 5.13.

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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 5.13, and such duties shall be determined solely by the express provisions of this ‎Section 5.13, or as Representative of the Trustee in Argentina may agree in writing from time to time with the Trustee and IRSA PC. No implied covenants or obligations shall be read into this ‎Section 5.13, 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: receive from Holders, IRSA PC, 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, within three (3) Business Days of receipt, notify and/or deliver to the Trustee by facsimile all such letters, claims, requests, memoranda or documents, and following the express instructions of the Trustee, respond to or answer such letters, claims, requests, memoranda or documents.

The Representative of the Trustee 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.

IRSA PC 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 5.13 and its services hereunder. The fees of the Representative of the Trustee in Argentina shall be in an amount agreed between IRSA PC and the Representative of the Trustee in Argentina. IRSA PC 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.

IRSA PC 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 willful misconduct on its part, arising out of or in connection with the acceptance of its commitments 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.

Section 4.24.Application to Agents.

 IRSA PC hereby agrees that the provisions of Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7 and 5.12 shall apply to the Agents

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and to the Representative of the Trustee in Argentina as if each of the Agents and the Representative of the Trustee in Argentina were expressly named therein.

ARTICLE V

CONCERNING THE SECURITYHOLDERS

Section 5.1.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 of any Series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of such 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 IRSA PC, if made in the manner provided in this Article VI.

Section 5.2.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. IRSA PC, 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 by IRSA PC at any time or from time to time. Any such record date shall be notified to the Trustee in writing not more than sixty (60) days nor less than five (5) days prior to the proposed date of such vote or consent. 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. The Trustee shall provide to IRSA PC at its request a written notice with the details of the Holders of record of each relevant record date.

Section 5.3.Holders to Be Treated as Owners.

 Subject to the rights of the relevant Holders as of a Regular Record Date to receive payments to which they are entitled on the relevant Interest Payment Date and ‎Section 2.9, IRSA PC, the Trustee, the Agents and any agent of IRSA PC, 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 IRSA PC, the Trustee, any Agent and any agent of IRSA PC, 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

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any such Security. Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall prevent IRSA PC, the Trustee, the Agents or any agent of IRSA PC, 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.

Section 5.4.Securities Owned by IRSA PC Deemed Not Outstanding.

 In determining whether quorum has been established in accordance with ‎Section 6.6 or whether the Holders of the requisite aggregate principal amount of Outstanding Securities of a Series have concurred in any request, consent or waiver under this Indenture, Securities of such Series that are owned by IRSA PC or any of its Subsidiaries or any other obligor on the Securities of such Series 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 of such Series with respect to which a Responsible Officer of the Trustee has received written notice that such Securities are so owned shall be so disregarded. Securities of a Series 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 IRSA PC 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, IRSA PC shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all Securities, if any, known by IRSA PC 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 Officer’s 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 5.5.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 of any Series 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 VI, 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

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be conclusively binding upon IRSA PC, the Trustee and the Holders of all the Securities affected by such action.

Section 5.6.Securityholders’ Meetings.

  Each of IRSA PC (through the Board of Directors or the Supervisory Committee of IRSA PC) 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 IRSA PC (through the Board of Directors or the Supervisory Committee of IRSA PC) at its discretion or upon the request of the Holders of at least 5% in aggregate principal amount of the Outstanding Securities of such Series, to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by the Securities of such Series to be made, given or taken by the Holders of the Securities of such Series, including the modification of any of the terms and conditions of such Securities of such Series. In the case of a request to call a meeting by Holders, IRSA PC shall notify the Trustee in writing of such request. In the event the Board of Directors or the Supervisory Committee of IRSA PC 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. In any case, meetings shall be held at such time and at such place as IRSA PC shall determine; provided that the meetings will be held in the City of Buenos Aires in accordance with the Negotiable Obligations Law. Any resolution duly passed at a meeting held in accordance with this Section 6.6 of the Holders of Securities of a Series will be binding on all Holders of the Securities of such Series (whether or not they were present at the meeting at which such resolution was passed). If a meeting is being held pursuant to the written request of Holders, the agenda for the meeting shall be that set forth in the request made by such Holders and such meeting shall be convened within forty (40) days from the date such written request is received by the Trustee or IRSA PC, as the case may be. Any such meeting held pursuant to written request of the Holders will be held simultaneously in the City of Buenos Aires and New York City by means of telecommunications which permit the participants to hear and speak to each other. Notice of any meeting of Holders of Securities of a Series (which shall include the date, place and time of the meeting, the agenda therefor and the requirements to attend) shall be given by IRSA PC not less than ten (10) days nor more than thirty (30) days prior to the date fixed for the meeting in accordance with ‎Section 12.4 and in the Official Gazette of Argentina (Boletín Oficial), in one other newspaper of wide circulation in Argentina, and also in the manner provided under ‎Section 12.4 and any publication thereof shall be for five (5) consecutive Business Days in each place of publication. Meetings of Holders of the Securities of a Series may be simultaneously convened for two (2) dates, in case the initial meeting were to be adjourned for lack of quorum. However, for meetings that include in the agenda items requiring unanimous approval by the Holders, notice of a new meeting resulting from adjournment of the initial meeting for lack of quorum shall be given not less than eight (8) days prior to the date fixed for such new meeting and shall be published for three (3) Business Days in the Official Gazette of Argentina, a newspaper of wide circulation in Argentina and the Merval’s Informative Bulleting (as long as the Securities are listed and traded on the Merval). To be entitled to vote at any meeting of Securityholders a Person shall be a

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Holder of one or more Securities as of the relevant record date determined pursuant to ‎Section 6.2 or a Person appointed by an instrument in writing as proxy by such Holder. 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 IRSA PC 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.

(a)The quorum at any meeting of Holders of the Securities of a Series called to adopt a resolution will be Persons holding or representing a majority in aggregate principal amount of the Outstanding Securities of such 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 a Series (other than items requiring consent of each Holder of a Security of such Series) 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 irrevocable once given and will be conclusive and binding on all subsequent Holders of such Security. Any modifications, amendments or waivers to this 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 clauses (a) through (g) of ‎Section 7.2.

(b)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 6.6 shall be binding on all the Securityholders of such Series whether or not present or represented at the meeting.

(c)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 IRSA PC and managers and other employees of IRSA PC. 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

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certificates of Euroclear or Clearstream, as the case may be, or the Common Depositary therefor.

(d)The Trustee, acting as a representative of the Holders, may appoint a representative to act as the chairman of each meeting of the Holders of the Securities of a Series. If the Trustee elects not to designate a representative to act as chairman of a meeting, the chairman of the meeting shall be: (i) a member of the Supervisory Committee designated by IRSA PC; (ii) should IRSA PC fail to designate a member of the Supervisory Committee, a representative designated by the controlling government agency; or (iii) should the controlling government agency fail to designate a representative, a Person appointed by a competent court. Notwithstanding the foregoing, if the meeting is called by the CNV or by a competent court at the request of the Holders of the Securities of a Series, 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 a Series, each Securityholder of such Series or proxy shall be entitled to cast one vote for each U.S. dollar or, if the Securities are denominated in a Specified Currency other than U.S. dollars, one vote for each unit of such Specified Currency, 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, if the Securities are denominated in a Specified Currency other than U.S. dollars, one vote for each unit of such Specified Currency of the redemption value of such Security calculated by the Exchange Rate Agent as of the date of such meeting or, in the case of written consents or notices, on such dates as IRSA PC 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.

(e)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. 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 ballots of the votes. The record shall be signed and verified by the chairman and secretary of the meeting and one of the duplicates shall be delivered to IRSA PC 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.

(f)If and for so long as the Securities of any Series are listed on the Luxembourg Stock Exchange for trading on the Euro MTF, the Merval or any other securities exchange, and for negotiation in the MAE, meetings of Holders of such

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Securities and notices thereof shall comply with the applicable rules of the Luxembourg Stock Exchange, the Merval, the MAE or such other securities exchange, as applicable.

(g)For avoidance of doubt, the Trustee shall not be required or otherwise obligated to attend any meeting of the Holders of the Securities of any Series; provided however that in the event IRSA PC or the Holders notify the Trustee that a meeting of the Holders of the Securities will be held, upon request of IRSA PC, the Trustee shall deliver written notice to the requesting party indicating whether or not the Trustee shall attend such meeting.

Section 5.7.Preservation of Information; Communications to Holders.

  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 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 upon receipt of a new list so furnished.

(a)Every Holder of Securities, by receiving and holding the same, agrees with IRSA PC and the Trustee that neither IRSA PC 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 provisions of this Indenture.

Section 5.8.Reports by IRSA PC.

 IRSA PC shall file with the Trustee, and transmit to Holders, such information, documents and other reports, and such summaries thereof, if any, as may be required pursuant to this Indenture.

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 compliance by IRSA PC or its Subsidiaries with any of their respective covenants hereunder.

ARTICLE VI

SUPPLEMENTAL INDENTURES

Section 6.1.Supplemental Indentures Without Consent of Securityholders.

 IRSA PC, when authorized by a resolution of the Board of Directors of IRSA PC, 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 IRSA PC such further covenants, restrictions, conditions or provisions as are for the benefit of the Holders of the Securities of any Series;

(b)surrendering any right or power conferred upon IRSA PC hereunder;

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securing the Securities of any Series pursuant to the requirements thereof or otherwise;

(c)evidencing the succession of another Person to IRSA PC and the assumption by any such successor of the covenants and obligations of IRSA PC in the Securities and in this Indenture pursuant to Article VIII;

(d)establishing the form or terms of Securities of any new Series as permitted by Sections ‎2.1 and ‎2.3;

(e)complying with any requirement of the CNV, the Merval and/or the MAE in order to effect and maintain the qualification of this Indenture under Argentine law with such institution;

(f)making any modification to conform this Indenture to the “Description of the Notes” in the Offering Memorandum and/or the applicable Pricing Supplement, as the case may be;

(g)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

(h)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 IRSA PC 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 neither the Trustee nor any Agent shall be obligated to enter into any such supplemental indenture that adversely affects the Trustee’s own or such Agent’s own rights, duties or immunities under this Indenture or otherwise; provided, however, that no supplemental indenture shall amend, modify or supplement the rights, duties or immunities of any Agent unless executed by such Agent.

Any supplemental indenture authorized by the provisions of this Section 7.1 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 IRSA PC and the Trustee of any supplemental indenture pursuant to the provisions of this Section 7.1, IRSA PC, at its expense, shall give notice thereof to the Holders of the relevant Series as specified in ‎Section 12.4, and shall give notice to the CNV, the Merval and the MAE, as applicable, setting forth in general terms the substance of such supplemental indenture. Any failure of IRSA PC 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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Supplemental Indentures With Consent of Securityholders.

 Without limiting the provisions of ‎Section 7.1, IRSA PC, when authorized by a resolution of the Board of Directors of IRSA PC, 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 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 the Holders of all of the Outstanding Securities of a Series directly and adversely affected thereby, extend the scheduled due date for the payment of principal of, premium, if any, or any installment of interest on any such Security, reduce the principal amount of, the stated rate of interest on or the premium payable upon redemption of any such Security, reduce the obligation of IRSA PC to pay Additional Amounts on any such Security, shorten the period during which IRSA PC is not permitted to redeem any such Security, change the Specified Currency in which or the required places at which any such Security or the premium or interest thereon is payable, reduce the percentage of the 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 or reduce the percentage of the aggregate principal amount of Outstanding Securities of a Series 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.

Upon the request of IRSA PC 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 and upon the Trustee’s receipt of the documents required by Section 7.4, the Trustee shall join with IRSA PC 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; provided, however, that no supplemental indenture shall amend, modify or supplement the rights, duties or immunities of any Agent unless executed by such Agent.

It shall not be necessary for the consent of the Securityholders under this Section 7.2 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 IRSA PC and the Trustee of any supplemental indenture pursuant to the provisions of this Section 7.2, IRSA PC, at its expense, shall give notice thereof to the Holders of the relevant Series as provided in ‎Section 12.4, and to the CNV, setting forth in general terms the substance of such supplemental indenture. If IRSA PC 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 12.4 at the expense of IRSA PC. Any failure of IRSA PC or the Trustee to give

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such notice, or defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

Section 6.2.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, if applicable, 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, IRSA PC 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 6.3.Documents to Be Given to the Trustee.

 In connection with any amendment or supplemental indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officer’s Certificate and an Opinion of Counsel and receipt 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 IRSA PC, complies with the applicable provisions of this Indenture and is authorized or permitted by the terms of this Indenture.

Section 6.4.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 VII may and shall if required by IRSA PC, bear a notation in form and manner approved by IRSA PC as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If IRSA PC 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 IRSA PC at its expense, authenticated by the Trustee and delivered in exchange for the Securities then Outstanding.

Section 6.5.Conformity with Negotiable Obligations Law.

 Every supplemental indenture executed pursuant to this ‎Article VII shall conform to the requirements of the Negotiable Obligations Law, the Capital Markets Law and the rules of the CNV, as then in effect.

ARTICLE VII

MERGER, CONSOLIDATION, SALE OR CONVEYANCE

Section 7.1.IRSA PC May Consolidate, etc., on Certain Terms.

 IRSA PC covenants that it will not, in a single transaction or series of related transactions, consolidate with or merge into, any Person (whether or not IRSA PC is the surviving or continuing Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or

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substantially all of IRSA PC’s properties and assets (determined on a consolidated basis for IRSA PC and its Subsidiaries), to any Person unless either:

(1)IRSA PC shall be the surviving or continuing corporation; or

(2)the Person (if other than IRSA PC) formed by such consolidation or into which IRSA PC 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 IRSA PC and of IRSA PC’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 all of the Securities and the performance and observance of every covenant of the Securities and this Indenture on the part of IRSA PC to be performed or observed.

For purposes of this Section 8.1, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of related transactions) of all or substantially all of the properties or assets of one or more Subsidiaries of IRSA PC, the Capital Stock of which constitutes all or substantially all of the properties and assets of IRSA PC (determined on a consolidated basis for IRSA PC and its Subsidiaries), will be deemed to be the transfer of all or substantially all of the properties and assets of IRSA PC.

Section 7.2.Surviving Entity Substituted.

 Upon any such consolidation, merger, sale, transfer, lease or other conveyance or disposal in which IRSA PC is not the continuing entity, such Surviving Entity formed by such consolidation or into which IRSA PC is merged or to which such conveyance, lease or transfer is made, shall succeed to and be substituted for, and may exercise every right and power of IRSA PC under this Indenture and the Securities with the same effect as if such Surviving Entity had been named as such.

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 this Indenture and/or 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, IRSA PC shall be discharged from all obligations and covenants under this Indenture and the Securities to be performed by IRSA PC and may be liquidated and dissolved.

No Surviving Entity shall have the right to redeem any Securities Outstanding unless IRSA PC would have been entitled to redeem such Securities pursuant to this

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Indenture in the absence of any such merger, consolidation, sale, transfer, lease or conveyance permitted under ‎Section 8.1.

By purchasing Securities, Holders expressly waive their right to objection contemplated in Section 83, 88 and related provisions of Argentine Law No. 19,550 and Section 4 of Argentine Law No. 11,867, in the event that the merger or consolidation or the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all the properties and assets of IRSA PC (determined on a consolidated basis) is made under the terms and conditions permitted by this Article VIII.

Section 7.3.Documents to Trustee.

 The Trustee may request, and IRSA PC shall provide, 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 Officer’s Certificate stating that all conditions precedent relating to such transaction and the execution of such supplemental indenture, if any, have been met in all material respects, and the Trustee may conclusively rely on such Opinion of Counsel and Officer’s Certificate as conclusive evidence of the matters described therein.

ARTICLE VIII

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

Section 8.1.Satisfaction and Discharge of Indenture.

 If at any time IRSA PC shall have paid or caused to be paid the principal of and interest (including Additional Amounts) on all the Securities 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 IRSA PC 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 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 IRSA PC 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 IRSA PC in accordance with Section ‎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, IRSA PC shall also pay or cause to be paid all other sums payable hereunder by IRSA PC with respect to the Securities, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer, exchange and replacement of Securities, and IRSA PC’s right of optional redemption, if any, (ii)

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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 the obligations of IRSA PC with respect thereto (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 IRSA PC accompanied by an Officer’s Certificate and an Opinion of Counsel and at the cost and expense of IRSA PC, shall execute 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. IRSA PC agrees to reimburse the Trustee for any costs or expenses thereafter reasonably 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 IRSA PC to the Trustee, the Agents and the Representative of the Trustee in Argentina under Sections 1.2, ‎3.4(b), ‎5.6, 5.13, 5.14 and 11.5 shall survive.

Section 8.2.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 IRSA PC 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 8.3.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 IRSA PC, 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 8.4.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) or other 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 IRSA PC, 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

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or abandoned or unclaimed property laws, thereafter look only to IRSA PC 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.

ARTICLE IX

REDEMPTION AND REPURCHASE OF SECURITIES

Section 9.1.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 IRSA PC pursuant to ‎Section 10.4 or otherwise pursuant to the terms of such Securities established as contemplated by ‎Section 2.3 shall be given to Holders as specified in ‎Section 12.4 and to the CNV. Each notice of redemption at the option of IRSA PC shall specify the provision pursuant to which the redemption is being made, the aggregate principal amount of each Security held by such Holders to be redeemed, the date fixed for redemption (the “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 Redemption Date 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 (unless IRSA PC defaults in the payment of any amounts due and owing under such Securities) 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 Redemption Date, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued.

(a)IRSA PC shall deliver to the Trustee any notice of redemption specifying the information set forth above at least five (5) days prior to the date on which such notice of redemption will be given to the Holders or such later date as the Trustee shall agree. The notice of redemption of Securities to be redeemed at the option of IRSA PC shall be given to Holders by IRSA PC or, at IRSA PC’s written request at least two (2) Business Days prior to the date notice of redemption is deliverable to the Holders of the relevant Securities, which such request shall include all of the information required to be set forth in the notice of redemption, by the Trustee in the name and at the expense of IRSA PC at least five (5) days but not more than sixty (60) days before the Redemption Date (unless otherwise specified pursuant to the terms of such Securities established as contemplated by ‎Section 2.3). Such notice shall be irrevocable.

(b)If less than all the Securities of a Series are to be redeemed at the option of IRSA PC, 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 pro rata, by lot or in such other manner as the Trustee deems appropriate (and in the case of Securities represented by a Global Security, in

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accordance with the provisions of the relevant Depositary) not more than sixty (60) days prior to the Redemption Date and a list of the Securities called for redemption will be notified to IRSA PC and the Holders in accordance with ‎Section 12.4 not less than three (3) days prior to the Redemption Date. Upon any partial redemption of Securities of such Series, the Trustee shall (i) 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 (ii) 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 IRSA PC 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 9.2.Payment of Securities Called for Redemption.

 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 10.2, IRSA PC will deposit with the Trustee (or, if IRSA PC 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 and unpaid interest, if any, to, but excluding the Redemption Date and any Additional Amounts. If notice of redemption has been given to the Holders as provided in ‎Section 10.1, 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 Redemption Date and any Additional Amounts, and on and after said Redemption Date (unless IRSA PC 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 Section ‎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 Redemption Date and any Additional Amounts. On presentation and surrender, pursuant to the terms of

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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 IRSA PC at the applicable redemption price, together with interest accrued thereon to the Redemption Date and any Additional Amounts; provided that any payment of interest becoming due on the Redemption Date and any Additional Amounts shall be payable to the Holders of such Securities registered as such on the relevant Regular Record Date subject to the terms and provisions of ‎Section 2.4.

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 Redemption Date 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 Redemption Date at the rate specified in the Security.

Upon presentation of any Security redeemed in part only, IRSA PC shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of IRSA PC, a new Security or Securities, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

Section 9.3.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 Officer’s Certificate delivered to the Trustee at least ten (10) 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 IRSA PC or a Person specifically identified in such written statement as directly or indirectly controlled by IRSA PC.

Section 9.4.Redemption at the Option of IRSA PC for Taxation Reasons.

 The Securities of any Series may be redeemed at the option of IRSA PC in whole, but not in part, at any time, on giving not less than five (5) nor more than sixty (60) days’ written notice (which shall be irrevocable) to the Holders, the Trustee and, if applicable, the CNV as required by Section 10.1, 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 Redemption Date, 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, IRSA PC has or will become obligated to pay Additional Amounts (a “Change in Tax Law”) 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

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Series, and IRSA PC determines in good faith that such obligation cannot be avoided by IRSA PC taking reasonable measures available to it; provided that reasonable measures shall not include changing IRSA PC’s jurisdiction of organization or the location of its principal executive office or incurring any cost or expense that IRSA PC deems in good faith to be material; and provided further that no such notice of redemption shall be given earlier than ninety (90) days prior to the earliest date on which IRSA PC would be obliged to pay such Additional Amounts were a payment in respect of the Securities then due.

(a)Prior to the distribution of any notice of redemption pursuant to this ‎Section 10.4, IRSA PC shall deliver to the Trustee (i) an Officer’s Certificate stating that IRSA PC has or will become obligated to pay Additional Amounts as a result of a Change in Tax Law and that such obligation cannot be avoided by IRSA PC taking reasonable measures available to it and (ii) an opinion of independent legal counsel qualified under the laws of Argentina to the effect that IRSA PC would become obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee shall be entitled to accept such certificate and Opinion of Counsel as sufficient evidence of the satisfaction of the conditions to redemption by IRSA PC pursuant to this Section 10.4, in which event it will be conclusive and binding on the Holders of such Series of Securities.

ARTICLE X

DEFEASANCE

Section 10.1.IRSA PC’s Option to Effect Total Defeasance or Partial Defeasance.

 IRSA PC may at its option, by written notice executed by an Authorized Person of IRSA PC delivered to the Trustee, elect to have either ‎Section 11.2 or ‎Section 11.3 applied to any Series of Securities, 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 and payable in U.S. dollars and have a fixed rate of interest.

Section 10.2.Total Defeasance.

 If IRSA PC 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 and payable in U.S. dollars and having a fixed rate of interest, IRSA PC shall be deemed to have been discharged from its obligations with respect to such Series of Securities on the date the conditions set forth in ‎Section 11.4 with respect to total defeasance 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 of such Series established pursuant to ‎Section 2.3) that IRSA PC shall be deemed to have paid and discharged the entire indebtedness represented by such Series of Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Series of Securities are concerned (and IRSA PC and the Trustee, upon the written request of IRSA PC, shall execute instruments acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder:

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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, IRSA PC’s obligations under Sections ‎1.2, ‎2.10, ‎2.11, ‎3.2, ‎3.3, ‎3.4(b), ‎3.5, ‎3.13, ‎5.6, ‎5.9, ‎5.10, 5.14 and ‎12.7; any other provisions specified pursuant to the terms of the Securities of such Series established pursuant to ‎Section 2.3; and the provisions of ‎Section 1.2, ‎Article V and this ‎Article XI. Subject to compliance with this ‎Article XI, IRSA PC may exercise its option under ‎Section 11.1 to have this ‎Section 11.2 apply to any Series of Securities notwithstanding the prior exercise of its option under ‎Section 11.1 to have ‎Section 11.3 apply to such Series of Securities.

Section 10.3.Partial Defeasance.

 Upon IRSA PC’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: IRSA PC shall be released from its obligations under Sections ‎3.14 and ‎3.15 and the occurrence of any event with respect to such Series of 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 IRSA PC 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 with respect to such Series of Securities (hereinafter, “partial defeasance”). For this purpose, partial defeasance means that IRSA PC 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 of such Series or in any other document, but the remainder of IRSA PC’s obligations shall be unaffected thereby.

Section 10.4.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)IRSA PC 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, freely transferable U.S. dollars, or 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 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

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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 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)IRSA PC 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, IRSA PC shall have delivered to the Defeasance Trustee and the Trustee opinions of independent U.S. counsel of nationally recognized standing experienced in such tax matters stating that (x) IRSA PC has received from, or there has been published by, the U.S. Internal Revenue Service a ruling or (y) since the date of the Offering Memorandum, 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 beneficial owners of such Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit, total defeasance and discharge and will 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 if so specified in the terms of the Securities of such series established pursuant to ‎Section 2.3, independent Argentine counsel of nationally recognized standing experienced in such tax matters to the effect that the beneficial owners 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, IRSA PC shall have delivered to the Defeasance Trustee and the Trustee opinions of independent U.S. and if so specified in the terms of the Securities of such Series established pursuant to ‎Section 2.3, Argentine counsel of nationally recognized

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standing experienced in such tax matters to the effect that the beneficial owners 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.

(e)IRSA PC 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 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 IRSA PC is a party or by which it is bound, and IRSA PC shall have delivered to the Trustee and the Defeasance Trustee an Opinion of Counsel to that effect.

(h)IRSA PC shall have delivered to the Trustee and the Defeasance Trustee an Officer’s 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)IRSA PC shall have delivered to the Trustee and the Defeasance Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the United States Investment Company Act of 1940, as amended, the Holders have a valid first priority perfected security interest in the trust funds, and 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 IRSA PC under either such statute, and either the trust funds will no longer remain the property of IRSA PC (and therefore, will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally) or if a court were to rule under any such law in any case or proceeding that the trust funds remained property of IRSA PC, 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

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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)IRSA PC 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.

(k)IRSA PC 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 10.5.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 IRSA PC’s written request, be paid to IRSA PC; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to IRSA PC for payment thereof, and all liability of the Defeasance Trustee with respect to such trust money shall thereupon cease.

IRSA PC 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 IRSA PC 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 IRSA PC from time to time upon the written request of IRSA PC any money or U.S. Government Obligations held by it on behalf of IRSA PC 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 10.6.Reinstatement.

 If the Defeasance Trustee is unable to apply any money in accordance with Sections ‎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 IRSA PC under this Indenture and the Securities with respect to which such money was deposited shall be revived and reinstated as

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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 Sections ‎11.2 or ‎11.3; provided that if IRSA PC makes any payment of principal of or any premium or interest on any such Security following the reinstatement of its obligations, IRSA PC 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 IRSA PC.

ARTICLE XI

MISCELLANEOUS

Section 11.1.Shareholders, Officers and Directors of IRSA PC Not Subject to 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 IRSA PC or of any successor, either directly or through IRSA PC 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 11.2.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 11.3.Successors and Assigns of IRSA PC Bound by Indenture.

 All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of IRSA PC shall bind its successors and assigns, whether so expressed or not.

Section 11.4.Notices and Demands on IRSA PC, Trustee and Securityholders.

   Any notice, demand or request 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 IRSA PC shall be sufficient for every purpose hereunder if given or served by hand, facsimile transmission or by internationally recognized overnight courier (except as otherwise specifically provided herein) addressed (until another address of IRSA PC is filed by IRSA PC with the Trustee) to IRSA Propiedades Comerciales S.A., Moreno 877, 22nd Floor (C1091AAQ), City of Buenos Aires, Argentina, Attention: Chief Financial and Administrative Officer, Telephone: 5411-4323-7444. Any notice, direction, request

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or demand by IRSA PC 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 English and in writing and given or made at the Corporate Trust Office by hand, facsimile an internationally recognized courier.

All notices regarding the Securities will be deemed to have been duly given to the Holders of the Securities with respect to Holders of Certificated Securities, if sent to them by first class mail (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 Business Day after the date of such mailing, and for notices mailed to Holders of Certificated Securities located in Argentina, upon receipt, with respect to Holders of Global Securities, if delivered to the Depositary thereof, or its nominee (or any successor), in accordance with its applicable procedures, for so long as such Securities are listed and traded on the Merval, upon publication in the City of Buenos Aires in Merval’s Informative Bulletin and in a widely circulated newspaper in Argentina, and for so long as such Securities are listed on the Luxembourg Stock Exchange for trading on the Euro MTF, upon provision of such notice to the Luxembourg Stock Exchange in accordance with the rules of such 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 notices delivered to a Depositary, or its nominee (or any successor). Such Depositaries will communicate such notices to its participants in accordance with its applicable procedures.

In addition, IRSA PC 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 and all notices required to be delivered to the CNV shall be the sole responsibility of IRSA PC.

Any aforementioned notice (a) if sent by internationally recognized overnight courier to IRSA PC 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 IRSA PC, when such facsimile is transmitted to the telephone number specified in this Section 12.4 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, IRSA PC agrees to give the Trustee the English text of any notice that IRSA PC 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.

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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 IRSA PC 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.

In respect of this Indenture, the Trustee shall not have any duty or obligation to verify or confirm that the Person sending notices, consents, instructions, requests, directions, resolutions, certificates, statements, acknowledgements, orders, instruments, documents, communications or other information by electronic transmission is, in fact, a Person authorized to give such notices, consents, instructions, requests, directions, resolutions, certificates, statements, acknowledgements, orders, instruments, documents, communications or other information on behalf of the party purporting to send such electronic transmission; and the Trustee shall not have any liability for any losses, liabilities, costs or expenses incurred or sustained by any party as a result of such reliance upon or compliance with such instructions, directions, reports, notices or other communications or information. Each other party agrees to assume all risks arising out of the use of electronic methods to submit notices, consents, instructions, requests, directions, resolutions, certificates, statements, acknowledgements, orders, instruments, documents, communications or other information to the Trustee, including without limitation the risk of the Trustee acting on unauthorized notices, consents, instructions, requests, directions, resolutions, certificates, statements, acknowledgements, orders, instruments, documents, communications or other information, and the risk of interception and misuse by third parties.

Section 11.5.Officer’s Certificates and Opinions of Counsel; Statements to Be Contained Therein.

 Upon any application or demand by or on behalf of IRSA PC to the Trustee to take any action under any of the provisions of this Indenture, IRSA PC shall furnish to the Trustee an Officer’s 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 IRSA PC 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 or information with respect to which is in the possession of IRSA PC, upon the certificate, statement or opinion of or representations by an officer of officers of IRSA PC, unless such counsel knows that the certificate,

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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 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 IRSA PC 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 IRSA PC, 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.

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 IRSA PC 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 11.6.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 Redemption Date or date fixed for 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

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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 11.7.Governing Law; Consent to Jurisdiction; Waiver of Immunity; Currency Indemnity.

  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 IRSA PC, and matters relating to the legal requirements necessary in order for the Securities to qualify as “obligaciones negociables simples no convertibles” under Argentine law, shall be governed by the Negotiable Obligations Law, together with the Argentine Companies Law, the Capital Markets Law and the rules of the CNV and other applicable Argentine laws and regulations.

(a)IRSA PC 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 Buenos Aires Stock Exchange) under the provisions of Section 46 of the Capital Markets Law, 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. IRSA PC 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. IRSA PC also agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon it and may be enforced in any court to the jurisdiction of which it is subject by a suit upon such judgment; provided that service of process is effected upon IRSA PC in the manner specified herein.

(b)IRSA PC 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. IRSA PC, 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.

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IRSA PC 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 IRSA PC 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. IRSA PC 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 IRSA PC to appoint such Process Agent prior to the issuance of the first Series of Securities hereunder.

(c)If a judgment or order given or made by any court for the payment of any amount in respect of any Security or this Indenture 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, IRSA PC will indemnify each of the Trustee and the relevant Holder, as applicable, 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 and this Indenture, 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, this Indenture or under any such judgment or order.

Section 11.8.Waiver of Jury Trial.

 EACH PARTY HERETO 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.

Section 11.9.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.

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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 11.10.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.

Section 11.11.USA PATRIOT Act.

 The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of March 23, 2016.

IRSA PROPIEDADES COMERCIALES S.A.
By:
	Name:
	Title:

THE BANK OF NEW YORK MELLON, 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:

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EXHIBIT A                                 

FORM OF GLOBAL SECURITY

Registered No.: ___________

CUSIP No.: ___________

ISIN No.: _____________

Registered Holder: _____________

IRSA PROPIEDADES COMERCIALES S.A.

IRSA Propiedades Comerciales S.A. 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 SECURITY

representing

[Currency] [Aggregate principal amount]

NOTES DUE [Stated Maturity Date]

[INCLUDE FOLLOWING RESTRICTIVE LEGEND FOR A RULE 144A GLOBAL SECURITY (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 IRSA PROPIEDADES COMERCIALES S.A. (“IRSA PC”) THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO IRSA PC OR TO ANY DEALERS APPOINTED BY IRSA PC 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

101

STATES OR OTHER APPLICABLE JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF IRSA PC THAT IT WILL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN.]

[INCLUDE FOLLOWING RESTRICTIVE LEGEND FOR A REGULATION S GLOBAL SECURITY (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 IRSA PROPIEDADES COMERCIALES S.A. 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 SECURITY: UNLESS (1) THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”) TO IRSA PROPIEDADES COMERCIALES S.A. 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.]

102

[INCLUDE FOR A EUROCLEAR/CLEARSTREAM GLOBAL SECURITY: UNLESS (1) THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF [NAME OF THE COMMON DEPOSITARY], OR ANY SUCCESSOR THERETO, AS COMMON DEPOSITARY (“COMMON DEPOSITARY”) FOR EUROCLEAR BANK S.A./N.V. (“EUROCLEAR”) AND CLEARSTREAM BANKING, SOCIÉTÉ ANONYME, LUXEMBOURG (“CLEARSTREAM”) TO IRSA PROPIEDADES COMERCIALES S.A. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, (2) ANY NOTE ISSUED IS REGISTERED IN THE NAME OF THE COMMON DEPOSITARY OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY AND (3) ANY PAYMENT IS MADE TO THE COMMON DEPOSITARY OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER HEREOF, THE COMMON DEPOSITARY, HAS AN INTEREST HEREIN.

TRANSFERS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO THE COMMON DEPOSITARY FOR EUROCLEAR AND CLEARSTREAM TO NOMINEES OF THE COMMON DEPOSITARY 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 ORIGINAL ISSUE DISCOUNT SECURITIES: 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 U.S. FEDERAL INCOME TAX OID RULES TO THIS NOTE:

ISSUE PRICE: US$_______ PER US$1,000 OF PRINCIPAL AMOUNT

ORIGINAL ISSUE DISCOUNT: $_______ PER US$1,000 OF PRINCIPAL AMOUNT

YIELD TO MATURITY: ___.___%

ORIGINAL ISSUE DATE: _________ ___, _____]

SERIES:

SPECIFIED CURRENCY:

PRINCIPAL AMOUNT:

ISSUE DATE:

103

STATED MATURITY:

ORIGINAL ISSUE DISCOUNT SECURITY: 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):

REGULAR RECORD DATE(S):

[THE TERMS OF THE PRICING SUPPLEMENT ATTACHED HERETO ARE INCORPORATED BY REFERENCE HEREIN IN THEIR ENTIRETY.]

This [Rule 144A] [Regulation S] Global Security (this “Note”) is issued in accordance with the Indenture dated as of March 23, 2016, among IRSA Propiedades Comerciales S.A., as issuer (“IRSA PC”), The Bank of New York Mellon, 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.

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 Euro MTF, 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 Security is a global security representing an issue of duly authorized Securities of IRSA PC issued and to be issued in one or more Series pursuant to the Indenture. This Global Security 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 bearing interest on said Principal Amount at the rate of interest specified above.

104

In the event of any conflict between the provisions stated herein or the provisions of the Terms and Conditions included herein and the terms and conditions set forth in the Indenture, the terms and conditions stated herein and in the Pricing Supplement will prevail. Terms used but not defined herein are used as defined in the Indenture and the Terms and Conditions.

IRSA PC, for value received, hereby promises to pay [IF DTC GLOBAL SECURITY INSERT: Cede & Co.] [IF EUROCLEAR/CLEARSTREAM GLOBAL SECURITY INSERT NAME OF COMMON DEPOSITARY OR ITS NOMINEE] or its registered assigns, the Principal Amount in the Specified Currency at the Stated Maturity specified above, unless earlier redeemed in accordance with the terms hereof, and unless this Global Security is an Original Issue Discount Security, to pay interest from the Interest Commencement Date of this Global Security specified above (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 Security, 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 above on the Interest Payment Date or Dates specified above in each year, commencing, unless otherwise specified above, with the first such Interest Payment Date falling at least fifteen (15) days after the Issue Date of this Global Security 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 above 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 or made available for payment. Such interest on a Floating Rate Note shall be payable by IRSA PC monthly, quarterly, semi-annually or annually, or at such other intervals, in each case as specified above under “Interest Period”, on the dates specified above 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 Security is exchangeable in whole or in part for duly executed and issued Certificated Securities in the form established pursuant to the Indenture, with the applicable legends as marked thereon, only if such exchange complies with ‎Section 2.7 of the Indenture. Interests in this Global Security are exchangeable or transferable in whole or in part for interests in another Global Security of the same Series, only if such exchange or transfer complies with ‎Section 2.10 of the Indenture.

This Global Security 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 Securities in respect of such Series issued pursuant to the Indenture referred to on the face of this Note. These Notes, together with any other Securities of IRSA PC issued under the Indenture (“Outstanding Notes”) are limited to an aggregate principal amount outstanding

105

at any one time of US$500,000,000 or the equivalent thereof in one or more Specified Currencies; provided, however, that the total amount of the Program and the maximum aggregate principal amount of Securities of all Series that may be Outstanding at any one time under the Indenture may be increased by a resolution of the shareholders of IRSA PC and without the consent of the Holders.

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 Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Global Security 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 IRSA PC, and matters relating to the legal requirements necessary in order for the Securities to qualify as “obligaciones negociables simples no convertibles” under Argentine law, shall be governed by the Negotiable Obligations Law, together with the Argentine Companies Law, the Capital Markets Law and the rules of the CNV and other applicable Argentine laws and regulations.

106

IN WITNESS WHEREOF, IRSA Propiedades Comerciales S.A. has caused this Global Security to be duly executed.

Date:

IRSA PROPIEDADES COMERCIALES S.A.
By:
	Name:
	Title:
By:
	Name:
	Title:

107

CERTIFICATE OF AUTHENTICATION

This Note is one of the Securities referred to in the within mentioned Indenture.

THE BANK OF NEW YORK MELLON,as Trustee
By:
	Name:
	Title:

108

[ATTACH TERMS AND CONDITIONS IN THE

FORM SET FORTH IN EXHIBIT C TO THE INDENTURE]

[ATTACH APPLICABLE PRICING SUPPLEMENT]

109

SCHEDULE A

Date Principal Amount of Certificated Securities issued in exchange for or upon transfer of an interest in this Global Security Principal Amount of this Global Security Redeemed or Repurchased Increase in Principal Amount of this Global Security due to the exchange or transfer of another Global Security (or an interest therein) for an interest in this Global Security Remaining Principal Amount of this Global Security Notation made on behalf of the Trustee by

110

EXHIBIT B                                 

FORM OF CERTIFICATED SECURITY

CUSIP No.: ____________

ISIN No.: ______________

IRSA PROPIEDADES COMERCIALES S.A.

IRSA Propiedades Comerciales S.A. 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 SECURITY

representing

[Currency] [Aggregate principal amount]

NOTES DUE [Stated Maturity Date]

[INCLUDE THE FOLLOWING PARAGRAPHS IF THIS SECURITY 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 IRSA PROPIEDADES COMERCIALES S.A. (“IRSA PC”) THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO IRSA PC OR TO ANY DEALERS APPOINTED BY IRSA PC 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

111

IRSA PC THAT IT WILL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN.]

[INCLUDE FOLLOWING PARAGRAPHS IF THIS SECURITY IS SOLD IN RELIANCE ON REGULATION S 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 IRSA PROPIEDADES COMERCIALES S.A. 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.]

THIS NOTE MAY BE TRANSFERRED ONLY IN MINIMUM PRINCIPAL AMOUNTS SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT.

[INCLUDE FOR ORIGINAL ISSUE DISCOUNT SECURITIES: 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 $1,000 OF PRINCIPAL AMOUNT

ORIGINAL ISSUE DISCOUNT: $________ PER $1,000 OF PRINCIPAL AMOUNT

YIELD TO MATURITY: ___.__%

ORIGINAL ISSUE DATE: _______ ___, ____]

SERIES:

SPECIFIED CURRENCY:

112

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):

REGULAR RECORD DATES:

OTHER TERMS AND CONDITIONS:

This Certificated Security (this “Note”) is issued in accordance with the Indenture dated as of March 23, 2016, among IRSA Propiedades Comerciales S.A., as issuer (“IRSA PC”), The Bank of New York Mellon, 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.

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 Euro MTF, 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 included herein and the terms and conditions set forth in the Indenture, the terms and conditions stated herein and in the attached Pricing Supplement will prevail. Terms used but not defined herein are used as defined in the Indenture and the Terms and Conditions.

113

IRSA PC, 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 Security, 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 Security, 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 above on the Interest Payment Date or Dates specified above in each year, commencing, unless otherwise specified above, 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 above 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 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 IRSA PC monthly, quarterly, semi-annually or annually, or at such other intervals, in each case as specified above under “Interest Period”, on the dates specified above 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.

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 Securities 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 IRSA PC issued under the Indenture (“Outstanding Notes”) are limited to an aggregate principal amount outstanding at any one time of US$500,000,000 or the equivalent thereof in one or more Specified Currencies; provided, however, that the total amount of the Program and the maximum aggregate principal amount of Securities of all Series that may be Outstanding at any one time under the Indenture may be increased by a resolution of the shareholders of IRSA PC and without the consent of the Holders.

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,

114

issuance and delivery of the Notes by IRSA PC, and matters relating to the legal requirements necessary in order for the Notes to qualify as “obligaciones negociables simples no convertibles” 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, the Capital Markets Law No. 26,831 and the rules of the CNV and other applicable Argentine laws and regulations.

115

IN WITNESS WHEREOF, IRSA Propiedades Comerciales S.A. has caused this Note to be duly executed.

Date:

IRSA PROPIEDADES COMERCIALES S.A.
By:
	Name:
	Title:
By:
	Name:
	Title:

116

CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within mentioned Indenture.

THE BANK OF NEW YORK MELLON,as Trustee
By:
	Name:
	Title:

117

[ATTACH TERMS AND CONDITIONS IN THE

FORM SET FORTH IN EXHIBIT C TO THE INDENTURE]

[ATTACH APPLICABLE PRICING SUPPLEMENT]

118

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 IRSA PC 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.

119

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 IRSA PC with full power of substitution in the premises.

In connection with any transfer of this Note occurring prior to the date that is one year after the Original Issue Date of this Note (provided that IRSA PC or any affiliate of IRSA PC has not acquired this Note during such one-year period), the undersigned confirms that without utilizing any general advertising or general solicitation:

(check one)

☒            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

☒            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

☒            This Note is being transferred to a Dealer or to IRSA PC; or

☒            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.

120

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.

121

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 Securities are to be issued under an Indenture, dated as of March 23, 2016 (as amended, supplemented or otherwise modified from time to time, the “Indenture”), among IRSA PC, The Bank of New York Mellon, 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 Securities 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 Securities, including the definitions therein of certain terms. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Indenture.

Securities may be issued from time to time in one or more Series under the Indenture. The Securities of all Series outstanding at any one time under the Program are limited to an aggregate amount of up to US$500,000,000 (or its equivalent in a Specified Currency) outstanding at any time; provided, however, that the total amount of the Program and the maximum aggregate principal amount of Securities of all Series that may be Outstanding at any one time under the Indenture may be increased by a resolution of the shareholders of IRSA PC and without the consent of the Holders. The particular terms of each issue of Securities, including, without limitation, the date of issue, issue amount, issue price, currency of denomination and payment, maturity, interest rate or interest rate formula, if any, payment method, and, if applicable, redemption, repayment and index or other macroeconomic ratio provisions, will be set forth for each such issue in the Securities and in the applicable Pricing Supplement. With respect to any particular Security, the description of the Securities herein is qualified in its entirety by reference to, and to the extent inconsistent therewith is superseded by, such Security and the applicable Pricing Supplement.

The Securities will qualify as “obligaciones negociables simples no convertibles” under the Negotiable Obligations Law and will be entitled to the benefits set forth therein and subject to the procedural requirements thereof. The Securities will rank pari passu in

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right of payment with all other existing and future unsecured and unsubordinated indebtedness of IRSA PC (other than obligations preferred by statute or by operation of law).

Unless previously redeemed, the Securities will mature on the date (the “Stated Maturity”) no less than thirty (30) days from their date of issue as specified on the face thereof and in the applicable Pricing Supplement.

The Securities 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 the Securities 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 Securities 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.

The Securities will bear interest, if any, at the interest rate or interest rate formula set forth on the face thereof and in the applicable Pricing Supplement. The Securities 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 Securities 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 Securities 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 permits, apply to such Dual Currency or Indexed Notes. References herein to Securities denominated in a Specified Currency shall, unless the context otherwise requires, include Dual Currency Notes payable in such Specified Currency.

The Securities may be issued as Original Issue Discount Securities. An “Original Issue Discount Security,” including, without limitation, 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 Securities 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.

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If specified in the applicable Pricing Supplement with respect to a Series of Securities, IRSA PC may from time to time, without the consent of Holders of Securities outstanding, create and issue additional Securities of such Series (“Additional Securities”); provided such Additional Securities have the same terms and conditions as the Securities of that Series (except for the date of issue, the issue price, the applicable legends, the date from which interest accrues and, if applicable, the first payment of interest); and provided further that if the Additional Securities are not fungible for U.S. federal income tax purposes with the previously Outstanding Securities of the relevant Series, such Additional Securities shall have a separate CUSIP number. The Additional Securities shall form a single Series with the previously outstanding Series of Securities.

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 either (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.

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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.

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.

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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 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; provided that in no event shall the Calculation Agent have any obligation to determine whether or not any such interest rate is 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 IRSA PC 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 Securities listed on the Luxembourg Stock Exchange for trading on the Euro MTF, no later than the first day of the relevant Interest Reset Period. Such notice will be in accordance with the provisions of the Securities relating to notices to Holders of Securities. 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.

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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 or otherwise, as specified in the applicable Pricing Supplement:

(a)            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 “LIBOR01” or “LIBOR02,” as applicable, on the Reuters Monitor Money Rates Service (or such other page as may replace such pages on that service for the purpose of displaying London interbank offered rates of major banks for deposits in the Specified Currency) (each, a “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 applicable Reuters Screen LIBOR Page, LIBOR with 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

(b)            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 “BBAM1” on the Bloomberg 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) (“Bloomberg 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 a “Reuters Screen LIBOR Page” nor a “Bloomberg Page” is specified in the applicable Pricing Supplement, LIBOR will be determined as if a Reuters Screen LIBOR 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 a Reuters Screen LIBOR Page as described in (a) above, or on which no rate appears on the Bloomberg Page as described in (b) above, as applicable, LIBOR will be determined on the basis of the rates

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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 IRSA PC (and notified to the Calculation Agent in writing) 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 IRSA PC’s judgment is representative for a single transaction in such market at such time (a “Representative Amount”). IRSA PC will request the principal London office of each of such banks to provide a quotation of its rates which such rates IRSA PC shall notify to the Calculation Agent in writing. 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 IRSA PC (and notified to the Calculation Agent in writing), for loans in the Specified Currency to leading European banks having the specified Index Maturity on the Interest Reset Date and in a Representative Amount; provided that if fewer than three (3) banks selected as aforesaid by IRSA PC 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 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 of 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 securities—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

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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 to IRSA PC by three leading primary United States government securities dealers selected by IRSA PC (and notified to the Calculation Agent in writing) 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 IRSA PC 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.

Payment of Principal and Interest

General. Interest (and principal, if any, payable other than at Stated Maturity or upon acceleration or redemption) shall be payable 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 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 payable to the Person to whom principal will be payable; and provided further, that if and to the extent IRSA PC 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 IRSA PC by notice given by or on behalf of IRSA PC to the Holders

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of the Securities 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. Unless otherwise specified in the applicable Pricing Supplement, the “Regular Record Date” with respect to any Security will be the date 15 calendar days prior to each Interest Payment Date, whether or not such date is a Business Day.

Payment 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 to the person in whose name such note is registered 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 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 Holder of the Global Securities, 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 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 Note issued and denominated in a Specified Currency other than U.S. dollars elects to receive payment of the principal of and any premium, 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 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.

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

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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 U.S. 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.

If IRSA PC 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

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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 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 IRSA PC 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.

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 IRSA PC’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 IRSA PC, 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 Securities 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 and any premium, 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 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 and any premium, interest, Additional Amounts or

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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 Securities 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 or any premium, 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, IRSA PC shall make any and all payments in respect of interest on, or principal of, the Securities, 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 IRSA PC. IRSA PC’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 Securities.

133

EXHIBIT D                                 

FORM OF CERTIFICATE FOR EXCHANGE OR TRANSFER FROM RULE 144A GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY DURING THE RESTRICTED PERIOD

(Exchanges or Transfers pursuant to

Section 2.10(c)(i) of the Indenture)

The Bank of New York Mellon,

as Trustee

101 Barclay Street, 7E

New York, New York 10286

Attention: Corporate Trust Department

Re:           IRSA Propiedades Comerciales S.A. Reference is hereby made to the Indenture dated as of March 23, 2016 (as amended, modified or supplemented from time to time the “Indenture”), among IRSA Propiedades Comerciales S.A. (“IRSA PC”), The Bank of New York Mellon, 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 [Describe Notes] (the “Securities”) that represent a beneficial interest in the Rule 144A Global Security (CUSIP No. ______) beneficially owned by the undersigned (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. _____) (Common Code No. __________; ISIN No. _____________).

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 the Transferor’s 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;

134

(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 terms 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 IRSA PC.

[Insert name of Transferor]
By:
	Name:
	Title:

Dated: , 20

135

EXHIBIT E                                 

FORM OF CERTIFICATE FOR EXCHANGE OR TRANSFER FROM RULE 144A GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY AFTER THE restricted PERIOD

(Exchanges or Transfers pursuant to

Section 2.10(c)(i) of the Indenture)

The Bank of New York Mellon,

as Trustee

101 Barclay Street,7E

New York, New York 10286

Attention: Corporate Trust Department

Re:           IRSA Propiedades Comerciales S.A. Reference is hereby made to the Indenture dated as of March 23, 2016 (as amended, modified or supplemented from time to time, the “Indenture”), among IRSA Propiedades Comerciales S.A. (“IRSA PC”), The Bank of New York Mellon, 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 [Describe Notes] (the “Securities”) that represent a beneficial interest in the Rule 144A Global Security (CUSIP No. ______) beneficially owned by the undersigned (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. _____) (Common Code No. __________; ISIN No. _____________).

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 the Transferor’s 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;

136

(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 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; 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 IRSA PC.

[Insert name of Transferor]
By:
	Name:
	Title:

Dated: , 20

137

EXHIBIT F                                 

FORM OF CERTIFICATE FOR EXCHANGE OR TRANSFER FROM REGULATION S GLOBAL SECURITY TO RULE 144A GLOBAL SECURITY

(Exchanges or Transfers pursuant to

Section 2.10(c)(ii) of the Indenture)

The Bank of New York Mellon

as Trustee

101 Barclay Street, 7E

New York, New York 10286

Attention: Corporate Trust Department

Re:           IRSA Propiedades Comerciales S.A.

Reference is hereby made to the Indenture dated as of March 23, 2016 (as amended, modified or supplemented from time to time, the “Indenture”), among IRSA Propiedades Comerciales S.A. (“IRSA PC”), The Bank of New York Mellon, 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 8.750% Notes due 2023, Series No. 2 (the “Securities”) that represent a beneficial interest in the Regulation S Global Security (CUSIP No. _____) (Common Code No. __________; ISIN No. ______) beneficially owned by the undersigned [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. ______).

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 Securities 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 these Securities 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.

This certificate and the statements contained herein are made for your benefit and the benefit of IRSA PC.

[Insert name of Transferor]
By:
	Name:
	Title:

Dated: , 20

138

EX-2.6

EXHIBIT 2.6

EXECUTION COPY

IRSA PROPIEDADES COMERCIALES S.A.,

as Issuer

and

The Bank of New York Mellon,

as Trustee, Co-Registrar,

Principal Paying Agent and Transfer Agent,

The Bank of New York Mellon (Luxembourg) S.A.,

as Luxembourg Paying Agent and

Luxembourg Transfer Agent

and

Banco Santander Río S.A.,

as Registrar, Paying Agent, Transfer Agent and

Representative of the Trustee in Argentina

First Supplemental Indenture

Dated as of March 23, 2016

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS SECTION  1

Section 1.1.                                                                                                                                       Certain Terms Defined in the Indenture.1

Section 1.2.                                                                                                                                       Definitions.1

ARTICLE II FORM AND TERMS OF THE NOTES  1

Section 2.1.                                                                                                                                       Form and Dating.1

Section 2.2.                                                                                                                                       Terms of the Notes.1

Section 2.3.                                                                                                                                       Optional Redemption.1

ARTICLE III MISCELLANEOUS  1

Section 3.1.                                                                                                                                       Governing Law.1

Section 3.2.                                                                                                                                       Multiple Counterparts.1

Section 3.3.                                                                                                                                       Severability.1

Section 3.4.                                                                                                                                       Ratification.1

Section 3.5.                                                                                                                                       Rights, Protections and Immunities of the Trustee.1

Section 3.6.                                                                                                                                       Trustee Not Responsible for Recitals.1

EXHIBIT A Form of 8.750% Notes due 2023, Series No. 2  A-1

FIRST SUPPLEMENTAL INDENTURE

FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental Indenture”), dated as of March 23, 2016, between IRSA PROPIEDADES COMERCIALES S.A., 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 (“IRSA PC”) , 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 Mellon, 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 IRSA PC in their respective capacities as such, the “Paying Agents”) and transfer agent (in such capacity, a “Transfer Agent” and, together with the Luxembourg Transfer Agent (as defined below) and any other transfer agents appointed by IRSA PC in their respective capacities as such, the “Transfer Agents”), The Bank of New York Mellon (Luxembourg) S.A., as paying agent in Luxembourg (the “Luxembourg Paying Agent”) and transfer agent in Luxembourg (the “Luxembourg Transfer Agent”) 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”).

RECITALS OF IRSA PC

WHEREAS, IRSA PC, the Trustee and the Representative of the Trustee in Argentina executed and delivered an Indenture, dated as of March 23, 2016 (the “Base Indenture” and, as supplemented by this First Supplemental Indenture, the “Indenture”), to provide for the issuance by IRSA PC from time to time of Securities to be issued in one or more Series as provided in the Indenture;

WHEREAS, the issuance and sale of US$360,000,000 aggregate principal amount of a new Series of the Securities of IRSA PC designated as its “8.750% Notes due 2023, Series No. 2” (the “Notes”) have been authorized by resolutions adopted by the Board of Directors of IRSA PC;

WHEREAS, IRSA PC desires to issue and sell US$360,000,000 aggregate principal amount of the Notes on the date hereof;

WHEREAS, Sections 2.1, 2.3 and 7.1 of the Base Indenture provide that IRSA PC, when authorized by a resolution of the Board of Directors of IRSA PC, and the Trustee may amend or supplement the Base Indenture to provide for the issuance of and to establish the form or terms and conditions of Securities of any Series as permitted by the Base Indenture;

WHEREAS, IRSA PC desires to establish the form, terms and conditions of the Notes; and

WHEREAS, all things necessary to make this First Supplemental Indenture a valid supplement to the Base Indenture according to its terms and the terms of the Base Indenture have been done;

NOW, THEREFORE, IRSA PC, the Trustee, the Co-Registrar, the Paying Agents, the Transfer Agents, the Registrar and the Representative of the Trustee in Argentina hereby agree that the following provisions shall supplement the Base Indenture solely with respect to the Notes:

ARTICLE I

DEFINITIONS SECTION

Section 1.1.Provisions of the Base Indenture.

Except insofar as otherwise expressly provided herein, all of the definitions, provisions, terms and conditions of the Base Indenture shall remain in full force and effect. The Base Indenture and this First Supplemental Indenture shall be read, taken and considered as one and the same instrument for all purposes and every Holder of Notes authenticated and delivered hereunder shall be bound hereby. Notwithstanding any other provision of this Section 1.1 or the Base Indenture or this First Supplemental Indenture to the contrary, to the extent any provisions of this First Supplemental Indenture or any Notes issued hereunder shall conflict with any provision of the Base Indenture, the provisions of this First Supplemental Indenture or the Notes, as applicable, shall control in respect of the Notes but not any other Series of Securities.

Section 1.2.Definitions.

For all purposes of this First Supplemental Indenture and the Notes, except as otherwise expressly provided or unless the subject matter or context otherwise requires:

(a)           any reference to an “Article” or a “Section” refers to an Article or Section, as the case may be, of this First Supplemental Indenture;

(b)           the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or other subsection;

(c)           all terms used in this First Supplemental Indenture and not defined herein have the meanings assigned to them in the Base Indenture;

(d)           the term “Securities,” as defined in the Base Indenture and as used therein (including in any definition therein), shall be deemed to include or refer to, as applicable, the Notes;

(e)           the following terms shall have the meanings given to them in this Section 1.2:

“Comparable Treasury Issue” means the United States Treasury security or securities selected by the Independent Investment Banker as having an actual or interpolated maturity from the applicable Redemption Date to March 23, 2023 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to March 23, 2023.

“Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (2) if fewer than four such Reference Treasury Dealer Quotations are obtained, the average of all such quotations.

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by IRSA PC.

 “Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.

“Pricing Supplement” means the pricing supplement dated March 17, 2016 relating to the Notes, including the accompanying Offering Memorandum dated March 17, 2016.

“Reference Treasury Dealer” means (a) each of Citigroup Global Markets Inc. and J.P. Morgan Securities LLC (or their respective affiliates that are primary U.S. government securities dealers in New York City (each, a “Primary Treasury Dealer”)) and their respective successors and (b) not less than three other Primary Treasury Dealers reasonably designated by the Issuer; provided that if any of the foregoing ceases to be a Primary Treasury Dealer, the Issuer will substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m. (New York City time) on the third Business Day preceding such Redemption Date.

 “S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or any successor thereto.

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

ARTICLE II

FORM AND TERMS OF THE NOTES

Section 2.1.Form and Dating.

The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes shall be executed on behalf of IRSA PC by a member of the Board of Directors of IRSA PC and a member of the Supervisory Committee of IRSA PC. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage. Each Note shall be dated the date of its authentication. The Notes and any beneficial interest in the Notes shall be in minimum denominations of US$500 and integral multiples of US$500 in excess thereof.

The terms and conditions contained in the Notes shall constitute, and are hereby expressly made, a part of the Indenture and IRSA PC and the Trustee, by their execution and delivery of this First Supplemental Indenture, expressly agree to such terms and conditions and to be bound thereby.

(a)Global Securities. The Notes designated herein shall be issued initially in the form of one or more fully registered DTC Global Securities, which shall be deposited with The Depository Trust Company, New York, New York (the “Depositary”) and registered in the name of Cede & Co., the Depositary’s nominee, duly executed by IRSA PC and authenticated by the Trustee.

In accordance with Section 2.1 of the Base Indenture, the Notes 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 Notes 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, each in book-entry form without interest coupons, deposited with a custodian for the Depositary and registered in the name of the Depositary or its nominee and otherwise comply with the provisions of Section 2.1 of the Base Indenture. Each of the Global Securities shall be dated the date of its authentication. Global Securities may not be transferred except by the Depositary, in whole and not in part, to another nominee of the Depositary or to a successor of the Depositary or its nominee except as set forth below.

(b)Book-Entry Provisions. This Section 2.1(b) shall apply only to the Global Securities deposited with or on behalf of the Depositary.

Depositary participants shall have no rights either under the Indenture or with respect to any Global Securities held on their behalf by the Depositary or under such Global Securities. The Depositary shall be treated by IRSA PC, the Trustee and any agent of IRSA PC or the Trustee as the absolute owner of such Global Security for all purposes under the Indenture. Notwithstanding the foregoing, nothing herein shall prevent IRSA PC or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and the Depository participants, the operation of customary practices of such Depositary governing the exercise of the rights of an owner of a beneficial interest in the Global Securities.

(c)Certificated Notes. Notes issued in the form of Certificated Securities shall be substantially in the form of Exhibit A hereto, but without including the text referred to therein as applying only to Global Securities. Except as provided in Section 2.7 of the Base Indenture, owners of beneficial interests in the Global Securities will not be entitled to receive physical delivery of Certificated Securities.

(d)Transfer and Exchange of the Notes. The transfer and exchange of beneficial interests in the Global Securities shall be effected through the Depositary, in accordance with the Indenture and the procedures of the Depositary therefor. Beneficial interests in the Global Securities may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the Global Securities in accordance with the terms of the Base Indenture.

Section 2.2.Terms of the Notes.

The following terms relating to the Notes are hereby established:

(a)Title. The Notes shall constitute a Series of Securities having the title “8.750% Notes due 2023, Series No. 2”.

(b)Principal Amount. The aggregate principal amount of the Notes that may be initially authenticated and delivered under the Indenture (except for Notes authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Notes in accordance with the Indenture) shall be US$360,000,000. IRSA PC may from time to time, without the consent of the Holders of the Notes, issue additional Notes (in any such case “Additional Notes”) of the same Series as the Notes; provided that such Additional Notes have the same terms and conditions as the Notes (except for the date of issue, the issue price, the applicable legends, the date from which interest accrues and, if applicable, the first payment of interest); and provided further that if the Additional Notes are not fungible for U.S. federal income tax purposes with the previously outstanding Notes, such Additional Notes shall have a separate CUSIP number. Such Additional Notes shall be consolidated with and form a single Series with the previously outstanding Notes.

(c)Stated Maturity. The entire outstanding principal of the Notes shall be payable on March 23, 2023, unless earlier redeemed or repurchased.

(d)Interest Rate; Place and Method of Payment. The rate at which the Notes shall bear interest shall be 8.750% per annum; the date from which interest shall accrue on the Notes shall be March 23, 2016, or the most recent Interest Payment Date to which interest has been paid or provided for; the Interest Payment Dates for the Notes shall be March 23 and September 23 of each year, beginning September 23, 2016; the interest so payable, and punctually paid or duly provided for, on any Interest Payment Date, will be paid, in immediately available funds, to the Persons in whose names the Notes (or one or more predecessor Notes) are registered at the close of business on the Regular Record Date for such interest, which shall be March 22 or September 22, as the case may be, next preceding such Interest Payment Date (whether or not such date is a Business Day). Interest on the Notes shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Any such interest not punctually paid or duly provided for shall forthwith cease to be payable to the respective Holders on such Regular Record Date, and such defaulted interest, may be paid to the Persons in whose names the Notes (or one or more predecessor Notes) is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than fifteen (15) days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in Section 2.9 of the Indenture. Payment of principal and interest on this Note will be made at the Corporate Trust Office of the Trustee or such other office or agency of IRSA PC as may be designated for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that each installment of interest and principal on the Notes may at IRSA PC’s option be paid in immediately available funds by transfer to an account maintained by the payee located in the United States.

(e)Redemption. The Notes are redeemable at the option of IRSA PC in accordance with Article X of the Base Indenture and Section 2.3 hereof. The Notes are not redeemable at the option of the Holders.

(f)Luxembourg Paying Agent and Transfer Agent. The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg Paying Agent and Luxembourg Transfer Agent, hereby agrees and accepts the terms of, and undertakes to perform its obligations and the specific powers and duties delegated to it (together with such powers and duties that are incidental thereto) under, the Indenture, in each case, subject to the rights, protections, immunities and indemnities granted to it as an “Agent” under the Indenture . As of the date of this First Supplemental Indenture, the office of the Luxembourg Paying Agent and the Luxembourg Transfer Agent is: The Bank of New York Mellon (Luxembourg) S.A., Vertigo Building – Polaris, 2-4 rue Eugène Ruppert, L-2453 Luxembourg.

(g)Sinking Fund Obligation. The Notes will not be subject to any sinking fund.

(h)Mandatory Redemption or Repurchase. IRSA PC shall be required to make an offer to repurchase the Notes as provided in Section 3.21 of the Base Indenture.

(i)Form and Denomination of Notes. The Notes shall be issued in registered form in the denominations specified in Section 2.1 hereof.

(j)Specified Currency. The currency of denomination of the Notes is U.S. dollars. Payment of principal of and interest and premium, if any, Additional Amounts and all other amounts due and owning under the Notes shall be payable in U.S. dollars.

(k)Payment Not Made by Reference to Index. Payments of principal of or interest or premium, if any, on the Notes shall not be determined by reference to any index.

(l)Meetings, Modifications and Waivers. The terms of the Notes and the Indenture may be modified or waived as provide in Article VII of the Base Indenture.

(m)Additional/Different Covenants; Modification to Events of Default. There is no addition to, deletion of or change in any covenants or Events of Default set forth in the Base Indenture as applicable to the Notes.

(n)Other Terms of the Notes. The Notes will benefit from the other terms and conditions set forth in the Base Indenture, as supplemented and/or modified by this First Supplemental Indenture only with respect to the Notes.

(o)Conversion. The Notes are not convertible or exchangeable for shares of common stock or preferred stock of IRSA PC.

(p)Agents. The provisions of Section 3.2 of the Base Indenture shall apply to the Notes.

(q)Defeasance. The Notes are defeasible pursuant to Article XI of the Base Indenture.

Section 2.3.Optional Redemption.

(a)The provisions of Article X of the Base Indenture shall apply to the Notes and shall be supplemented by the following clauses (b) and (c).

(b)Optional Redemption with a Make-Whole Premium. Prior to March 23, 2020, IRSA PC may, at its option, to redeem the Notes, in whole or in part, at any time or from time to time at a redemption price equal to the greater of (1) 100% of the outstanding principal amount of such Notes, and (2) the sum of the present values of each remaining scheduled payment of principal and interest thereon (excluding accrued but unpaid interest to, but excluding, the applicable Redemption Date), discounted to the applicable Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points (the “Make-Whole Amount”) plus, in either case, accrued and unpaid interest to, but excluding, the applicable Redemption Date, subject to the right of Holders of Notes of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date.

(c)Optional Redemption Without a Make-Whole Premium. On and after March 23, 2020, IRSA PC may, at its option, redeem the Notes, in whole or in part, at any time or from time to time at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if any, to but excluding the applicable Redemption Date, subject to the right of Holders of Notes of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period commencing on March 23 of each of the years indicated below:

Year	Percentage
2020	104.375%
2021	102.188%
2022 and thereafter	100.000%

(d)On and after the Redemption Date for the Notes, interest will cease to accrue on the Notes or any portion thereof called for redemption, unless IRSA PC defaults in the payment of the applicable redemption price. In the event IRSA PC elects to redeem the Notes, IRSA PC will deposit with a Paying Agent, or the Trustee, funds sufficient to pay the applicable redemption price of the Notes to be redeemed on such Redemption Date in accordance with Section 10.2 of the Base Indenture. If less than all of the Notes are to be redeemed, the Notes to be redeemed will be selected in accordance with Section 10.1(d) of the Base Indenture.

(e)All redemption prices with respect to the Notes shall be calculated by IRSA PC.

ARTICLE III

MISCELLANEOUS

Section 3.1.Governing Law.

This First Supplemental Indenture and the Notes 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 IRSA PC, and matters relating to the legal requirements necessary in order for the Notes to qualify as “obligaciones negociables simples no convertibles” under Argentine law, shall be governed by the Negotiable Obligations Law, together with the Argentine Companies Law, the Capital Markets Law and the rules of the CNV and other applicable Argentine laws and regulations.

Section 3.2.Multiple Counterparts.

The parties may sign multiple counterparts of this First Supplemental Indenture. Each signed counterpart shall be deemed an original, but all of them together represent one and the same First Supplemental Indenture.

Section 3.3.Severability.

Each provision of this First Supplemental Indenture shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purpose of this First Supplemental Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and a Holder shall have no claim therefor against any party hereto.

Section 3.4.Ratification.

The Trustee accepts the trusts created by the Indenture, as supplemented by this First Supplemental Indenture, and agrees to perform the same upon the terms and conditions of the Indenture, as supplemented by this First Supplemental Indenture.

Section 3.5.Rights, Protections and Immunities of the Trustee.

All of the rights, protections, benefits, immunities and indemnities afforded or given to the Trustee and the Agents pursuant to the Base Indenture shall apply to and be enforceable by the Trustee and each Agent acting in their respective capacities relating to the Notes and pursuant to this First Supplemental Indenture mutatis mutandi as if set forth and incorporated herein. The Trustee is acting hereunder, not in its individual capacity, but solely in its capacity as Trustee for the Notes under the Indenture.

Section 3.6.Trustee Not Responsible for Recitals.

The recitals contained herein and in the Notes, shall be taken as the statements of IRSA PC, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this First Supplemental Indenture, or any offering materials or of the Notes. The Trustee shall not be accountable for the use or application by IRSA PC of any of the Notes or of the proceeds thereof.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first above written.

IRSA PROPIEDADES COMERCIALES S.A.
By:
	Name:
	Title:

By:
	Name:
	Title:

[Signature page to the First Supplemental Indenture]

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THE BANK OF NEW YORK MELLON, as Trustee, Co-Registrar, Principal Paying Agent and Transfer Agent.
By:
	Name:
	Title:

[Signature page to the First Supplemental Indenture]

THE BANK OF NEW YORK MELLON (LUXEMBOURG) S.A., as Luxembourg Paying Agent and Transfer Agent.
By:
	Name:
	Title:

[Signature page to the First Supplemental Indenture]

BANCO SANTANDER RÍO S.A., as Registrar, Paying Agent, Transfer Agent and Representative of the Trustee in Argentina.
By:
	Name:
	Title:
By:
	Name:
	Title:

[Signature page to the First Supplemental Indenture]

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EXHIBIT A

[FORM OF FACE OF GLOBAL SECURITY]

Registered No.: [R-[__]][S-[__]]

CUSIP No.: [Rule 144A: 463588 AA1][ Regulation S: P5880U AB6]

ISIN No.: [Rule 144A: US463588AA16][ Regulation S: USP5880UAB63]

Registered Holder: [Cede & Co., or registered assigns]

IRSA PROPIEDADES COMERCIALES S.A.

IRSA Propiedades Comerciales S.A. 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.

[RULE 144A/ REGULATION S] GLOBAL SECURITY

representing

US$[Aggregate principal amount]

8.750% NOTES DUE 2023, SERIES NO. 2

UNLESS (1) THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”) TO IRSA PROPIEDADES COMERCIALES S.A. 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 THE FOLLOWING RESTRICTIVE LEGEND FOR A RULE 144A GLOBAL SECURITY (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 IRSA PROPIEDADES COMERCIALES S.A. (“IRSA PC”) THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO IRSA PC OR TO ANY DEALERS APPOINTED BY IRSA PC 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 IRSA PC THAT IT WILL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN.]

[INCLUDE THE FOLLOWING RESTRICTIVE LEGEND FOR A REGULATION S GLOBAL SECURITY (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 IRSA PROPIEDADES COMERCIALES S.A. 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.]

8.750% NOTES DUE 2023, SERIES NO. 2

SERIES: No. 2

SPECIFIED CURRENCY: U.S. dollars

PRINCIPAL AMOUNT: US$[_________]

ORIGINAL ISSUE DATE: [March 23, 2016]

STATED MATURITY: March 23, 2023

OTHER TERMS AND CONDITIONS: As set forth below and in the Indenture

FIXED RATE OF INTEREST: 8.750%

INTEREST COMMENCEMENT DATE: [March 23, 2016]

INTEREST PAYMENT DATE(S): March 23 and September 23

REGULAR RECORDS DATE(S): March 22 and September 22 immediately preceding the relevant Interest Payment Date (whether or not a Business Day)

This [Rule 144A] [Regulation S] Global Security (this “Note” and, together with any other Securities of the same Series as this Note, the “Notes”) is issued pursuant to the Indenture referred to herein.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Copies of the Indenture and this Global Security 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 Euro MTF, 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 Notes applicable to it. Terms used but not defined herein are used as defined in the Indenture and the on the reverse of this Note.

This Note is a Global Security representing an issue of duly authorized Securities of IRSA PC issued and to be issued in one or more Series pursuant to the Indenture. This 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 herein and in the Indenture, and bearing interest on such Principal Amount at the rate of interest specified herein.

In the event of any conflict between the provisions stated or incorporated herein and the terms and conditions set forth in the Pricing Supplement (as such term is defined in the First Supplemental Indenture referred to herein), the terms and conditions in the Pricing Supplement will prevail. Accordingly, in any such circumstances this Note shall be deemed to have incorporated by reference those terms and conditions ‎set forth in the Pricing Supplement.

IRSA PC, for value received, hereby promises to pay Cede & Co. or its registered assigns, the Principal Amount in the Specified Currency at the Stated Maturity specified above, unless earlier redeemed in accordance with the terms hereof, and to pay interest from the Interest Commencement Date of this Note specified above (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 any interest in respect hereof at the Fixed Rate of Interest per annum specified above on the Interest Payment Date or Dates specified above in each year, commencing with the first such Interest Payment Date falling at least fifteen (15) 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.

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 other Securities in respect of such Series issued pursuant to the Indenture. The Notes, together with any other debt Securities of IRSA PC issued under the Indenture are limited to an aggregate principal amount outstanding at any one time of US$500,000,000 or the equivalent thereof in one or more Specified Currencies; provided, however, that the total amount of the Program and the maximum aggregate principal amount of Securities of all Series that may be Outstanding at any one time under the Indenture may be increased by a resolution of the shareholders of IRSA PC and without the consent of the Holders.

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 Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

THIS NOTE 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 NOTES BY IRSA PC, AND MATTERS RELATING TO THE LEGAL REQUIREMENTS NECESSARY IN ORDER FOR THE NOTES TO QUALIFY AS “OBLIGACIONES NEGOCIABLES SIMPLES NO CONVERTIBLES” UNDER ARGENTINE LAW, SHALL BE GOVERNED BY THE NEGOTIABLE OBLIGATIONS LAW, TOGETHER WITH THE ARGENTINE COMPANIES LAW, THE CAPITAL MARKETS LAW AND THE RULES OF THE CNV AND OTHER APPLICABLE ARGENTINE LAWS AND REGULATIONS.

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IN WITNESS WHEREOF, IRSA PC has caused this Global Security to be duly executed.

Dated: March , 2016

IRSA PROPIEDADES COMERCIALES S.A.

By: __________________________

Name:

Title:

By: __________________________

Name:

Title:

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TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the Series designated and referred to in the within-mentioned Indenture, as such is supplemented by the within-mentioned First Supplemental Indenture.

THE BANK OF NEW YORK MELLON, as Trustee

By: __________________________

Name:

Title:

Dated: March [ ], 2016

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[FORM OF REVERSE OF GLOBAL SECURITY]

TERMS AND CONDITIONS

General

The Notes are issued as a Series of Securities under the Indenture, dated as of March 23, 2016, among IRSA PC, The Bank of New York Mellon, as trustee (in such capacity, the “Trustee”), co-registrar, principal paying agent 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, as amended and supplemented by the First Supplemental Indenture thereto, dated as of March 23, 216, among IRSA PC, the Trustee, the Representative of the Trustee in Argentina and The Bank of New York Mellon (Luxembourg) S.A., as paying agent and transfer agent in Luxembourg (as amended or supplemented from time to time, the “Indenture”). Capitalized terms used herein are used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the Indenture, and Holders are referred to the Indenture for a statement of all such terms. To the extent permitted by applicable law, in the event of inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Notes will control.

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.

The Notes will qualify as “obligaciones negociables simples no convertibles” under the Negotiable Obligations Law and will be entitled to the benefits set forth therein and subject to the procedural requirements thereof. The Notes will rank pari passu in right of payment with all other existing and future unsecured and unsubordinated indebtedness of IRSA PC (other than obligations preferred by statute or by operation of law).

Unless previously redeemed, the Notes will mature on the date (the “Stated Maturity”) no less than thirty (30) days from their date of issue as specified on the face hereof.

The Notes shall be denominated in the currency (a “Specified Currency”) as specified on the face hereof. Payments on the Notes will be made in the Specified Currency.

The Notes shall bear interest at a fixed rate (a “Fixed Rate Note”). See “Interest Rate” below.

The Notes will not be subject to any sinking fund and will not be redeemable prior to their Stated Maturity, except as provided in the Indenture.

IRSA PC may from time to time, without the consent of Holders of Notes outstanding, create and issue additional Notes of such Series (“Additional Notes”); 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, the date from which interest accrues and, if applicable, the first payment of interest); and provided further that if the Additional Notes are not fungible for U.S. federal income tax purposes with the previously outstanding Notes of the relevant Series, such Additional Notes shall have a separate CUSIP number. The Additional Notes shall be consolidated with and form a single Series with the previously outstanding Series of Notes.

Global Securities are exchangeable in whole or in part for duly executed and issued Certificated Securities in the form established pursuant to the Indenture, with the applicable Restrictive Legends as marked thereon, only if such exchange complies with Section 2.7 of the Base Indenture. Interests in Global Securities are exchangeable or transferable in whole or in part for interests in another Global Security of the same Series, only if such exchange or transfer complies with Section 2.10 of the Base Indenture.

Interest Rate

Each Fixed Rate Note will bear interest from (and including) the issue date (the “Interest Commencement Date”) or from the most recent Interest Payment Date to which interest on such Note has been paid or duly provided for at the fixed rate per annum, 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.

Fixed Rate Notes

Fixed Rate Notes shall bear interest from (and including) the Interest Commencement Date specified above 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.

Payment of Principal and Interest

Interest (and principal, if any, payable other than at Stated Maturity or upon acceleration or redemption) shall be payable 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 payable to the Person to whom principal will be payable; and provided further, that if and to the extent IRSA PC 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 IRSA PC by notice given by or on behalf of IRSA PC 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. 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. The interest so payable, and punctually paid or made available for payment, on any Interest Payment Date, will, as provided in the Indenture, be paid, in immediately available funds, to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on September 22 or March 22 (whether or not a Business Day, as defined in the Indenture), as the case may be, next preceding such Interest Payment Date (the “Regular Record Date”).

Payment 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 to the person in whose name such note is registered 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 the 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) the Depositary, as Holder of Global Securities, shall be entitled to receive payments of interest by wire transfer of immediately available funds and (b) a Holder of at least US$1,000,000 in aggregate principal or face amount of Securities 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. 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 with respect to any Interest Payment Date will include interest accrued to but excluding such Interest Payment Date.

Interest on Fixed Rate Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

If the Stated Maturity for any Fixed Rate Note or the Interest Payment Date for any Fixed Rate Note falls on a day which is not a Business Day, payment of principal (and premium, if any) and interest with respect to such Note will be made on the next succeeding Business Day 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.

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SCHEDULE A

Date Principal Amount of Certificated Securities or other Global Securities issued in exchange for or upon transfer of an interest in this Global Security Principal Amount of this Global Security Redeemed or Repurchased Increase in Principal Amount of this Global Security due to the exchange or transfer of another Global Security (or an interest therein) for an interest in this Global Security Remaining Principal Amount of this Global Security Notation made on behalf of the Trustee by

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 IRSA PC with full power of substitution in the premises.

In connection with any transfer of this Note occurring prior to the date that is one year after the Original Issue Date of this Note (provided that IRSA PC or any affiliate of IRSA PC has not acquired this Note during such one-year period), the undersigned confirms that without utilizing any general advertising or general solicitation:

(check one)

☒            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

<>ÎýáC¨l°NÛèÖÆ ÒY9

‚ã'

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ªçüFš?RÍ5☒                                 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

☒            This Note is being transferred to a Dealer or to IRSA PC; or

☒            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.

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.

EX-4.11

TRADUCCIÓN PÚBLICA 

SWORN TRANSLATION 

EIGHTH AGREEMENT FOR THE IMPLEMENTATION OF

AMENDMENTS

TO THE CORPORATE SERVICES MASTER AGREEMENT

[Except for the signature page, all the pages that make up the source document in Spanish carry six illegible initials.]

Agreement made in the Autonomous City of Buenos Aires on the 12th day of November of 2015 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 the undersigned attorneys-in-fact (hereinafter “CRESUD”) as party of the one part;

(ii) IRSA Propiedades Comerciales S.A., domiciled at Moreno 877, Piso 22 in the Autonomous City of Buenos Aires, represented hereat by the undersigned attorneys-in-fact (hereinafter “IRSAPC”), 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 the undersigned attorneys-in-fact, as party of the third part (hereinafter “IRSA” and collectively with CRESUD and IRSAPC 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) On August 23, 2007 THE PARTIES executed the first Agreement for the Implementation of Amendments to the Corporate Services Master Agreement (hereinafter the “First Agreement”), whereby certain amendments were introduced to the Areas of Exchange of Corporate Services and the Cost Distribution Bases, and new Individually Responsible Persons were appointed;

(iii) On August 14, 2008 and November 27, 2009, THE PARTIES executed the Second Agreement for the Implementation of Amendments to the Corporate Services Master Agreement (hereinafter the "Second Agreement”) and the Third Agreement for the Implementation of Amendments to the Corporate Services Master Agreement (hereinafter the “Third Agreement”), respectively, whereby new amendments were introduced to the Areas of Exchange of Corporate Services and the Cost Distribution Bases;

(iv) On March 12, 2010, THE PARTIES executed an Addendum to the Master Agreement for the Exchange of Corporate Services (hereinafter the “Addendum”) whereby THE PARTIES agree to unify in CRESUD the services of the Areas of Exchange of Corporate Services, to the effect of which the employment agreements of most of the employees of such areas were transferred and the procedure to allocate the costs of potential labor expenses arising from retirement of employees was established;

(v) On July 11, 2011, THE PARTIES executed the Fourth Agreement for the Implementation of Amendments to the Corporate Services Master Agreement (hereinafter the "Fourth Agreement”), on October 15, 2012, THE PARTIES executed the Fifth Agreement for the Implementation of Amendments to the Corporate Services Master Agreement (hereinafter the "Fifth Agreement"), on November 12, 2013, THE PARTIES executed the Sixth Agreement for the Implementation of Amendments to the Corporate Services Master Agreement (hereinafter the “Sixth Agreement”) and on February 18, 2015, THE PARTIES executed the Seventh Agreement for the Implementation of Amendments to the Corporate Services Master Agreement (hereinafter the “Seventh Agreement” and together with the First Agreement, the Second Agreement, the Third Agreement, the Fourth Agreement, the Fifth Agreement and the Sixth Agreement, the “Agreements”), whereby new amendments were introduced to the Areas of Exchange of Corporate Services and the Cost Distribution Bases;

(vi) Pursuant to the structuring process of a new organizational model of division of areas by business, an agreement was reached to transfer to IRSA and/or IRSAPC the employment agreements of those employees who render services related to the Technical, Infrastructure and Services, Purchases, Architecture and Design and Works Development Area, Real Estate Business Management, Real Estate Business Human Resources, Safety and Real Estate Areas, all of them related to the real estate business. On February 24, 2014 THE PARTIES executed a Second Addendum to the Master Agreement for the Exchange of Corporate Services (hereinafter the “Second Addendum”) whereby the mechanisms to be used for the allocation of the costs of potential labor expenses that such process would involve were established.

(vii) THE PARTIES have implemented the Master Agreement based on an Implementation Manual updated by Deloitte & Co. S.R.L., (hereinafter “Deloitte”) on February 11, 2008;

(viii) In accordance with the recommendations made by Deloitte on its semi-annual reports, new operational changes have been implemented in the Areas of Exchange of Corporate Services and the Cost Distribution Bases starting on June 11, 2015, which THE PARTIES wish to acknowledge in writing;

(ix) THE PARTIES have disclosed the content of the EIGHTH AGREEMENT FOR THE IMPLEMENTATION OF AMENDMENTS TO THE CORPORATE SERVICES MASTER AGREEMENT (hereinafter the “Eighth Agreement”) to their respective Audit Committees; and

(x) The Board of Directors of IRSAPC, CRESUD and IRSA approved the Eighth Agreement at the meeting held on November 12, 2015;

NOW IN CONSIDERATION OF THE FOREGOING, THE PARTIES hereby agree to execute this Eighth 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, as amended by the Agreements, to the Master Agreement as per the following detail:

(i) Starting in July 2014, in relation to the Finance Area, a decision was made (a) to exclude the Planning Department for it to be incorporated into the Areas of Exchanges; and (b) to modify its distribution method, thereby introducing changes into Exhibit I and Exhibit II in a manner such that as from July 2014 the components of said method shall be as detailed in new Exhibit I and Exhibit II.

(ii) Starting in July 2014, a decision was made to exclude the Shared Services Center Department from the Administration and Control Area and for the Shared Services Center Department to become covered by the Areas of Exchange. In addition, as from July 2014 a decision was made to change the distribution method of the Master Data Sector.

In January 2015 and in connection with the Shared Services Center Area, there were two additions, namely: (a) the Back Office sector was added and (b) the General Services sector was added.

As a result of the decision adopted in this clause, it was further decided to modify Exhibit I and Exhibit II such that as from January 2015 they shall be made up as detailed in the new Exhibit I and Exhibit II.

(iii) Starting in July 2014 and in connection with the Administration and Control Area, a decision was made to (a) modify the distribution method applicable to the Accounting and Reporting Department; (b) modify the distribution method applicable to the Global Budget and Management Control Department; and (c) modify the distribution method applicable to the SOX Regulation Department thereby modifying Exhibit II which as from that date shall be made up as detailed in the new Exhibit II.

(iv) Starting in July 2014, a decision was made to exclude the Governmental Affairs Department from the Real Estate Area, to incorporate the Governmental Affairs Department into the Areas of Exchange and to modify its distribution method. Therefore, Exhibit I and Exhibit II were amended accordingly so that as from such date, they shall be made up as detailed in the new Exhibit I and Exhibit II.

(v) Starting in July 2014, a decision was made to incorporate the Real Estate Accounting and Reporting Department into the Real Estate Management Area. Therefore, Exhibit I and Exhibit II were amended accordingly so that as from such date, they shall be made up as detailed in the new Exhibit I and Exhibit II.

(vi) Starting in July 2014 and in connection with the Human Resources Area, a decision was made to (a) change the name of the department known as “Project Management Department”, which shall from now bear the following designation “Human Resources Management Department”; (b) change the name of the department known as “Safety and Hygiene Department”, which shall from now on bear the following designation “Administration and Labor Relations Department” and; (c) change the name of the department known as Project Quality Department, which shall from now on bear the following designation “Culture Management Department”. Therefore, Exhibit II was amended accordingly so that as from such date, it shall be made up as detailed in the new Exhibit II.

In consideration of the foregoing, the PARTIES hereby put on record that, subject to the clarifications detailed in the preceding clauses and for purposes of updating Exhibits I and II, they shall read as hereto attached for the periods and as from the dates indicated.

TWO: THE PARTIES agree that the costs related to the employees acting in the new Areas included pursuant to this Eighth Agreement, shall be governed in accordance with the terms and conditions set forth in the Master Agreement, the Addendum and the Second Addendum.

THREE: THE PARTIES represent that all the sections of the Master Agreement, the Agreements, the Addendum and the Second Addendum that have not been amended pursuant to this Eighth 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] [Seal:] Carlos Mariano Garriga - Attorney-in-fact / [illegible signature] [Seal:] CRESUD S.A.C.I.F. y A. Agronomic Engineer Alejandro G. Casaretto - Attorney-in-fact

IRSA Inversiones y Representaciones Sociedad Anónima 

[illegible signature] [Seal:] José Luis Rinaldini – Attorney-in-fact / [illegible signature] Gastón Lernoud

IRSA Propiedades Comerciales S.A. 

[illegible signature] [Seal:] David A. Perednik Attorney-in-fact / [illegible signature][Seal:] Mariano Mitelman, Attorney-in-fact.

Exhibit I 

Description of Corporate Services Areas of Exchanges 

Human Resources 

The Human Resources sector renders to the Parties the service consisting in Human Resources Administration; Human Resources Management, and Organizational Culture Management. Within the main activities of the sector we may mention labor relationships, selection of managerial positions, leadership training and interpersonal skills, remunerations and benefits, internal communication, etc.

Finance 

The Finance sector renders to THE PARTIES the service consisting in Investor Relations, Capital Markets, Financial Risk, Management of Financial Transactions, Financial Analysis.

Planning 

The Planning area is responsible for medium- and long-term planning, for aligning the PARTIES’ objectives and individual goals, for coordinating the PARTIES’ investment analysis and for coordinating all the management information flowing through the businesses and submitted to the respective Boards of Directors.

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 and Control 

The Administration and Control sector is responsible for the PARTIES’ management control, budget of structure expenses, and SOX controls.

Shared Services Center 

The Shared Services Center provides THE PARTIES with all the transactional and operational services associated to income and expense management, to the services inherent in managing human resources benefits and payroll processing, in commercial contract management, in errand running services and in general services. And it is equally responsible for managing, maintaining and providing support to systems, technology and processes.

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.

Safety 

The Safety sector renders to THE PARTIES the surveillance service. 

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.

Technical, Infrastructure and Services, Architecture and Design, and Works Development

The Technical, Infrastructure and Services, Architecture and Design, and Works Development sector renders to THE PARTIES the services consisting in operational coordination of the following sectors: Architecture and Design; Works Development; and Technical, Infrastructure and Services.

Purchases and Hirings 

The Purchases and Hirings sector bears the responsibility of obtaining the most appropriate goods and/or services for the purpose for which they will be used. Quality, costs and terms of delivery are essential when taking the decision to hire. In addition, this sector deals with the necessary means to obtain appropriate funding of the purchases from suppliers.

Environment and Quality 

The Environment and Quality sector renders to the PARTIES the services consisting in management of national and municipal permits and licenses before the controlling entities. In addition, it assesses the environmental impact of projects and activities in order to define preventive and corrective actions for minimizing such impacts, following the working methodology set forth in an Environmental Management System.

Real Estate 

The Real Estate sector renders to THE PARTIES the services consisting in sales and acquisitions of real estate, except for real estate assigned to the agricultural business.

Governmental Affairs 

The Governmental Affairs sector takes part in the businesses arising from governmental grants (exploitation concessions and private initiatives).

Hotels 

The Hotels sector renders to THE PARTIES the services consisting in the integration of the different areas of hotels along with their business relations. It carries out activities to optimize and control hotels’ management and organization.

Board of Directors to be Distributed 

The Board of Directors to be Distributed sector includes the employees performing activities of support and assistance to the Parties’ Board of Directors.

Real Estate Business Board of Directors to be Distributed 

The Real Estate Business Board of Directors to be Distributed sector includes the employees performing activities of support and assistance to the Board of Directors of IRSA and IRSAPC.

General Management Department to be Distributed 

The General Management Department to be Distributed sector includes employees performing activities of support and assistance to the Parties’ General Management Departments.

Board of Directors’ Safety 

The Board of Directors’ Safety sector renders to the Parties the service consisting in comprehensive safety for the main officers acting in their Board of Directors.

Audit Committee 

The Audit Committee sector includes the employees performing tasks of support and assistance to THE PARTIES' Audit Committees.

Real Estate Business Management 

The Real Estate Business Management sector renders the following services to IRSA and IRSAPC: budget and control management, accounting and reporting, analysis of new businesses, analysis of the business clients’ credit risk, IT support to shopping centers, marketing and leadership agreements for the business legal aspects.

Real Estate Business HHRR 

The Real Estate Business HHRR sector renders to IRSA and IRSAPC the service consisting in Human Resource Administration; Human Resource Management; Workplace Safety, Hygiene and Environment; Organizational Culture Management and Project Management. The main sector activities include, among others: personnel management, recruitment and training, compensation and benefits, internal communication, third party control, etc.

Fraud Prevention 

The Fraud Prevention sector renders to THE PARTIES corporate Fraud Prevention services.

Internal Audit 

The Internal Audit sector renders to THE PARTIES internal audit services. 

Exhibit II 

Cost Distribution Bases 

Corporate Departments	Department	Division / Subdivision	Distribution Method
Human Resources	Human Resources Management		By headcount (non-corporate personnel) and weighting the percentages of other areas (corporate personnel).
	Culture Management
	Administration and Labor Relations
Finance	Capital Markets		Weighting is as follows: Capital Markets 25% Relations with Investors 25% Financial Analysis 12.5% Financial Risk 12.5% Financial Administration 25% Investors Relations: Number of business highlights during the semester, number of result announcements, number of meetings with investors (current or potential) to discuss the companies’ business and strategy, number of active coverages, number of result conferences, the complexity of the website of each company, number of relevant facts published in the Argentine Securities and Exchange Commission and the US Securities and Exchange Commission, and number of Roadshows (Deal or Non-Deal). All items involved are weighted in equal parts. Capital Markets: Amount of financial transactions conducted in the period weighted at 70% and the remaining 30% corresponds to updates of offering memoranda and “horizontal” works (20F, annual reports, Press Release, etc.) Financial Risk: Time invested in the duties performed. Financial Administration: Total assets weighted at 40% and total liabilities weighted at 60%. The resulting percentage shall be weighted at 80% over the total. The remaining 20% will correspond to the percentage that each company consummates over the total inquiries for special transactions. Financial Analysis: Time devoted to the tasks performed.
	Relations with Investors
	Financial Risk
	Financial Administration
	Financial Analysis
Planning			Proportional among the three companies.
Institutional Relations			Tasks performed and the time spent in each.

Administration and Control Each one of the sectors comprising the Department is weighted.	Accounting and Reporting		Tasks conducted and hours spent in each task
	Taxes		Salaries are weighted according to the position and tasks performed (per company and in equal shares)
	Budget and Global Management Control		The preceding half year’s structure expenses are pro-rated.
	SOX Regulation		Distribution of key control % per front / company
Shared Services Center (CSC) (The percentages of all the sectors reporting to the CSC are weighted according to projected salaries of the sector in question over CSC total salaries).	Expenses Administration		Number of Expense Transactions performed by each Company + Direct Allocation of Resources
	Revenues Administration		Number of Revenue Transactions performed by each Company + Direct Allocation of Resources
	Customer Administration		Direct Allocation of Resources
	Collections Administration		Direct Allocation of Resources
	Treasury Administration		Number of Treasury Transactions performed by each Company.
	Own Account Administration		Number of Transactions performed by each Company.
	Technology		Weighting of time spent in each task (related to the services).
	IT Services		Number of CASTI incidents processed for each Company.
	Master Data		Number of Transactions processed by each Company.
	Maintenance Systems		Hours devoted to each task.
	Project Systems		Hours devoted to each task.
	Commercial Transactions		Hours devoted to each task.
	IT Security		Weighting of time spent in each task.
	Process Quality		Weighting of time spent in each task.
	CSC Human Resources		50% weighting of % of CSC sectors; 50% weighting of Corporate sectors.
	Errand Running Service		Number of errands run.
	Back office		Hours spent in each task.
	General Services		Hours spent in each task.
Real Estate Business Management (each of the Departments comprising the Area are weighted. It does not render services to Cresud)	Real Estate IT Services		70% IRSAPC, 30% to be distributed IRSAPC and IRSA based on supervised projects.
	Real Estate Business Analysis		Hours devoted to reviewed projects as applicable to IRSA PC or IRSA.
	Real Estate Credit Risk		Hours worked for each company.
	Real Estate Legal Affairs		Weighting of hours and salaries.
	Real Estate Budget and Management Control		Actual revenues per company.
	Real Estate Business Accounting and Reporting		Real Estate Business accounting voucher weighting.
Real Estate Business Board of Directors to be Distributed			Proportional between IRSA and IRSAPC. Excludes Cresud.
Real Estate Business HHRR			Based on payroll.
Insurance			Based on the amount of premiums under the annual insurance program.
Safety			Per hour
Contract Department	Contracts		Number of contracts executed.
Technical, Infrastructure and Services, Architecture and Design, and Works Development Department An average is obtained from the Departments reporting to it	Technical, Infrastructure and Services (IRSAPC – IRSA: Weighted average from the Departments reporting to it less the percentage allocated to CRESUD. CRESUD: a percentage is calculated based on the hours spent in the tasks performed/planned)	Planning and Control	Weighted average of the areas under the supervision of the TIS Department of IRSA and IRSAPC, excluding CRESUD.
		Logistics	Weighted between directly assigned personnel and centralized personnel distributed per square meter of the real property (IRSA and IRSAPC) and time spent in tasks (CRESUD).
		Distributed Operations	Square meters of real property held, operated and to which maintenance services are provided (IRSA and IRSAPC) and time spent in tasks (CRESUD).
		Architecture	IRSA/IRSAPC: Personnel distributed per surface area and number of stores.
		Third parties' services	Distribution of resource allocation.
		Traveling Personnel	Maintenance hours (IRSA and IRSAPC) and time spent in tasks (CRESUD).
		Engineering and Maintenance	Square meters of real property held, to which maintenance, engineering and other services are provided (IRSA and IRSAPC) and time spent in tasks (CRESUD).
	Works Development		Tasks performed and time spent in each.
	Architecture and Design		Completed projects.
Purchases and Hirings			Weighted volume and amounts of purchase orders.
Environment and Quality			The distribution of corporate costs of the Environment, Farming Quality and Standardization area will be made according to the hours devoted to each global topic by person and company during the period.
Real Estate			Tasks performed and time spent in each.
Governmental Affairs			Weighting of allocated projects.
Hotels			100% IRSA.
Internal Audit			Times estimated/forecast in the annual plan.
Fraud Prevention			Proportional among the three companies
Board of Directors to be Distributed			Proportional among the three companies
Audit Committee			Weighting of tasks performed.
General Management Department to be Distributed			Proportional among the three companies
Board of Directors’ Safety			Proportional among the three companies

THIS DOCUMENT IS A TRUE AND ACCURATE TRANSLATION into English of the document in Spanish I have had before me in Buenos Aires, on this 27th day of September, 2016.

[For authentication purposes only:]                                                                                                                              

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 27 días de setiembre de 2016.

EX-8

Exhibit 8.1

LIST OF SUBSIDIARIES

The following table lists our subsidiaries and their jurisdiction of incorporation as of June 30, 2016:

Subsidiary	Country of Incorporation
Fibesa S.A.	Argentina
Emprendimiento Recoleta S.A.	Argentina
Shopping Neuquén S.A.	Argentina
Panamerican Mall S.A.	Argentina
Arcos del Gourmet S.A.	Argentina
Torodur S.A.	Uruguay

EX-12.1

SECTION 302 CERTIFICATION

I,  Alejandro G. Elsztain, certify that:

1. I have reviewed this annual report on Form 20-F of IRSA Propiedades Comerciales S.A. (the “Company”) for the fiscal year ended June 30, 2016;

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 position at June 30, 2016 and 2015 and the results of operations and cash flows of the Company for the periods ended June 30, 2016, 2015 and 2014;

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.

	IRSA Propiedades Comerciales S.A.
October 21, 2016.	By:	/s/ Alejandro G. Elsztain
		Alejandro G. Elsztain
		Chief Executive Officer

EX-12.2

EXHIBIT 12.2

SECTION 302 CERTIFICATION

I, Matias Gaivironsky, certify that:

1. I have reviewed this annual report on Form 20-F of IRSA Propiedades Comerciales S.A. (the "Company") for the fiscal year ended June 30, 2016;

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 position at June 30, 2016 and 2015, and the results of operations and cash flows of the Company for, the periods ended June 30, 2016, 2015 and 2014;

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.

	IRSA Propiedades Comerciales S.A.
October 21, 2016.	By:	/s/ Matias Gaivironsky
		Matias Gaivironsky
		Chief Financial and Administrative Officer

EX-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 IRSA Propiedades Comerciales S.A. (the “Company”) for the fiscal year ended June 30, 2016 as filed with the 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.

	IRSA Propiedades Comerciales S.A.
October 21, 2016.	By:	/s/ Alejandro G. Elsztain
		Alejandro G. Elsztain
		Chief Executive Officer

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

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 IRSA Propiedades Comerciales S.A. (the “Company”) for the fiscal year ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Matias Gaivironsky, as Chief Financial and Administrative 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.

	IRSA Propiedades Comerciales S.A.
October 21, 2016.	By:	/s/ Matias Gaivironsky
		Matias Gaivironsky
		Chief Financial and Administrative Officer

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.