IRSA Inversiones y Representaciones Sociedad Anónima (IRS) Q3 2016 Earnings Report, Transcript and Summary

Good day everyone and welcome to the IRSA Third Quarter 2016 results Conference Call. Today’s live webcast, both audio and slide show, may be accessed through the Company’s Investor Relations Web site at www.irsa.com.ar/ir by clicking on the banner entitled Conference Call. The following presentation and the earnings release issued last week are also available for download on the Company Web site. After management’s remarks there will be a question-and-answer session for analysts and investors. At that time further instructions will be given. [Operator Instructions] Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the Company’s financial and operating performance. All projections are subject to risks and uncertainties and actual results may differ materially. Please refer to the detailed note in the Company’s earnings release regarding forward-looking statements. I will now turn the conference over to Alejandro Elsztain, CEO. Please go ahead, sir.

To correct in IRSA I am the second Vice President. Good morning everyone -- good afternoon sorry. We’re going to begin the first nine months of 2016 and we began in this period to consolidate IDBD results since this quarter and now we’re consolidating that with the three months period lag of their balance. If you see about our financial consolidated results revenues of the group consolidating Israel was at the level of almost ARS20 billion and we divided and to make it easier to investors and to analyst into the Argentina business center and the Israel business center, so in each of the lines we’re going to see both of the effects. So if we divide the revenue the Argentine revenues were ARS3.2 billion and in the case of Israel was ARS16.5 billion. At the EBITDA level we achieved ARS4.4 billion, from those 2.5 billion came from Argentina business center and ARS1.8 billion from Israel. And the net income we achieved a loss of ARS1 billion and Argentina gave us a profit of 146 million and from Israel business center we bring a loss of ARS1.2 billion. If we talk about some events that happened at IRSA level, IRSA sold in this quarter 0.5% of IRSA Commercial Properties. Now we went from 95.22% to 94.74% of the shares of the IRSA Commercial Properties. There was a very good result in the rental segment and the sales and development during the last nine months. We did this quarter a sale of Catalinas office -- 14 floors to IRSA Commercial Properties and the investment in Israel have many nos on this quarter. There was a tender offer obligation, we modified the tender offer that we had in the past and we paid during March and we’re going to explain you later and at the same time we believe that company IDBD is today 100% on the hands of IRSA and the hands of IFISA. There was a debt issuance at IRSA Commercial Properties for $360 million -- first corporation who entered to the market and with that 240 million went to cancel the inter-company loan that we have between IRSA and IRSA Commercial Properties. So I will introduce now Daniel Elsztain our COO.

Thank you, Alejandro. Good afternoon, everyone. On Page Number 3 we start with the Argentina Business Center, speaking about shopping centers. Our stock in shopping centers got a little increase by the addition of Alto Comahue Shopping. Occupancy remains very high and stable at levels of 98.6%, almost 99%. Sales went up this quarter by 29% or 25.4% if we measure same-store sales. This was a weaker quarter than the previous one but this mainly has some effects on -- basically that we have the new prices after the devaluation, but without salaries that changed in the month of April so we see a change also in this declining of level of sales after this quarter. In terms of visitors, we increased the amount of visitors again in the same shopping and also by the inclusion of hydro power shopping. In the segment of office building on Page 4, we can see that we maintained our monthly list -- the price per square meter, but we see some reduction on occupancy, this is mainly explained by the oil and gas tenants they reduced their amount of sales, but this is the picture at the end of this quarter. And as of today we are seeing that we have all the little sales and this number would go back to the previous numbers that we had in previous quarters. And also at the level of IRSA Commercial Properties, we did a partial sale in September 2016 of about 6,000 square meters in the Torre InterContinental Plaza. This is about a 5.2% cap rate and we have a gain of ARS300 million of the total sale of ARS324 million. Also in February of this year we sold whole another floor on this building, also with the parking, the eight parking space and we sold for ARS41.5 million and recognize a gain of 38.6 million. We still have remaining in this tower about 6,000 square meters that are held for sale. On Page Number 5, we can see some numbers regarding the hotels -- we still have the three hotels. Occupancy went down a little bit but nevertheless because we try to maintain the average price per room ADR, we were able to increase revenues in pesos and also gross profit. So despite the devaluation and the loss on some part of occupation we were able to maintain the revenues. And I think this is after the devaluation now we are seeing our new trend of business people coming to the country and because of devaluation the country became little bit more cheap, we see a new trend of people visiting Argentina and we believe -- even though this is a small business the future looks a little bit better than it was in the past. On Page Number 6, we can see the sales that we have during these nine months in term of size we started with Dique IV. This was -- we sold this tower, it is 11,000 square meters. A total value of ARS649 million and if you look at the difference, the gain that we show it's for 587 so it is 9.5 book value. Also another sale in Maipú, a partial sale of 3,500 square meters approximately, we sold for a total of ARS123 million again book value to price is 8.5 times book value the price that we sold this unit. And the last one it's a piece of land in the Province of Santa Fe. We acquired this land some time ago with intention of doing the development. We didn’t do the development because we didn’t see the market yet, but we were able to sell this piece of land for ARS37 million, again 7.7 times book value and we kept some rights for future development in these piece of land. On Page Number 7, we announced during this nine months the start of construction, we didn’t start yet but we announced that we are going to start very soon the construction of Torre Catalinas, this is a tower in one of the best locations in Buenos Aires and best locations in the country. This is total G&A of 35,000 square meters, 30 floors, with 316 parking spaces, which will start during the next quarter and delivery is approximately by the end of 2019. So after the announcement we need to sell one we sold to an Argentinean a company that operates worldwide. We sold to them four floors for approximately ARS180 million, plus $12 million that will be paid during construction. After this we did an intercompany sale, we sold from IRSA to IRSA Commercial Properties 16,000 square meters as of G&A, we did parking unit which is about 14 floors, floors from 13 to 16 and 21 to 30, those that are in between, 17 to 20 are the ones the we saw to the other company. And the idea of IRSA Commercial Properties is to hold this floor for long-term list. The price that was paid was in two tranches, the first tranche was the land acquisition that IRSA Commercial Properties paid 455 million, approximately $1600 per square meters. And the construction will be -- and the remaining, the rest of the price will be subject to cost of construction. IRSA still has 14,000 square meters in its portfolio and the purpose is some to be leased, some to be for sale. Now talking a little bit about investments. Also it's still under the Argentina Business Centers, but it’s not in Argentina. This is the building in New York, the Lipstick Building. We can see here that occupation is going up, now we’re running at 95.1% that was at the end of the quarter. As of today we have listed out and we believe that we’re going to be very close to 97-98 for in the next quarter. The new agreement -- I mean we also see that the price per square foot has been growing recently but the growth is not that much when we see the whole tower that the last tenants that we signed are in the order of mid 80s per square meter as per square feet. And then here I'll make the comment again, price per square feet per year in compliance with the other ones, that is price per square meter per month. And the building also during these nine months got the LEED certificate, we got the Gold standard certificate so it’s best in environmental practices and we’re following this idea of getting LEED certificates also in other buildings in our portfolio. Talking about Condor, Condor Hospitality REIT as we have a proportion issue a new series of preferred B shares that will happen in March 16 with an injection of $30 million from a new partner StepStone. It’s an investor from the West Coast of the United States where they have some offices in New York. They injected $30 million with this new preferred series and we also converted our preferred C series into this preferred D. The idea of the cash that was -- that came into the company was to buyout to redeem the preference A and B, which already happened and to have some cash for new acquisitions. The preferred D’s have same queue points as the preferred C shares, but the preferred Ds are obliged to convert into commercials in the case of a new follow-on on the shares. So basically we’re very happy we got a partner in this company. The company has completely new team, new CEO and new CFO and new CAO. So new hotels under management and the portfolio is getting much better, so the company is really now under a lot of changes changed the headquarters from Omaha Nebraska to Washington D.C. And we can see also that the price in the share is also going up reflecting that the market is really looking at this company as back in the market. So now I introduce you to -- go back to Alejandro Elsztain.

Thank you, Danny. If we go to Page Number 10 and we see about Banco Hipotecario. The results for the nine months were almost ARS200 million, almost 100% comparing to the numbers of last year, so a very good operational result. And there was a subsequent event and we brought this to the presentation because Banco Hipotecario was able to acquire in an auction, a public auction, the Del Plata building, an office building that the city of Buenos Aires was using like a public building for their offices. That is emblem and historical memory of the city and Banco Hipotecario was able to buy that but is located on the most important avenue de 9 de Julio, in front of our [indiscernible]. So the main area -- of an area that’s is very busy in transportation, it’s one of the -- probably the more -- is full traffic of the country and it’s a Time Square area for Argentina and Banco Hipotecario bought that property for making overheads for the office, the whole Banco Hipotecario. So it’s a very good move for our company to buy a property like that. If we move to Page Number 12, we begin our explanation in the Israel Business Center and because of the change on the consolidation we can see that because we changed and now we’re consolidating, we began to explain deeper the results about Israel operation. So in the Page 11 -- sorry I am beginning with Page 11 and I'm counting back to Page 10 later. Investment highlights of the nine months. What happened at the company level is we have appointed a new -- an acting CEO and CFO for IDBD and DIC, so this is very recent and they are beginning to -- they became CEO and CFO and now they're beginning to run the company since a few months ago. During December the sales process off CLAL, our insurance company was cancelled and that affected a lot to balance sheet and Matias later will explain how it is affecting our balance sheet of this quarter. In January of 2016, though it has been signed with IFISA an option to acquire 92 million shares of IDBD at 1.64 per share in a two year period, plus an interest of 8.5% like an annual interest rate. Later in March of this year we had to pay our tender offer obligations and instead of paying what was an 8 per share tender offer obligation there was a strong negotiation and finally we were able to acquire all the float and directly to the list the company that the last price per share was 2.14. The way of recreating the 8 per share tender was through an acquisition with the ILS125 per share in cash, 120 in the series 9 bond, and we made a premium or a bonus contingent for the shareholders that if we are approved to keep the control of this company or we sell the CLAL stake on average 75% of the book value they are going to receive an extra ILS105 per share. And so with that we cancelled and there are no more further commitments for the company. Now the only commitment and the contingency we have to pay is this ILS105 in the case of the sale or the permission of CLAL. So this is up to now it's an invested $515 million and with that we'll have the full control of the company. If we move to Page Number 12, we can see a description of the assets. And we began mainly with the description of the PBC, the real estate than more familiar for IRSA, where we have divided into -- in the right we can see the income producing properties in Israel. This is the main activity through a company called Gav-Yam where we are involved directly at the board level, Eduardo and myself. Here this company has a portfolio of more than 1 million square meters and the rental today we are constructing in the year 2016, 150,000 square meters of rental properties through these companies in Israel as well a lot of land bank as we have been into commercial properties. In the case of land bank of Israel we have 700,000 square meters of development rights to make mainly more office buildings, more parks like the park in Gav-Yam another park in Haifa or the parking at [indiscernible]. In the residential in Israel the company is running a company that is under construction of 1,200 units in a year and development right for making 1,500 units more, so a big and a very active residential company making apartments to sell in the country. I'll go back in the income producing properties and I would like to point something that happened very recently, that is not here but the case of why the company is under a lot of construction and we went to the market and we raised a bond at the local market and we were able to achieve a rate of 1.85 for seven years, plus inflation. So we are doing a lot of construction at very low interest rates and the yield that we are achieving on the properties we are launching is between 8% to 10%, so there is a big room to finance. So we went to the market and we took a very small portion, we offered -- we received offers for 1.2 billion and we took ILS0.5 billion in that kind of interest rates and with that process we are building a lot of new buildings in the country. So these two are in Israel, so these are the income producing and the residential in Israel. In the left we can see the international activities main building in the international asset of PBC is the HSBC Tower in Manhattan in Fifth Avenue. 80,000 square meters 100% owned by PBC. And there is a big land reserved and projects under construction this company is making the 1,000 a year mainly in India and has the lot of land bank, we are doing almost 27,000 square meters of office and commercial which is mainly in Vegas a Project called Tivoli that is office buildings and retail in Vega in Las Vegas area apart of that PBC owns another listed company called Mehadrin owns 47% of the shares and Mehadrin is the largest grower and exporter of citrus and avocado of Israel Mehadrin runs 5,300 acres of cultivated land and 1,400 of those are owned by the company. So a big portion of that is owned by the company so this is part of the company that is going to be transformed to Yurdan and every area that is transformed from agriculture to Yurdan change the value a lot and this is something that happens every year. So this company is larger exported of fruits of the country main countries that we are exporting is Europe like area, but Russia, the United States and Asia this is the largest by far exporter of fruits of Israel and we’re beginning thinking on doing this not only in Israel. So this is the main explanation about their real estate about PBC and subsidiaries Gav-Yam and Mehadrin. If we go to the right we can see some details about the super market company. This is the leader company the largest food retailer of the country 275 stores all of them in Israel 512,000 square meters of retail and 18 commercial properties and three big warehouses of 85,000 square meters. If we move to next page, we can see the Cellcom markets our cellular company this is the Israel’s leading mobile communications operator with over 2.8 million subscribers. This is running 27% of the market share of Israel communications. In October 2011 the combination with 013 Netvision has created a one stop shop offering communication since including cellular ISP and domestic and international telephony service, this main cellular company of the country. Adama in the case of Cellcom we have majority we consolidate directly in case of Adama that is the leading manufacturer and distributor of generic agrochemicals we have minority that’s the reason why we have an equity in Brazil. And this has a lot of comprehensive product offerings over 100 countries is the sale, implementing its strategy of growth through acquisition in LATAM, Europe and Asia production of formulation in Israel and Brazil. Global marketing and distribution network consisting of 40 centers worldwide, strong post merger integration capabilities. Our partnership with a very important and big Chinese company called ChemChina the one that recently is trying to buy Syngenta shares. And finally this is in the main company we made a summary because it is a very big holding so we bought just nig-big companies and assets. CLAL, CLAL is our company is the Israeli leading insurance company pension and financial group. Provides comprehensive financial solutions including insurance, pension funds, provident funds, mutual funds and investments and employs over 4,000 insurance agents. The market share of the company is in 15% to 20%. Gross premiums amounted to $2.5 billion assets under management over $43 billion and the equity for this company is 1.2 billion and here because of the regulators and some regulations are not permissions that we are achieving on the company level we are putting on our balance sheet at market value and Matias will explain later what is effecting our balance sheet of [indiscernible]. So now I will introduce Matias Gaivironsky our CFO.

Thank you, Alejandro. Good afternoon, everybody. Going to Page 16 we have here an explanation of what we started this quarter. We started to consolidate on the results on IDB remember that we started on the net worth in the previous quarter, now we have started with our financial statement as well. We will use a lag of three months to consolidate IDB because they have different legal framework to presenting formation in Israel for instance they have 60 days to present quarter information and we have here in Argentina 42 days so it’s impossible to match with the same quarter so far so we will work in the future to identify if we can change this if not we will continue to have a lag of three months but in the middle we have to analyze subsequence events after they report it to us and consider if we have to prove that the implications of those subsequent events in our financial statements as well. So there is a little more complex but it’s the only that we have to consolidate IDB. So for [indiscernible] to maintain explanation of the different segments of the company and to facilitate the reading of our financial statement we separated the books in two we will present information and we are presenting information in two business centers Argentina and Israel business center in Argentina we are including as well our international office and REIT investment and the rest of the segment will be the same shopping centers offices sale and development hotels and financials of another that is not relevant anymore but we still have some minor operations there. And then we have Israel’s business center where we have the real estate that is mainly PBC, super market that is Shufersal are the chemicals that is per month here we don’t consolidate Adama in IDB financial statement we are recognizing results on our VPP and the equity method but it is a segment in terms of disclosure. The same with telecommunication that is mainly Cellcom the insurance is planned here as well we are not consolidating CLAL today we have 65% of the company, IDB has 55% of CLAL but the control of the shares investment belong to us we have the shares in a trust so the regulator in Israel haven’t gave us the control permit so we maintain the shares in a trust and we are not consolidating the results of CLAL. And then other segments are minor segments for IDB. So in terms of results for this quarter for the nine month period going to Page 16, I will explain the relevancy of the effort that the Argentina Research Center and here the main segments are the rental segment that was very good results 29% increased in pesos term that here includes the shopping centers, the offices and hotel so we achieved ARS1.367 million. Then we have the sales and development segment, that we have this nine month period ARS944 million of result that is mainly the disposal of office building in Puerto Madero what we call [Banca Quadrum] that is ARS587 million than we sold some floors in the InterContinental Plaza building and some other office floors in Maipú building so with that we achieved a 944 compared with the previous year that we mainly sold some floors in the La Nacion building and our building in Manhattan in Madison and 34th. Then the financials another is what the reduction of from 163 previous year to ARS81 million this year the main inclination it was that last year we have the Madison building recognition in this financial segment. In Page 17, something important to mention is we are presenting nine months period we sold and in Israel we have started to consolidate on the financial statements since December or since December is the first quarter so when we talk about results of Israel we are including only three months of results not nine month like in Argentina. So we don’t have a comparison with the previous year because we started now so we are only presenting information for this fiscal year. Revenues as Alejandro mentioned achieved ARS16.5 billion. The gross margin was ARS3.6 billion and the operating income ARS778 million remember that here to compare with years so it is not comparable at all because of the different industries we have the more comparable is PBC that is real estate but then in Shufersal and Cellcom we have much more revenues because we include here all the sale in the supermarket and selling, Cellcom equipments and CLAL’s. So we will maintain these operations to facilitate the reading of the financial statements. So going to Page 18, well as I explained operating income increased in Argentina and also we are Israel so now we have ARS3.1 billion. The next financial -- we have a very good operating income leaving aside Israel we generated very good operating income so that was compensated with lower financial results more cost that the main explanation here is on one side the FX losses on our dollar denominated debt that was compensated with some of our liquidity that also brought in dollars and some hedge that we did in Argentina so the net financial cost for IRSA that is the Argentina Research Center was ARS628 million, sorry ARS535 million sorry the net financial cost was ARS628 million for Argentina. Then we have some costs when we repurchased our debt that I will explain later that is ARS160 million and other fair value of financial assets of ARS12 million. So that is the part, the most important part of Argentina of the -- different in Argentina compared with the previous year and then we have ARS1.8 billion that came from Israel. From this 1.8 that we are consolidating here all the debt of all the group IDB the main figure is reduction on the fair value of CLAL or the evaluation of CLAL in our books that we have to recognize a loss of almost ARS1.3 billion and it is mainly because we are valuing our stake in CLAL not at the equity net or not at the fair value of the company we are using the value of the shares in the market and since there is treat of the regulator that she can start to sell shares in the market that was a collapse in the price of the shares and after the cancellation of a cell processing plant the shares decreased a lot and are not reflecting the real value of the company around the book value of the company and the price of the transaction that we’ve been discussing with some -- not we because the processor was not managed by us but by the regulator. And was almost the double price of the shares today in the market, so we are reflecting today half of that value and the loss on the reaction this year from -- that was 1.8 in the previous or 13 September to 1.3 now. Going forward that will be a source of volatility in our results because we will have to maintain our valuation at the value of the shares so if the shares go up we will recognize a gain and if the shares go down we will recognize a loss. So finishing this the net loss of the company for this quarter was or for this nine month period was for Argentina ARS164 million this is the total not the part of total to our shareholders then, then what sorry that was the previous quarter against a gain of 146 in this quarter. And then we have the loss that came from Israel for ARS1.2 billion that the main part of this is the recognition of the evaluation of CLAL so if we leave aside that probably IDB will bring us positive results. Then on Page 19 this is an important event for the company we financed the debt at the IRSA Commercial Properties level so we launched the transaction combining IRSA and IRSA Commercial Property so IRSA launched 2 tender offers for our existing debt the notes that mature in 2017 and 2020 IRSA Commercial Properties also launched the tender offer for the existing ’17 notes and at the same time we issue a new debt. So with the proceeds of the new debt we issue $360 million at an interest rate of 8.75% the yield was 9% so now we have their maturity for 2023 and the use of proceeds we use it to repay the previous intercompany loan with IRSA $240 million and 121 to cancel the existing or the previous ’17 notes of IRSA CP level. At the same time the bondholders gave us a consent to eliminate most of the restricted covenants at the IRSA. So now the company have structured the structural debt is at the level of IRSA commercial properties we will see in the next page the structure. IRSA will remain with low debt we have the remaining ’17 notes $75 million for the next year and the rest is for the 2020 so it was an expansion of all the structural debt of the group we replaced intercompany loan with the market clearing our debt structure and elimination of the covenant that will remain we will have covenants at the IRSA commercial properties level i.e. where we have the structural debt of the company so makes much more sense for that. In Page 20 we have the debt amortization of scale comparing the previous schedule and the current schedule, so you can see in the upper part of the graph that we eliminated most part of the amortization of the IRSA level to -- and that were cancelled with the intercompany loan. And then at the IRSA commercial properties level almost all of our debt will remain in the long run for 2023 so we don’t have to be worried about next payments. We received offers for almost ARS1 billion so we $1 billion sorry and we decided only to took 360 we believe that the interest rate in Argentina will decline so in the future we have this to use it if we want to ask us again to the capital market and probably at the lower interest rate. Page 21 this is something that we’re presenting for the first time this is the breakdown of the debt of IDB in the difference of series so you can see here how much debt we have in each of the vehicles. This was of the December 31 remember and after that Dolphin made a capital increase or a capital injection in IDB so after this IDB will receive almost $100 million and with that the net of the company is around $680 million DIC debt is $1.174 million and Shufersal 779, Cellcom 974, PBC is $2.442 billion, and others $157 million, all the subsidiaries of IDB the super Cellcom PBC and the others are very healthy they are as Alejandro mentioned the example of PBC financing in the market at the rational level interest rate compared with the market there 2% to 3% interest rate in shekels and we remain focused in working in the debt structure of IDB that is here you have below the debt amortization of scale with amortization that we have for the next year so the level of debt is more concentrated in the short run so we are working on keep deleveraging the company and trying to extend the tenure. One subsequent event that is important to mention after the presentation of December 31 that was a treat on the bondholders of one series in Israel on one long-term series here you can see that the 2020 to 2025 debt that is $272 million. There was a bondholders’ meeting that was to accelerate the debt that is not important to the company they have to go to the court and approve in a court the company believes there isn’t any legal reason to accelerate the debt the company was paying every single amortization and was not in default in any moment so we don’t believe they don’t have covenants they don’t have any argument to go to the court but this is important to mention. So with this we finished the presentation now we open to receive your questions.

Thank you. The floor is now open for questions. [Operator Instructions] The first question comes from Jarrell Golotti with Morgan Stanley. Please go ahead.

My question is specifically on IDBD debt so looking at your amortization schedule you have 560 million due this year, 177 million due next year and I was just wondering if you can provide some color as to how you intend to amortize that debt is it refinancing that you are looking into, is it sell of CLAL just to get some more color on that near-term debt?

Okay [Jarrell] for the debt of 2016 most of we almost have all the cash we have only $69 million remaining for this quarter after the cash that was injected in the company. The company is working in different actions to sell noncore assets probably will claim most of their funds from there and also there is the potential sale of CLAL shares that could cover this. When you consider since we enter into the company we injected $500 million in the company and most of the cash was to repay the debt. Since the beginning we haven’t sold any assets so the assets remain the same with much lower debt and we haven’t refinanced anything yet, so we have been paying any single amortization, so we believe that the company could start to refinancing the market and extending debt from there will be a combination probably selling assets and refinance in the market. I think that will be the main source of funds for them for the future. There is any commitment from IRSA or from Dolphin today with the company so we already financed or paid all our commitments so now the company are looking for the best way to refinance in the market.

But is the focus then to sell assets just at the IDB level or would it include assets at the IRSA or IRSA Commercial Properties level as well?

No I am referring to IDB not to IRSA.

Okay. And I was also wondering if you can provide some more color on the legal proceedings that are going regarding the bond that's due in 2020 beyond 2020 the 272 million in debt. So, what is the timeframe for rest of resolution that you expect for this issue?

I think it's a NYSE process they are treating us without any legal framework so this is the first time in my life that I see an acceleration without default or without any covenant or without any reaching in any financial clause, so they have to go to the court this do not belong to us and then a judge should approve or should recheck that motion but the legal framework I can’t anticipate because it depends on the chances there, but this is not -- there is any clause or anything that gave them a legal framework to go to the court.

[Operator Instructions] The next question comes from Alejandra Aranda with Itau. Please go ahead. Go ahead Alejandra your line is open perhaps your line is muted.

I was wondering two questions just. The first one is on the capitalist on the CLAL issue is there any timing for the resolution of the court selling or not that stake? And then regarding IRSA if you could give us a little bit more color on the pipeline of CapEx on shopping and sales and development?

Alejandra regarding CLAL there was a framework that was established by the insurance commissioner in Israel so they are asking to sell the shares, remember that we don’t have the control of the shares we only have the economical benefit, but we don’t control and this process is not managed by us. So the insurance commissioner have an instruction to sell 5% of the shares we have 55. They gave an instruction to the company to sell 5% of the shares that was not executed yet. So probably we will see in the next days or weeks what happens but nothing happened yet with this 5%. And then the framework is to sell 5% every four months and in the meantime we’re working and trying to present an alternative proposal for this.

And Alejandra regarding CapEx there is a level we already announced on CapEx the first date [indiscernible] which is approximately at $65 million investment there will be in two years. We also announced the expansion of Alto Palermo shopping which is also $21 million that will have a year and a half may be two years of conclusion. Also it’s more the extension in [indiscernible] given out there for ARS22 million and that is basically what we already announced. Plus the construction that will start in the next year for the Catalinas project that project will be part with CapEx and part with sales.

Okay. Perfect. And for that last one you don’t have a guidance number?

We do have some guidance as a total construction but we still don’t know how much is going to be paid by each partner so far so the total project will be about $80 million total construction cost and it will take more than two fiscal years it will be around three fiscal years.

[Operator Instructions] And we have a follow up from Ms. Aranda with Itau. Please go ahead.

Hi, sorry. On that issue of the debt on IDB would you be willing if you don’t tap the market to inject the cash for those 64 [Technical Difficulty] that you said you were short to inject them to through IRSA to IDB?

Alejandra there is no formal commitment to us so now that company is working in terms of financing by itself so that is the original plan that we have.

Ladies and gentlemen this concludes our question-and-answer section. At this time I would like to turn the floor back to Alejandro Elsztain for any closing remarks.

Thank you very much. We are finalizing a good quarter in the political things about Argentina the environment of business communities is changing a lot and we are launching a lot of new projects in many of the rental properties. The operation of the quarter was very good and we made very good results. We cancelled the obligations in Israel and we began the consolidation of that too we deleted IDB and so we think it’s a very good moment of the company and we expect the next quarter the last quarter of the year to keep very good numbers. So thank you very much, good day everyone and have a very good day. So thanks a lot.

Thank you, sir. This does conclude today's presentation. You may disconnect your line at this time and have a nice day.