##### Table of Contents

 

 

**United States**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**
 
**

**FORM 20-F**

 

**
 
**

 

**OR**

 

**For the fiscal year ended: June 30, 2010**

**OR**

 

**OR**

 

**Date of event requiring this shell company report             **

**For the transition period from              to            **

**Commission file number: 000-30982**

 

**
 
**

**Alto Palermo S.A. (APSA)**

**(Exact name of Registrant as specified in its charter)**

 

**
 
**

**Republic ofArgentina**

**(Jurisdiction of incorporation or organization)**

**Moreno 877, 22nd Floor**

**Buenos Aires, Argentina**

**(Address of principal executive offices)**

**Gabriel Blasi – CFO**

**Tel + (54 11) 4323 7449**

**Moreno 877 21st Floor (C1091AAQ) Buenos Aires**

 

**
 
**

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

 

 

**Securities registered or to be registered pursuant to Section 12(g) of the Act: 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, 2010 was 782,064,214 

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

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of1934.    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 forsuch shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days.    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 Rule405 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 suchfiles).     ̈  Yes     ̈  No 

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

Large acceleratedfiler   ̈    Accelerated filer  x    Non-accelerated filer   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financialstatements included in this filing: 

 

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    x Item 18 

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

 

 

 

Table of Contents
**Table of Contents**

**ALTO PALERMO S.A. (APSA)**

 
   **Page No.** 
Disclosure Regarding Forward-Looking Information
   5  
Certain Measurements and Terms
   6  
Presentation of Financial and Certain Other Information
   6  
Market Data
   7    **Part I**  
Item 1
  Identity of Directors, Senior Management and Advisers   8  
Item 2
  Offer Statistics and Expected Timetable   8  
Item 3
  Key Information   8    (a)    Selected Financial Data   8    (b)    Capitalization and Indebtedness   12    (c)    Reasons for the Offer and Use of Proceeds   12    (d)    Risk Factors   12  
Item 4
  Information on the Company   31    (a)    History and Development of the Company   31    (b)    Business Overview   38    (c)    Organizational Structure   80    (d)    Property, Plants and Equipment   81  
Item 4A
  Unresolved staff comments   82  
Item 5
  Operating and Financial Review and Prospects   82    (a)    Operating Results   82    (b)    Liquidity and Capital Resources   107    (c)    Research and Development, Patents and Licenses, etc.   111    (d)    Trend Information   112    (e)    Off-Balance Sheet Arrangements   112    (f)    Tabular Disclosure of Contractual Obligations   113    (g)    Safe Harbor   113  
Item 6
  Directors, Senior Management and Employees   113    (a)    Directors and Senior Management   113  
 
2 

Table of Contents
 
  (b)    Compensation   118    (c)    Board Practices   119    (d)    Employees   120    (e)    Share Ownership   120  
Item 7
  Major Shareholders and Related Party Transactions   121    (a)    Major Shareholders   121    (b)    Related Party Transactions   123    (c)    Interests of Experts and Counsel   127  
Item 8
  Financial Information   127    (a)    Consolidated Statements and Other Financial Information   127    (b)    Significant Changes   130  
Item 9
  The Offer and Listing   131    (a)    The Offer and Listing Details   131    (b)    Plan of Distribution   133    (c)    Markets   133    (d)    Selling Shareholders   135    (e)    Dilution   135    (f)    Expenses of the Issue   135  
Item 10  
  Additional Information   136    (a)    Share Capital   136    (b)    Memorandum and Articles of Association   136    (c)    Material Contracts   140    (d)    Exchange Controls   141    (e)    Taxation   143    (f)    Dividends and Paying Agents   151    (g)    Statement by Experts   151    (h)    Documents on Display   151    (i)    Subsidiary Information   151  
Item 11
  Quantitative and Qualitative Disclosures About Market Risk   151  
Item 12
  Description of Securities Other than Equity Securities   154  
 
3 

Table of Contents
 
  (a)    Debt Securities   154    (b)    Warrants and Rights   154    (c)    Other Securities   154    (d)    American Depositary Shrares   154    **Part II**  
Item 13  
  Defaults, Dividend Arrearages and Delinquencies   155  
Item 14
  Material Modifications to the Rights of Security Holders and Use of Proceeds   155  
Item 15
  Controls and Procedures   155    (a)    Disclosure Control and Procedures   155    (b)    Management ́s Annual Report on Internal Control Over Financial Reporting   155    (c)    Attestation Report of the Registered Public Accounting Firm   156    (d)    Changes in Internal Control Over Financial Reporting   156  
Item 16
  Reserved   156    Item 16.A. Audit Committee Financial Expert   156    Item 16.B. Code of Ethics   157    Item 16.C. Principal Accountant Fees and Services   157    Item 16.D. Exemptions from the Listing Standards for Audit Committees   158    Item 16.E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers   158    Item 16.F. Change in Registrant ́s Certifying Account   158    Item 16.G. Corporate Governance   158    **Part III**  
Item 17
  Financial Statements   160  
Item 18
  Financial Statements   160  
Item 19
  Exhibits   160    Signatures   162  
 
4 

Table of Contents
**DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION**

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

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

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

 
 • 
changes in general economic, business, political or other conditions in Argentina or changes in general economic or business conditions in LatinAmerica and in the United States of America; 

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

 
 • 
inflation; 

 
 • 
interest rates; 

 
 • 
government regulation; 

 
 • 
adverse legal or regulatory disputes or proceedings; 

 
 • 
fluctuations and declines in the value of Argentine public debt; 

 
 • 
competition in the shopping center and related industries; 

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

 
 • 
fluctuations and declines in the exchange rate of the Peso; and 

 
 • 
the risk factors discussed under “Risk Factors.” 

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 Form because of new information, future events or other factors. In light of the risks and uncertainties described above, theforward-looking events and circumstances discussed in this Form might not occur and are not guarantees of future performance. 

 
5 

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**CERTAIN MEASUREMENTS AND TERMS**

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

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

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

**PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION**

In this annual report where we refer to “Peso,” “Pesos,” or “Ps.” we mean Argentine pesos, the lawfulcurrency in Argentina; when we refer to “U.S. dollars,” 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 Argentine CentralBank. 

This annual report contains our Audited Consolidated Financial Statements as of June 30, 2010 and 2009 and for theyears ended June 30, 2010, 2009 and 2008 (our consolidated financial statements). Our consolidated financial statements have been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina, a member firm ofPricewaterhouseCoopers, an independent registered public accounting firm whose report is included herein. 

We prepare ourAudited Consolidated Financial Statements in Pesos and in conformity with generally accepted accounting principles in Argentina, as set forth by the *Federación Argentina de Consejos Profesionales de Ciencias Económicas*(“FACPCE”) and as implemented, adapted, amended, revised and/or supplemented by the *Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires* (“CPCECABA”) (collectively, “ArgentineGAAP”) and the regulations of the *Comisión Nacional de Valores* which differ in certain significant respects from generally accepted accounting principles in the United States of America (“U.S. GAAP”). Such differencesinvolve methods of measuring the amounts shown in our consolidated financial statements, as well as additional disclosures required by U.S. GAAP and Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). See Note 17 to ourAudited Consolidated Financial Statements contained elsewhere in this annual report for a description of the principal differences between Argentine GAAP and U.S. GAAP, as they relate to us, and reconciliation to U.S. GAAP of our net income andshareholders’ equity. 

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

Resolution CD93/2005, issued by the CPCECABA provided for the accounting treatment of differences between the tax basis and book basis of non-monetary items for deferred income tax calculation purposes when

 
6 

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companies prepare price-level restated financial statements. This resolution mandated companies to treat these differences as temporary but allowed a one-time accommodation to continue treatingthose differences as permanent. As a result, we elected to continue treating differences as permanent. In addition, the new standards provided for the recognition of deferred income taxes on a non-discounted basis. 

On March 20, 2009, the FACPCE issued Technical Resolution No. 26 (“RT No.26”) “Adoption of InternationalFinancial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”)” which requires companies under the supervision of the *Comisión Nacional de Valores* to prepare theirfinancial statements in accordance with IFRS as published by the IASB for fiscal periods beginning on or after January 1, 2011, including comparative information for earlier periods. There are *Consejos Profesionales* or standard settersin each provincial jurisdiction in Argentina, which have the power to adopt, reject or modify a technical resolution issued by the FACPCE. The jurisdiction where we are located is the Federal District. On April 25, 2009, the CPCECABA approvedRT No. 26. The *Comisión Nacional de Valores* issued RT No. 562/09, as amended by Resolution 576/10, formally adopting application of RT No. 26 to its regulated entities for fiscal years beginning on January 1, 2012.We will be required to prepare our financial statements in accordance with IFRS as issued by the IASB for our fiscal year ended June 30, 2013. Our transition date to IFRS will be July 1, 2011. On April 29, 2010, our Board of Directorsapproved a plan for implementing IFRS. We are in the early stages of completing a diagnosis of the principal differences between Argentine GAAP and IFRS. We have not quantified the effect any potential change in accounting principles would have onour financial condition or results of operations and therefore can give no assurance that such changes will not have an adverse effect on our financial condition or results of operations. 

Certain amounts which appear in this annual report (including percentage amounts) may not sum due to rounding. Solely for the convenienceof the reader, we have translated certain Peso amounts into U.S. dollars at the exchange rate quoted by the Central Bank for June 30, 2010, which was Ps.3.931 = US$1.00. We make no representation that the Peso or U.S. dollar amounts actuallyrepresent or could have been or could be converted into U.S. dollars at the rates indicated, at any particular rate or at all. 

References to fiscal years 2006, 2007, 2008, 2009 and 2010 are to the fiscal years ended June 30, 2006, 2007, 2008, 2009 and 2010,respectively. 

**MARKET DATA**

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

 
7 

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**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 fromour consolidated financial statements as of the dates and for each of the periods indicated below. This information should also be read in conjunction with and is qualified in its entirety by reference to our Audited Consolidated FinancialStatements and the discussion in Operating and Financial Review and Prospects included elsewhere in this annual report. The selected consolidated statement of operations data for the years ended June 30, 2010, 2009 and 2008 and the selectedconsolidated balance sheet data as of June 30, 2010 and 2009 have been derived from our consolidated financial statements included in this annual report which have been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina,a member firm of PricewaterhouseCoopers, an independent registered public accounting firm. 

The selected consolidatedstatement of income data for the years ended June 30, 2007 and 2006 and the selected consolidated balance sheet data as of June 30, 2008 and 2007 have been derived from our Audited Consolidated Financial Statements as of June 30, 2008and 2007 and for the years ended June 30, 2008, 2007 and 2006 which are not included herein. 

The selected consolidatedbalance sheet data as of June 30, 2006 has been derived from our Audited Consolidated Financial Statements as of June 30, 2007 and 2006 and for the years ended June 30, 2007, 2006 and 2005, which are not included herein. 

References to fiscal years 2006, 2007, 2008, 2009 and 2010 are to the fiscal years ended June 30, 2006, 2007, 2008, 2009 and 2010,respectively: 

 
   **As of and for the year ended June 30(1)**    **2010**  **2010**  **2009**  **2008**  **2007**  **2006**    **(US$)(2)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)** 
**STATEMENT OF OPERATIONS DATA**
       
***Argentine GAAP***
       
Revenues:
       
Leases and services
   131,863    518,355    396,733    345,395    270,132    215,003  
Consumer financing
   67,501    265,346    236,827    291,030    212,965    122,969  
Others
   298    1,172    9,005    3,729    134    23,384  
**Total revenues**
  ** ****199,662****  ** ** ****784,873****  ** ** ****642,565****  ** ** ****640,154****  ** ** ****483,231****  ** ** ****361,356****  **
Costs
   (65,844)   (258,832)   (238,517)   (205,987)   (151,766)   (129,162) 
Gross profit (loss):
       
Leases and services
   91,528    359,796    287,811    246,575    179,413    138,369  
Consumer financing
   42,076    165,401    113,221    187,442    153,255    88,938  
Others
   215    844    3,016    150    (1,203)   4,887  
**Total gross profit**
  ** ****133,819****  ** ** ****526,041****  ** ** ****404,048****  ** ** ****434,167****  ** ** ****331,465****  ** ** ****232,194****  **
Selling expenses
   (41,399)   (162,739)   (206,958)   (219,833)   (139,452)   (79,292) 
Administrative expenses
   (20,716)   (81,434)   (60,851)   (51,050)   (41,274)   (30,290) 
Net income (loss) from retained interest in securitized receivables
   9,532    37,470    (46,012)   (1,261)   3,255    2,625  
Gain from recognition of inventories at net realizable value
   296    1,162    —      185    545    3,498  
Operating income (loss):
       
Leases and services
   67,800    266,522    215,780    183,250    127,052    96,658  
Consumer financing
   13,247    52,075    (128,452)   (22,053)   30,678    24,411  
Others
   484    1,903    2,899    1,011    (3,191)   7,666  
**Total operating income**
  ** ****81,531****  ** ** ****320,500****  ** ** ****90,227****  ** ** ****162,208****  ** ** ****154,539****  ** ** ****128,735****  **
 
8 

Table of Contents   **As of and for the year ended June 30(1)**    **2010**  **2010**  **2009**  **2008**  **2007**  **2006**    **(US$)(2)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)** 
Loss on equity investees
   —      —      —      (14)   (679)   (678) 
Amortization of goodwill, net
   (418)   (1,645)   (1,531)   (2,202)   (4,366)   (4,740) 
Financial results, net(3)
   (28,580)   (112,348)   (108,879)   (13,388)   (19,466)   (15,634) 
Other income (expenses), net
   (840)   (3,304)   3,275    8,775    (3,348)   (9,762) 
Income (loss) before taxes and minority interest
   51,692    203,203    (16,908)   155,379    126,680    97,921  
Income tax expense
   (20,154)   (79,225)   (16,782)   (76,514)   (56,252)   (48,458) 
Minority interest
   (1,240)   (4,876)   11,630    1,105    (6,371)   (4,784) 
**Total net income (loss)**
  ** ****30,298****  ** ** ****119,102****  ** ** ****(22,060****) ** ** ****79,970****  ** ** ****64,057****  ** ** ****44,679****  **
Basic net income (loss) per common share
   0.04    0.15    (0.03)   0.10    0.08    0.06  
Basic net income (loss) per ADS
   1.55    6.09    (1.13)   4.09    3.28    2.29  
Diluted net income (loss) per common share
   0.01    0.05    (0.03)   0.04    0.03    0.03  
Diluted net income per ADS
   0.53    2.10    0.23    1.56    1.32    1.12  
Number of shares outstanding
   782,064    782,064    782,064    782,064    782,064    781,963  
***U.S. GAAP***
       
Revenues(4)
   255,523    1,004,462    820,329    774,395    594,721    450,012  
Costs(4)
   (126,796)   (498,435)   (427,630)   (339,084)   (256,705)   (212,881) 
Gross profit
   128,727    506,027    392,699    435,311    338,016    237,131  
Selling expenses
   (39,600)   (155,668)   (189,120)   (203,294)   (133,963)   (85,494) 
Administrative expenses
   (20,425)   (80,291)   (58,776)   (48,730)   (40,555)   (30,043) 
Net income (loss) from retained interest in securitization receivables
   14,784    58,115    (42,652)   (12,460)   (1,635)   (13,877) 
Gain from recognition of inventories at net realizable value
   —      —      (2,569)   —      —      —    
Gain on bargain purchase
   14,874    58,470    —      —      —      —    
Operating income
   98,360    386,653    99,582    170,827    161,863    107,717  
Loss on equity investees
   (214)   (842)   (18,135)   (14)   (1,750)   (1,314) 
Amortization of goodwill
   682    2,681    1,037    —      —      —    
Financials results, net
   (24,480)   (96,229)   (161,314)   2,662    (25,739)   (25,302) 
Other (expenses) income, net
   (736)   (2,892)   2,223    (2,922)   (6,274)   (3,210) 
Income (loss) before taxes and non-controlling interest
   73,613    289,371    (76,607)   170,553    128,100    77,891  
Income tax expense
   (15,894)   (62,481)   (42,674)   (58,959)   (46,859)   (28,235) 
**Total net income (loss)**
  ** ****57,718****  ** ** ****226,890****  ** ** ****(119,281****) ** ** ****111,594****  ** ** ****81,241****  ** ** ****49,656****  **
Non-controlling interest
   (1,396)   (5,486)   (1,158)   (2,121)   (5,499)   (2,648) 
**Total net income (loss) attributable to Alto Palermo S.A.**
  ** ****56,323****  ** ** ****221,404****  ** ** ****(120,439****) ** ** ****109,473****  ** ** ****75,742****  ** ** ****47,008****  **
**BALANCE SHEET DATA**
       
***Argentine GAAP***
       
*Current Assets:*
       
Cash and banks and other investments, net
   48,266    189,732    207,693    361,276    517,239    70,473  
Accounts receivable, net
   82,082    322,663    232,376    175,847    154,209    104,820  
Other receivables and prepaid expenses, net
   17,850    70,170    73,572    53,459    49,105    30,422  
Inventory, net
   3,637    14,297    715    652    7,292    7,989  
**Total current assets**
  ** ****151,835****  ** ** ****596,862****  ** ** ****514,356****  ** ** ****591,234****  ** ** ****727,845****  ** ** ****213,704****  **
*Non-Current Assets:*
       
Accounts receivable, net
   6,505    25,572    5,253    10,128    41,968    32,540  
Other receivables and prepaid expenses, net
   29,824    117,240    152,894    57,706    32,131    13,254  
Inventory, net
   1,945    7,644    11,031    3,387    —      —    
Fixed assets, net
   389,105    1,529,571    1,581,723    1,312,544    1,168,027    912,795  
Investments
   —      —      —      —      —      130  
Other investments, net
   42,656    167,682    176,860    267,924    125,504    167,843  
Intangible assets, net
   13,610    53,502    15,514    1,166    1,714    3,222  
Goodwill, net
   (3,440)   (13,523)   (6,116)   (11,995)   (3,479)   11,558  
**Total non-current assets**
  ** ****480,206****  ** ** ****1,887,688****  ** ** ****1,937,159****  ** ** ****1,640,860****  ** ** ****1,365,865****  ** ** ****1,141,342****  **
**Total Assets**
  ** ****632,040****  ** ** ****2,484,550****  ** ** ****2,451,515****  ** ** ****2,232,094****  ** ** ****2,093,710****  ** ** ****1,355,046****  **
 
9 

Table of Contents   **As of and for the year ended June 30(1)**    **2010**   **2010**   **2009**  **2008**  **2007**  **2006**    **(US$)(2)**   **(Ps.)(1)**   **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)** 
*Current Liabilities:*
         
Trade accounts payable
   57,323     225,335     213,715    227,341    184,459    105,719  
Short-term debt
   51,972     204,303     235,824    105,993    78,898    93,431  
Salaries and social security payable
   6,536     25,692     23,857    24,018    19,599    10,885  
Taxes payable
   19,548     76,842     125,546    60,979    44,715    23,762  
Customer advances
   23,210     91,239     76,721    68,306    58,548    48,053  
Dividends payable
   —       —       —      —      926    —    
Other liabilities
   9,052     35,585     3,718    20,536    15,463    11,200  
**Total debts**
  ** ****167,641****  **  ** ****658,996****  **  ** ****679,381****  ** ** ****507,173****  ** ** ****402,608****  ** ** ****293,050****  **
Provisions
   443     1,743     1,004    656    733    507  
**Total current liabilities**
  ** ****168,084****  **  ** ****660,739****  **  ** ****680,385****  ** ** ****507,829****  ** ** ****403,341****  ** ** ****293,557****  **
*Non-Current Liabilities:*
         
Trade accounts payable
   5,945     23,368     19,681    3,241    21    1,010  
Long-term debt
   172,512     678,145     692,134    662,302    678,752    146,780  
Taxes payable
   12,383     48,676     56,952    30,234    27,661    13,707  
Customer advances
   22,682     89,164     93,528    84,092    65,725    41,535  
Other liabilities
   3,877     15,242     14,926    10,427    10,434    10,959  
**Total debts**
  ** ****217,399****  **  ** ****854,595****  **  ** ****877,221****  ** ** ****790,296****  ** ** ****782,593****  ** ** ****213,991****  **
Provisions
   2,013     7,913     5,492    7,813    12,441    10,667  
**Total non-current liabilities**
  ** ****219,412****  **  ** ****862,508****  **  ** ****882,713****  ** ** ****798,109****  ** ** ****795,034****  ** ** ****224,658****  **
**Total Liabilities**
  ** ****387,496****  **  ** ****1,523,247****  **  ** ****1,563,098****  ** ** ****1,305,938****  ** ** ****1,198,375****  ** ** ****518,215****  **
Minority interest
   33,666     132,343     122,559    78,000    71,428    29,990  
Retained earnings (accumulated deficit)
   30,298     119,102     (22,060)   79,970    64,057    106,611  
Shareholders’ Equity
   210,878     828,960     765,858    848,156    823,907    806,841  
**BALANCE SHEET DATA**
         
***U.S. GAAP***
         
*Current Assets:*
         
Cash and banks and other investments, net
   46,232     181,737     189,600    360,413    518,655    70,093  
Accounts receivable, net
   74,404     292,483     186,565    129,466    136,111    94,312  
Other receivables and prepaid expenses, net
   29,325     115,277     134,507    100,357    72,873    45,562  
Inventory, net
   3,341     13,135     715    652    4,782    4,492  
**Total current assets**
  ** ****153,302****  **  ** ****602,632****  **  ** ****511,387****  ** ** ****590,888****  ** ** ****732,421****  ** ** ****214,459****  **
*Non-Current Assets:*
         
Accounts receivable, net
   6,177     24,281     5,253    10,128    41,968    32,540  
Other receivables and prepaid expenses, net
   27,144     106,703     116,080    42,441    21,199    7,259  
Inventory, net
   1,253     4,925     8,312    3,237    —      —    
Fixed assets, net
   362,593     1,425,354     1,472,481    1,253,937    1,120,692    861,157  
Investments
   —       —       —      —      (4,434)   (814) 
Other investments, net
   42,656     167,682     176,860    262,636    128,605    167,843  
Intangible assets, net
   25,301     99,460     217    874    99    (762) 
Goodwill, net
   8,716     34,261     39,948    39,776    25,111    40,147  
**Total non-current assets**
  ** ****473,840****  **  ** ****1,862,666****  **  ** ****1,819,151****  ** ** ****1,613,029****  ** ** ****1,333,240****  ** ** ****1,107,370****  **
**Total Assets**
  ** ****627,143****  **  ** ****2,465,298****  **  ** ****2,330,538****  ** ** ****2,203,917****  ** ** ****2,065,661****  ** ** ****1,321,829****  **
*Current Liabilities:*
         
Trade accounts payable
   54,978     216,119     220,264    236,617    189,373    105,571  
Short-term debt
   51,972     204,303     235,824    105,626    78,811    93,356  
Salaries and social security payable
   6,480     25,471     23,453    23,418    19,251    10,746  
Taxes payable
   19,307     75,897     122,578    60,098    44,608    23,728  
Customer advances
   23,210     91,239     76,721    68,306    58,548    48,053  
Related parties
   —       —       —      (3,607)   1,497    387  
Dividends payable
   —       —       —      —      926    —    
Other liabilities
   9,297     36,547     5,521    20,536    15,463    11,278  
**Total debts**
  ** ****165,244****  **  ** ****649,576****  **  ** ****684,361****  ** ** ****510,994****  ** ** ****408,477****  ** ** ****293,119****  **
Provisions
   441     1,732     1,004    656    734    507  
**Total current liabilities**
  ** ****165,685****  **  ** ****651,308****  **  ** ****685,365****  ** ** ****511,650****  ** ** ****409,211****  ** ** ****293,626****  **
 
10 

Table of Contents   **As of and for the year ended June 30(1)**    **2010**  **2010**  **2009**  **2008**  **2007**  **2006**    **(US$)(2)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)**  **(Ps.)(1)** 
*Non-Current Liabilities:*
       
Trade accounts payable
   6,292    24,732    19,681    3,241    21    1,010  
Long-term debt
   172,138    676,674    690,122    659,965    676,273    143,946  
Taxes payable
   37,712    148,244    164,241    138,471    157,312    151,026  
Customer advances
   22,682    89,164    93,528    84,092    65,725    41,535  
Related parties
   —      —      (7,339)   —      —      —    
Other liabilities
   4,728    18,587    19,345    12,848    10,434    10,959  
**Total debts**
  ** ****243,552****  ** ** ****957,401****  ** ** ****979,578****  ** ** ****898,617****  ** ** ****909,765****  ** ** ****348,476****  **
Provisions
   2,013    7,913    5,492    7,812    12,441    10,667  
**Total non-current liabilities**
  ** ****245,564****  ** ** ****965,314****  ** ** ****985,070****  ** ** ****906,429****  ** ** ****922,206****  ** ** ****359,143****  **
**Total Liabilities**
  ** ****411,250****  ** ** ****1,616,622****  ** ** ****1,670,435****  ** ** ****1,418,079****  ** ** ****1,331,417****  ** ** ****652,769****  **
**Shareholders’ Equity attributable to Alto Palermo S.A.**
  ** ****177,001****  ** ** ****695,789****  ** ** ****528,898****  ** ** ****711,937****  ** ** ****668,074****  ** ** ****643,847****  **
Non-controlling interest
   38,893    152,887    131,205    73,901    65,794    25,213  
**Shareholders’ Equity**
  ** ****215,893****  ** ** ****848,676****  ** ** ****660,103****  ** ** ****785,838****  ** ** ****733,868****  ** ** ****669,060****  **
**CASH FLOW DATA**
       
***Argentine GAAP:***
       
Net cash provided by operating activities
   32,959    129,561    71,458    168,107    179,712    170,666  
Net cash provided by (used in) investing activities
   2,320    9,118    (298,662)   86,884    (622,291)   (124,024) 
Net cash (used in) provided by financing activities
   (34,149)   (134,241)   20,300    (46,492)   433,563    (39,952) 
***U.S. GAAP: (6)***
       
Net cash provided by operating activities
   32,090    126,146    69,876    175,085    178,538    170,019  
Net cash provided by (used in) investing activities
   4,349    17,094    (309,431)   79,507    (622,633)   (124,800) 
Net cash (used in) provided by financing activities
   (34,550)   (135,815)   20,300    (46,492)   433,563    (39,952) 
Effect of exchange rate changes on cash and cash equivalents
   169    664    8,700    755    730    1,144  
**OTHER FINANCIAL DATA**
       
***Argentine GAAP:***
       
Capital expenditures(5)
   13,693    53,829    247,384    270,171    96,334    100,184  
Depreciation and amortization (7)
   31,025    121,959    94,725    79,185    74,608    68,574  
Ratio of current assets to current liabilities
   0.90    0.90    0.76    1.16    1.80    0.73  
Ratio of non-current assets to total assets
   0.76    0.76    0.79    0.74    0.65    0.84  
Dividends per share
   0.02    0.07    0.08    0.07    0.06    0.04  
Dividends per ADS
   0.73    2.86    3.20    2.80    2.40    1.49  
Working capital
   (16,250)   (63,877)   (166,029)   83,405    324,504    (79,853) 
 
(1)In thousands of Pesos, except ratios. Includes adjustments for inflation through February 28, 2003. Totals may not sum due to rounding. (2)Solely for the convenience of the reader we have translated Peso amounts into U.S. Dollars at the exchange rate quoted by Banco de la Nación Argentina as ofJune 30, 2010, which was Ps. 3.931 per US$ 1.0 as of June 30, 2010. 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 ratesindicated, at any particular rate or at all. See “Exchange Rates”. Totals may not sum due to rounding. (3)Includes interest income from past-due receivables, effect on the present value accounting, mortgage loans interest in Torres de Abasto, results from financialinvestments, other interest, foreign currency exchange results, other holding results, financial expenses, interest on taxes payable, results from derivative instruments and gain on repurchase of Non-Convertible Notes. (4)As part of the lease agreements, tenants are required to pay their proportionate share of common area maintenance expenses. We do not charge any mark up on reimbursablecosts. These expenses are incurred and paid by us and then passed through to tenants as reimbursable costs. Under Argentine GAAP, pass-through expenses, such as these reimbursable costs, are accounted for on a net basis and, as such, excluded fromrevenues and expenses in the financial statements. Under US GAAP, the Company accounts for pass-through revenue and expenses in accordance with ASC No. 605-45-15 “Revenue Recognition” (“ASC No. 605-45-15”)(formerly EITF Issue No. 01-14, “Income Statement Characterization of Reimbursements Received for “Out-of-Pocket” Expenses Incurred”) and include these costs incurred as a component of revenue and as a component of operatingexpenses in the statement of operations. As these expenses are fully reimbursed, without mark-up, by the tenants, there is no impact on operating income, net income, EPS, cash flows or the balance sheet. Prior year amounts have been modified toreflect this disclosure difference. (5)Capital expenditures include the purchase of fixed assets (including facilities and equipment) and undeveloped parcels of land. Capital expenditures also include escrowdeposits held in favor of third parties related to the acquisition of certain fixed assets. (6)This table is intended to present cash flows from operating, investing and financing activities under Argentine GAAP but following the classification guidelines of ASCNo. 230 “Statement of Cash Flows” (“ASC No. 230”) under US GAAP. (7)Corresponds to amortization and depreciation included in operating income. 
 
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*Exchange Rates*

In April 1991, Argentine law established a fixed exchange rate according to which the Central Bank was statutorily obliged to sell U.S.dollars to any individual at a fixed exchange rate of Ps.1.00 per US$1.00. On January 7, 2002, the Argentine congress enacted the Public Emergency Law, abandoning over ten years of fixed Peso-U.S. dollar parity at Ps.1.00 per US$1.00. Afterdevaluing the Peso and setting the official exchange rate at Ps.1.40 per US$1.00, on February 11, 2002, the government allowed the Peso to float. The shortage of U.S. dollars and their heightened demand caused the Peso to further devaluesignificantly in the first half of 2002. As of December 15, 2010 the exchange rate was Ps. 3.9740=US$1.00 as quoted by *Banco de la Nación Argentina* at the U.S. dollar selling rate. During the calendar year 2009 and the firstsemester of year 2010, the Central Bank has indirectly affected the exchange rate market, through active participation with the purpose of isolate the external shocks and to maintain a stable parity. 

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

 
   **Exchange Rate**    **High(1)**   **Low(2)**   **Average(3)**   **Period Closing** 
Fiscal year ended June 30, 2003
   3.7400     2.7120     3.2565     2.8000  
Fiscal year ended June 30, 2004
   2.9510     2.7100     2.8649     2.9580  
Fiscal year ended June 30, 2005
   3.0400     2.8460     2.9230     2.8670  
Fiscal year ended June 30, 2006
   3.0880     2.8590     3.0006     3.0860  
Fiscal year ended June 30, 2007
   3.1080     3.0480     3.0862     3.0930  
Fiscal year ended June 30, 2008
   3.1840     3.0160     3.1396     3.0250  
Fiscal year ended June 30, 2009
   3.7780     2.9940     3.3862     3.7770  
Fiscal year ended June 30, 2010
   3.9130     3.6360     3.8255     3.9110  
July 2010
   3.9200     3.9110     3.9145     3.9200  
August 2010
   3.9300     3.9120     3.9178     3.9300  
September 2010
   3.9530     3.9240     3.9323     3.9400  
October 2010
   3.9410     3.9280     3.9365     3.9370  
November 2010
   3.9680     3.9370     3.9486     3.9680  
December 2010 (As of December 15, 2010)
   3.9630     3.9530     3.9570     3.9540  
 

*Source: Banco de la Nación Argentina*
(1)The high exchange rate stated was the highest closing exchange rate of the month during the fiscal year or any shorter period, as indicated. (2)The low exchange rate stated was the lowest closing exchange rate of the month during the fiscal year or any shorter period, as indicated. (3)Average month-end closing exchange rates. 
Fluctuations in the Peso-dollar exchange rate may affect the equivalent in dollars of the price in Pesos of our shares on the Buenos Aires Stock Exchange. Increases in Argentine inflation or devaluationof the Argentine currency could have a material adverse effect on our operating results. 

***B.Capitalization and Indebtedness***

This section is not applicable. 

***C. Reasons for the Offer and Use of Proceeds***

This section is not applicable. 

***D. Risk Factors***

You should consider thefollowing risks described below, in addition to the other information contained in this annual report. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair ourbusiness. In general, you take more risk when you invest in the securities of issuers in emerging markets such as Argentina than when you invest in the securities of issuers in the United States. You should understand that an investment in ourcommon shares and ADSs involves a high degree of risk, including the possibility of loss of your entire investment. 

 
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*Risks Related to Argentina*

***Argentina’s recent growth may not be sustainable.***

The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, highinflation and currency devaluation. 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. Although theeconomy has recovered significantly since then, uncertainty remains as to whether the recent growth is sustainable, since it has depended, to a significant extent, on favorable exchange rates, high commodity prices and excess capacity. The recovery,however, has resulted in inflation and has intensified the country’s need for capital investment, with many sectors, in particular the energy sector, operating near full capacity. Additionally, the global financial crisis and economic downturnhas had a significant adverse impact on the country’s performance and could remain a factor in the foreseeable future. The Argentine economic growth rates for fiscal years 2008 and 2009 have slowed due to, among other reasons, the globalfinancial crisis. 

The Argentine GDP has maintained its upward trend in 2009, though at a slower pace than in previous years,with a 0.9% variation according to the *Instituto Nacional de Estadística y Censos* (National Institute of Statistics and Censuses) (“INDEC”). 

As of June 30, 2010, the Monthly Economic Activity Estimator, as reported by INDEC and known as EMAE, increased 10.9% compared to the same month in the previous fiscal year. If this trend continuesthe GDP is expected to grow 9% in 2010. 

Moreover, the country’s relative stability since 2002 has been affected recentlyby increased political tension and government intervention in the economy. 

Our business depends to a significant extent onmacroeconomic and political conditions in Argentina. We cannot assure you that Argentina’s recent growth will continue. Deterioration of the country’s economy would likely have a significant adverse effect on our business, financialcondition and results of operations. 

***Continuing inflation may have an adverse effect on the economy.***

The devaluation of the Peso in January 2002 created pressures on the domestic price system that generated highinflation throughout 2002, before inflation substantially stabilized in 2003. However, inflationary pressures have since reemerged, with consumer prices increasing by 12.3% in fiscal year 2005. In fiscal years 2008, 2009 and 2010, inflation was8.5%, 7.2% and 11.0%, respectively, in part due to actions implemented by the Argentine government to control inflation, which included limitations on exports and price arrangements agreed upon with private sector companies. However, in spite ofthis decline in inflation, uncertainty surrounding future inflation may impact the country’s growth. 

In the past,inflation has undermined the Argentine economy and the government’s ability to create conditions conducive to growth. A return to a high inflation environment would adversely affect the availability of long-term credit and the real estatemarket and may also affect Argentina’s foreign competitiveness by diluting the effects of the Peso devaluation and negatively impacting the level of economic activity and employment. 

If inflation remains high or continues to rise, Argentina’s economy may be negatively impacted and our business could be adverselyaffected. 

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

In January 2007, the INDEC modified its methodology used to calculate the consumer price index, which is calculated as the monthlyaverage of a weighted basket of consumer goods and services that reflects the pattern of consumption of Argentine households. Several economists, as well as the international and Argentine press, have suggested that this change in methodology wasrelated to the Argentine government’s 

 
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policy aimed at curbing the increase of inflation and reducing payments on inflation-linked bonds outstanding. At the time that INDEC adopted this change in methodology, the Argentine governmentalso replaced several key officers at INDEC, prompting complaints of governmental interference from the technical staff at INDEC. In addition, the International Monetary Fund, or IMF, has requested that the government clarify its inflation rates. InJune 2008, INDEC published a new consumer price index that eliminated nearly half of the items included in previous surveys and introduced adjustable weightings for fruit, vegetables and clothing, which have seasonal cost variations. INDEC hasindicated that it based its evaluation of spending habits on a national household consumption survey from 2004 to 2005 in addition to other sources; however, the new index has been criticized by economists and investors after its debut report foundprices rising well below expectations. These events have negatively affected the credibility of the consumer price index published by INDEC, as well as other indexes published by INDEC which require the consumer price index for their owncalculation, including the poverty index, the unemployment index and real gross domestic product. Argentina’s inflation rate may be significantly higher than the rates indicated by official reports. 

Recently, some investigations have led to judicial proceedings to determine whether there was alteration of confidential statisticalinformation related to the collection of data used to calculate the rates published by the INDEC. If these investigations determine that the methodology was manipulated, or if it is determined that it is necessary to correct the consumer price indexand the other INDEC indexes derived from the consumer price index, there could be a significant decrease in confidence in the Argentine economy, which could, in turn, have a materially adverse effect on our ability to access international creditmarkets at market rates to finance our operations. 

Moreover, on November 2010 the Argentine government requested the IMF toprovide technical assistance in the revision of the consumer price index. 

***Argentina’s ability to obtain financingfrom international markets is limited, which may impair its ability to implement reforms and foster economic growth***

During the first half of 2005, Argentina restructured part of its sovereign debt that had been in default since the end of 2001. Thegovernment announced that, as a result of the restructuring, the country’s total outstanding indebtedness amounted approximately to US$62 billion, excluding approximately US$20 billion of defaulted bonds held by holdouts (i.e. creditors thatdid not participate in the restructuring). 

In 2006, Argentina paid US$9.8 billion of indebtedness owed to the IMF usingCentral Bank reserves. In addition, the government announced its decision to (i) pay US$6.7 billion of indebtedness owed to the Paris Club (a group composed of 19 countries, including the United States of America and other members of the G8industrially developed group of nations) using Central Bank reserves and (ii) make an offer to the existing holdouts of the 2005 restructuring. As of the date hereof, the Ministry of Economy has not disbursed the funds necessary to pay suchindebtedness. Additionally, in June 2010, Argentina completed the renegotiation of approximately 66% of the defaulted bonds that were not swapped in 2005. 

With respect to the Paris Club indebtedness, on September 2, 2008, pursuant to Decree No. 1,394/2008, Argentina officially announced its decision to pay its debt owed to its creditor nations whoare members of the Paris Club. Pursuant to a communication issued on September 18, 2008, the Paris Club announced that it accepted Argentina’s decision. As of the date hereof, the amount of the debt to be paid and the terms of payment havenot been defined. Recent discussions have been held with individual members of Paris Club. Reaching an agreement with the Paris Club is critical since, without private international funds, Argentina will not be able to repay its obligations andfunding from multilateral financial institutions may become limited or unavailable. This may adversely affect the economic growth of Argentina and its public finances, which in turn could also adversely affect our operations, financial condition orresults. 

With respect to holdouts of the 2005 restructuring, some bondholders in the United States, Italy and Germany havefiled legal actions against Argentina, including claims in the International Center for the Settlement of Investment Disputes (“ICSID”). Other holdouts may initiate new suits in the future. In an effort to reach a resolution with theholdouts of the 2005 restructuring, the government has received a proposal from Citibank S.A., Barclays Bank and Deutsche Bank, proposing (i) an exchange offer to these holdouts and (ii) the

 
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restructuring of certain of the country’s liabilities which were to become due between 2009 and 2012 (the “Secured Loans”). In a press conference held on October 16, 2008, theJefe de Gabinete (Head of the Cabinet of Ministers) announced the execution of a letter of understanding between the government and the above-mentioned banks in order to implement the restructuring of the Secured Loans. On February 2, 2009,pursuant to Joint Resolutions No.’s 8/2009 and 5/2009 of the Secretariat of Economy and the Secretariat of Finance of the Ministry of Finance, an exchange offer relating to the domestic tranche of the Secured Loans was launched. Subsequently,the government announced that approximately 97% creditors had accepted the terms of the exchange offer, representing Ps.15.08 billion of the Ps.15.60 outstanding aggregate amount of domestic Secured Loans due in 2009, 2010 and 2011. The new bondsissued pursuant to the exchange offer mature on January 2014. The government has filed a registration statement on Form S-B with the SEC on December 16, 2009, setting forth the terms and conditions of the expected exchange offer with theholdouts of the 2005 restructuring. 

Through Decree No. 2010/2009 (the “Decree 2010”) the executive branch ofthe federal government created the Fondo de Bicentenario para el Desendeudamiento y la Estabilidad (the “Bicentenary Fund”) in order to (i) guarantee debt obligations due in 2010; (ii) increase the development of the localeconomy; and (iii) obtain financing with lower rates than the current ones, not only for the public sector but also for the private. The Decree 2010 set forth that the Bicentenary Fund would be funded with US$6.569 billion of the CentralBank’s international reserves in exchange for a non transferable ten-year Argentine treasury bond. Pursuant to this Decree, the president of the Central Bank, Mr. Martin Redrado, requested in-house and outside legal opinions to confirm thelegality of the transfer of international reserves to the Bicentenary Fund. Since both in-house and outside legal opinions concluded that the Central Bank was not allowed to transfer the above-mentioned funds, the president of the Central Bank didnot proceed with the funding of the Bicentenary Fund and the President of Argentina requested his resignation. When the president of the Central Bank did not resign, the President of Argentina dismissed him by Decreto de Necesidad y Urgencia (anemergency decree). Since the president of the Central Bank considered that this decree did not fulfill the requirements set forth by the Carta Orgánica del Banco Central (the Central Bank’s bylaws), he filed a preliminary injunction to(i) request the declaration of the emergency decree as unconstitutional; and (ii) request the reinstatement of his position in the Central Bank. The judge granted the preliminary injunction and ordered his reinstatement and set forth thatthe Central Bank’s international reserves could not be transferred to the Bicentenary Fund without the intervention and approval of the federal legislative branch. The executive branch subsequently appealed the decision. The Cámara en loContenciso Administrativo Federal (The Administrative Court of Appeals) confirmed the judge’s resolution with respect to the Bicenterary Fund. The Administrative Court of Appeals stated that the status of the president of the Central Bank wouldbe determined by the Comisión Bicameral Permanente (Permanent Bi-Chambered Commission) of the federal congress which was to issue a non binding opinion to the federal executive branch recommending whether to dismiss or keep Mr. Redradoas president of the Central Bank. However, the president of the Central Bank resigned prior to the Permanent Bi-Chambered Commission issuing the non binding opinion requesting Mr. Redrado’s dismissal. Consequently, the federal executivebranch did not accept his resignation. Once the Permanent Bi-Chambered Commission issued its opinion, the federal executive branch ratified his dismissal and appointed Mercedes Marco del Pont as the new president of the Central Bank. The finalimplementation of the Bicentenary Fund is to be discussed and decided by the federal congress. Therefore, we cannot assure the outcome of the process or the impact that its implementation or non-implementation could have on the national economy andlocal financial markets. 

Additionally, foreign shareholders of certain Argentine companies have filed claims in excess ofUS$17 billion in the ICSID, alleging that certain Argentine government measures are inconsistent with the fair and equitable treatment standards set forth in various bilateral treaties to which Argentina is a party. To date, the ICSID has rendereddecisions adverse to Argentina in several cases. Additionally, it should be noted that on October 7, 2008, an ICSID tribunal, in a case in which it had already awarded compensation to the claimants, issued a decision ordering Argentina to paythe compensation previously awarded to the claimants within 60 days. In its decision, the ICSID tribunal stated that, based on the interpretation of the Bilateral Treaty on Protection and Reciprocal Promotion of Investments (the “IBT”),executed between the United States and Argentina, (i) to the extent the compensation orders are not revoked, the compensation payments ordered to be made by the ICSID should be made immediately and claimants do not need to file subsequentactions or execution proceedings seeking payment of the awarded compensation and (ii) Argentina’s position of waiting for the claimants to file execution proceedings to seek collection of already awarded amounts is in flagrant breach ofthe international law obligations undertaken by Argentina under the IBT. 

 
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Argentina’s past default, its failure to completely restructure its remaining sovereigndebt, and its failure to fully negotiate with the holdout creditors has prevented and may continue to prevent Argentina from re-entering the international capital markets. Additionally, litigation initiated by holdout creditors as well as ICSIDclaims has resulted in material judgments and may result in new material judgements against the government and could result in attachments of or injunctions relating to assets of Argentina that the government intended for other uses. As a result,the government may not have the financial resources necessary to implement reforms and foster growth, which could have a material adverse effect on the country’s economy, and consequently, our financial condition. 

***Significant devaluation of the Peso against the U.S. Dollar may adversely affect the Argentine economy as well as ourfinancial performance.***

Despite the positive effects of the real depreciation of the Peso in 2002 on thecompetitiveness of certain sectors of the Argentine economy, it has also had a far-reaching negative impact on the Argentine economy and on businesses and individuals’ financial condition. The devaluation of the Peso has had a negative impacton 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 marketdemand, such as utilities and the financial industry, and adversely affected the government’s ability to honor its foreign debt obligations. 

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

***Significantappreciation of the Peso against the U.S. Dollar may adversely affect the Argentine economy.***

A substantialincrease 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 foreigncurrency-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 GDPgrowth 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 havean adverse effect on the Argentine economy and our business. 

***Government measures to preempt or respond to social unrestmay adversely affect the Argentine economy and our business.***

The Argentine government has historically exercisedsignificant influence over the country’s economy. Additionally, the country’s legal and regulatory frameworks have at times suffered radical changes, due to political influence and significant political uncertainties. 

Moreover, during its crisis in 2001 and 2002, Argentina experienced significant social and political turmoil, including civil unrest,riots, looting, nationwide protests, strikes and street demonstrations. Despite Argentina’s economic recovery and relative stabilization, social and political tension and high levels of poverty and unemployment continue. In 2008, Argentinafaced nationwide strikes and protests from farmers due to increased export taxes on agricultural products, which disrupted economic activity and heightened political tension. Future government policies to preempt, or in response to, social unrestmay include expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims,and changes in laws and policies affecting foreign trade and investment. Such policies could destabilize the country and adversely and materially affect the economy, and thereby our business. 

 
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***The nationalization of Argentina’s pension funds has materially and adverselyaffected local capital markets and may continue to do so.***

Under Law No. 26,425, which was published in theOfficial Gazette in December 2008, the Argentine government transferred approximately Ps.94.4 billion (US$29.3 billion) in assets held by the country’s private Administradoras de Fondos de Jubilaciones y Pensiones (pension fund managementcompanies, or “AFJPs”) to the government-run social security agency (“ANSES”). 

Law No. 26,425 wassupplemented, among others, by Decree No. 2103/2008 which describes the composition of the fund (Fondo de Garantia de Sustentabilidad) to be managed by ANSES and the directions for the management thereof; in turn, Decree No. 2104/08regulates the matters concerning the transfer to the Argentine government of the contributions and all the documentation of the members of the capitalization regime retroactive as of December 1, 2008. 

AFJPs were the largest participants in the country’s local capital markets, leading the group of institutional investors. With thenationalization of their assets, the dynamics of the local capital markets changed due to the decrease in size, becoming substantially concentrated. In addition, the government became a significant shareholder in many of the country’spublicly-held companies, a circumstance that may bring about consequences to Argentina’s capital markets and companies that are difficult to measure as of the date of this annual report. 

As a result, access to liquidity may be further limited, funding costs may rise and the government may have greater influence over theoperations of such companies of which it became shareholder. The nationalization of the AFJPs has adversely affected investor confidence in Argentina. 

In addition, we cannot assure you that the government will not take similar measures in the future that interfere with private sector businesses and adversely affect the economy in general, and/or ourbusiness in particular. 

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

In 2001 and 2002,Argentina imposed exchange controls and transfer restrictions substantially limiting the ability of companies to retain foreign currency or make payments abroad. Many of these restrictions were substantially eased after the crisis. However, in June2005, the government issued decree No. 616/2005, that established additional controls on capital inflow, including the requirement that, subject to limited exemptions, 30% of all funds remitted to Argentina remain deposited in a domesticfinancial institution for one year without earning any interest. This measure increases the cost of obtaining foreign funds and limits access to such financing. 

The Argentine government may, in the future, impose additional controls on the foreign exchange market and on capital flows from and into Argentina, for example in response to capital flight ordepreciation of the Peso. These restrictions may have a negative effect on the economy and on our business if imposed in an economic environment where access to local capital is substantially constrained. 

In December, 2008 Law No. 26,476 introduced certain changes in the Argentine labor and tax regime. As part of these changes, a broadtax moratorium was declared and natural and legal persons falling under its scope were given the option to disclose their holdings in national and foreign currency and other assets, both in Argentina and abroad, for purposes of their entry to thecountry, subject to the payment of a tax as established in the law. Those falling under the scope of this law were not obliged to disclose to the Argentine Tax Authority (“AFIP”) the date of purchase of their holdings or the source of thefunds with which they had made such purchase, and were released from civil or criminal liability relating to those holdings. The period to disclose the holdings was effective from March 1, 2009 until August 31, 2009. Although theInternational Financial Action Group (“GAFI”) has not rendered an opinion in this regard, these actions could encourage the entry of money of doubtful origin, breaching the international regulations and commitments undertaken by Argentina,which would in turn generate even more distrust in the local financial system. 

 
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Finally, under Resolution No. 82/2009, the Ministry of Economy and Public Financesuspended the mandatory deposit set forth by Decree 616/2005 during the term of the mentioned tax moratorium and until September 2009, to the extent that the incoming funds were used for any of the purposes described in Section 27 (b),(c) and (d) of Law No. 26,476. Therefore, no deposit would be required when bringing capital into Argentina, pursuant to the terms of the tax moratorium, for the following purposes: (i) assets based in the country and holdings oflocal and foreign currency in Argentina; (ii) foreign currency held abroad and/or foreign deposits, and local currency and/or foreign currency held in Argentina, allocated to the subscription of government securities issued by the Argentinegovernment; (iii) foreign currency held abroad and/or foreign deposits, and local currency and/or foreign currency held in Argentina by individuals, allocated to the purchase in Argentina of newly built properties or properties that haveobtained the relevant work completion certificate; and (iv) foreign currency held abroad and/or foreign deposits, and local currency and/or foreign currency held in Argentina, allocated to the building of new properties, completion of works inprogress, funding of infrastructure works, real estate, agricultural, industrial, tourism and services investments in Argentina. 

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

Beginning in February 2002, the payment of dividends, irrespective of amount, outside Argentina required prior authorization from the Central Bank. On January 7, 2003, the Central Bank issuedcommunication “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 arisefrom approved and audited financial statements. However similar restrictions may be enacted by the Argentine government or the Central Bank again and, if this were to occur, it could have an adverse effect on the value of our common shares and theADSs. Moreover, in such event, restrictions on the transfers of funds abroad may impede your ability to receive dividend payments as a holder of ADSs. 

***The stability of the Argentine banking system is uncertain.***

During2001 and the first half of 2002, a significant amount of deposits were withdrawn from Argentine financial institutions. This massive withdrawal of deposits was largely due to the loss of confidence of depositors in the Argentine government’sability to repay its debts, including its debts within the financial system, and to maintain Peso-Dollar parity in the context of its solvency crisis. 

To prevent a run on the U.S. Dollar reserves of local banks, the government restricted the amount of money that account holders could withdraw from banks and introduced exchange controls restrictingcapital outflows. 

While the condition of the financial system has improved, adverse economic developments, even if notrelated to or attributable to the financial system, could result in deposits flowing out of the banks and into the foreign exchange market, as depositors seek to shield their financial assets from a new crisis. Any run on deposits could createliquidity or even solvency problems for financial institutions, resulting in a contraction of available credit. 

In the eventof a future shock, such as the failure of one or more banks or a crisis in depositor confidence, the Argentine government could impose further exchange controls or transfer restrictions and take other measures that could lead to renewed politicaland social tensions and undermine the Argentine government’s public finances, which could adversely affect Argentina’s economy and prospects for economic growth. 

***The Argentine economy could be adversely affected by economic developments in other global markets, in particular if the global financial and economic recovery is interrupted.***

Financial and securities markets in Argentina are influenced, to varying degrees, by economic and market conditions in other globalmarkets. 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, including Argentina and the availability of funds forissuers in such countries. Lower capital inflows and declining securities prices negatively affect the real economy of a country through higher interest rates or 

 
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currency volatility. The Argentine economy was adversely impacted by the political and economic events that occurred in several emerging economies in the 1990s, including those in Mexico in 1994,the collapse of several Asian economies between 1997 and 1998, the economic crisis in Russia in 1998 and the Brazilian devaluation in January 1999. 

In addition, Argentina is also affected by the economic conditions of major trade partners, such as Brazil and/or countries that have influence over world economic cycles, such as the United States. Ifinterest rates rise significantly in developed economies, including the United States, Argentina and other emerging market economies could find it more difficult and expensive to borrow capital and refinance existing debt, which would negativelyaffect their economic growth. In addition, if these developing countries, which are also Argentina’s trade partners, fall into a recession the Argentine economy would be affected by a decrease in exports. All of these factors would have anegative impact on us, our business, operations, financial condition and prospects. 

In particular, the adverse effect of the“sub-prime” crisis in the United States in mid-2007, principally caused by the collapse of high risk mortgage market, resulted in a financial crisis that affected the U.S. financial system and quickly expanded to the internationalfinancial system. As a consequence of this global crisis, several U.S. and European financial institutions were declared insolvent and the main global stock markets, including the Argentine stock exchange, crashed. In order to curtail the effects ofthe global economic crisis, the governments of developed countries implemented bailout measures to help the affected financial institutions and provide liquidity to the markets. 

Notwithstanding these measures, no assurance can be given with regard to the effects of the insolvency of such financial institutions onthe international financial system. Moreover, the financial crisis is taking place within an environment of a world economic recession, which has led to volatile oil and commodity prices and a significant reduction in the availability ofinternational credit. Although these recessionary conditions are easing, the world’s largest economies could once again shrink or weakness in global financial institutions could lead to an even worse tightening of international credit markets,further increasing the slowdown of the world’s principal economies. The current global economic crisis may have significant long-term effects in Latin America. In particular, Argentina may be adversely affected as a result of the lack ofinternational credit, a reduction in demand for Argentine exports, a significant reduction of direct foreign investment and higher inflation rates throughout the world. The occurrence of any or all such events, as well as any event affectingArgentina’s main regional partners (including the Mercosur member countries) may have a significant adverse effect on the Argentine economy and, consequently, on our operations, businesses and results. 

***If the decline in international prices for Argentina’s main commodity exports continues, such decline could have an adverseeffect on Argentina’s economic growth and on our business.***

Argentina’s economy has historically relied onthe export of commodities, the prices of which have been volatile in the past and largely outside its control. Argentina’s recovery from the financial crisis in 2001 and 2002 has depended to a significant extent on the rise in commodity prices,particularly prices of its main commodity exports, such as soybeans. High commodity prices have contributed significantly to government revenues from taxes on exports. If commodity prices decline, the growth of the Argentine economy could beaffected. Such occurrence would have a negative impact on the levels of government revenues, the government’s ability to service its debt and on our business. 

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

As a result of several years of recession, and the forced conversion into Pesos and subsequent freeze of gas and electricity tariffs, there has been a lack of investment in gas and electricity supply andtransport 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 price constraints. 

The federal government has been taking a number of measures to alleviate the short-term impact of energy shortages on residential andindustrial users. If these measures prove to be insufficient, or if the investment that is required to increase natural gas production and transportation capacity and energy generation 

 
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and transportation capacity over the medium-and long-term fails to materialize on a timely basis, economic activity in Argentina could be curtailed. 

*Risks Related to Our Business*

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

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

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

 
 • 
the intrinsic attractiveness of the shopping center; 

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

 
 • 
increasing competition from internet sales; 

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

 
 • 
changes in consumer demand and availability of consumer credit, both of which are highly sensitive to general macroeconomic conditions; and

 
 • 
the fluctuations in occupancy levels in the shopping centers. 

An increase in operating costs, caused by inflation or other factors, could have a material adverse effect on us if our tenants areunable to pay higher rent due to the increase in expenses. Moreover, the shopping center business is closely related to consumer spending and to the economy in which customers are located. All of our shopping centers are in Argentina, and, as aconsequence, their business could be seriously affected by potential recession in Argentina. For example, during the economic crisis in Argentina, spending decreased significantly, unemployment, political instability and inflation significantlyreduced consumer spending in Argentina, lowering tenants’ sales and forcing some tenants to leave our shopping centers. If the international financial crisis has a substantial impact on economic activity in Argentina, it will likely have amaterial adverse effect on the revenues from the shopping center activity. 

***Our performance is subject to risksassociated with our properties and with the real estate industry.***

Our economic performance and the value of our realestate assets are subject to the risk that if our properties do not generate sufficient revenues to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to service our debt and cover other expensesmay be adversely affected. Events or conditions beyond our control that may adversely affect our operations or the value of our properties include: 

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

 
 • 
volatility and decline in discretionary spending; 

 
 • 
competition from other shopping centers; 

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

 
 • 
decreases in consumption levels; 

 
 • 
changes in interest rates and availability of financing; 

 
 • 
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; 

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

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

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

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

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

 
 • 
changes in law or governmental regulations (such as those governing usage, zoning and real property taxes) or government action such as expropriationor confiscation. 

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

***An adverse economic environment forreal estate companies and the credit crisis may adversely impact our results of operations and business prospects significantly.***

The success of our business and profitability of our operations are dependent on continued investment in the real estate markets and access to capital and debt financing. A long term crisis of confidencein real estate investments and lack of available credit for acquisitions would be likely to constrain our business growth. As part of our business goals, we intend to increase our properties portfolio with strategic acquisitions of core propertiesat advantageous prices, and core plus and value added properties where we believe we can bring necessary expertise to enhance property values. In order to pursue acquisitions, we may need access to equity capital and/or debt financing. Recentdisruptions 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. Anyconsideration 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 andfinancial performance, which in turn is subject to prevailing economic conditions. If a recurrence of the disruptions in financial markets presents itself in the future, there can be no assurances that government responses to the disruptions in thefinancial markets will restore investor confidence, stabilize the markets or increase liquidity and the availability of credit.

***The loss of significant 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 generaldownturn of business, or if we simply failed to retain their patronage, our business could be adversely affected. Our shopping centers are typically anchored by significant tenants, such as well known department stores who generate shopping trafficat the mall. A decision by such significant tenants to cease operations at our shopping centers could have a material adverse effect on the revenues and profitability of the affected segment and, by extension, on our financial condition and resultsof operations. The closing of one or more significant tenants 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 theproperty. In addition, key tenants at one or more properties might terminate their leases as a result of mergers, acquisitions, consolidations, dispositions or bankruptcies in the retail industry. The bankruptcy and/or closure of one or

 
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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 theproperties involved. 

***Our future acquisitions may be unprofitable.***

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

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

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

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

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

If we acquire a business, we will be required to integrate the operations, personnel and accounting and information systems of the acquired business. In addition, acquisitions of or investments incompanies 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. 

***We face risks associated with property acquisitions.***

We have in the past acquired, and intend to acquire in the future, properties, including large properties (such as the acquisition ofAbasto de Buenos Aires or Alto Palermo Shopping) 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 futurehave, and will, enhance our future financial performance, the success of such transactions is subject to a number of uncertainties, including the risk that: 

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

 
 • 
acquired properties may fail to perform as expected; 

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

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

 
 • 
we may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into our organization and to manage newproperties in a way that allows us to realize cost savings and synergies. 

***Some of the land we havepurchased 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

 
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permits and authorizations. We cannot assure you that we will continue to be successful in our attempts to rezone land and to obtain all necessary permits and authorizations, or that rezoningefforts 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 todevelop 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 capital.***

Our growth strategy is focused on the redevelopment of properties we already own and the acquisition and development of additional properties. As a result, we are likely to depend to an important degreeon 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 favorableterms. 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 andpotential future earnings. Depending on the outcome of these factors, we could experience delay or difficulty in implementing our growth strategy on satisfactory terms, or be unable to implement this strategy. 

***Serious illnesses and pandemics, such as the 2009 outbreak of Influenza A H1N1 virus, also known as the “swine flu”, havein 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 Influenza A H1N1 during the winter of 2009, consumers and tourists dramatically changed their spending and travel habits to avoid contact with crowds. Further, severalgovernments 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 crowdedplaces, 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. Additionally, the outbreak ofInfluenza A H1N1 contributed significantly to a decrease in the number of tourists visiting Argentina in 2009. 

We cannotassure you that a new outbreak or health hazard will not occur in the future, or that such an outbreak or hazard would not significantly negatively affect consumer and/or tourist activity, and that such scenario would not adversely affect ourbusinesses. 

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

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

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

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

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

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

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

***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 proceedingsgenerally take between six months and two years from the date of filing of the suit to the time of actual eviction. 

We haveusually 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 negotiationswith 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 conditionand results of operation. 

***Our investment in property development, redevelopment and construction activities may be lessprofitable than we anticipate.***

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

 
 • 
abandonment of development opportunities and renovation proposals; 

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

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

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

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

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

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

 
 • 
impossibility to obtain, delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits andauthorizations, or building moratoria and anti-growth legislation; 

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

 
 • 
construction may not be completed on schedule because of a number of factors, including weather, labor disruptions, construction delays or delays inreceipt 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; and 

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

 
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In addition, we may face contractors’ claims for the enforcement of labor laws inArgentina (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 theevent 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 andseveral liabilities for both companies. 

While our policies with respect to expansion, renovation and development activitiesare 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 ofavailability 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 delaysor expenses could adversely affect the investment returns from these redevelopment projects and harm our operating results. 

***We are subject to great competitive pressure.***

All of our properties are located in Argentina. There are other shopping centers and numerous smaller retail stores and residential properties within the market area of each of our properties. The numberof 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 tocharge. To date, there have been relatively few companies competing with us for shopping center properties. However, if additional companies become active in the Argentine shopping center market in the future, such competition could have a materialadverse effect on our results of operations. 

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

For the fiscal yearended June 30, 2010, 83.6 % of our sales from leases and services were derived from properties in the City of Buenos Aires and the greater Buenos Aires metropolitan area. Although we own properties and may acquire or develop additionalproperties outside of the City of Buenos Aires and the greater Buenos Aires metropolitan area, we expect to continue to depend to a very large extent on economic conditions affecting those areas and therefore, an economic downturn in those areascould have a material adverse effect on our financial condition. 

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

The substantial majority of our income is derived from rental income fromreal 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 inmore detail below): 

 
 • 
Delay lease commencements; 

 
 • 
Decline to extend or renew leases upon expiration; 

 
 • 
Fail to make rental payments when due; or 

 
 • 
Close stores or declare bankruptcy. 

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

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

We currently carry insuarence policies that cover potential risks suchas 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 certaintypes 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, wecould 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 obligationsrelated 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, delayrevenue and result in large expenses to repair or rebuild the property. Moreover, we do not purchase life or disability insurance for any of our key employees. If any of our key employees were to die or become incapacitated, we could experiencelosses 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. 

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

We had, and expect to continue to have, substantial liquidity and capital resource requirements to finance our business. As ofJune 30, 2010, our consolidated financial debt amounted to Ps. 882.4 million (including accrued and unpaid interests and deferred financing costs). 

Although we are generating sufficient funds from operating cash flows to satisfy our debt service requirements and our capacity to obtain new financing is adequate given the current availability of creditlines with the banks, we cannot assure you that we will maintain such cash flow 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 andthe 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 ofmoney 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 economicdownturns. 

We may not be able to generate sufficient cash flows from operations to satisfy our debt service requirements orto 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 debtor 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 asmacroeconomic conditions (including the recent international credit crisis) 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 couldadversely affect our ability to generate cash flows and repay our obligations. 

 
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***We may be negatively affected by a financial crisis in the U.S., the European Unionand global capital markets.***

We must maintain liquidity to fund our working capital, service our outstandingindebtedness 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. 

The capital and credit markets have been experiencing extreme volatility and disruption during the last credit crisis. If our currentresources 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 creditratings, 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 atall. 

***The recurrence of a credit crisis could have a negative impact on our major customers, which in turn couldmaterially adversely affect our results of operations and liquidity.***

The recent credit crisis had a significantnegative 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 anoverall deterioration of their businesses which could lead to a significant reduction 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 materialadverse effect on our results of operations and liquidity. 

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

During the last years, retail sales by means of the Internethave grown significantly in Argentina, even though the market share of Internet sales related to retail sales is still not significant. The Internet enables manufacturers and retailers to sell directly to consumers, diminishing the importance oftraditional 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 likelyto 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 ourfinancial condition, results of operations and business prospects. 

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

Under the terms andconditions 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 theproperties, except for claims arising from our negligence or intentional misconduct or that of our agents. 

Tenants aregenerally 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 maintaintheir insurance policies or have the ability to pay the deductibles. 

Should a loss occur that is uninsured or in an amountexceeding 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 revenuefrom, one or more of the properties, which could have a material adverse effect on our operating results and financial condition. 

 
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***Our business is subject to extensive regulation and additional regulations may beimposed 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 acquireland, 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 requiredto 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 complywith 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 governmentalpermits 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. Suchregulations 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 eventof 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 theArgentine 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 Argentinereal estate market and the rental market and materially and adversely affect our operations and profitability. 

***Ourability to pay dividends is limited by law.***

In accordance with Argentine corporate law, we may pay dividends in Pesosout of retained earnings, if any, to the extent set forth in our audited financial statements prepared in accordance with Argentine GAAP. 

***Dividend restrictions in our subsidiaries’ debt agreements may adversely affect us.***

We have subsidiaries and hence an important source of funds for us are cash dividends and other permitted payments from our subsidiaries. The debt agreements of our subsidiaries may contain covenantsrestricting their ability to pay dividends or make other distributions. If our subsidiaries are unable to make payments to our Company, or are able to pay only limited amounts, we may be unable to pay dividends or make payments on our indebtedness.

***We are controlled by one principal shareholder.***

As of November 30, 2010, IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”), our major shareholder,owned in the aggregate 94.9% of our capital stock. This principal shareholder controls us and has significant influence on the election of our directors and the outcome of any action requiring shareholder approval. The number of shares beneficiallyowned by IRSA will increase by approximately 2,174,829,978 assuming full conversion of US$31.7 million of our outstanding Convertible Notes owned by IRSA. 

***We are dependent on our chairman, Eduardo S. Elsztain and certain other senior managers.***

Our success, to a significant extent, on the continued employment of Eduardo S. Elsztain, Chairman of our board of directors, who has significant expertise and knowledge of our business and industry. Theloss or interruption in of his services for any reason could have a material adverse effect on our business. Our future 

 
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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 our Company. 

***Due to the currency mismatches between our assets andliabilities, we have significant currency exposure.***

As of June 30, 2010, the majority of our liabilities, suchas our Series I Notes, Series IV Notes and our convertible notes are denominated in U.S. dollars while our revenues and most of our assets as of June 30, 2010 are denominated in Pesos. This currency gap exposes us to a risk of exchange ratevolatility, which would negatively affect our financial results if the dollar were to appreciate against the Peso. Any further depreciation of the Peso against the U.S. dollar will correspondingly increase the amount of our debt in Pesos, withfurther adverse effects on our results of operation and financial condition and may increase the collection risk of our leases and other receivables from our tenants and mortgage debtors, most of whom have Peso-denominated revenues. 

*Risks Related to the American Shares and the Shares*

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

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

****The ADS are freely transferable under U.S. securities laws, including shares sold to our affiliates. IRSA, which as ofNovember 30**,** 2010 own approximately 94.9% of our common shares (or approximately 1,195,253,997 common shares which may be exchanged for an aggregate of 29,881,350 ADS), is free to dispose of any or all of its common shares or ADS at anytime in its discretion. Sales of a large number of our common shares and/or ADS would likely have an adverse effect on the market price of our common shares and the ADS. ****

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

There may be less publicly available information about the issuers of securitieslisted on the Buenos Aires Stock Exchange (the “*Bolsa de Comercio de Buenos Aires”)* than is regularly published by or domestic issuers of listed securities in the United States and certain other countries. In addition, all listedArgentine companies must prepare their financial statements in accordance with Argentine GAAP and the regulations of the *Comisión Nacional de Valores*, which differ in certain significant respects from U.S. GAAP. For this and otherreasons, the presentation of Argentine financial statements and reported earnings may differ from that of companies in other countries in this and other respects. 

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

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

We are a publicly heldcorporation (*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 serviceof process within the United States upon us or such persons or to enforce against us or them in United States courts judgments obtained in such courts predicated upon the civil liability provisions of the United States federal securities laws. Thereis doubt whether the Argentine courts 

 
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will enforce, to the same extent and in as timely a manner as a US or foreign court, an action predicated solely upon the civil liability provisions of the United States federal securities lawsor other foreign regulations brought against such persons or against us. 

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

Based on the current and projected composition of our income and valuation of our assets we do not believe we were a passive foreign investment company (“PFIC”), for United States federal incometax purposes for the tax year ending June 30, 2010, 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 possiblethat 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 maysubstantially 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 arepotentially subject to differing interpretation.If we become a PFIC, U.S. Holders (as defined in “Taxation-United States Taxation”) of our shares or ADSs will be subject to certain United States federal income tax rules that have negativeconsequences 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 shares or ADSs at a gain, as well as reporting requirements. Please see “Taxation-UnitedStates Taxation” for a more detailed discussion of the consequences if we are deemed a PFIC. You should consult your own tax advisors regarding the application of the PFIC rules to your particular circumstances. 

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

Our corporate affairs are governed by our by-laws and by Argentine corporate law, which differ from the legal principles that would applyif 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 theirinterests 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 underArgentine law, the Argentine securities markets are not as highly regulated or supervised as the US securities markets or markets in some other jurisdictions. In addition, rules and policies against self—dealing and regarding the preservationof 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 Statesand may be more difficult to enforce.***

Under Argentine law, the protections afforded to minority shareholders aredifferent 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 developedunder 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. Asa result, it may be more difficult for our minority shareholders to enforce their rights against us or our directors or controlling shareholder than it would be for shareholders of a US company. 

***Holders of common shares may determine 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 inour audited financial statements prepared in accordance with Argentine GAAP. The approval, amount and payment of dividends are subject to the approval by our shareholders at our annual ordinary shareholders meeting. The approval of dividendsrequires 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 willdecide that dividends will be paid. 

 
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**ITEM 4.****Information on the Company**
***A. History and Development of the Company***

*General Information*

Our legal name is “Alto Palermo S.A. (APSA)” and our commercial name is Alto Palermo Centros Comerciales. We were authorized and incorporated by Executive Decree issued by the ArgentineExecutive Branch on August 29, 1889, registered under No. 126 of Page 268 of Book IV (special), and registered in the Public Registry of Commerce of the City of Buenos Aires (as adapted to conform to law 19,550) on February 27, 1976under 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 shares are listed and traded on the *Bolsa de Comercio de Buenos Aires* and our ADSon the NASDAQ. Our headquarters and principal executive offices are located at Moreno 877, 22nd Floor, (C1091AAQ), Buenos Aires, Argentina. Our telephone is +54-(11)-4344-4600. Our Depositary Agent for the ADS in the United States is Bank of New York whose address is 1258 Church Street Station, NewYork, New York 10286, and whose telephone is +1-(610)-312-5315. Our website is www.apsacc.com.ar. Information contained in or accesible through our website is not a part of this annual report. All references in this annual report to this orother internet sites are inactive textual references to these URLs, or “uniform resources locator” and are for your information reference only. We assume no responsibility for the information contained on this site. 

*History*

We were organized in 1889 under the name “Sociedad Anónima Mercado de Abasto Proveedor (SAMAP)”, and, until 1984, we ledthe main fresh produce market in the City of Buenos Aires. Our most important asset during that period was the historic Mercado de Abasto building which served as the location of the market from 1889 to 1984, when we largely ceased operations. InJuly 1994, IRSA acquired a controlling interest in our company and, subsequently, we resumed real estate operations. Since then, we have continued to grow through a series of acquisitions and the development of our businesses. In April 1997, wemerged with fourteen of our wholly owned subsidiaries, including Alto Palermo S.A., and subsequently changed our name from “Sociedad Anónima Mercado de Abasto Proveedor (SAMAP)” to “Alto Palermo S.A. (APSA)”. As ofNovember 30, 2010, the largest beneficial owner of our capital stock is IRSA with an aggregate shareholding of 94.9% of our common shares. Our remaining shares are owned by the public. 

*Significant acquisitions, dispositions and development of businesses*

The following is a description of the most significant events in terms of acquisitions, divestitures, real estate barter transactions andother transactions which occurred during the years ended June 30, 2010, 2009 and 2008: 

***Fiscal Year EndedJune 30, 2010***

*Acquisitions*

*Acquisition of Tarshop’s shares.* On October 30, 2009, our consumer financing subsidiary Tarshop S.A. (“Tarshop”) capitalized certain capital contributions made by us, increasingour interest in Tarshop to 98.5878%. 

During January 2010, we acquired the remaining minority interest in Tarshop for US$0.54 million, reaching 100% of its capital stock. 

 
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*Acquisition of Arcos del Gourmet S.A.’s shares*. In August 2007, we paid US$0.6 million for an option to purchase an 80% interest in Arcos del Gourmet S.A. (“Arcos del Gourmet”), a company holder of a concession to exploit the old warehouses and adjacent spaces located at Palermo neighborhood in Buenos Aires,and owned by the *Organismo Nacional Administrador de Bienes del Estado (“ONABE”)*, a public entity created to administer certain public assets, mainly former national railway assets. 

On November 27, 2009, we exercised the option and completed the acquisition of 80% of Arcos del Gourmet’s common stock for anaggregate purchase price of US$ 6.5 million, of which US$ 3.1 million was paid as of June 30, 2010. The remaining balance will be paid as follows: (i) US$ 2.0 million in two equal annual installments due on the second andthird anniversary of the acquisition date and (ii) US$ 1.4 million at the time of executing the share subscription agreements. 

As customary for this type of transactions, we consulted with the National Antitrust Commission about the need to report the acquisition, which is still pending a response. 

On February 17, 2010, the shareholders of Arcos del Gourmet approved a capital increase of US$ 2.7 million, equivalent to Ps.10.4 million, of which we contributed Ps. 8.3 million. 

On June 25, 2010, we and certain minority shareholdersentered into an option agreement to acquire a 17.54% minority interest in Arcos del Gourmet for an aggregate price of US$1.4 million, of which US$ 0.4 million was paid as of the date of these financial statements. The option expires onApril 30, 2011 and is subject to certain conditions including but not limited to ONABE ́s launch of a bidding process for the sale of the concessioned assets over which we have a preemptive right. 

*Dispositions*

*Sale of equity interest in Tarshop*. On December 29, 2009, we signed an agreement with Banco Hipotecario to sell 80% of Tarshop’s shares subject to the approval of the Central Bank. OnAugust 30, 2010, the Central Bank approved our sale of 80% of Tarshop’s capital stock to Banco Hipotecario. As a result, on September 13, 2010, we transferred 107,037,152 common shares of Tarshop to Banco Hipotecario. The totalpurchase price paid was US$ 26.8 million. Immediately after the sale, our interest in Tarshop was 20% of its capital stock. 

*Sale of properties in Rosario.*On April 14, 2010, we sold the lot designated as 2A of a building located in the District ofRosario, City of Rosario, Province of Santa Fe for US$ 4.2 million, of which US$ 1.0 million was collected as of June 30, 2010. The remaining balance will be settled upon executing the title deed. The sale is subject to certainconditions precedent, which have not been fulfilled as of the date of this annual report. 

On May 3, 2010, we sold thelot designated as 2E of a building located in the District of Rosario, City of Rosario, Province of Santa Fe for US$ 1.4 million, of which US$ 0.3 million was collected as of June 30, 2010. The outstanding balance will be settled asfollows: (a) an amount of US$ 0.3 million due on September 30, 2010, upon transfer of title and (b) an amount of US$ 0.7 million, plus interest at 14% payable on May 30, 2011. The lot was mortgaged in favor of theCompany as collateral. 

*Developments of businesses*

*Panamerican Mall S.A. (“PAMSA”).* PAMSA, a company organized in November 2006 between us and Centro Comercial PanamericanoS.A. (“CCP”), with 80% and 20% interests, respectively, has developed a commercial venture comprising a shopping center, a hypermarket and an office building in the Saavedra neighborhood in Buenos Aires City. During May 2009, “DotBaires” and the hypermarket were opened while multiplex cinema was opened in early July. The office building is at the completion stage. Construction is being carried out by Constructora San José Argentina S.A., a company related to CCP.

Dot Baires Shopping has 4 levels and 3 basements, a covered area of 173,000 square meters, out of which 49,731 are squaremeters of gross leasable area and includes 153 stores, a hypermarket, a 10 theater multiplex cinema and parking space for 2,200 automobiles. It is the shopping mall with the largest amount of square meters in Buenos Aires City. 

 
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Total contributions to this project made by the shareholders amounted to Ps.556.9 million and Ps. 532.4 million as of June 30, 2010 and 2009, respectively. 

***Fiscal Year EndedJune 30, 2009***

*Developments of businesses*

*Barter transaction with Cyrsa S.A*. On July 21, 2008, we entered into a barter agreement with Cyrsa S.A. (“Cyrsa”)pursuant to which we, subject to certain closing conditions, would surrender to Cyrsa our right to construct a building over a preexisting structure (owned by a third party) in exchange for de minimis cash and 25% of the housing units in the futurebuilding. The total fair value of the transaction is US$ 5.9 million. 

On December 17, 2010, we and CYRSA signed an instrumentwhich rescinds the abovementioned agreement. 

*Barter transaction agreement with Condominios del Alto S.A*. OnNovember 27, 2008, we entered into a barter agreement with Condominios del Alto S.A. pursuant to which we bartered a plot of land located in Rosario, Province of Santa Fe for future 42 apartments and 47 parking spaces of the total units to beconstructed on the land. Under this agreement, we will have a 22% of the total square meters covered by the apartments and garages. The total fair value of the transaction is US$ 2.3 million disclosed in the line item “Torres de Rosariounder construction” in Note 4.e of our audited consolidated financial statements. As part of the agreement, Condominios del Alto S.A. paid us US$ 34.0 million and assumed certain obligations. Condominios del Alto S.A. (i) guaranteedthe transaction by the assumption of a first degree mortgage on the land in our favor for US$ 2.3 million; (ii) established a security insurance of which we will be assignor of the insured amount of US$ 2.3 million; and (iii) theshareholders of Condominios del Alto S.A. assumed a personal guarantee of the obligations of Condominios del Alto S.A. up to the amount of US$ 1.0 million. 

*Paraná plot of land.* On June 30, 2009, we signed a Letter of Intent with an unrelated party to purchase a 10,022 square meter property in the City of Paraná, Province of EntreRios, Argentina. We intend to construct a shopping center on the site. On August 12, 2010, the agreement of purchase was executed. See “Recent Developments” for subsequent events details. 

*Capital increase and loans in Tarshop*. In order to face the increasing volatility in the international financial context and toprovide Tarshop with a capital base in consonance with the market conditions, in the first quarter of fiscal year 2009 the Company decided to take part in a capital increase for up to the amount of Ps. 60 million, thereby increasing itsownership interest in Tarshop from 80% to 93.4%. 

The following are some of the decisions made during fiscal year 2009:

 
 i.Readjustment of the operational structure to align it to the new business scenario. 
 
 ii.Adjustments in plans involving both cash and Consumer Financing at retail stores. 
 
 iii.Changes in Loan Origination Policies. 
 
 iv.Reinforcement of Collection Management. 
 
 v.Analysis and implementation of new funding tools. 
 
 vi.Adjustment of the uncollectibility provisioning policies through the establishment of a criterion stricter than that suggested by the Central Bank.
During the second quarter of fiscal year 2009, the Company provided financial assistance to Tarshop for Ps.105 million then accepted as irrevocable capital contributions. This measure was adopted to strengthen its financial position, meet operating expenses and reposition Tarshop on the market, considering the complex situation that presented thesecuritized receivables market, its historical source of financing. The capitalization of such irrevocable capital contributions was decided by Tarshop’s Extraordinary Shareholders’ Meeting held 

 
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on October 30, 2009. After this capitalization, the interest in such company reached 98.59%. On January 2010 we acquired the remaining minority interest in Tarshop. On December 22,2009, we reported our board of director’s approval of the sale of part of our interest in Tarshop to Banco Hipotecario. Immediately after the sale, our equity interest in Tarshop was 20% of its capital stock. See “Recent Developments”for subsequent events details. 

*Córdoba Shopping*. On December 27, 2006, we acquired 100% interest in theCordoba Shopping - Villa Cabrera located in Cordoba, Argentina, owned by Empalme S.A.I.C.F.A. y G. (“Empalme”). The property, which is located in the Villa Cabrera neighbourhood of the City of Cordoba, is a 35,000 square meter shoppingcenter comprising 106 stores, a 12 movie theatre complex and a 1,500-vehicle parking lot. 

The interest was acquired for US$13.3 million. We paid US$ 5.3 million in cash and financed the remaining portion of the purchase price in four equal installments of US$ 2 million each due every six months as from June 2007. This financing accrued interest at a fixed rateof 6% per annum. The unpaid balance was collateralized by a pledge on the shares of Empalme in favor of the sellers. Governmental approval was obtained in December 2006. In December 2008, the fourth and last installment was paid and theencumbrance was lifted. 

Our purchase of Empalme has been accounted for following the guidance in Technical ResolutionNo. 18 (RT No. 18). As from January 1, 2009, Empalme merged into Shopping Alto Palermo S.A. (“SAPSA”). 

*Sale of E-Commerce Latina S.A. shares and purchase of Comercializadora Los Altos S.A. shares.* As of June 30, 2007, we had a100% ownership interest in E-commerce Latina S.A. E-commerce Latina S.A. conducted operations through its subsidiary Altocity.com which offered products over the internet through March 2007 when the website was deactivated. E-commerce Latina S.A.started new operations in April 2007. For that reason, E-commerce Latina S.A. effected the change of its subsidiary ́s name from Altocity.com to Comercializadora Los Altos S.A. (“Comercializadora Los Altos”). In November 2007,E-commerce Latina S.A. ́s interest in Comercializadora Los Altos was transferred directly to us for aggregate consideration of Ps. 3.7 million having a de minimis effect in our Consolidated Financial Statements. Concurrently we sold ourinterest in E-commerce Latina S.A. (after the reorganization of Comercializadora Los Altos) to IRSA and Patagonian Investment S.A., our controlling shareholder and one of IRSA ́s subsidiaries, respectively, for aggregate consideration of Ps.3.5 million. Comercializadora Los Altos operates as lease agent for us. As from July 1, 2009 Comercializadora Los Altos merged into Fibesa S.A. (“Fibesa”). 

*Acquisition of minority interest in Mendoza Plaza Shopping S.*A On September 29, 2004, upon executing the agreement to purchase the capital stock of Mendoza Plaza Shopping S.A., we signed anagreement with Inversiones Falabella Argentina S.A. (“Falabella”), the remaining minority shareholder of Mendoza Plaza Shopping S.A., pursuant to which, among other things, Falabella had the irrevocable right to sell us (put option) itsownership interest in Mendoza Plaza Shopping S.A. for a total consideration of US$ 3.0 million. 

On June 30, 2008,Inversiones Falabella Argentina S.A. formally notified the put exercise previously granted by which this company sells to us 2,062,883 nonendorsable, registered share of common stock, Class A, with face value of Ps. 1 each and with 5 votingrights per share and 2,062,883 nonendorsable, registered shares of common stock, Class B, with face value of Ps. 1 each and with 1 voting rights per share, thus acquiring 5% of the share on behalf SAPSA. 

Total shares acquired represent 14.6% of the capital stock of Mendoza Plaza Shopping S.A. at the price of US$ 3.0 millionestablished in the respective option agreement (equivalent to Ps. 9.1 million). Such price was fully paid in by us on July 2, 2008, when the respective deed to close between both companies was executed. 

The shares acquired on behalf of SAPSA were transferred to such company on July 2, 2008 by means of a Shares Assignment Agreementand the amount paid of US$ 1.0 million was returned to us on October 2, 2008. 

As from January 1, 2009, MendozaPlaza Shopping S.A. merged into SAPSA. 

 
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***Fiscal Year ended June 30, 2008***

*Acquisitions*

*Exercise of option.*In August 2007, we exercised the option to purchase a 75% interest in a company engaged in the development of a cultural, recreational and entertainment complex in the Palermoneighborhood in Buenos Aires. We paid US$ 0.6 million for the option which is accounted for under non current investments. The purchase is subject to certain approvals by the regulatory authorities which have not been obtained as of the date ofthis annual report. Should the approvals be obtained, we have committed to invest approximately US$ 24.4 million. 

OnNovember 27, 2009, the Company exercised the option and completed the acquisition of 80% of Arcos del Gourmet’s common stock. 

*Beruti plot of land.* On June 24, 2008, we acquired a plot of land located at Beruti 3351/3359, between Bulnes street and Coronel Díaz Avenue in the City of Buenos Aires for US$17.8 million, which was fully paid as of June 30, 2008. See “Recent Developments” for subsequent events details. 

*Acquisition of Soleil Factory shopping center business.* On December 28, 2007, we entered into an agreement with INCSA, an unrelated party, for the acquisition of the “Soleil Factory”shopping center business, for an aggregate purchase price of US$ 20.7 million, of which US$ 8.1 million had been paid and disclosed in the line item “Suppliers advances” in Note 20.a. The transaction was subject to certainconditions. Upon fulfillment of the conditions and transfer of the business, the remaining balance of the purchase price amounting to US$ 12.6 million would accrue fixed interest at 5% per year and be payable in seven annual andconsecutive installments starting on the first anniversary of the signing of the contract. 

Furthermore, on December 28,2007, the Company and INCSA had signed a letter of intent to acquire, build and manage a commercial center in a plot of land owned by INCSA, located in the City of San Miguel de Tucumán, Province of Tucumán. The price of thistransaction was set at US$ 1.3 million, of which US$ 0.05 million was paid on January 2, 2008. This transaction was subject to certain conditions precedent, such as the completion of the acquisition of the Soleil Factory describedabove. 

These conditions were fulfilled on July 1, 2010 and the transaction was closed. See Note 16 to our AuditedConsolidated Financial Statements for subsequent events details. 

*Developments of businesses*

*Barter transaction agreement with Condominios del Alto S.A*. On October 11, 2007, we entered into a barter agreement with anunrelated party Condominios del Alto S.A. pursuant to which we bartered a plot of land located in Rosario, Province of Santa Fe for future 15 apartments and 15 parking spaces of the total units to be constructed on the land. Under this agreement,the Company will have a 14.85% and 15% of the total square meters covered by the apartments and garages, respectively. The total fair value of the transaction is US$ 1.1 million disclosed in the line item “Torres de Rosario” in Note4.e to our audited consolidated financial statement. Upon signing of the agreement, Condominios del Alto S.A. paid us US$ 15 and assumed certain obligations. Condominios del Alto S.A. (i) guaranteed the transaction by the assumption of a firstdegree mortgage on the land in our favor for US$ 1.1 million; (ii) established a security insurance of which we will be assignor of the insured amount of US$ 1.6 million; and (iii) the shareholders of Condominios del Alto S.A. assumed apersonal guarantee of the obligations of Condominios del Alto S.A. up to the amount of US$ 0.8 million. 

On March 17,2010, the Company and Condominios del Alto S.A. subscribed a supplementary deed specifically determining the units committed for bartering that will be transferred to the Company and the ownership title to 15 parking spaces. 

*Shopping Neuquén project.* The main asset of the Shopping Neuquén S.A. is a 50,000 square meter undeveloped parcel ofland located in Neuquén, Argentina, where we intend to develop a commercial project including the construction of a shopping center, a hypermarket and other developments. 

 
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On December 13, 2006, Shopping Neuquén S.A. entered into an agreement with theMunicipality of Neuquén and with the Province of Neuquén by which, mainly, the terms to carry out the commercial and residential venture were rescheduled and authorized Shopping Neuquén S.A. to transfer to third parties thetitle to the plots of land into which the property is divided, provided that it is not the plot of land on which the shopping center would be built. The agreement was subject to two conditions, both already complied with, (i) the ratificationof the agreement by means of an ordinance of the legislative body of the Municipality of Neuquén, and (ii) the approval by the Municipality of Neuquén of the new project and extension of the environmental impact study. 

The agreement put an end to the law suit of Shopping Neuquén against the City Hall of Neuquén before the High Court ofNeuquén, in which the only pending issue was the determination of fees of the City Hall attorneys’ fees that are to be borne by Shopping Neuquén. On November 8, 2010, Shopping Neuquén was served notice of a resolutionissued by the High Court of Neuquén, by which the pending fees borne by Shopping Neuquén were established. Such decision is not final and Shopping Neuquén has appealed it through the filing of an explanatory appeal onNovember 12, 2010, an appeal for annulment on November 17, 2010, and an extraordinary appeal on November 24, 2010. 

According to the terms of the agreement, Shopping Neuquén S.A. submitted the corresponding project plans within the required timeframe of 150 days as from approval date due February 17, 2008.The Municipality of Neuquén objected to certain terms of the plans and Shopping Neuquén S.A. requested an extension to the term to submit a revised plan. 

On June 12, 2009, Shopping Neuquén S.A. and the Municipality of Neuquén executed a revised agreement by which Shopping Neuquén S.A. committed itself to presenting a new roadproject and to making those amendments that may be necessary to the general project. On October 19, 2009, the respective amendments were filed. On January 18, 2010, the Municipality of Neuquén requested changes to the plans, whichwere finally approved on April 8, 2010. 

Shopping Neuquén S.A. submitted the working plans related to the firststage of the work (contemplating the construction of the shopping mall and the hypermarket) for which the respective permits were obtained. Shopping Neuquén S.A. started construction on July 5, 2010. 

The first construction stage should be completed within a 22-month period as from July 2010. 

In the case of failing to comply with the conditions established in the agreement, the Municipality of Neuquén is entitled toterminate the Agreement and carry out certain actions that may be considered necessary, including to request the return of the Company ́s plots acquired to the Municipality of Neuquén. 

*Capital Expenditures*

***Fiscal year 2010***

For the fiscal year ended on June 30, 2010 weinvested Ps. 53.8 million in capital expenditures of which: (i) Ps. 32.5 million were related to improvements made to our shopping centers and offices; (ii) Ps. 7.4 million were related to works and advance payments made inDot Baires shopping; (iii) Ps. 6.0 million were allocated to suppliers advances; (iv) Ps. 2.6 million were allocated to the acquisition of furniture and fixtures, computer equipment, software and facilities; (v) Ps.3.1 million were allocated to the acquisition of undeveloped parcels of land and (vi) Ps. 2.2 million were allocated to other purposes. 

***Fiscal year 2009***

For the fiscal year ended on June 30, 2009 weinvested Ps. 247.4 million in capital expenditures of which: (i) Ps. 205.9 million were related to works and advance payments made in Dot Baires shopping; (ii) Ps. 11.1 million were allocated to the acquisition of furnitureand fixtures, computer equipment, software and facilities; (iii) Ps. 17.0 million were related to improvements made to our shopping centers and offices; (iv) Ps. 4.0 million were allocated to the acquisition of undevelopedparcels of land and (v) Ps. 9.4 million were allocated to other purposes. 

 
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***Fiscal year 2008***

For the fiscal year ended on June 30, 2008 we invested Ps. 270.2 million in capital expenditures of which: (i) Ps.114.4 million were related to the construction of Dot Baires shopping; (ii) Ps. 50.0 million were related to improvements made to our shopping centers and offices; (iii) Ps. 25.6 million were related to an advance paymentfor the acquisition of Soleil Factory shopping center business; (iv) Ps. 23.1 million were related to payments for the acquisition of Patio Olmos building, located in the City of Córdoba; (v) Ps. 16.9 million were relatedto an advance payment for the purchase of an undeveloped parcel of land located at Beruti St.; (vi) Ps. 11.6 million were related to the acquisition of furniture and fixtures, computer equipment, software and facilities; (vii) Ps.8.6 million were related to payments for the construction of garages in Paseo Alcorta shopping; (viii) Ps. 10.2 million were related to the acquisition of other fixed assets; (ix) Ps. 0.6 million were related to theacquisition of other undeveloped parcels of land and (x) Ps. 9.2 million were allocated to other purposes. 

*Recent Developments*

***Acquisition of TGLT Shares:*** On November 4, 2010, we acquired the amount of 5,214,662 registred non-endorsable common shares of TGLT S.A. (“TGLT”) for a total consideration ofPs.47.1 million. 

***Exercise of purchase option for acquiring Parque Arauco S.A.’s direct and indirect interest inus:***On October 15 2010, IRSA executed its option to acquire Parque Arauco S.A.’s direct and indirect stake in the Company. The purchase price was US$ 126 million, of which US$ 6 million was paid by IRSA at the time theoption was granted. According to the terms of the option granted on January 13, 2010, the dividends corresponding to the fiscal year ended on June 30, 2010 were deducted from the puchase price. As a consequence of this transaction, IRSAincreased its equity interest in Alto Palermo from 63.35% to 94.9% of its capital stock. 

***Sale of Beruti Plot to TGLT:***On October 13, 2010, we executed a sale and purchase agreement with TGLT in order to transfer the property we own, located at Beruti 3351/3359, between Bulnes Street and Coronel Diaz Avenue in the City of Buenos Aires. In such propertyTGLT intends to build an apartment building with both residential and commercial parking spaces. The transaction was agreed upon at a purchase price of US$ 18.8 millions. As a consideration TGLT has to transfer us: (i) a number of residentialunits to be determined, representing 17.33% of the total square meters of the residential units to be constructed in the building; (ii) a number of residential parking spaces to be determined representing 15.82% of the total square meters ofresidential parking spaces to be constructed in the building; (iii) all of the commercial parking spaces to be constructed in the building; and (iv) the amount of US$ 10,700,000 to be paid simultaneously with the signing of the deed of theproperty in favor of TGLT. 

On October 29, 2010, TGLT completed the initial public offering of its shares on the *Bolsade Comercio de Buenos Aires*, thus complying with the condition to which the operation was subject. 

On November 5,2010, TGLT advanced payment of US$ 10.7 million. On December 16, 2010, it was executed the title deed to the Beruti plot of land. 

***Conversion of Alto Palermo ́s Convertible Notes:***On October 7, 2010, we reported that two holders of our Convertible Notes exercised their conversion rights. Hence, we issued477,544,197 common shares, with nominal value of Ps. 0.1 each, and cancel Convertible Notes for an amount of US$ 15,472,432. 

As a result of the conversion, our capital stock increased from Ps. 78,206,421.4 to Ps. 125,960,841.1 and the number of outstandingshares increased from 782,064,214 to 1,259,608,411. On the other hand, the amount of Convertible Notes outstanding is US$ 31,755,502. 

***Payment of early dividend:***On October 7, 2010, our board of directors approved the distribution of an early dividend in cash for an amount of Ps. 113 million or Ps. 0,08971042033per share (Ps. 3,588416813 per ADR) and was paid in Argentina on October 15th, 2010. 

 
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***Sale of Tarshop:*** On August 30, 2010, the Central Bank approved our saleof 80% of Tarshop’s capital stock to Banco Hipotecario. As a result, on September 13, 2010, we transferred 107,037,152 common shares of Tarshop to Banco Hipotecario. The total purchase price paid was U$S 26.8 million. Inmediately after thesale, our interest in Tarshop was 20% of its capital stock. 

***Paraná Plot:***On August 12, 2010 weexecuted a preliminary purchase agreement in order to acquire a plot of land in Paraná, Entre Ríos. The purchase price was US$ 0.5 million, payable as follows: i) US$ 0.05 million were paid as advance payment on July 14,2009; ii) US$ 0.1 million were paid upon execution of the preliminary purchase agreement; and iii) US$ 0.35 million will be paid upon execution of the title deed of conveyance of property. 

***Acquisition of “Soleil Factory” Shopping Center:***On July 1, 2010, we executed together with INC S.A.(“INCSA”) the final instrument for the partial transfer of business whereby INCSA transferred the business of the shopping center that does business under the name “Soleil Factory”. The business mainly includes a building, otherfixed assets, lease agreements, titles to the brand names and rights to build certain number of square meters. 

Thetransaction was filed with the Argentine Antitrust Authority, which has not rendered a decision yet. 

***San Miguel deTucumán Plot:***On March 15, 2010, we executed an offer to purchase, build and operate a shopping center in a plot of land owned by INCSA, located in the City of San Miguel de Tucumán, Province of Tucumán. Thetransaction was subject to certain conditions precedent that were fulfilled on July 1, 2010 as a result of the execution of the final instrument for the partial transfer of business with INCSA. 

***Start of Works in Shopping Neuquén S.A.:***Shopping Neuquén S.A. filed the work plans for the first stage ofthe project (which includes the construction of a shopping center and an hypermarket), obtained the consents required for commencing works, and on July 5, 2010, within the 90-calendar day term required, it started the works committed.

The first stage of the project must be completed within 22 months as from the date of commencement of the works. In case of adefault of the conditions set forth in the agreement, the Municipality of Neuquén is entitled to terminate the agreement and take such actions as deemed necessary in such regard, including, *inter alia,*request reimbursement of theparcels of Shopping Neuquén sold by the Municipality of Neuquén. 

***B. BusinessOverview***

*Operations and principal activities*

We are primarily engaged in the ownership, acquisition, development, leasing, management and operation of shopping centers and we are oneof the largest owners and managers of shopping centers in Argentina in terms of gross leasable area and number of shopping centers. At present, we own and/or operate eleven shopping centers in Argentina, seven of which are located in the BuenosAires metropolitan area and four of which are in the provinces of Córdoba, Mendoza, Salta and Santa Fe. We also own certain properties for future development in Buenos Aires and several important provincial cities. 

As of June 30, 2010, we had total assets of Ps. 2,484.6 million and shareholders’ equity of Ps. 829.0 million. During ourfiscal years ended June 30, 2008, 2009 and 2010, we had revenues of Ps.640.2 million, Ps. 642.6 million and Ps. 784.9 million, respectively, and generated net income of Ps. 80.0 million for the fiscal year ended June 30,2008, a net loss of Ps. 22.1 million for the fiscal year ended June 30, 2009 and net income of Ps. 119.1 million for the fiscal year ended June 30, 2010. We operate our business through three reportable segments: Leases andservices, Consumer financing and Others, as described below. 

*Leases and services.* We derive a majority of our revenuesfrom leases with retail tenants in our eleven shopping centers. We generally charge our tenants a rent based on the higher of (i) a monthly base rent and (ii) a specified percentage of the tenant’s monthly gross retail sales. We alsocharge our tenants a monthly management fee, prorated among all tenants according to their leases, which differs from shopping center to 

 
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shopping center, for our administration and maintenance of common areas and administration of contributions made by tenants to finance promotional efforts for our shopping centers. We alsogenerate revenues from admission rights (a non-refundable admission fee tenants may be required to pay upon entering into or renewing a lease), leasing agent fees and parking lot fees charged to visitors. As of June 30, 2010, the averageoccupancy rate of our shopping centers was 97.5%. Our Leases and services segment generated operating income of Ps. 183.3 million, Ps. 215.8 million and Ps. 266.6 million during our fiscal years ended June 30, 2008, 2009 and2010, respectively, representing 113.0%, 239.2% and 83.2% of our consolidated operating income for such fiscal years, respectively. 

*Consumer financing.* We operate a Consumer financing business through our majority-owned subsidiary, Tarshop and jointly controlled subsidiary Metroshop S.A. (“Metroshop”). Tarshop’sand Metroshop’s operations consist primarily of lending and servicing activities relating to the credit card products we offer to consumers at shopping centers, hypermarkets and street stores. We finance a substantial majority of our creditcard and personal loans activities through securitization of the receivables underlying the accounts we originate. Our revenues from credit card transactions are derived from interest income generated by financing and lending activities,merchants’ fees, charges for life and disability insurances, and fees for data processing and printing cardholders’ account statements and others. Our Consumer financing segment had assets for an amount of Ps.343.8 million as ofJune 30, 2009 and Ps. 478.3 million as of June 30, 2010, representing 14.0% and 19.2%, respectively, of the consolidated assets as of those dates and generated operating losses of Ps. 22.1 million and Ps. 130.9 million andan operating income of Ps. 49.0 million, during our fiscal years ended June 30, 2008, 2009 and 2010, respectively, representing (13.6%), (145.1%) and 15.3% of our consolidated operating income for such fiscal years, respectively.

In December 2009, we entered into an agreement for the sale of 80% of our shareholding in Tarshop to Banco Hipotecario. OnMay 21, 2010, and as part of the above mentioned agreement, we and Tarshop entered into an agreement pursuant to which Tarshop sold to us 18,400,000 registered, non-endorsable common shares issued by Metroshop, representing 50% ofMetroshop’s capital stock. On August 30, 2010, the Central Bank notified Banco Hipotecario of the approval of the transaction. Consequently, on September 13, 2010, the transaction was closed. Inmediatelly after the sale, our interestin Tarshop was 20% of its capital stock. 

*Others*. Our Others segment includes the development and sale of residentialproperties, acquisitions of undeveloped parcels of land for future development and sales from time to time of such undeveloped parcels. For the fiscal years ended June 30, 2008, 2009 and 2010, revenues from our Others segment were notsignificant. Our Others segment generated operating income of Ps. 0.0 million, Ps. 2.9 million and Ps. 1.9 million during fiscal years ended June 30, 2008, 2009 and 2010, respectively, representing 0.0%, 3.2% and 0.6% of ourconsolidated operating income for such fiscal years, respectively. 

Our major shareholders were IRSA and Parque Arauco whichtogether owned 92.9% of our outstanding shares as of June 30, 2010. IRSA is an Argentine company engaged in a range of diversified real estate activities and whose shares are listed on the *Bolsa de Comercio de Buenos Aires* and the NewYork Stock Exchange. Parque Arauco is a Chilean company primarily engaged in the acquisition, development and operation of shopping centers and whose shares are listed on the Santiago Stock Exchange. 

On October 15, 2010, IRSA acquired Parque Arauco’s direct and indirect stake in Alto Palermo. The purchase price was US$126 million, fully paid as of October 15, 2010. According to the terms of the option granted on January 13, 2010, the dividends corresponding to the fiscal year ended on June 30, 2010 were deducted from the acquisition price. Asa consequence of this transaction, IRSA increased its equity interest in Alto Palermo from 63.35% to 94.9% of its capital stock. 

 
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*Business Strategy*

In recent years, the Argentine shopping center industry has benefited from improved macroeconomic conditions and a significant expansionin consumer credit. 

We believe that the Argentine shopping center sector offers attractive prospects for long-term growth dueto, among other factors, a continuing evolution of consumer preferences in favor of shopping malls (away from street-level stores) and a level of shopping center penetration in the market that we consider low compared to many developed countries. Weseek to generate a sustained growth in cash flow from our existing shopping centers, increase their long term value and maintain our leading position in the shopping center industry in Argentina, developing new shopping centers in urban areas withattractive prospects of growth, including in the Buenos Aires metropolitan area, Argentine provinces and others places in Latin America. 

We seek to achieve this objective by: 

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

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

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

 
 • 
***Continuously upgrading our shopping centers*****.** We expect to continue to upgrade and renovate our shopping center properties tomaintain their modern and attractive physical appearance while maintaining competitive tenant occupancy costs. 

 
 • 
***Enhancing our relationship with our tenants*****.**We seek to enhance our relationship with our shopping center tenants by providingthem with administrative advice and recommendations with respect to their promotional and marketing initiatives. 

*Investment Strategy*

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

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

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

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

 
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 • 
disposing of non-shopping center assets and lines of business from time to time as opportunities arise to realize attractive returns on such assets andlines of business. 

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

*Shopping Centers*

***Overview***

As of June 30, 2010, we owned a majority interest in,and operated, a portfolio of eleven shopping centers in Argentina, six of which are located in the City of Buenos Aires (Abasto, Paseo Alcorta, Alto Palermo, Patio Bullrich, Buenos Aires Design and Dot Baires), one is located in the greater BuenosAires area (Alto Avellaneda), and the rest are located in different provinces (Alto NOA in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza and Córdoba Shopping-Villa Cabrera in the City ofCórdoba). 

***Description of our business portfolio***

Our shopping centers comprise a total of 286,286 square meters of gross leasable area (excluding certain space occupied by hypermarketswhich are not our tenants). Total tenant sales in our shopping centers, as reported by retailers, were approximately Ps. 5,778.2 million for the fiscal year ended June 30, 2010 (excluding Dot Baires total sales, total sales were Ps.5,014.7 million) and Ps. 4,194.2 million for the fiscal year ended June 30, 2009 (excluding Dot Baires, the total sales to June 30, 2009 were Ps. 4,094.7 million). Tenant sales at our shopping centers are relevant to our revenues andprofitability 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. 

During the fiscal year ended June 30, 2010, the income from our five biggest tenants of each shopping center was 7.3% ofconsolidated sales from revenues and services. 

As of June 30, 2010, we owned and/or operated the following elevenshopping centers in Argentina: 

 

**Shopping Center**
  **Interest owned(2)**  
**Location**

Paseo Alcorta
   100%  City of Buenos Aires, Argentina
Patio Bullrich
   100%  City of Buenos Aires, Argentina
Abasto
   100%  City of Buenos Aires, Argentina
Alto Palermo
   100%  City of Buenos Aires, Argentina
Buenos Aires Design(1)
   53.684%  City of Buenos Aires, Argentina
Dot Baires Shopping
   80%  City of Buenos Aires, Argentina
Alto Avellaneda
   100%  Buenos Aires, Argentina
Alto NOA
   100%  Salta, Argentina
Alto Rosario
   100%  Santa Fe, Argentina
Mendoza Plaza
   100%  Mendoza, Argentina
Córdoba Shopping-Villa Cabrera
   100%  Córdoba, Argentina
 
(1)We have a 53.684% equity interest of Emprendimiento Recoleta S.A. (“Emprendimiento Recoleta”), which holds the concession to operate the Buenos Aires DesignShopping Center. (2)Percentage of equity interest owned has been rounded 
 
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***Tenant Retail Sales***

The following table sets forth the total approximate tenant retail sales in Pesos at the shopping centers in which we had an interestduring the years shown below: 

 
   **Fiscal year ended June 30,(1)**    **2008**   **2009**   **2010**    **(in thousands of Ps.)** 
Abasto
   720,398     774,496     926,373  
Alto Palermo
   631,821     745,008     879,728  
Alto Avellaneda
   560,693     696,502     885,195  
Paseo Alcorta
   385,515     374,756     414,652  
Patio Bullrich
   271,411     274,923     344,789  
Alto NOA
   173,998     211,353     280,241  
Buenos Aires Design
   132,958     129,075     140,974  
Mendoza Plaza
   433,394     436,599     559,359  
Alto Rosario
   271,331     318,443     419,143  
Córdoba Shopping-Villa Cabrera
   120,827     133,526     164,257  
Dot Baires Shopping
   —       99,478     763,528  
Total Sales (2)
   3,702,346     4,194,159     5,778,239  
 
(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, althoughin certain cases we own less than 100% of such shopping centers. (2)Excludes sales from stands and spaces used for special exhibitions. 
The following table shows certain information on shopping centers in which we held an interest as of June 30, 2010: 

 
   **Acquisition**