##### Table of Contents

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United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 20-F



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

OR



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

For the fiscal year ended: June 30, 2007

OR



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

Commission file number: 128 0-30982



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Alto Palermo S.A. (APSA)

(Exact
name of Registrant as specified in its charter)



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Republic of Argentina

(Jurisdiction of incorporation or organization)

Moreno 877, Piso 22

Buenos Aires,
Argentina

(Address of principal executive offices)



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

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



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

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

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



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

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

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

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

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

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

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

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



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##### Table of Contents

Table of Contents

ALTO PALERMO S.A. (APSA)



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



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##### Table of Contents

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



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##### Table of Contents

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



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



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DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

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

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

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



| |  |  | changes in general economic, business, political or other conditions in Argentina or changes in general economic or business conditions in Latin America;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | changes in exchange rates or regulations applicable to currency exchanges or transfers;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | unexpected developments in certain existing litigation;
| | - |  | -------------------------------------------------------



| |  |  | increased costs;
| | - |  | ----------------



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



| |  |  | the factors discussed under Risk Factors.
| | - |  | -------------------------------------------

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

CERTAIN MEASUREMENTS AND TERMS

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

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

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



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PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION

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

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

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

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

Adoption byComisión Nacional de Valoresof accounting standards

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



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

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

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

MARKET DATA

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



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##### Table of Contents

PART I



|ITEM 1. | Identity of Directors, Senior Management and Advisers
|------- | -----------------------------------------------------

This item is not applicable.



|ITEM 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------

This item
is not applicable.



|ITEM 3. | Key Information
|------- | ---------------

A. Selected financial data

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

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

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

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

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



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

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

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

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



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



10



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##### Table of Contents

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



11



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##### Table of Contents

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



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##### Table of Contents

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

---

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

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

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

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

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

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

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



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##### Table of Contents

Exchange Rates

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

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



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

Source: Banco de la Nación Argentina

---

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

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

|(3) | Average month-end closing exchange rates.
|--- | -----------------------------------------

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



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##### Table of Contents

B. Capitalization and Indebtedness

This section is not applicable.

C. Reasons for the Offer and Use of Proceeds

This section is not applicable.

D. Risk Factors

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

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

Risks Related to Argentina

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

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

The Argentine economy remains fragile for the following reasons:



| |  |  | unemployment remains high;
| | - |  | --------------------------



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



| |  |  | investment as a percentage of GDP remains low;
| | - |  | ----------------------------------------------



| |  |  | the current fiscal surplus could become a fiscal deficit;
| | - |  | ---------------------------------------------------------



| |  |  | inflation has risen recently and threatens to accelerate;
| | - |  | ---------------------------------------------------------



| |  |  | the countrys public debt remains high and international financing is limited; and
| | - |  | ----------------------------------------------------------------------------------



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

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

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

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



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##### Table of Contents

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

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

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

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

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

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

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

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

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

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



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##### Table of Contents

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

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

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

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

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

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

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



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##### Table of Contents

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

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

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

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

The stability of the Argentine banking system is uncertain.

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

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

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

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



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

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

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

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

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

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

Risks Related to Our Business

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

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



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



| |  |  | the intrinsic attractiveness of the shopping center;
| | - |  | ----------------------------------------------------



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



| |  |  | increasing competition from internet sales;
| | - |  | -------------------------------------------



| |  |  | the amount of rent collected from each shopping center rental unit; and
| | - |  | -----------------------------------------------------------------------



| |  |  | the fluctuations in occupancy levels in the shopping centers.
| | - |  | -------------------------------------------------------------

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



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

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

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



| |  |  | downturns in the national, regional and local economic climate;
| | - |  | ---------------------------------------------------------------



| |  |  | volatility and decline in discretionary spending;
| | - |  | -------------------------------------------------



| |  |  | competition from other real estate operators which might down our prices and profits;
| | - |  | -------------------------------------------------------------------------------------



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



| |  |  | changes in interest rates and availability of financing;
| | - |  | --------------------------------------------------------



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



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



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



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



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



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



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



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

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



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

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

Our future acquisitions may be unprofitable.

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



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



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



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



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

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

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

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



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

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

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

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

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

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

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

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



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



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



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



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

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

Eviction proceedings in Argentina are difficult and time consuming.

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

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

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

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



| |  |  | abandonment of development opportunities and renovation proposals;
| | - |  | ------------------------------------------------------------------



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



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



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



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



| |  |  | sale prices for residential units may be insufficient to cover development costs;
| | - |  | ---------------------------------------------------------------------------------



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



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



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We are subject to great competitive pressure.

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

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

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

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

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



| |  |  | Delay lease commencements;
| | - |  | --------------------------



| |  |  | Decline to extend or renew leases upon expiration;
| | - |  | --------------------------------------------------



| |  |  | Fail to make rental payments when due; or
| | - |  | -----------------------------------------



| |  |  | Close stores or declare bankruptcy.
| | - |  | -----------------------------------

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

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

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

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



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

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

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

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

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

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

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

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

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



| |  |  | adverse changes in the Argentine economy;
| | - |  | -----------------------------------------



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| |  |  | adverse changes in the regional economies;
| | - |  | ------------------------------------------



| |  |  | political instability;
| | - |  | ----------------------



| |  |  | increases in unemployment; and
| | - |  | ------------------------------



| |  |  | erosion of real and/or nominal salaries.
| | - |  | ----------------------------------------

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

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

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

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

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

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

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

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



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

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

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

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

We are controlled by two principal shareholders.

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

We are dependent on our chairman Eduardo S. Elsztain.

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



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

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

Risks Related to the American Shares and the Shares

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

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

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

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

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

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

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

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



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

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

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

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

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

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

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

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



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|ITEM 4. | Information on the Company
|------- | --------------------------

A. History and Development of the Company

General Information

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

History

Limited Operating History

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

Significant acquisitions, dispositions and development of businesses

Fiscal Year ended June 30, 2007

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

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



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

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

Fiscal Year ended June 30, 2006

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

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

Fiscal Year ended June 30, 2005

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

Capital Expenditures

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



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

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

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

Recent Developments

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

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

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

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

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

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



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B. Business Overview

Operations and principal activities

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

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

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

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

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

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



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Business Strategy

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

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

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



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



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



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



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



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

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

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



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



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| |  |  | selectively developing new shopping centers in high density locations with attractive prospects for growth;
| | - |  | -----------------------------------------------------------------------------------------------------------



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



| |  |  | disposing of non-shopping center assets and lines of business from time to time as opportunities arise to realize attractive returns on such assets and lines of
businesses. See BusinessCredit Card Operations and E-Commerce Activities.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Description of our business portfolio

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

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



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

---

|(1) | We have a 99.99% interest in Alto Palermo through a 99.99% interest in our subsidiary Shopping Alto Palermo S.A. (SAPSA).
|--- | ---------------------------------------------------------------------------------------------------------------------------

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



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

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

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

Tenant Retail Sales

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



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

---

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

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

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



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



36



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##### Table of Contents

---

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

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

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

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

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

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

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

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

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

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

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

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

Occupancy Rate

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



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

Rental Price

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



37



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##### Table of Contents

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

---

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

Lease Expirations

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



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

---

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

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

|(3) | Does not include information from Córdoba Shopping  Villa Cabrera.
|--- | -------------------------------------------------------------------

Depreciation

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

Detailed Information About Each of our Shopping Centers

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

Abasto, City of Buenos Aires.

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



38



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##### Table of Contents

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

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

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

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

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

Abastos five largest tenants

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

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



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



39



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##### Table of Contents

Tenant mix of Abasto

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



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

---

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

Revenues from Abasto

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



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

---

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

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



40



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##### Table of Contents

Lease expiration for Abasto

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



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

---

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

Alto Palermo, City of Buenos Aires

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

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

Alto Palermos five largest
tenants

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



41



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##### Table of Contents

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



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

Tenant Mix of Alto Palermo

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



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

Revenues from Alto Palermo

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



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



42



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##### Table of Contents

---

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

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

Lease expirations for Alto Palermo

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



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



---

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

Alto Avellaneda, greater Buenos Aires area

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

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



43



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##### Table of Contents

Alto Avellanedas five largest tenants

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

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



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

Tenant mix of Alto Avellaneda

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



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



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Revenues from Alto Avellaneda

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



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

---

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

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

Lease expirations for Alto Avellaneda

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



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

---

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



45



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Buenos Aires Design, City of Buenos Aires

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

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



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



| |  |  | destruction or abandonment of the area under concession;
| | - |  | --------------------------------------------------------



| |  |  | bankruptcy or liquidation;
| | - |  | --------------------------



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

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

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

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

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

Buenos Aires Designs five largest tenants

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

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



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



46



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##### Table of Contents

Tenant mix of Buenos Aires Design

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



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

Revenues from Buenos Aires Design

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



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

---

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

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

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



47



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##### Table of Contents

Lease expirations for Buenos Aires Design

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



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

---

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

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

Paseo Alcorta, City of Buenos Aires

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

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

Paseo Alcortas five largest tenants

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

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



48



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##### Table of Contents

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

Tenant mix of Paseo Alcorta

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



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

Revenues from Paseo Alcorta

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



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



49



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##### Table of Contents

---

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

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

Lease expirations for Paseo Alcorta

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



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

---

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

Patio Bullrich, City of Buenos Aires

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

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

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

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

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



50



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##### Table of Contents

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

Patio Bullrichs five largest tenants

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

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



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

Tenant mix of Patio Bullrich

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



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

Revenues from Patio Bullrich

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



51



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##### Table of Contents

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

---

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

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

Lease expirations for Patio Bullrich

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



|                            |  |                                        |  |                                |  |                                          |  |                                    |  |                                      
|--------------------------- |  | -------------------------------------- |  | ------------------------------ |  | ---------------------------------------- |  | ---------------------------------- |  | -------------------------------------
|Lease Agreements Expiration |  | Number of LeaseAgreements toExpire (1) |  | SquareMeters ofLeases toExpire |  | Square MeterPercentage ofLeases toExpire |  | Amount of LeaseAgreements toExpire |  | Percentage ofLeaseAgreements toExpire
|                            |  |                                        |  | (m2)                           |  | (%)                                      |  | (Ps )                              |  | (%)                                  
|2008                        |  | 60                                     |  | 9,360                          |  | 85                                       |  | 4,907,484                          |  | 36                                   
|2009                        |  | 14                                     |  | 947                            |  | 9                                        |  | 4,970,187                          |  | 36                                   
|2010                        |  | 9                                      |  | 671                            |  | 6                                        |  | 3,754,560                          |  | 28                                   
|2011 and subsequent years   |  |                                       |  |                               |  |                                         |  |                                   |  |                                     
|                            |  |                                        |  |                                |  |                                          |  |                                    |  |                                      
|Total                       |  | 83                                     |  | 10,978                         |  | 100                                      |  | 13,632,231                         |  | 100                                  

---

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

Alto Noa, City of Salta

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



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

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

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

Five largest tenants of Alto Noa

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

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



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

Tenant mix of Alto Noa

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



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

Revenues from Alto Noa

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



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

---

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

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

Lease expirations for Alto Noa

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



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



---

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

Mendoza Plaza, City of Mendoza

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

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

Five largest tenants of Mendoza Plaza

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

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



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



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Tenant mix of Mendoza Plaza

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



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

Revenues from Mendoza Plaza

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



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



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---

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

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

Lease expirations for Mendoza Plaza

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



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

---

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

Alto Rosario, City of Rosario

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

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

Five largest tenants of Alto Rosario

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

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



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

Tenant mix of Alto Rosario

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



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

Revenues from Alto Rosario

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



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



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---

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

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

Lease expirations for Alto Rosario

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



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

---

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

Córdoba Shopping Villa Cabrera

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

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

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



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Residential Complexes

Torres de Abasto

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

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

Expansion Opportunities

Panamerican Mall Project

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

Caballito Project

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

Patio Olmos Building

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

Torres Rosario, City of Rosario

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

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



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

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

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

Coto Residential Project

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

Neuquén Project

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

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

Shopping Centers Administration and Management

Administration and Management of Shopping Centers

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

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



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



| |  |  | Ps. 80,000 in Alto Palermo,
| | - |  | ---------------------------



| |  |  | Ps. 50,000 in Alto Avellaneda,
| | - |  | ------------------------------



| |  |  | Ps. 80,000 in Abasto,
| | - |  | ---------------------



| |  |  | Ps. 65,000 in Patio Bullrich,
| | - |  | -----------------------------



| |  |  | Ps. 35,000 in Alto Rosario,
| | - |  | ---------------------------



| |  |  | Ps. 30,000 in Paseo Alcorta,
| | - |  | ----------------------------



| |  |  | 10% of the total amount of the common area maintenance expenses in Buenos Aires Design and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | 5% of the total amount of the common area maintenance expenses in Mendoza Plaza.
| | - |  | --------------------------------------------------------------------------------

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

Principal Terms of our Leases

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

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



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



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



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

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

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



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

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

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

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

Control Systems

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

Insurance

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



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Related Business

Credit Card Operations

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

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

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

History of our Credit Card Business

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

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

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



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

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



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

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

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



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

---

|(1) | Including the securitized portion.
|--- | ----------------------------------

|(2) | In constant Ps.
|--- | ---------------



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



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

Distribution Network

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

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

Credit Risk Management

Credit Approval Process

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



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

Credit Limits

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

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

Payment Plans

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

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

Credit Monitoring and Collection Procedures

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

Tarshops collection procedures are similar to those established in the trust, see Funding and Securitization Activities below.

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



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



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



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

---

|(1) | In million of Ps.
|--- | -----------------

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

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

Funding and Securitization Activities

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

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

Receivables Portfolio Securitization

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

Liquidity Policies

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



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Technology

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

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

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

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

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

Summary Balance Sheet and Other Data

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



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



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E-Commerce Activities

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

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

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

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

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

Competition

Shopping centers

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

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



|             |  |                    |  |             |  |                    |  |       |  |                                    |   |  |           |  
|------------ |  | ------------------ |  | ----------- |  | ------------------ |  | ----- |  | ---------------------------------- | - |  | --------- | -
|Company      |  | Shopping Center    |  | Location(1) |  | Leasable grossarea |  | Shops |  | % Overall nationalleasable area(2) |   |  | % Shop(2) |  
|Alto Palermo |  |                    |  |             |  |                    |  |       |  |                                    |   |  |           |  
|             |  | Alto Avellaneda(5) |  | GBA         |  | 49,604             |  | 152   |  | 3.77                               | % |  | 3.08      | %



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



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



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

---

|(1) | GBA means Gran Buenos Aires, the Buenos Aires metropolitan area, and BA means the city of Buenos Aires.
|--- | -----------------------------------------------------------------------------------------------------------

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

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

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

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

Source: Argentine Chamber of Shopping Centers.

Credit Card Operations

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



| |  |  | International and domestic Cards: Visa, Master, AMEX, Cabal, Diners and Carta Franca.
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Regional cards: Naranja, Provencred, Efectivo Sí and Credilogros.
| | - |  | -----------------------------------------------------------------



| |  |  | Zonal cards: Italcred, Carta Sur, Crédito Actual and Credial.
| | - |  | -------------------------------------------------------------



| |  |  | Closed cards: Falabella, Garbarino, Frávega, Musimundo, Carrefour and Century.
| | - |  | ------------------------------------------------------------------------------



| |  |  | Banks:Columbia, Itaú, Comafi, Privado and others.
| | - |  | -------------------------------------------------



| |  |  | International financial companies: GE Capital and Cetelem.
| | - |  | ----------------------------------------------------------

Seasonality

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

Regulation and Government Supervision

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



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

Leases

Argentine law imposes certain restrictions on landlords, including:



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



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

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



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



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



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



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

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

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

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

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



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

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

Development and Land Use

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

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

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

Sales and Ownership

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

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



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

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



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



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

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

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

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

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

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

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



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

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

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

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

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

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

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

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



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



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



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



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



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

Other Regulations

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



| |  |  | warranty and liability disclaimers;
| | - |  | -----------------------------------



| |  |  | waiver of consumer rights;
| | - |  | --------------------------



| |  |  | extension of seller rights; and
| | - |  | -------------------------------



| |  |  | shifting of the burden of proof against consumers.
| | - |  | --------------------------------------------------

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

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



| |  |  | the acquisition or rental of movable property;
| | - |  | ----------------------------------------------



| |  |  | the supply of services; and
| | - |  | ---------------------------



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



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

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

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



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



| |  |  | contracts involving used assets, executed between consumers.
| | - |  | ------------------------------------------------------------

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

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

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

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



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C. Organizational Structure



|    
|----
|LOGO



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---

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

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

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

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

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

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

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

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



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

---

|(1) | Percentage of equity interest has been rounded.
|--- | -----------------------------------------------

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

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

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

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

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

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

D. Property, Plant and Equipment

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

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

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



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

---

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

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

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

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

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

|(6) | Acquired on September 25, 2007.
|--- | -------------------------------

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

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



|ITEM 4A. | Unresolved staff comments
|-------- | -------------------------

This item is not
applicable



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|ITEM 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------

A. Operating Results

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

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

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

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

Critical Accounting Policies and Estimates

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



| |  |  | revenue recognition
| | - |  | -------------------



| |  |  | provision for allowances and contingencies;
| | - |  | -------------------------------------------



| |  |  | impairment of long-lived assets;
| | - |  | --------------------------------



| |  |  | deferred income tax;
| | - |  | --------------------



| |  |  | minimum presumed income tax; and
| | - |  | --------------------------------



| |  |  | extension of our Convertible Notes maturity date.
| | - |  | --------------------------------------------------

Revenue Recognition

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



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

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

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

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

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

Provision for allowances and contingencies

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

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

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



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Impairment of long-lived assets

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

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

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



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

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

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

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



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

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

Deferred income tax

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

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



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



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

Minimum presumed income tax

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

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

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

Extension of our Convertible Notes
maturity date

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



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

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

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

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

U.S. GAAP Reconciliation

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



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



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



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



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



| |  |  | the reversal of the amortization expense related to goodwill recognized under Argentine GAAP;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | the impact of certain U.S. GAAP adjustments on our equity investees;
| | - |  | --------------------------------------------------------------------



| |  |  | the accounting for increasing rate debt;
| | - |  | ----------------------------------------



| |  |  | the accounting for securitized credit card receivables in accordance with SFAS No. 140;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | the accounting for available-for-sale securities;
| | - |  | -------------------------------------------------



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| |  |  | the amortization of fees related to the Senior Notes;
| | - |  | -----------------------------------------------------



| |  |  | the present-value accounting of asset tax credits;
| | - |  | --------------------------------------------------



| |  |  | the restoration of previously recognized impairment losses;
| | - |  | -----------------------------------------------------------



| |  |  | the reversal of the gain from recognition of inventories at net realizable value;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | the debtors accounting for a modification of convertible debt instruments;
| | - |  | ---------------------------------------------------------------------------



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



| |  |  | the revenue recognition of deferred brokerage commissions over the term of the respective leases under US GAAP.
| | - |  | ---------------------------------------------------------------------------------------------------------------



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



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



| |  |  | the effect on minority interest of the foregoing reconciling items, and
| | - |  | -----------------------------------------------------------------------



| |  |  | the reversal of capitalized exchange differences under Argentine GAAP.
| | - |  | ----------------------------------------------------------------------

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

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

Overview

Effects of Devaluation
and Economic Crisis on us

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

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



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

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

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

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

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

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

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



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Effects of inflation

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



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

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

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

Effects of interest
rate fluctuations

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

Effects of foreign
currency fluctuations

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

Business Segment Reporting

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

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



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A general description of each segment follows:

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

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

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

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

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



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

---

|(1) | In million of Pesos.
|--- | --------------------

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



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

---

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

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



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

---

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

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



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

---

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

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



94



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



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

---

|(1) | Includes inter-segment eliminations.
|--- | ------------------------------------

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



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Operating Results

Fiscal Year 2007 as compared to Fiscal Year 2006

Revenues

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

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

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

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



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



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Costs

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

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

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

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



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



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Gross Profit

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

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

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

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



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

Selling expenses

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



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##### Table of Contents

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

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

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

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



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

Administrative expenses

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

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



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

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



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

Net income from retained interest in securitized receivables

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

Gain
from recognition of inventories at net realizable value

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

Operating income

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

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



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

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

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



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

Equity loss from related companies

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

Amortization of goodwill

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

Financial results, net

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



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

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

Other expenses, net

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

Income before taxes and minority interest

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

Income tax

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

Minority interest

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

Net
income

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



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Fiscal Year 2006 as compared to Fiscal Year 2005

Revenues

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

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

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

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



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

Costs

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



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

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

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

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



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

Gross Profit

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

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



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

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

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



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

Selling expenses

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

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

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



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

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



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

Administrative expenses

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

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

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



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

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



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

Net income from retained interest in securitized receivables

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

Gain from recognition of
inventories at net realizable value

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

Operating income

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

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



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

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

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



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

Equity loss from related companies

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

Amortization of goodwill

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

Financial results, net

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

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



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

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

Other expenses, net

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

Income before taxes and minority interest

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

Income tax

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

Minority interest

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

Net income

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



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Fiscal Year 2005 as compared to Fiscal Year 2004

Revenues

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

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

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

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



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

Costs

Total costs increased 26.0%, from Ps. 73.4 million during fiscal year ended June 30, 2004 to Ps. 92.5 million during fiscal year ended June 30, 2005. Total costs as a percentage of total revenues
decreased from 51.2% during fiscal year ended June 30, 2004 to 40.2% for fiscal year ended June 30, 2005. This was mainly as a result of a higher increase in revenues of 60.7% as compared to the 26.0% increase in total costs due to a
decrease in costs of our Leases and Services and Credit Card Operations segments.

Leases and Services. Costs from Leases and
Services increased 12.7%, from Ps. 61.4 million during fiscal year ended June 30, 2004 to Ps. 69.2 million during fiscal year ended June 30, 2005. This increase was mainly due to: (i) the costs related to the opening of Alto
Rosario Shopping, which amounted to Ps. 4.9 million; and (ii) the consolidation in fiscal year ended June 30, 2005 of Mendoza Plaza Shoppings costs for nine months totaling Ps. 3.2 million. Most of the costs affected were
amortization charges and non-recovered general expenses. Costs from the Leases and Services segment as a percentage of revenues from this segment decreased from 54.1% during fiscal year ended June 30, 2004 to 41.7% for fiscal year ended
June 30, 2005. This is attributable to a higher increase in revenues of 46.2% recorded from this segment compared to the 12.7% increase in costs from the same segment.



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Credit Card Operation. Costs from our Credit Card operations increased 77.1%, from Ps.
13.8 million during fiscal year ended June 30, 2004 to Ps. 24.5 million during fiscal year ended June 30, 2005. This increase was mainly due to: (i) an increase of the cost of salaries and social security charges of Ps.
3.6 million resulting from the expansion and opening of new branches, (ii) an increase of commissions and interest charges of Ps. 2.3 million; (iii) an increase of fees and services expenses of Ps. 1.6 million altogether related
to the issue of new series of Financial Trusts and (iv) an increase of taxes, duties and contributions of Ps. 1.5 million also resulting from the reason explained in (i). Costs related to our Credit Card operations segment as a percentage
of revenues from this segment decreased from 46.0% during fiscal year ended June 30, 2004 to 37.9% during fiscal year ended June 30, 2005. This was mainly due to an increase in revenues from this segment of 114.9% as compared to an
increase of 77.1% in costs.

Other. Costs from our Other segment did not change significantly from the previous fiscal year,
although it increased from Ps. 0.03 million during fiscal year ended June 30, 2004 to Ps. 0.2 million during fiscal year ended June 30, 2005. Costs from Other segment as a percentage of revenues from this segment increased from
44.3% during fiscal year ended June 30, 2004 to 168.5% during fiscal year ended June 30, 2005, as a result of the 89.3% variation of revenues from this segment as compared to the increase of 619.4% in costs related to this segment.



|                          |  |                                       |   |  |       |  
|------------------------- |  | ------------------------------------- | - |  | ----- | -
|                          |  | Costs for fiscal years ended June 30, |  
|                          |  | 2004                                  |   |  | 2005  |  
|                          |  | (in million of Pesos)                 |  
|Leases and services       |  | (61.4                                 | ) |  | (69.2 | )
|Credit card operations    |  | (13.8                                 | ) |  | (24.5 | )
|Other                     |  | 0.0                                   |   |  | (0.2  | )
|Intersegment eliminations |  | 1.9                                   |   |  | 1.4   |  
|                          |  |                                       |   |  |       |  
|Total costs               |  | (73.4                                 | ) |  | (92.5 | )

Gross Profit

Gross profit increased 97.1%, from Ps. 69.8 million during fiscal year ended June 30, 2004 to Ps. 137.6 million during fiscal year ended June 30, 2005. This increase was mainly attributable to
greater revenues derived from our Leases and Services and Credit Card Operations segments as a consequence of the expansion of private consumption and our subsidiary Tarshop S.A. during fiscal year ended June 30, 2005. Gross profit, calculated
in terms of total revenues percentage, increased from 48.8% during fiscal year ended June 30, 2004 to 59.8% during fiscal year ended June 30, 2005. This was mainly as a result of a greater increase in total revenues of 60.7% as compared to
the 26.0% increase in total costs.

Leases and Services. Gross profit from Leases and Services, increased 85.7% from Ps.
52.0 million during our fiscal year ended June 30, 2004 to Ps. 96.6 million during fiscal year ended June 30, 2005. This was mainly as a result of an increase in the sales of our tenants in all of our shopping centers. Gross
profit from Leases and Services calculated as a percentage of revenues from this segment, increased from 45.9% during fiscal year ended June 30, 2004 to 58.3% during fiscal year ended June 30, 2005. This was mainly due to the higher
increase in revenues from this segment of 46.2% as compared to the increase of 12.7% in costs related to this same segment.

Credit
Card Operations. Gross profit from our Credit Card operations, increased 147.2% from Ps. 16.2 million during fiscal year ended June 30, 2004 to Ps. 40.1 million during fiscal year ended June 30, 2005. This was mainly as a
result of greater sales recorded from this segment derived from the expansion and opening of new branches of our subsidiary Tarshop. Gross profit from Credit Card Operations calculated as a percentage of revenues from the same segment, increased
from 54.0% during fiscal year ended June 30, 2004 to 62.1% during fiscal year ended June 30, 2005. This was mainly attributable to a greater increase in revenues from this segment of 114.9% as compared to an increase of 77.1% in costs from
the same business segment.



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Other. Gross profit from our Other segment did not suffer significant variations.
Nevertheless when calculated as a percentage of revenues from this segment, gross profit fell from 55.7% during fiscal year ended June 30, 2004 to (68.5)% during fiscal year ended June 30, 2005. This was mainly as a result of the increase
in costs from this segment from Ps. 0.03 million during fiscal year ended June 30, 2004 to Ps. 0.2 million during fiscal year ended June 30, 2005.



|                          |  |                                             |  |       |  
|------------------------- |  | ------------------------------------------- |  | ----- | -
|                          |  | Gross profit forfiscal years ended June 30, | 
|                          |  | 2004                                        |  | 2005  |  
|                          |  | (in million of Pesos)                       | 
|Leases and services       |  | 52.0                                        |  | 96.6  |  
|Credit card operations    |  | 16.2                                        |  | 40.1  |  
|Other                     |  | 0.0                                         |  | (0.1  | )
|Intersegment eliminations |  | 1.6                                         |  | 1.0   |  
|                          |  |                                             |  |       |  
|Total gross profit        |  | 69.8                                        |  | 137.6 |  

Selling expenses

Selling expenses registered a 152.1% increase, from Ps. 9.8 million during fiscal year ended June 30, 2004 to Ps. 24.8 million during
fiscal year ended June 30, 2005 as a consequence of (i) the increase recorded in selling expenses from our Credit Card Operations segment, derived from the expansion of our subsidiary Tarshop S.A., and (ii) the increase in expenses of
our Leases and Services segment. Selling expenses, as a percentage of total revenues, increased from 6.9% during fiscal year ended June 30, 2004 to 10.8% during fiscal year ended June 30, 2005. This is mainly attributable to an increase in
selling expenses of 152.1% as compared to the increase of 60.7% in total revenues due to an increase in selling expenses in our Leases and Services and Credit Card Operations segments.

Leases and Services. Selling expenses from Leases and Services increased 112.7% from Ps. 5.2 million during the fiscal year ended
June 30, 2004 to Ps. 11.0 million during fiscal year ended June 30, 2005. This increase was mainly due to: (i) an increase in the charge of allowance for doubtful accounts of Ps. 3.4 million; (ii) an increase in the gross
revenue tax charges of 1.4 million related to the increase of our revenues previously mentioned; (iii) the consolidation of Mendoza Plaza Shopping expenses of Ps. 1.3 million; and (iv) stamp taxes of Ps. 0.4 million due to the
opening of Alto Rosario Shopping. Selling expenses from this segment, calculated as a percentage of revenues from this segment, increased from 4.6% during fiscal year ended June 30, 2004 to 6.6% during fiscal year ended June 30, 2005. This
was mainly attributable to the greater increase in selling expenses from this segment already mentioned above, as compared to an increase in revenues from this segment of 46.2%, reflecting primarily our increased allowance for doubtful accounts and
selling expenses related to Mendoza Plaza and Alto Rosario shopping centers which we began to consolidate in our fiscal year ended June 30, 2005.

Credit Card Operations. Selling expenses from our Credit Card operations increased 198.9% from Ps. 4.5 million during fiscal year ended June 30, 2004 to Ps. 13.5 million during fiscal year
ended June 30, 2005. This increase was mainly due to: (i) an increase of advertising expenses of Ps. 6.3 million as a consequence of the opening of new branches of our subsidiary Tarshop; (ii) an increase in the gross revenue tax
charges of Ps. 2.1 million related to the increase of our revenues previously stated; and (iii) an increase of the charge of allowance for doubtful accounts of Ps. 0.5 million related to the increase of our credit portfolio. Selling
expenses from Credit Card Operations, calculated as a percentage of revenues from this segment increased from 15.0% during fiscal year ended June 30, 2004 to 20.9% during fiscal year ended June 30, 2005. This was mainly as a result of the
higher increase of 198.9% in selling expenses from this segment already mentioned above, as compared to a 114.9% increase in revenues from this segment, due primarily to our increased advertising expenses incurred in connection with opening of new
Tarshop branches.



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Other. Selling expenses from our Other segment did not change significantly from the
previous fiscal year, recording losses of Ps. 0.1 million during fiscal year ended June 30, 2004 and Ps. 0.3 million during fiscal year ended June 30, 2005. Selling expenses from Other segment calculated as a percentage of
revenues from this same segment increased from 197.2% during fiscal year ended June 30, 2004 to 206.6% during fiscal year ended June 30, 2005. This was mainly as a result of the none variation in revenues from this segment compared to a
slightly positive variation in selling expenses from this segment as shown above.



|                          |  |                                                     |   |  |       |  
|------------------------- |  | --------------------------------------------------- | - |  | ----- | -
|                          |  | Selling expenses for thefiscal years ended June 30, |  
|                          |  | 2004                                                |   |  | 2005  |  
|                          |  | (in million of Pesos)                               |  
|Leases and services       |  | (5.2                                                | ) |  | (11.0 | )
|Credit card operations    |  | (4.5                                                | ) |  | (13.5 | )
|Other                     |  | (0.1                                                | ) |  | (0.3  | )
|Intersegment eliminations |  | 0.0                                                 |   |  | 0.0   |  
|                          |  |                                                     |   |  |       |  
|Total selling expenses    |  | (9.8                                                | ) |  | (24.8 | )

Administrative expenses

Administrative expenses increased 53.8% from Ps. 20.7 million during fiscal year ended June 30, 2004 to Ps. 31.9 million during fiscal year
ended June 30, 2005 as a consequence of the increases in administrative expenses recorded in our Credit Card Operations and Leases and Services segments. Administrative expenses as a percentage or total revenues slightly decreased from 14.5%
during fiscal year ended June 30, 2004 to 13.8% during fiscal year ended June 30, 2005. This was mainly as a result of the higher increase in revenues of 60.7% as compared to the increase of 53.8% in administrative expenses already
mentioned above, reflecting proportionately lower administrative expenses in each of our segments.

Leases and Services.
Administrative expenses from Leases and Services increased from Ps. 12.5 million during fiscal year ended June 30, 2004 to Ps. 16.9 million during fiscal year ended June 30, 2005. This was mainly due to: (i) an increase of
the board of directors ́ fees of Ps. 1.5 million; (ii) the consolidation of Mendoza Plaza Shoppings administrative expenses of Ps. 1.3 million; (iii) an increase of the amount of salaries, bonuses and social security charges of
Ps. 1.4 million; and (iv) an increase of tax charges, duties and contributions of Ps. 1.1 million. This was mainly due to an increase of the financial transactions tax. Administrative expenses from Leases and Services, calculated as a
percentage of revenues from this segment, decreased from 11.0% during fiscal year ended June 30, 2004 to 10.2% during fiscal year ended June 30, 2005. This was mainly as a result of greater revenues recorded from this segment of 46.2% as
compared to the 35.5% increase in administrative expenses from the same segment, primarily due to the fact that the additional revenues contributed by our consolidation in our fiscal year ended June 30, 2005 of Alto Rosario and Mendoza Shopping
far exceeded the incremental administrative expenses related to such two shopping centers.

Credit Card Operations.
Administrative expenses from Credit Card Operations increased Ps. 6.7 million from Ps. 8.2 million during fiscal year ended June 30, 2004 to Ps. 14.9 million during fiscal year ended June 30, 2005. This was mainly due to:
(i) an increase of the amount of salaries, bonuses and social security charges of Ps. 3.5 million as a consequence of an increase in the Companys payroll; (ii) an increase in fees and third parties services of Ps.
1.6 million related to new issues of our securitization programs; and (iii) an increase of tax charges, duties and contributions of Ps. 0.6 million and rent expenses of Ps. 0.5 million due to the opening of new branches.
Administrative expenses from Credit Card Operations, calculated as a percentage of revenues from this segment, decreased from 27.3% during fiscal year ended June 30, 2004 to 23.1% during fiscal year ended June 30, 2005. This is mainly
attributable to the greater increase in revenues recorded from this segment of 114.9%, derived from the expansion of our subsidiary Tarshop, as compared to an increase in administrative expenses from this segment of 81.9%. This was mainly due to a
lower increase in Tarshops payroll as compared to the previous period.



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Other. Administrative expenses from our Other segment did not change significantly from the
previous fiscal year, recording charges of Ps. 0.03 million during fiscal year ended June 30, 2004 and Ps. 0.04 million during fiscal year ended June 30, 2005. Administrative expenses from this segment, calculated as a percentage
of revenues from this segment, decreased from 47.3% during fiscal year ended June 30, 2004 to 30.0% during fiscal year ended June 30, 2005.



|                              |  |                                                            |   |  |       |  
|----------------------------- |  | ---------------------------------------------------------- | - |  | ----- | -
|                              |  | Administrative expenses for thefiscal years ended June 30, |  
|                              |  | 2004                                                       |   |  | 2005  |  
|                              |  | (in million of Pesos)                                      |  
|Leases and services           |  | (12.5                                                      | ) |  | (16.9 | )
|Credit card operations        |  | (8.2                                                       | ) |  | (14.9 | )
|Other                         |  | 0.0                                                        |   |  | 0.0   |  
|Intersegment eliminations     |  | 0.0                                                        |   |  | 0.0   |  
|                              |  |                                                            |   |  |       |  
|Total administrative expenses |  | (20.7                                                      | ) |  | (31.9 | )

Net Income from Retained Interest in Securitized Receivables

Net income in credit card trust increased from Ps. 0.3 million during fiscal year ended June 30, 2004 to Ps. 0.4 million during fiscal year
ended June 30, 2005.

Operating income

Operating income increased from Ps. 39.6 million during fiscal year ended June 30, 2004 to Ps. 81.4 million during fiscal year ended June 30, 2005, which represented a 105.8% increase. This
increase was mainly due to significant increases in gross profits from our Leases and Services and Credit Card Operations segments of 85.7% and 147.2%, respectively. This is mainly attributable to greater sales from all our Shopping Centers and the
increase in revenues derived from the expansion of our subsidiary Tarshop. Operating income, as a percentage of our total revenues, increased from 27.6% during fiscal year ended June 30, 2004 to 35.4% during fiscal year ended June 30,
2005. This increase was mainly attributable to (i) a higher increase of gross profit as compared to total revenues from 48.8% during fiscal year ended June 30, 2004 to 59.8% during fiscal year ended June 30, 2005, partially offset by
(i) a smaller increase of selling expenses as compared to total revenues from 6.9% during fiscal year ended June 30, 2004 to 10.8% during fiscal year ended June 30, 2005, and (ii) a decrease in administrative expenses as compared
to total revenues from 14.5% during fiscal year ended June 30, 2004 to 13.8% during fiscal year ended June 30, 2005.

Leases and Services. Operating income from Leases and Services increased 99.9%, from Ps. 34.3 million during fiscal year ended June 30, 2004 to Ps. 68.6 million during fiscal year ended June 30, 2005 as a
result of a significant increase in sales in all of our shopping centers. Operating income from this segment as a percentage of revenues from the same segment, increased from 30.3% during fiscal year ended June 30, 2004 to 41.4% during fiscal
year ended June 30, 2005. This was mainly attributable to a 12.4% increase in gross profit related to this segment as a percentage of its revenues. This reflects the recognition of sales during fiscal year ended June 30, 2005 from two new
Shopping Centers as of such fiscal year, Mendoza Plaza Shopping and Alto Rosario Shopping.

Credit Card Operations. Operating
income from Credit Card Operation increased 221.1%, from Ps. 3.8 million during fiscal year ended June 30, 2004 to Ps. 12.1 million during fiscal year ended June 30, 2005. This highlights the significant expansion and opening of
new branches of our subsidiary Tarshop. Operating income as a percentage of revenues, both from our Credit Card Operation, increased from 12.6% during fiscal year ended June 30, 2004 to 18.8% during fiscal year ended June 30, 2005. This
was mainly due to (i) a greater increase in revenues of 114.9% from this segment as compared to the increase in costs from this segment of



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77.1%, and (ii) an increase of 8.1% in gross profit from this segment as a percentage of revenues from this same segment, derived from (i), as compared
with a decrease in administrative expenses as a percentage of revenues and a lower increase in selling expenses as a percentage of revenues, all from our Credit Card Operations segment.

Other. Operating income from our Other segment decreased 205.7%, from a loss of Ps. 0.1 million during fiscal year ended June 30,
2004 to a loss of Ps. 0.4 million during fiscal year ended June 30, 2005. This was mainly as a result of the small increase in costs from this segment of Ps. 0.2 million, that, nothwithstanding, represented a porcentual increase of
619.4%. Operating loss from Other segment, as a percentage of total revenues from this segment, increased from 188.8% during fiscal year ended June 30, 2004 to 305.0% during fiscal year ended June 30, 2005, primarily as a result of a
higher increase in costs as compared to the increase in revenues.



|                          |  |                                                     |   |  |      |  
|------------------------- |  | --------------------------------------------------- | - |  | ---- | -
|                          |  | Operating Income for thefiscal years ended June 30, |  
|                          |  | 2004                                                |   |  | 2005 |  
|                          |  | (in million of Pesos)                               |  
|Leases and services       |  | 34.3                                                |   |  | 68.6 |  
|Credit card operations    |  | 3.8                                                 |   |  | 12.1 |  
|Other                     |  | (0.1                                                | ) |  | (0.4 | )
|Intersegment eliminations |  | 1.6                                                 |   |  | 1.0  |  
|                          |  |                                                     |   |  |      |  
|Total operating income    |  | 39.6                                                |   |  | 81.4 |  

Equity loss from related companies

The result arising from our share in other companies registered a Ps. 0.4 million increase, from a loss of Ps. 1.1 million during fiscal year
ended June 30, 2004 to a loss of Ps. 0.7 million during fiscal year ended June 30, 2005. This was mainly due to: (i) a decrease in the loss from E-Commerce Latina S.A. in which we share an interest of 50.0%; and (ii) the
consolidation of Mendoza Plaza Shopping as from October 2004 as a consequence of our acquisition of an additional 49.9% ownership interest.

Amortization of goodwill

The amortization of goodwill did not change from the previous fiscal year, amounting to Ps.
4.8 million for both fiscal years ended June 30, 2004 and 2005. Such amount represents the amortization of the goodwill generated by the acquisition of Shopping Alto Palermo S.A., Fibesa S.A. and Tarshop S.A.

Financial results, net

Financial
results, net decreased Ps. 4.9 million, from an income of Ps. 7.3 million during fiscal year ended June 30, 2004 to an income of Ps. 2.4 million during fiscal year ended June 30, 2005.

Financial results, net generated by assets decreased Ps. 13.6 million, from an income of Ps. 31.8 million during fiscal year ended
June 30, 2004 to an income of Ps. 18.2 million during fiscal year ended June 30, 2005. This was mainly due to a higher recovery recorded during fiscal year ended June 30, 2004 in the allowance for impairment of long-lived assets.

Financial results, net generated by liabilities decreased Ps. 8.7 million, from a loss of Ps. 24.5 million during fiscal year
ended June 30, 2004 to a loss of Ps. 15.8 million during fiscal year ended June 30, 2005. This decrease was mainly attributed to: (i) a lower charge for interest with affiliated companies and other related parties of Ps.
12.0 million mainly resulting from the Argentine peso appreciation vs. the U.S. dollar of 2.4%, taking into account that during year 2004 the value of the foreign currency had an inverse performance by depreciating 5.6%. Such appraisal produces
a positive impact on our US$ debt for convertible notes, the



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majority of which is held by our major shareholders; (ii) less income of Ps. 6.0 million recorded in year 2005 in connection with derivative
financial instruments cancelled in April 2005; (iii) a higher income of Ps. 2.1 million originated during fiscal year ended June 30, 2005. This was mainly due to the cancellation with discount of financial loans owed by Mendoza Plaza
Shopping S.A.; (iv) a decrease of the financial expenses of Ps. 0.9 million primarily due to less indebtedness originated after the repurchase and cancellation of Negotiable Obligations and the capitalization of interest allocated to the
development of Alto Rosario, that were partially offset by the inclusion of the financing expenses of Mendoza Plaza Shopping S.A. and charges arising from the new loans taken by us. We would like to mention that these new loans accrue a lower rate
of interest if compared with the loans previously cancelled during the year.

Other expenses, net

Other expenses, net increased Ps. 2.2 million, from Ps. 5.2 million during
fiscal year ended June 30, 2004 to Ps. 7.4 million during fiscal year ended June 30, 2005. This was mainly due to: (i) an increase of donations of Ps. 1.6 million and (ii) a loss of Ps. 1.5 million related to the
tax on personal assets of shareholders, as a consequence of the board of directors ́ decision of not transferring such tax, which was partially offset by the non-existence of negative results for the rejection of a gross income tax exemption on
construction for Ps. 2.1 million that were recorded in fiscal year ended June 30, 2004.

Income before taxes and minority
interest

As a result of the factors described above, income before taxes and minority interest registered a Ps. 35.2 million
increase from Ps. 35.7 million during fiscal year ended June 30, 2004 to Ps. 70.9 million during fiscal year ended June 30, 2005.

Income tax

The income tax charge increased Ps. 17.3 million, from Ps. 16.3 million during
fiscal year ended June 30, 2004 to Ps. 33.6 million during fiscal year ended June 30, 2005. The effective tax rate for fiscal year ended June 30, 2005 was 47.4% and 45.7% for fiscal year ended June 30, 2004. The effective
rate differs from the statutory tax rate mainly due to non deductible amortization and depreciation charges originated by inflation accounting. We record income taxes using the deferred tax method. Accordingly, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We have treated the differences between the price-level
restated amounts of assets and liabilities and their historical basis as permanent differences for deferred income tax calculation purposes as prescribed by Argentine GAAP.

Minority interest

Minority interest
registered a Ps. 3.5 million decrease, from a loss of Ps. 0.6 million during fiscal year ended June 30, 2004 to a loss of Ps. 4.0 million during fiscal year ended June 30, 2005. This increase was mainly due to the
consolidation of the nine-month period results of Mendoza Plaza Shopping S.A. and an increase in the income registered by our subsidiary Tarshop.

Net income

As a result of the factors explained above, net income increased Ps. 14.4 million, from Ps.
18.8 million during fiscal year ended June 30, 2004 to Ps. 33.3 million during fiscal year ended June 30, 2005.

B. Liquidity and
Capital Resources

Our main liquidity and capital resources requirements include:



| |  |  | the acquisition of shopping centers;
| | - |  | ------------------------------------



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| |  |  | the development of new shopping centers;
| | - |  | ----------------------------------------



| |  |  | the improvement of existing shopping centers;
| | - |  | ---------------------------------------------



| |  |  | the development of residential properties for sale;
| | - |  | ---------------------------------------------------



| |  |  | working capital needs; and
| | - |  | --------------------------



| |  |  | the maintenance of cash and other liquid assets to enable us to take advantage of the acquisition and development opportunities as they arise.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------

As of June 30, 2007 we had working capital of Ps. 324,5 million. At the same date, we had cash and cash equivalents
totaling Ps. 485.5 million, an increase of Ps. 429.1 million, from Ps. 56.4 million held as of June 30, 2006, primarily due to an increase in cash provided by operating activities of Ps. 9.0 million and an increase in cash
provided by financing activities of Ps. 473.5 million, mainly generated by the cash and cash equivalent generated by the issuance of Notes and the cash acquired from Empalme S.A.I.C.F.A. y G. and Panamerican Mall S.A., partially offset by an
increase in cash used in investing activities of Ps. 60.2 million.

Cash Flow Information

Operating Activities

Fiscal Year
2007. Our operating activities generated net cash of Ps. 179.7 million for fiscal year ended June 30, 2007. Net cash generated by operations during fiscal year ended June 30, 2007 increased 5.3% by Ps. 9.0 million as compared
to fiscal year ended June 30, 2006, primarily due to an increase in operating cash inflows without considering changes in certain assets and liabilities of Ps. 52.1 million, an increase in trade accounts payable, salaries and social
securities and customer advances of Ps. 31.8 million and a decrease in accounts receivable of Ps. 8.7 million. This was partially offset by increases in other receivable and prepaid expenses, and inventory of Ps. 61.7 million and a
decrease in taxes payable of Ps. 23.8 million.

Fiscal Year 2006. Our operating activities generated net cash of Ps.
170.7 million for fiscal year ended June 30, 2006. Net cash generated by operations during the fiscal year ended June 30, 2006 increased 79.5% by Ps. 75.6 million as compared to fiscal year ended June 30, 2005, primarily due
to an increase in operating cash inflows without considering changes in certain assets and liabilities of Ps. 62.8 million, an increase in trade accounts payable and accrued interests of Ps. 45.2 million and a decrease in inventory of Ps.
18.2 million. This was partially offset by increases in accounts receivable of Ps. 32.0 million and a decrease in customer advances and taxes payable of Ps. 21.0 million.

Fiscal Year 2005. Our operating activities generated net cash of Ps. 95.1 million for fiscal year ended June 30, 2005. Net cash
generated by operations during the fiscal year ended June 30, 2005 increased 21.1% by Ps. 16.6 million as compared to fiscal year ended June 30, 2004, primarily due to an increase in operating cash inflows without considering changes
in certain assets and liabilities of Ps. 49.7 million and an increase in customer advances of Ps. 15.0 million. This was partially offset by increases in accounts receivable and other receivables and prepaid expenses totaling Ps.
43.5 million and a decrease in accrued interest of Ps. 7.7 million.

Investment Activities

Fiscal Year 2007. The net cash used in investing activities was Ps. 184.2 million for fiscal year ended June 30, 2007. Net cash used in
investing activities increased by Ps. 60.2 million as compared to fiscal year ended June 30, 2006, primarily due to: (i) an increase of Ps. 25 million in cash used for the construction of garages, to be located in a building next
to our Paseo Alcorta shopping center, (ii) an increase of Ps. 18.5 million related to the construction of Panamerican Mall, (iii) a down payment of Ps. 9.7 million for the acquisition of the building known as Ex Escuela
Gobernador Vicente Olmos, located in Cordoba, (iv) an increase of Ps. 44.4 million related to the acquisition of the 100% of the capital stock of Empalme S.A.I.C.F.A. y G. and the 80% of the capital stock of Panamerican Mall S.A., and
(v) an increase of Ps. 28.2 million related to other investments. This was partially offset by a decrease in the net cash used for the acquisition of undeveloped parcels of land of Ps. 60.7 million.



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Fiscal Year 2006. The net cash used in investing activities was Ps. 124.0 million fiscal year
ended June 30, 2006. Net cash used in investing activities increased by Ps. 62.5 million as compared to fiscal year ended June 30, 2006. The increase in net cash used in investing activities was primarily the result of: (i) the
increase in cash used for the acquisition of Philips Argentina S.A.s parcel of land and other land reserves amounting to Ps. 61.3 million during fiscal year ended June 30, 2006 as compared to Ps. 0.7 million during fiscal year
ended June 30, 2005, (ii) an increase of Ps. 17.8 million related to other investments, and (iii) Ps. 8.6 million corresponding to a guarantee deposited in escrow with Deustche Bank in favor of Argentimo S.A. related to an
agreement entered into between Alto Palermo S.A., Argentimo S.A. and Constructora San José Argentina S.A. by which the guidelines are established for negotiating the acquisition of land for the development of a shopping center and a dwelling
and / or office building . This was partially offset by a decrease in the net cash used in the improvements of our shopping center properties of Ps. 20.3 million.

Fiscal Year 2005. The net cash used in investing activities was Ps. 61.5 million for fiscal year ended June 30, 2005. The increase in net cash used in investing activities was primarily the result of
the increase in cash used for the construction of Alto Rosario Shopping and for the acquisition of other fixed assets amounting to Ps. 50.6 million during fiscal year ended June 30, 2005 as compared to Ps. 20.4 million during fiscal
year ended June 30, 2004, (ii) Ps. 0.7 million related to the acquisition of undeveloped parcels of land and (iii) Ps. 4.2 million (US$1.77 million corresponding to the first installment, net of cash acquired) related to the
acquisition of 49.9% of the capital stock of Mendoza Plaza Shopping S.A. We acquired Mendoza Plaza Shopping S.A. for a total amount of US$5.3 million, of which US$1.77 million was paid on December 2, 2004 and the remaining balance was paid in
two equal annual installments of US$1.77 million each due on September 29, 2005 and 2006.

Financing Activities

Fiscal Year 2007.The net cash used in financing activities was Ps. 433.6 million for fiscal year ended June 30, 2007, primarily due to
cash equivalent generated by the issuance of Notes and other new loans of Ps. 696.2 million, partially offset by cash used in (i) the cancellation of Ps. 190.2 million of loans and advances in current account, (ii) the payment of
dividends for Ps. 47.0 million, and (iii) the cancellation of Ps. 24.9 million related to the seller financing for the acquisition of Empalme S.A.I.C.F.A. Y G., Shopping Neuquén S.A. and Mendoza Plaza Shopping S.A.

Fiscal Year 2006. The net cash used in financing activities was Ps. 40.0 million for fiscal year ended June 30, 2006, primarily due
to the payment of debts of Ps. 42.0 million, the payment of dividends of Ps. 29.0 million and the cancellation of Ps. 5.1 million corresponding to the second installment related to the acquisition of 49.9% of the capital stock of
Mendoza Plaza Shopping S.A., partially offset by cash inflows of Ps. 38.4 million as a result of new loans and advances in current account.

Fiscal Year 2005. The net cash used in financing activities was Ps. 52.2 million for fiscal year ended June 30, 2005, mainly due to the payment of debts of Ps. 133.3 million and the payment of
dividends of Ps. 18.4 million, partially offset by cash inflows of Ps. 99.5 million as a result of new loans and the settlement of the swap agreement.

Our working capital and our cash from operating activities are adequate for our present and future requirements. In the event that cash generated from our operations is at any time insufficient to finance our working
capital, we would seek to finance such working capital needs through debt or equity financing or selective asset sales.



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Our Indebtedness

Our total pending debt as of June 30, 2007, amounted to Ps 756.0 million, out of which 72.4% was debt denominated in US dollars and 27.6% was in Pesos.

Certain information on our debt as of June 30, 2007, and a description of the main components thereof are disclosed in the following table:

Debt as of June 30, 2007



|                                               |  |                |  |                 |   |  |                  |   |  |                  |   |  |                  |   |  |              |   |  |           |   |  |              |  
|---------------------------------------------- |  | -------------- |  | --------------- | - |  | ---------------- | - |  | ---------------- | - |  | ---------------- | - |  | ------------ | - |  | --------- | - |  | ------------ | -
|                                               |  | Currency       |  | Less than1 year |   |  | From 1 to 2years |   |  | From 2 to 3years |   |  | From 3 to 5years |   |  | Over 5 years |   |  | Total     |   |  | Average rate |  
|                                               |  | (in thousands) |  |                 |   | 
|Bank and financial loans                       |  |                |  |                 |   |  |                  |   |  |                  |   |  |                  |   |  |              |   |  |           |   |  |              |  
|Convertible Notes Due 2014 (1)                 |  | US$            |  | 6,483.3         |   |  |                 |   |  |                 |   |  |                 |   |  | 146,076.0    |   |  | 152,559.3 |   |  | 10           | %
|Serie I Notes (1)                              |  | US$            |  | 4,059.6         |   |  |                 |   |  |                 |   |  |                 |   |  | 371,160.0    |   |  | 375,219.6 |   |  | 7.88         | %
|Serie II Notes (1)                             |  | Ps.            |  | 2,353.0         |   |  | 22,002.8         |   |  | 44,005.7         |   |  | 44,005.7         |   |  | 44,005.7     |   |  | 156,373.0 |   |  | 11           | %
|Notes issuance expenses                        |  | Ps.            |  | (1,016.5        | ) |  | (1,016.5         | ) |  | (741.5           | ) |  | (536.4           | ) |  | (2,529.1     | ) |  | (5,839.9  | ) |  |              |  
|Checking account Overdrafts                    |  | Ps.            |  | 40,006.3        |   |  |                 |   |  |                 |   |  |                 |   |  |             |   |  | 40,006.3  |   |  | 11           | %
|Standard Bank (former Bank Boston)             |  | Ps.            |  | 8,500.0         |   |  | 2,800.0          |   |  |                 |   |  |                 |   |  |             |   |  | 11,300.0  |   |  | 14           | %
|Banco Ciudad Loan                              |  | Ps.            |  | 1,926.0         |   |  | 2,200.1          |   |  | 597.2            |   |  |                 |   |  |             |   |  | 4,723.3   |   |  | 13           | %
|Other financial loans                          |  | US$            |  | 618.4           |   |  | 536.0            |   |  |                 |   |  |                 |   |  |             |   |  | 1,154.4   |   |  |              |  
|Other financial loans                          |  | Ps.            |  | 90.8            |   |  |                 |   |  |                 |   |  |                 |   |  |             |   |  | 90.8      |   |  |              |  
|Interest payable on account of financial trust |  | Ps.            |  | 1,108.7         |   |  |                 |   |  |                 |   |  |                 |   |  |             |   |  | 1,108.7   |   |  |              |  
|Other interest payable                         |  | Ps.            |  | 593.4           |   |  |                 |   |  |                 |   |  |                 |   |  |             |   |  | 593.4     |   |  |              |  
|                                               |  |                |  |                 |   |  |                  |   |  |                  |   |  |                  |   |  |              |   |  |           |   |  |              |  
|Total bank and financial loans                 |  |                |  | 64,723.0        |   |  | 26,522.4         |   |  | 43,861.4         |   |  | 43,469.3         |   |  | 558,712.6    |   |  | 737,288.7 |   |  |              |  
|Other loans                                    |  |                |  |                 |   |  |                  |   |  |                  |   |  |                  |   |  |              |   |  |           |   |  |              |  
|Mortgage loans                                 |  | Ps.            |  | 105.8           |   |  |                 |   |  |                 |   |  |                 |   |  |             |   |  | 105.8     |   |  |              |  
|Total other loans                              |  |                |  | 105.8           |   |  |                 |   |  |                 |   |  |                 |   |  |             |   |  | 105.8     |   |  |              |  
|Mortgage loans                                 |  |                |  |                 |   |  |                  |   |  |                  |   |  |                  |   |  |              |   |  |           |   |  |              |  
|Seller financingEmpalme S.A.I.C.F.A.yG. (1)   |  | US$            |  | 12,381.3        |   |  | 6,186.0          |   |  |                 |   |  |                 |   |  |             |   |  | 18,567.3  |   |  | 6            | %
|Total mortgage loans                           |  |                |  | 12,381.3        |   |  | 6,186.0          |   |  |                 |   |  |                 |   |  |             |   |  | 18,567.3  |   |  |              |  
|Total debt                                     |  |                |  | 77,210.1        |   |  | 32,708.4         |   |  | 43,861.4         |   |  | 43,469.3         |   |  | 558,712.6    |   |  | 755,961.8 |   |  |              |  
|                                               |  |                |  |                 |   |  |                  |   |  |                  |   |  |                  |   |  |              |   |  |           |   |  |              |  

---

|(1) | Including interest accrued as of June 30, 2007.
|--- | -----------------------------------------------



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Convertible Notes due 2014

On August 20, 2002 we issued US$50.0 million of uncollateralized convertible notes (the Convertible Notes) in exchange for cash and the
settlement of certain liabilities with our shareholders. Raymond James Argentina Sociedad de Bolsa S.A. acted as subscription and placement agent and the offer was subscribed in full. Proceeds from the issuance of Convertible Notes were used to
repay short-term bank loans for Ps.27.3 million and for the redemption of certain senior notes we had issued for a principal amount of Ps.52.8 million. The Convertible Notes bear interest (payable semiannually) at a fixed annual rate of 10.0% and
are convertible, at any time at the option of the holder, into common shares of Ps.0.10 par value per share. The conversion rate per U.S. dollar is the lesser of 3.08642 and the result obtained from dividing the exchange rate in effect at the
conversion date by the par value of our common shares. The Convertible Notes were originally scheduled to mature on July 19, 2006. However, on May 2, 2006 during an extraordinary noteholders meeting, the noteholders approved to
extend the maturity date of the Convertible Notes to July 19, 2014, leaving unchanged all other terms and conditions. During fiscal years 2006, 2005, 2004 and 2003 holders of approximately US$2.77 million of our Convertible Notes exercised
their conversion rights and, as a result, we issued 1,539,000; 52,741,373; 22,852,514 and 4,829,745 common shares, respectively. As of June 30, 2007 the outstanding balance of our Convertible Notes was US$47.2 million. In the event all the
bondholders exercise their conversion rights, our common shares would increase from Ps.782.1 million to Ps.2,239.7 million.

Bank Boston
and Banco Ciudad loans.

Our subsidiary Tarshop obtained a Ps. 4.9 million loan from Banco de la Ciudad de Buenos Aires secured by
certificates of participation of Tarjeta Shoppings Series XII, XIV, XVI, and XVIII financial trusts. It also obtained Ps. 11.7 million from Bank Boston N.A., Sucursal Buenos Aires, partially secured through a security interest on the
certificates of participation of Tarjeta Shoppings Series XXI, XXIII, XXV, and XXVI financial trusts.

Purchase of shares 
Empalme S.A.I.C.F.A. y G.

On July 7, 2006, we executed a share purchase agreement jointly with our subsidiary Shopping Alto
Palermo S.A. for the acquisition of all the shares held by Empalme S.A.I.C.F.A. y G., owner of Córdoba Shopping Villa Cabrera. The price agreed upon for such transaction was set at a gross amount of US$12.0 million plus a variable amount
(originally established in the contract), that was determined at Ps.4 million. The Companys incorporation was effective on December 31, 2006. To date, our company and our subsidiary Shopping Alto Palermo S.A. paid over US$6.0 million and
the amount related to the year-end adjustment. As of June 30, 2007, 3 US$2.0 million installments are pending payment; such installments will become due and payable semi-annually as from December 2007, accruing interest at 6.0% p.a.
To secure the unpaid payment price, we have pledged in favor of the sellers 100% of our equity interests in Empalme. Upon repaying each of the remaining installments, the encumbrance will be partially lifted.

Series I and II Notes.

On
May 11, 2007, we issued two new series of notes in an aggregate principal amount of US$170 million. Series I consists of US$120 million of notes due on May 11, 2017, which accrue interest at a fixed rate of 7.875% payable semi-annually on
May 11 and November 11 of each year, commencing on November 11, 2007. The Series I notes mature in a single installment on May 11, 2017.

Series II consists of Ps.154 million (equivalent to US$50 million) of notes which mature in seven, equal and consecutive semi-annual installments commencing on June 11, 2009, and which accrue interest at
11% per annum, payable on June 11 and December 11 of each year commencing on December 11, 2007.

The Series I and II
were issued within the Global Corporate Bonds Issuance Program for a face value of up to US$ 200 million (the Program) authorized by the Comisión Nacional de Valores through Resolution No. 15,614 dated
April 19, 2007.



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Notes Series I and II were rated by Standard & Poors Rating Services (S&P)
and Fitch Ratings Ltd. (Fitch). S&P has rated both classes B+ internationally and raAA- locally, while Fitch rated both series B+ internationally and AA-(arg) locally.

Our capital expenditures

Fiscal year 2007

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

Fiscal year 2006

During fiscal year 2006 we invested approximately Ps. 100.2 million in capital expenditures of which
Ps. 61.3 million were related to the acquisition of a plot of land in the Northern Area of the City of Buenos Aires, in the district of Saavedra, and other undeveloped plots of land, Ps. 30.3 million correspond to improvements made to our
shopping center properties and Ps. 8.6 million are kept in escrow in the Deustche Bank in favor of Argentimo S.A. pursuant to an agreement entered into between Alto Palermo S.A., Argentimo S.A. and Constructora San José Argentina S.A.
which sets forth the guidelines for negotiating the acquisition of land in which we plan to develop a commercial center and a dwelling and / or office building. For more information on our capital expenditures after June 30, 2006.

Fiscal year 2005

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

Five month period-Fiscal Year 2008.

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

Recent Developments

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



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

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

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

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

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

C. Research and Development, Patents and Licenses, etc.

We do not have any research, development, patents or
licenses that are material for the conduct of our business.

D. Trend Information

Development and Perspectives of Shopping Centers in Argentina

On the basis of the last available data provided by Argentine statistical and census agency or INDEC, the first quarter of calendar year 2007 showed a new
improvement in total consumption, reaching record values both in its private component (with an interannual positive 8.2% variation) and in its public component (with a positive 6.4% variation). Although there is no official data up today, it is
expected for calendar 2007 that private consumption increases by 7%. Such indicator would be anticipating a good behavior of household consumption, as can be seen from the development of wholesaling, retailing and auto sales in a context where
consumer loans continue to show increased growth rates.

The increase in the retail consumption was evidenced in a greater quantity of
registered revenues for the shopping centers at constant prices. In the January  October period, unseasonalized sales at constant prices by shopping centers showed a positive interannual 18.01% variation while total sales booked in the same
period show a interannual 28.11% increase regarding the same period of the prior year.

Unemployment would continue to shrink in
interannual terms, taking into account increase labor demand



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that would accompany the expansion of the economic activity. Thus, the uptrend of year 2006 would extend all throughout year 2007, although the reduction
would be lower than that of the last two years. For the third quarter of the calendar year 2007, unemployment rate measured by the Permanent Household Survey (EPH) prepared by INDEC stood at 8.1% of economically active population (PEA), continuing
its upward trend seen since the crisis onset.

The perspectives on the consumption behavior and the ensuing performance of shopping centers
are closely linked to the economy trend and the preference of the affluent tourism for the commercial alternatives in the country and the competitiveness of the nominal exchange rate. According to the IMF as to GDP development during the calendar
years 2006 and 2007, which will exceed 7.5%, it should be expected that the sales at shopping centers continue to improve in the coming year.

The Shopping Center industry in Argentina has been benefited from the recovery of the economy. Our net revenues increased 33.7% from Ps 361.4 million during fiscal year ended June 30, 2006, to Ps 483.2 million during fiscal
year ended June 30, 2007. This was mainly as a result of: (i) a Ps 90.0 million increase in revenues from our Credit Card Operations segment and; (ii) a Ps 55.4 million increase in revenues from our Leases and Services
segment partially offset by (iii) the non-recurring sale of the Alcorta Plaza parcel of land which generated revenues in our Others segment amounting to Ps 23.0 million during fiscal year ended June 30, 2006.

The occupancy of our shopping centers has been one of the ratios that we have been able to maintain in almost optimum levels during fiscal year 2007. GLA
percentage occupied as of June 30, 2007 was 97.0%. Vacancy levels in our shopping centers suffered minimum variations reflecting an increase in demand as a result of our excellent commercial offering, and the ability of our commercial
department to properly manage this growth in demand from potential tenants.

Tarshop, our credit card subsidiary, showed good results which
were reflected in the substantial growth of its credit portfolio, which amounted to Ps. 723.6 million as of June 30, 2007 as compared to Ps. 384.6 million as of June 30, 2006. In addition, the amount of sales and the number of
member stores increased 90.5% and 49.0%, respectively, while short and medium term delinquency rates were maintained at historically low levels. We expanded our operations in the interior of the country, where our performance was highly
satisfactory, and decided to expand into other densely populated cities.

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

Our performance enabled us to distinguish ourselves from our competitors in the shopping center market in the City of Buenos Aires
and the greater Buenos Aires area, while maintaining the efficiency gap obtained over the past fiscal year. For the twelve-month period ended June 30, 2007 our tenants sales per square meter were a 79.3% more than our competitors.
Our competitors sales per square meter are determined by calculating the difference between total square meters of gross leasable area, in the City of Buenos Aires and greater Buenos Aires area, and the square meters of our gross leasable
area. Our tenants sales, not including Córdoba Villa Cabreras sales, increased 24.2% from Ps. 2,275.1 million during fiscal year ended June 30, 2006, to Ps. 2,825.8 million during the fiscal year ended June 30,
2007.

Due to the increased activity in the retail sector, we have been able to negotiate more favorable leasing conditions with our new
tenants and the existing tenants upon renewal.

During fiscal year 2007 we maintained our leading position in the shopping center market,
holding more than less 58.9% of the gross leasable area available in the City of Buenos Aires and around 10.8% of the total stores in shopping centers in the greater Buenos Aires area. We are an important channel for positioning first-line brands
and high impact promotions.



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As part of our business strategy we will continue making changes to attract new customers, including the
generation of new offerings in our shopping centers. We have created several exclusive products with the aim of attracting tourists from abroad, including publicity at hotels, harbors and airports. We also have implemented advertising campaigns at
the national and international level. Our customer service centers are now available to respond to questions and confirm the receipt of orders.

These factors have caused demand for our space to increase, allowing us to choose a higher quality of customers and tenant mix appropriate for each shopping center. Our tenants also invested significantly in the development of new
commercial offerings, improving the conditions offered by each shopping center. We continue to provide our customers with training, advice, conferences and seminars, thus promoting a stronger relationship with us.

Although we expect the positive economic trends to continue, we cannot assure this will happen. Our business is largely affected by economic downturns.
Any decrease in investment and consumption decisions could cause a reduction in retail sales, sales of real estate and commercial space.

E. Off-Balance Sheet Arrangements

There are no transactions, agreements or other contractual agreements
involving an unconsolidated entity that are not currently reflected in our consolidated balance sheet.

F. Tabular Disclosure of Contractual Obligations

The table below presents the maturity of our significant
contractual obligations, as of June 30, 2007, which consist of loans, bonds, and development obligations and agreements to purchase real estate. The table does not include deferred income tax liability and estimated payments of interest on our
loans and bonds, obligations under operating leases, assignment of credits payable, other accounts payable or costs to be incurred on the units not yet sold.



|                            |  |                                         |  |           |  |           |  |                  |  |          
|--------------------------- |  | --------------------------------------- |  | --------- |  | --------- |  | ---------------- |  | ---------
|                            |  | Payments due by period (Million of Ps.)
|                            |  | Less than1 year                         |  | 1-3 years |  | 3-5 years |  | More than5 years |  | Total    
|Debt                        |  | 38,163.0                                |  | 76,569.9  |  | 87,032.1  |  | 515,149.9        |  | 716,914.9
|Purchase obligations        |  | 1,010.0                                 |  |          |  |          |  |                 |  | 1,010.0  
|Other long term obligations |  | 181.8                                   |  | 416.3     |  | 498.0     |  | 568.8            |  | 1,664.9  
|Total (1)                   |  | 39,354.7                                |  | 76,986.2  |  | 87,530.1  |  | 515,718.7        |  | 719,589.8

---

|(1) | Includes our main financial and related parties debts, foreign suppliers and tax amnesty plan for gross sales tax payable.
|--- | --------------------------------------------------------------------------------------------------------------------------

G. Safe Harbor

See the discussion at the beginning of this Item 5 and Forward looking
statements in the introduction of this Annual Report for forward-looking safe harbor provisions.



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|ITEM 6. | Directors, Senior Management and Employees
|------- | ------------------------------------------

A. Directors and Senior Management

Board of Directors

Our administration and management rest with our Board of Directors. Our bylaws provide that the Board of Directors will be comprised of a minimum eight
and a maximum twelve directors and between eight and twelve alternate directors. The directors are elected by majority vote by our shareholders at a regular shareholders meeting for a three-year term and may be reelected indefinitely.

At present, our Board of Directors is comprised of ten directors and nine alternate directors. Alternate directors will be summoned to act
as directors in case of absence, vacancy or demise, until a new director is appointed.

The table below contains the information on our
Directors and Alternate Directors:



|                                |  |               |  |                         |  |                                |  |                  |  |                              
|------------------------------- |  | ------------- |  | ----------------------- |  | ------------------------------ |  | ---------------- |  | -----------------------------
|Name                            |  | Date of birth |  | Position held           |  | Appointed tocurrentposition in |  | Office ending in |  | Holding currentposition since
|Eduardo S. Elsztain             |  | 26/01/1960    |  | Chairman                |  | 2006                           |  | 2009             |  | 1994                         
|Saúl Zang                       |  | 30/12/1945    |  | Vice-chairman           |  | 2006                           |  | 2009             |  | 2003                         
|Alejandro G. Elsztain           |  | 31/03/1966    |  | Executive vice-chairman |  | 2006                           |  | 2009             |  | 2003                         
|Daniel R. Elsztain              |  | 22/12/1972    |  | Director                |  | 2004                           |  | 2009             |  | 2004                         
|Abraham Perelman                |  | 04/04/1941    |  | Director                |  | 2006                           |  | 2009             |  | 2003                         
|Ira Chaplik                     |  | 21/06/1961    |  | Director                |  | 2006                           |  | 2009             |  | 2006                         
|Fernando A. Elsztain            |  | 04/01/1961    |  | Director                |  | 2006                           |  | 2009             |  | 1998                         
|José Said Saffie                |  | 17/04/1930    |  | Director                |  | 2006                           |  | 2009             |  | 1998                         
|Leonardo Fernández              |  | 30/06/1967    |  | Director                |  | 2007                           |  | 2010             |  | 2007                         
|Enrique Antonini                |  | 16/03/1950    |  | Director                |  | 2007                           |  | 2010             |  | 2007                         
|David A. Perednik               |  | 15/11/1957    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2003                         
|José D. Eluchans Urenda         |  | 06/08/1953    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2003                         
|Hernán Büchi Buc                |  | 06/03/1949    |  | Alternate director      |  | 2006                           |  | 2009             |  | 1996                         
|Juan M. Quintana                |  | 11/02/1966    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2003                         
|Pablo Daniel Vergara del Carril |  | 03/10/1965    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2006                         
|Marcos Oscar Barylka            |  | 29/06/1945    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2006                         
|Salvador Darío Bergel           |  | 17/04/1932    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2006                         
|Mauricio Wior                   |  | 23/10/1956    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2006                         
|Gastón Armando Lernoud          |  | 04/06/1968    |  | Alternate director      |  | 2006                           |  | 2009             |  | 2006                         
|Andrés Olivos                   |  | 05/14/1958    |  | Alternative director    |  | 2007                           |  | 2010             |  | 2007                         
|Gabriel A.G. Reznik             |  | 18/11/1958    |  | Alternative director    |  | 2007                           |  | 2010             |  | 2004                         



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The following is a brief biographical description of each member of our board of directors:

Eduardo S. Elsztain.Mr. Elsztain studied Economic Sciences at University of Buenos Aires (Universidad de Buenos Aires). He
has been engaged in the real estate business for more than twenty years. He is the chairman of the board of directors of IRSA, Cresud, Shopping Alto Palermo S.A., Consultores Asset Management and BACS Banco de Crédito &
Securitización among other companies. He is also vice-chairman of Banco Hipotecario, E-Commerce Latina S.A. and BrasilAgro among other companies. He is Fernando A. Elsztains cousin and Alejandro G. Elsztains and Daniel R.
Elsztains brother

Saúl Zang. Mr. Zang obtained a law degree from the University of Buenos Aires. He is a member
of the International Bar Association and of the Interamerican Federation of Lawyers. He is a founding partner of Zang, Bergel & Viñes, law firm. He is also second vice chairman of the board of directors of IRSA and Cresud S.A.C.I.F.
y A. and he is also a member of the board of directors of Emprendimiento Recoleta, Puerto Retiro S.A., Nuevas Fronteras S.A., Cresud S.A.C.I.F. y A., Banco Hipotecario S.A. and Tarshop S.A.

Alejandro G. Elsztain. Mr. Elsztain obtained a degree in agricultural engineering from the University of Buenos Aires. He is currently
chairman of Tarshop S.A. and Emprendimiento Recoleta, director of Altocity and second vice-chairman of IRSA and Cresud S.A.C.I.F. y A. Alejandro G. Elsztain is Eduardo S. Elsztains and Daniel R. Elsztains brother and Fernando A.
Elsztains cousin.

Daniel R. Elsztain. Mr. Elsztain obtained a degree in economic sciences at the Torcuato Di Tella
University and has a master in business administration. He has been our commercial director since 1998. Mr. Elsztain is Mr. Eduardo S. Elsztains and Mr. Alejandro G. Elsztains brother and Fernando A.
Elsztains cousin.

Abraham Perelman. Mr. Perelman studied economic sciences at the University of Buenos Aires.
During the last thirty years he was a director of several outstanding companies in areas such as communications, electronics, aviation, farm technology, public services and art. He also was chairman of ISREX Argentina S.A. He is currently a director
of Guanaco Mining Co.

Ira Chaplik. Mr. Chaplik obtained a degree in accounting and J.D. from the University of Illinois. He is
chief operating officer of Equity International. He has been associated with us since its inception in 1999. Mr. Chaplik joined Equity Group Investments, LLC (EGI) in 1989. Prior to the formation of Equity
International, he played a key role in many real estate transactions involving Equity Office Properties Trust (EOP), Equity Residential (EQR), and Equity Lifestyle Properties, Inc. (ELS), as well as the four Zell/Merrill Lynch funds,
which led to the creation of EOP. Mr. Chaplik is also a certified public accountant.

Fernando A. Elsztain.
Mr. Elsztain obtained a degree in architecture at the University of Buenos Aires. He has been the chief commercial officer of IRSA since March 1994. He has been engaged in the real estate business as consultant and as managing officer of a
familiar real estate company. He is a director of IRSA,and Baldovinos S.A.; and alternate director of Banco Hipotecario S.A., among others. Mr. Fernando A. Elsztain is Eduardo S. Elsztains and Alejandro G. Elsztains
cousin.

José Said Saffie. Mr. Said obtained a law degree at the University of Chile. He is the chairman of Banco BBVA
of Chile and Parque Arauco S.A.; and director of the Asociación de Bancos e Instituciones Financieras A.G.

Leonardo F.
Fernández. Mr. Fernández obtained a degree in law at the University of Buenos Aires. He serves as an alternate director on the board of directors of Disco S.A. and Transportadora de Gas del Norte S.A.

Enrique Antonini. Mr. Antonini holds a degree in law from the University of Buenos Aires. He is currently a member of the board of
directors of Banco Mariva S.A. (since 1992), Mariva Bursátil S.A. (since 1997). He has also served as a director of Inversiones y Representaciones S.A. from 1993 to 2002. He is a member of the Banking Lawyers Committee and the International
Bar Association.



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David A. Perednik. Mr. Perednik obtained a degree as a public accountant from the University
of Buenos Aires. He has worked in various companies such as Marifran Internacional S.A., a subsidiary of Louis Dreyfus Amateurs, where he acted as finance director from 1986 to 1997. Earlier he worked as a senior consultant in the Administration and
Systems management of Deloitte & Touche from 1983 until 1986. He currently works as administrative director of Cresud S.A.C.I.F. y A. and IRSA.

José D. Eluchans Urenda. Mr. Eluchans Urenda obtained a law degree at the Pontifician Catholic University of Chile (Pontificia Universidad Católica de Chile). He is a partner of the
Chilean law firm Eluchans and is a permanent advisor to Parque Araucos board of directors and an advisor to Banco BHIFs board of directors.

Hernán Büchi Buc. Mr. Büchi obtained a degree in civil engineering at the University of Chile and a masters degree in economy at Columbia University, New York, U.S.A. From 1979 to
1989, he worked as Undersecretary of Economy, Undersecretary of Health, Minister of Odeplan, Superintendent of Banks and Financial Institutions, and Minister of Finance of Chile. Currently, he is the President of Forestal Terranova and Luchetti and
a director of SQM and Madeco.

Juan M. Quintana. Mr. Quintana obtained a law degree at the University of Buenos Aires. He is a
partner of the law firm Zang, Bergel & Viñes. He is a director of APSA and an alternate director of Nuevas Fronteras S.A. and Fibesa.

Pablo Daniel Vergara del Carril. Mr. Vergara del Carril obtained a law degree from the Argentine Catholic University where he teaches Commercial Law and Contract Law. He also teaches Corporate Law,
Contracts and Capital Markets in post-graduate courses. He is a member of the Legal Advisory Committee of the Cámara de Sociedades Anónimas as well as Vice President of the Antitrust Law Committee of the Colegio de Abogados de la
Ciudad de Buenos Aires. He is a member of the board of directors of Emprendimiento Recoleta, Nuevas Fronteras S.A., Milkaut S.A. and Banco Hipotecario S.A. Mr. Pablo Vergara del Carril is the son of our syndic Mr. Ángel D. Vergara
del Carril.

Marcos Oscar Barylka. Mr. Barylka obtained a degree in commercial activities from the Gral. San Martín
School. Oscar Barylka has been involved in the retail and the gastronomy industries for over 35 years, having served as partner, manager and consultant for several companies. Since 2006, Mr. Barylka serves as Secretary of the Pele Ioetz
Foundation, which provides support to families suffering economic and social problems in Argentina.

Salvador D. Bergel.
Mr. Bergel obtained a law degree and a Ph.D from Litoral University (Universidad del Litoral). He is a founding partner of Zang, Bergel & Viñes law firm and a consultant at Repsol YPF S.A. He is also an alternate director
of Cresud S.A.C.I.F. y A.

Mauricio Wior. Mr. Wior obtained a masters degree in finance, as well as a bachelors degree in
economics and accounting from Tel Aviv University in Israel. Mr. Wior is currently a director of Ertach S.A. and Banco Hipotecario S.A. He has held positions at Bellsouth were he was Vice-President for Latin America from 1995 to 2004.
Mr. Wior was also CEO of Movicom Bellsouth from 1991 to 2004. In addition, he led the operations of various cellular phone companies in Uruguay, Chile, Peru, Ecuador and Venezuela. He was president of the Asociación Latinoamericana de
Celulares (ALCACEL); U.S. Chamber of Commerce in Argentina and the Israeli-Argentine Chamber of Commerce. He was director of Instituto para el Desarrollo Empresarial de la Argentina (IDEA), Fundación de Investigaciones
Económicas latinoamericanas (FIEL) and Tzedaka.

Gastón Armando Lernoud. Mr. Lernoud obtained a law degree
from El Salvador University (Universidad de El Salvador) in 1992. He finished his master in corporate law at the Palermo University (Universidad de Palermo) in 1996. He was a senior associated member of Zang, Bergel & Viñes Law Firm
until June 2002, and then he entered Cresud S.A.C.I.F. y A as a senior manager.



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Andrés Olivos. Mr. Olivos graduated as a commercial engineer from the University of
Chile. He is Managing Director of Parque Arauco S.A. and Constructora y Administradora Uno S.A.

Gabriel A. G. Reznik.
Mr. Reznik obtained a degree in civil engineering from the University of Buenos Aires. He worked for IRSA since 1992 until May 2005 at which time he resigned. He formerly worked for an independent construction company in Argentina. He is an
alternate director of Emprendimiento Recoleta, Puerto Retiro S.A., Tarshop S.A. and Fibesa S.A., as well as member of the board of directors of Banco Hipotecario S.A., among others.

Employment Contracts With Our Directors

We do not have written contracts with our directors. However, Alejandro Elsztain, Fernando Elsztain and Daniel Elsztain are employed by us under the Labor Contract Law No. 20.744. This law governs certain conditions of the labor
relationship, including remuneration, protection of wages, hours of work, holidays, paid leave, maternity protection, minimum age requirements, protection of young workers and suspension and termination of the contract.

Executive Committee

In conformity
with our by-laws, the aspects related to the organization of the decision-making process are the responsibility of the Executive Board, which is made up by four directors, including our chairman and vice chairman. The current members of the
Executive Board are Mrs. Eduardo S. Elsztain, Saúl Zang, Alejandro G. Elsztain, and Fernando Elsztain.

The Executive
Board is in charge of the daily management of the activities delegated by the Board of Directors in conformity with current laws and our by-laws. Our by-laws authorize the Executive Board to:



| |  |  | designating managers and establishing their duties and compensation;
| | - |  | --------------------------------------------------------------------



| |  |  | granting and revoking powers on behalf of our company;
| | - |  | ------------------------------------------------------



| |  |  | hiring, penalizing, and terminating personnel, as well as determining salaries and compensation;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | entering into contracts related to our companys activity;
| | - |  | ----------------------------------------------------------



| |  |  | managing our companys assets;
| | - |  | ------------------------------



| |  |  | executing credit agreements for our companys activities and creating encumbrances to secure our obligations;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | and engaging in all the acts necessary to manage our companys daily activities.
| | - |  | --------------------------------------------------------------------------------

Supervisory Committee

Our
Supervisory Committee (Comisión Fiscalizadora) is responsible for reviewing and supervising our administration and affairs, and verifying compliance with our by-laws and the resolutions adopted at shareholders
meetings. The members of the Supervisory Committee are appointed at our annual general ordinary shareholders meeting for a one-year term. The Supervisory Committee is composed of three members and three alternate members.

The following table sets forth information about members of our Supervisory Committee who were elected at the annual general ordinary shareholders
meeting held on October 25, 2007. Positions will expire when the next annual general ordinary shareholders meeting takes place:



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|                             |  |               |  |                   |  |                           
|---------------------------- |  | ------------- |  | ----------------- |  | --------------------------
|Name and Position            |  | Date of Birth |  | Occupation inAPSA |  | Current PositionHeld Since
|Guillermo E. Matta y Trejo   |  | 11/08/1949    |  | Syndic            |  | 2006                      
|José D. Abelovich            |  | 07/20/1956    |  | Syndic            |  | 2005                      
|Ángel. D. Vergara del Carril |  | 03/15/1935    |  | Syndic            |  | 2006                      
|Armando Fabián Ricci         |  | 03/06/1964    |  | Alternate Syndic  |  | 2006                      
|Fabián Cainzos               |  | 11/07/1966    |  | Alternate Syndic  |  | 2006                      
|Marcelo Héctor Fuxman        |  | 11/30/1955    |  | Alternate Syndic  |  | 2005                      

Set forth below is a brief biographical description of each member of our Supervisory Committee:

Guillermo E. Matta y Trejo. Mr. Matta y Trejo obtained a law degree at the University of Buenos Aires. He is a member of the
International Bar Association and of the Insolvency International Institute. From 1975 to 1998 he taught Commercial Law at the University of Buenos Aires. He also teaches Corporate Law and legal aspects of Capital Markets in post-graduate courses at
University of Buenos Aires, Argentine Catholic University, Austral University and Belgrano University. He is the President of the board of directors of Ganadera del Villaguay, S.A.

José D. Abelovich. Mr. Abelovich obtained a degree in accounting from the University of Buenos Aires. He is a founding member and
partner of Abelovich, Polano & Asociados/SC International, a public accounting firm in Argentina. Formerly, he had been a manager of Harteneck, López y Cía/Coopers & Lybrand and has served as a senior advisor in
Argentina for the United Nations and the World Bank. He is a member of the Supervisory Committees, among others of APSA, SAPSA, Hoteles Argentinos and Inversora Bolívar S.A.

Ángel D. Vergara del Carril. Mr. Vergara del Carril obtained a law degree at the Universidad de Buenos Aires. In 1976 he received the
degree of Doctor of Juridical Sciences (S.J.D.) from Argentine Catholic University with a thesis on Merger of Business Companies. He served as in-house counsel to the Bunge & Born Corporation. He was Head of the Legal Department of Acindar
S.A. He founded the law firm Cassagne & Asociados with other lawyers. He has been teaching Commercial Law at Argentine Catholic University. He is also director of the capital markets postgraduate course at the same University, as well as
member of the Argentine Institute on Commercial Law of the National Law Academy and the International Bar Association. From 2002 to 2006 he acted as external legal advisor of the Securities Committee of the Bolsa de Comercio de Buenos Aires.
Currently he is counsel at law firm Zang, Bergel & Viñes, as well as chairman of the Club de Abogados de Empresas. He is an alternate member of the Arbitration Board of the Bolsa de Comercio de Buenos Aires of which rules of
arbitration he contributed to enact, as well as syndic of Atanor S.A. and Bodegas Hispano Argentinas S.A. Mr. Ángel D. Vergara del Carril is the father of our alternate director Mr. Pablo Daniel Vergara del Carril.

Armando F. Ricci. Mr. Ricci obtained a law degree at the Universidad de Buenos Aires. He serves as an alternate director on the board of
directors of Nuevas Fronteras S.A., Pereiraola S.A., Canteras Natal Crespo S.A., Inversora Bolívar S.A., Palermo Invest S.A. y Tarshop S.A. Mr. Ricci has a master on corporate law at the ESEADE (Escuela Superior de Economía y
Administración de Empresas). He is a trained mediator and is advisor of several argentine listed companies. He is an associate of the law firm Zang, Bergel & Viñes, where he specializes in corporate law.

Fabián Cainzos. Mr. Cainzos obtained a law degree from the University of Buenos Aires. Currently, he is partner of the law firm
Cainzos, Fernández & Premrou. He also serves as director of Sullair Argentina S.A. and of the Supervisory Committee of Editorial Atlántida S.A.



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Marcelo H. Fuxman. Mr. Fuxman obtained a degree in accounting from the University of Buenos
Aires. He is a partner of Abelovich, Polano & Asociados/SC International, a public accounting firm in Argentina. He is a member of the Supervisory Committees of SAPSA, Inversora Bolívar S.A. and Banco Hipotecario S.A.

Senior Management

The board of
directors appoints and removes the senior management. Senior management performs its duties in accordance with the instructions of the board of directors.

The following table shows information about our current senior management, appointed by the board of directors at the meeting held on December 26, 2004:



|                      |  |               |  |                              |  |                           
|--------------------- |  | ------------- |  | ---------------------------- |  | --------------------------
|Name                  |  | Date of birth |  | Position                     |  | Current positionheld since
|Alejandro G. Elsztain |  | 03/31/1966    |  | Chief Executive Officer      |  | 2002                      
|Gabriel Blasi         |  | 11/22/1960    |  | Chief Financial Officer      |  | 2004                      
|David A. Perednik     |  | 11/15/1957    |  | Chief Administrative Officer |  | 2002                      
|Daniel R. Elsztain    |  | 12/22/1972    |  | Chief Commercial Officer     |  | 2004                      

The following is a brief description of each of our managers who are not directors:

Gabriel Blasi. Mr. Blasi obtained a degree in business administration and carried out post-graduate studies in Finance at CEMA
University (Universidad del CEMA -Centro de Estudios Macroeconómicos Argentinos-) and in the IAE (Universidad Austral). He formerly worked as a senior securities trader in Citibank N.A. Sucursal, Buenos Aires. He also held
several management positions related to investment banking and capital markets at Banco Río de la Plata S.A. (BSCH) and was financial director of the Carrefour Group and Goyaique SACIFIA (Grupo Perez Companc). Currently, he also serves as
chief financial officer of IRSA and Cresud.

B. Compensation

Members of the Board of Directors and Executive Committee

The Law of Corporations No. 19,550 establishes that if the compensation of the members of the board of directors and the Supervisory committee is not
established in our bylaws, the shareholders meeting should determine it. The maximum amount of total compensation of the members of the board of directors and the Supervisory committee, including wages and compensation for technical or
administrative permanent activities, cannot exceed 25% of our earnings.

That amount should be limited to 5% when there is no distribution
of dividends to shareholders, and will be increased proportionally to the distribution until reaching the limit set when all profits are distributed. In applying this rule any reduction in dividend distribution from the deduction of Board and
Supervisory committee compensation shall not be taken into account.

When one or more directors perform special commissions or technical or
administrative activities, and there are no earnings to distribute, or they are reduced, the shareholders meeting may approve compensation in excess of the above-mentioned limits.

The compensation of our directors for each fiscal year is determined pursuant to the Corporations Law, and taking into consideration if the directors
perform technical or administrative activities and our fiscal years results. Once the amount is determined, they are considered by the shareholders meeting.



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During our annual ordinary shareholders meeting which was held October 25, 2007 the shareholders
agreed to pay Ps.8.2 million to the members of the board of directors for the fiscal year ended June 30, 2007.

The members of the
executive committee did not receive compensation other than fees for their services as members of the board of directors.

Supervisory Committee

The shareholders meeting held on October 25, 2007, further approved unanimously not
to pay any compensation to the Supervisory Committee.

Senior Management

During the fiscal year ended June 30, 2007 we paid an aggregate amount of approximately Ps.2.3 million as compensation to our senior management.

Audit Committee

The members of the Audit Committee do not receive compensation other than fees for their services as members of the board of directors.

Compensation plan for executive management

During fiscal year 2007, we developed a special compensation plan for our
key managers (the Plan) by means of contributions to be made by the employees and us.

Such Plan is directed to key managers
and aims to retain them by increasing their total compensation package. It is granted to those who have met certain conditions. Participation and contributions under the Plan are voluntary. Once the invitation to participate has been accepted by the
employee (the Participant), he/she is required to make two kinds of contributions: monthly contributions (salary based) and extraordinary contribution (annual bonus based). The suggested contribution to be made by Participants is up to
2.5% of their monthly salary and up to 15.0% of their annual bonus.

Our contribution will be 200% of the employees ́ monthly
contributions and 300% of the extraordinary employees contributions.

The funds as a result of the Participants contributions
are transferred to a special independent vehicle created and located in Argentina as a Investment Fund approved by the Comisión Nacional de Valores. Such funds (including the rents derived thereof) are freely redeemable upon request of
the Participants.

Contributions made by us under the Plan are transferred to another separate and independent vehicle (e.g., a trust
fund).

Participants or their assigns, as the case may be, will have access to 100% of the benefits of the Plan (that is, our contributions
made on the Participants behalf to the specially created vehicle) under the following circumstances:



| |  |  | ordinary retirement in accordance with applicable labor regulations;
| | - |  | --------------------------------------------------------------------



| |  |  | total or permanent incapacity or disability; and
| | - |  | ------------------------------------------------



| |  |  | death.
| | - |  | ------

In case of resignation or
termination without good cause, the manager may redeem the amounts contributed by us only if he or she has participated in the Plan for at least 5 years.



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As of June 30, 2007 our contributions amounted to Ps.0.9 million.

C. Board Practices

Benefits upon Termination of Employment

There are no contracts providing for benefits to Directors upon termination of employment.

Audit Committee

In accordance with the Regime of Transparency in Public Offerings provided by Decree
No. 677/01, the regulations of the Comisión Nacional de Valores and Resolutions No. 400 and 402 of the Comisión Nacional de Valores, our board of directors established an audit committee which would focus on
assisting the board in exercising its duty of care, compliance with disclosure requirements, the enforcement of accounting policies, management of our business risks, the management of our internal control systems, ethical conduct of our businesses,
monitoring the sufficiency of our financial statements, our compliance with the laws, independence and capacity of independent auditors and performance of our internal audit duties both by our company and our external auditors.

On November 7, 2007, our board of directors appointed Abraham Perelman, Enrique Antonini and Leonardo Fernández, all of them independent
members, as members of the audit committee. We have a fully independent audit committee as per the standard provided in Rule 10(A)-3(b)(1) of the General rules and regulations promulgated under the Securities Exchange Act of 1934.

Remuneration Committee

There is no remuneration
committee.

D. Employees

As of June 30, 2007, we had 2,285 employees, and as of June 30, 2006 we had 1,945
employees. We believe that our relationship with our employees is good. Through a bidding process, we subcontract to third parties the construction of our development projects and the provision of security, maintenance and cleaning services for our
shopping centers.

The following table shows the number of our employees as of the dates indicated:



|                                   |  |                |  |       |  |       |  |      
|---------------------------------- |  | -------------- |  | ----- |  | ----- |  | -----
|                                   |  | As of June 30,
|                                   |  | 2004           |  | 2005  |  | 2006  |  | 2007 
|Alto Palermo S.A.                  |  | 499            |  | 615   |  | 680   |  | 709  
|Shopping Alto Palermo S.A.         |  | 87             |  | 99    |  | 100   |  | 101  
|Emprendimiento Recoleta S.A.       |  | 36             |  | 37    |  | 42    |  | 40   
|Fibesa S.A.                        |  | 22             |  | 26    |  | 26    |  | 27   
|Altocity.Com S.A.                  |  | 35             |  | 40    |  | 49    |  | 3    
|Alto Research and Development S.A. |  | 2              |  |      |  |      |  |      
|Tarshop S.A.                       |  | 390            |  | 556   |  | 979   |  | 1,302
|Mendoza Plaza Shopping S.A.(1).    |  |               |  | 55    |  | 69    |  | 64   
|Empalme S.A.I.C.F.A. y G. (2)      |  |               |  |      |  |      |  | 39   
|Total                              |  | 1,071          |  | 1,428 |  | 1,945 |  | 2,285

---

|(1) | We obtained a controlling interest in this subsidiary during fiscal year ended June 30, 2005.
|--- | ---------------------------------------------------------------------------------------------

|(2) | We obtained a controlling interest in this subsidiary during fiscal year ended June 30, 2006.
|--- | ---------------------------------------------------------------------------------------------



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E. Share Ownership

The following table sets forth the amount and percentage of our shares beneficially owned
by our Directors, Senior Managers, members of the Supervisory Committee and members of the Audit Committee as of November 30, 2007.



|                            |  |                                                   |  |                 |  |            |  
|--------------------------- |  | ------------------------------------------------- |  | --------------- |  | ---------- | -
|                            |  |                                                   |  | Share Ownership | 
|Name                        |  | Position                                          |  | Amount          |  | Percentage |  
|Directors                   |  |                                                   |  |                 |  |            |  
|Eduardo S. Elsztain(1)      |  | Chairman                                          |  | 48,862,668      |  | 62.5       | %
|Saúl Zang                   |  | Vice Chairman                                     |  |                |  |           |  
|Alejandro G. Elsztain       |  | Executive Vice Chairman / Chief Executive Officer |  | 132,576.8       |  | 0.17       | %
|Abraham Perelman            |  | Director                                          |  |                |  |           |  
|Ira Chaplik                 |  | Director                                          |  |                |  |           |  
|Fernando A. Elsztain        |  | Director                                          |  |                |  |           |  
|José Said Saffie            |  | Director                                          |  |                |  |           |  
|Leonardo F. Fernández       |  | Director                                          |  |                |  |           |  
|Daniel R. Elsztain          |  | Director / Chief Comercial Officer                |  |                |  |           |  
|David A. Perednik           |  | Alternate director / Chief Administrative Officer |  |                |  |           |  
|Gabriel A.G. Reznik         |  | Alternate Director                                |  |                |  |           |  
|José D. Eluchans Urenda     |  | Alternate Director                                |  |                |  |           |  
|Juan M. Quintana            |  | Alternate Director                                |  |                |  |           |  
|Gastón Lernoud              |  | Alternate Director                                |  |                |  |           |  
|Hernán Büchi Buc            |  | Alternate Director                                |  |                |  |           |  
|Marcos O. Barylka           |  | Alternate Director                                |  |                |  |           |  
|Pablo D. Vergara del Carril |  | Alternate Director                                |  |                |  |           |  
|Salvador D. Bergel          |  | Alternate Director                                |  |                |  |           |  
|Mauricio Wior               |  | Alternate Director                                |  |                |  |           |  
|Andrés Olivos               |  | Alternate Director                                |  |                 |  |            |  
|                            |  |                                                   | 
|Senior Management           |  |                                                   |  |                 |  |            |  
|Gabriel Blasi               |  | Chief Financial Officer                           |  |                |  |           |  
|                            |  |                                                   | 
|Supervisory Committee       |  |                                                   |  |                 |  |            |  
|Angel D. Vergara del Carril |  | Member                                            |  | 17,372          |  | 0.02       | %
|Guillermo E. Matta y Trejo  |  | Member                                            |  |                |  |           |  
|José D. Abelovich           |  | Member                                            |  |                |  |           |  
|Marcelo H. Fuxman           |  | Alternate Member                                  |  |                |  |           |  
|Fabián Cainzos              |  | Alternate Member                                  |  |                |  |           |  
|Armando F. Ricci            |  | Alternate Member                                  |  |                |  |           |  

---

|(1) | Common shares benefiacially owned by IRSA
|--- | -----------------------------------------

Convertible Notes

The following persons own our Convertible Notes as of June 30, 2007.



|                         |  |                 |    
|------------------------ |  | --------------- | ---
|Convertible Notes Holder |  | Number of Notes |    
|Eduardo S. Elsztain(1)   |  | 31,738,262      | (1)
|Alejandro G. Elsztain    |  | 10,000          |    

---

|(1) | Beneficially owned through IRSA.
|--- | --------------------------------



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The Convertible Notes originally matured on July 19, 2006. A meeting of noteholders resolved to
extend the maturity date of the Convertible Notes through July 19, 2014 although the remaining terms and conditions were left unchanged. The Convertible Notes accrue interest (payable semiannually) at a fixed annual rate of 10% and are
convertible, at any time at the option of the holder, into common shares of Ps.0.10 par value per share. The conversion rate per U.S. dollar is the lesser of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion
date by the par value of our common shares.

Assuming IRSA exercises its conversion rights of all of its Convertible Notes and no exercise
of such rights by any of our other bondholders, IRSA would own 83.34% of our common shares. In the case all shareholders exercise their conversion rights and IRSA exercises them as well, IRSA would own 65.6% of our common stock.

Option Ownership

No options
to purchase shares have been granted to our Directors, Senior Managers, members of the Supervisory Committee or Audit Committee.

Employees Participation in our Capital Stock

There are no arrangements for involving our employees in our
capital stock or related to the issuance of options, shares or securities.



|ITEM 7. | Major Shareholders and Related Party Transactions
|------- | -------------------------------------------------

A. Major Shareholders

Information about Major Shareholders

Share Ownership

The following table
shows as of November 30, 2007 the information known by us, regarding shareholders that beneficially own a significant percentage of our capital stock:



|                  |  |                 |  |            |  
|----------------- |  | --------------- |  | ---------- | -
|Shareholder(s)    |  | Number ofShares |  | Percent(3) |  
|IRSA(1)           |  | 488,626,680     |  | 62.5       | %
|Parque Arauco (2) |  | 231,116,952     |  | 29.6       | %
|Total             |  | 719,743,632     |  | 92.0       | %

---

|(1) | The number of shares will increase to 1,468,202,668 assuming full conversion of the US$31.7 million Convertible Notes held by IRSA.
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(2) | Parque Arauco owns 57,338,554 shares through Parque Arauco, 21,188.698 through Sociedad Inversora Internacional Parque Arauco and 152,589,700 shares through Parque Arauco Argentina
S.A., a wholly owned subsidiary. The number of shares beneficially owned by Parque Arauco in the aggregate will increase to 708,661,150 assuming full conversion of 15,472,432 Convertible Notes owed by Parque Arauco.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Figures may not sum due to rounding.
|--- | ------------------------------------



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Through its ownership of our common stock, IRSA currently shares with Parque Arauco the voting control
over us and has the power to direct or cause the direction of our management and policies.

IRSA is an Argentine real estate company
engaged in a range of real estate activities in Argentina. IRSAs shares are listed and traded on the Bolsa de Comercio de Buenos Airesand the NYSE. Mr. Eduardo S. Elsztain, Chairman of our board of directors, is the
beneficial owner of 101,936,754 shares of Cresud, representing 31.8% of its total share capital. As a result of his 31.8% interest in Cresud, Mr. Elsztain has an 8.2% indirect economic interest in IRSA. Although Mr. Elsztain does not have
a majority of the shares of Cresud, he is its largest shareholder and exercises substantial influence over Cresud. If Mr. Elsztain were considered the beneficial owner of Cresud due to his substantial influence over Cresud, he would be the
beneficial owner of 31.8% of IRSAs shares (without taking into account his indirect interest in IRSA through Inversiones Financieras del Sur S.A. (IFISA)). Also, Mr. Eduardo S. Elsztain is the Chairman of the board of
directors of IFISA and is the beneficial owner of shares representing 100% of its capital stock. If Mr. Elsztain were to be considered the beneficial owner of IFISA due to his substantial influence over IFISA, he would be deemed to be the
beneficial owner of an additional 1.1% of IRSAs shares (without taking into account his indirect interest in IRSA through Cresud). Although Mr. Elsztain does not have a majority of the shares of IRSA, he is its largest shareholder and
exercises substantial influence over IRSA. If Mr. Elsztain were considered the beneficial owner of IRSA due to his substantial influence over IRSA, he would be the beneficial owner of 62.5% of our shares.

Parque Arauco is a Chilean commercial real estate developer engaged in the acquisition, development and operation of shopping centers, and its shares are
listed and traded on the Santiago Stock Exchange.

Changes in Share Ownership



|                 |  |                                        |   |  |                               |   |  |      |   |  |      |   |  |      |  
|---------------- |  | -------------------------------------- | - |  | ----------------------------- | - |  | ---- | - |  | ---- | - |  | ---- | -
|Shareholder      |  | Share Ownership as ofNovember 30, 2007 |   |  | Share Ownership as ofJune 30, |  
|                 |  |                                        |   |  | 2007                          |   |  | 2006 |   |  | 2005 |   |  | 2004 |  
|IRSA(1)          |  | 62.5                                   | % |  | 62.5                          | % |  | 61.6 | % |  | 61.6 | % |  | 53.8 | %
|Parque Arauco(2) |  | 29.6                                   | % |  | 29.6                          | % |  | 29.6 | % |  | 29.6 | % |  | 27.8 | %
|Dolphin Fund Plc |  | 0.0                                    | % |  | 0.0                           | % |  | 0.0  | % |  | 0.0  | % |  | 1.7  | %
|GSEM/AP          |  | 0.0                                    | % |  | 0.0                           | % |  | 0.0  | % |  | 0.0  | % |  | 6.1  | %

---

|(1) | IRSA share ownership is 65.6% assuming full conversion of its holding of Convertible Notes as of November 30, 2007.
|--- | -------------------------------------------------------------------------------------------------------------------

|(2) | Parque Arauco share ownership is 31.6% assuming full conversion of its holding of Convertible Notes as of November 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

Differences in Voting Rights

Our major shareholders
do not have different voting rights.

Other Share Ownership Information

There are no differences in voting rights among shareholders.

As of November 30, 2007, we had 782,064,214 shares outstanding which 90.0% were held in Argentina. As of November 30, 2007, we had 1,963,607 ADS outstanding (representing 78,544,280 of our common shares, or
10.0% of all of our shares). As of such date, we had four registered holders of our ADS in the United States.



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On July 19, 2002 we issued US$50.0 million of Convertible Notes, which are convertible into US$50
million of our shares of common stock. The offering was subscribed in full. Our Convertible Notes mature on July 19, 2014 and are convertible from August 28, 2002 to July 19, 2014. Of the US$50.0 million of Convertible Notes that we
issued, IRSA and Parque Arauco subscribed for US$31.7 million and US$15.4 million, respectively.

In the event that all the bondholders
converted their Convertible Notes on November 30,2007, our share capital would increased from 782,064,214 shares to 2,239,716,498 shares.

B. Related Party Transactions

Lease of our Headquarters

As of December 2003, we moved our headquarters to the 22nd floor of the Intercontinental Plaza tower, located at Moreno 877, in the City of Buenos Aires.
We lease our headquarters and parking lot spaces from Inversora Bolivar S.A., a subsidiary of IRSA, pursuant to two lease agreements, the first one for our headquarters and ten parking lot spaces and the second one for our subsidiary Fibesa
S.A.s headquarters and another eight parking lot spaces. The first agreement has an initial duration of 60 months with an optional extension of 36 additional months, and the second one, effective as of January 2005, has an initial duration of
46 months with an optional extension of 36 additional months. We pay a monthly rent of US$ 5,958 for the first agreement and US$ 2,979 for the second one, with the first two months free.

As of December 2005, we lease the entire 9thfloor and one third of the 24thfloor of the Intercontinental Plaza Tower from
Inversora Bolivar pursuant to two lease agreements, the first one for our headquarters and eight parking lot spaces and the second one for our headquarters (one third of the floor) and three parking lot spaces. The first agreement, effective as from
January 2005, has an initial duration of 46 months with optional extension of 36 additional months, and the second one, effective as from September 2005, has a duration of 35 months with no optional extension. We pay a monthly rent of US$ 5,386 for
the first agreement and US$ 2,648 for the second one, with the first month free.

We lease the entire 2thfloor and eight parking lot spaces of the Intercontinental Plaza Tower from Inversora Bolivar
pursuant to a lease agreement, for our headquarters. The lease has a three-year term scheduled to expire in December 2007 with an optional extension for 36 additional months. We pay a monthly rent of US$ 4,488 with the first two months free.

As of October 2007, we lease the entire 4thfloor of the Intercontinental Plaza Tower from Inversora Bolivar. The agreement, effective as from October 2007, has an initial duration of 60 months We pay a monthly rent of US$
5,958 for the agreement.

Saúl Zang is our Vice-Chairman and director of Inversora Bolivar S.A. and Alejandro Elsztain is our
executive Vice-Chairman and Vice-president of Inversora Bolivar S.A. Fernando Elsztain is a director of APSA and President of Inversora Bolivar S.A. and Gabriel Reznik is a director in APSA and Inversora Bolivar S.A.

Lease of Tarshops Headquarters

As of today,
Tarshop leases 5 floors of the Suipacha building, located at Suipacha 664, in the City of Buenos Aires, from IRSA pursuant to five lease agreements, the agreements are effective until 2007, 2008 and 2010 depending on the agreement. Tarshop pays a
monthly rent of US$35,405, for all the agreements.

Our 1stVice-president Saúl Zang is the Vice-Chairman of Tarshop and director of Inversora Bolivar S.A. and our 2ndVice-president Alejandro Elsztain is the president of Tarshop and the executive Vice-Chairman and Vice-president of Inversora Bolivar S.A. Our director Fernando Elsztain is the
President of Inversora Bolivar S.A. and our director Gabriel Reznik is a director in Inversora Bolivar S.A.



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Loan agreement with Tarshop

On October 30, 2007, we entered into a loan agreement with Tarshop S.A. whereby APSA granted a loan to Tarshop for the total amount of Ps. 10,000,000, to be repaid in a single payment on April 30, 2008.
The applicable interest rate is the rate published by the Argentine Central Bank, known as BADLAR Bancos Privados plus four hundred basis points. The rate will be redetermined every 90 days. In addition, it was agreed that the
loan will be accelerated in the event of a changes in the current shareholding structure of Tarshop S.A.,

Lease of our Chairman offices

Our Chairmans offices are located at Bolívar 108, City of Buenos Aires. We have leased them from Isaac Elsztain e Hijos S.C.A., a company
controlled by relatives of Eduardo S. Elsztain, our chairman, and also from Hamonet S.A., a company controlled by Fernando A. Elsztain, one of our Directors, and certain of his relatives. A lease agreement was signed among us, IRSA, Cresud and Isaac
Elsztain e Hijos S.C.A., in March 2004. This lease has a term of 120 months and monthly rent of Ps.8,490. We, IRSA and Cresud each pay one-third of such rent in an amount of Ps.2,830 each.

Agreement for Shared Corporate Services with IRSA and CRESUD S.A.C.I.F. y A.

In order to reduce administrative expenses and to achieve a more efficient allocation of corporate resources, we entered into an Exchange of Operating Services Agreement with Cresud and IRSA, on June 30, 2004.
This agreement has a term of two years, which may be renewed for an equal term unless any of the parties decides to terminate it. Pursuant to this agreement tasks are performed by one or more of the companies for the benefit of one or more of other
companies in exchange for a fee to be paid primarily through the provision of services in other areas. Through this agreement, each company continues to maintain its strategic and commercial independence while increasing operating efficiency. This
agreement will not affect the independence of each companys record and accounting systems or adversely affect internal control systems or external audit tasks. Each company will continue to maintain separate assets and liabilities.

Alejandro Gustavo Elsztain is the General Coordinator of the program and the program is operated and implemented by Abraham Perelman for us, Gabriel
Adolfo Gregorio Reznik for Cresud and Cedric Bridger for IRSA, all of whom are directors and members of the Supervisory Committees of their respective companies. The main duties for implementation of the project are (a) monitoring the
projects implementation in accordance with the agreement; (b) reviewing the billing report on a monthly basis to analyze and check it against the provisions of the agreement, and, in the event of discrepancies or deviations, preparing a
report to submit for the consideration of the General Coordinator, and by each companys boards of directors and (c) assessing, on a permanent basis, the results derived from the projects implementation and proposing to the General
Coordinator changes in the event of a conflict with the agreement or, if appropriate, the possibility of establishing cost or benefit allocation mechanisms or criteria more consistent with the goals of the agreement. The areas originally involved
were Human Resources, Finance, Institutional Relations, Administration, Systems, Insurance, Purchasing, Messenger Services, Contracts, Operations and Directors Assistants, among others. This program was implemented to reduce operating costs by
optimizing the individual administrative efficiencies of each company.

Currently, the program includes Internal Audit and the other Shared
Corporate Services, while the sharing of Directors Assistants has been dropped.

In the future and in order to continue our policy of
achieving a more efficient allocation of corporate resources, we may extend the areas in which we share corporate services with Cresud and IRSA. Our chairman is also chairman of Cresud and IRSA and our vice-chairman is also vice-chairman of Cresud
and IRSA. We believe that the terms and conditions of these transactions are consistent in all material respects with those prevailing in the market at the relevant time for agreements between unaffiliated parties.



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Loans from our Major Shareholders

As of December 31, 2006 IRSA and Parque Arauco owned US$27.2 million and US$15.2 million, respectively, of our Convertible Notes.

As of June 30, 2007, IRSA owned 62.5% of our common shares. Assuming IRSA exercises its conversion rights of all of its Convertible Notes and no exercise of such rights by any of our other bondholders, IRSA would
own 83.3% of our common shares. In the case all shareholders exercise their conversion rights and IRSA exercises them as well, IRSA would own 65.6% of our common stock.

The Convertible Notes originally matured on July 19, 2006. A meeting of noteholders resolved to extend the maturity date of the Convertible Notes through July 19, 2014 although the remaining terms and
conditions were left unchanged. The Convertible Notes accrue interest (payable semiannually) at a fixed annual rate of 10% and are convertible, at any time at the option of the holder, into common shares of Ps.0.10 par value per share. The
conversion rate per U.S. dollar is the lesser of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion date by the par value of our common shares.

Sale of E-Commerce Latina S.A. to IRSA.

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

Options to Purchase Shares of Comercializadora Los Altos S.A. (formerly known as Altocity.com
S.A.)

In January 2000, E-Commerce Latina, a company owned 50% by us and 50% by Telefónica, granted Consultores Internet Managers
Ltd. an option to purchase certain of its class B shares of Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.). Consultores Internet Managers Ltd. is a special-purpose Cayman Islands corporation created to act on behalf of
its management and is represented by an independent attorney-in-fact.

The option granted to Consultores Internet Managers represents 15%
of the capital stock of Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) and was granted for a period of eight years.

Pursuant to the terms of the agreement, the exercise price is equal to the quotient of (i) the original value of class B shares at the time of the contribution to Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) by
E-Commerce Latina, plus interest accrued at an annual fixed interest rate of 14% through the exercise date of the option, over (ii) the total number of class B shares owned by E-Commerce Latina at the exercise date of the option.

The option was granted to Consultores Internet Managers Ltd. to be allocated by it among the management of Comercializadora Los Altos S.A. (formerly know
as Altocity.com S.A.) as an incentive compensation for their services, but as of today, no individual awards have been determined for participating employees under this option. Upon exercise of the option, Consultores Internet Managers Ltd.s
sole asset will be its 15% interest in Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.).

On October 24, 2006, we
entered into a share purchase agreement with Telefónica, where we acquired 808,354 ordinary shares issued and outstanding of E-Commerce Latina S.A., and 11 ordinary shares issued and outstanding of Comercializadora Los Altos S.A. (formerly
know as Altocity.com S.A.) for a total price of



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Ps.85,876. Such agreement was subject to approval by the Comisión Nacional de Defensa de la Competencia. By the end of December 2006, the
commission approved the transaction and in January 2007 the agreed upon price was settled and the shareholders duly transferred their shares.

Through this operation, we have obtained total share control of E-Commerce Latina. During January 2007, the total price agreed was fully paid.

As of April 17, 2007, our subsidiary Altocity.com S.A. change its name to Comercializadora Los Altos S.A.

On November 6, 2007, E-Commerce Latina sold its 90% equity interest in Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) a 10% to our subsidiary Shopping Alto Palermo S.A. and the remaining 80% to us; and furthermore
we sold our 100% equity interest in E-Commerce Latina to our major shareholder IRSA Inversiones y Representaciones S.A.

Donations to Fundación
IRSA and Fundación Museo de los Niños

On October 31, 1997, our shareholders approved the execution of an agreement
granting Fundación IRSA the free right to use 3,800 square meters of constructed area in the Abasto for a 30-year period.

Moreover,
on November 29, 2005, our shareholders approved the execution of an agreement granting Fundación Museo de los Niños, the free right to use approximately 2,670.11 square meters of constructed area in the Shopping Rosario for a
30-year period.

Fundación IRSA is a charitable, non-profit organization whose Chairman is Eduardo S. Elsztain and whose Secretary,
is Mariana Carmona de Elsztain, Mr. Elsztains wife. Our Chairman Eduardo S. Elsztain is also the Chairman of IRSA. Fundación IRSA has used the available area to house a museum called Museo de los Niños, Abasto,
an interactive learning center for both children and adults which was opened to the public in April 1999. On September 27, 1999 Fundación IRSA assigned and transferred for free, the Museo de los Niños, Abastos total rights
and obligations to Fundación Museo de los Niños.

Fundación Museo de los Niños is a charitable non-profit
organization created by the same founders of Fundación IRSA and has the same members of the administration committee as Fundación IRSA. Fundación Museo de los Niños acts as special vehicle for the developments of
Museo de los Niños, Abasto and Museo de los Niños, Rosario. On October 29, 1999, our shareholders approved the assignment of Museo de los Niños, Abasto agreement to Fundación Museo
de los Niños, and on December 12, 2005, the agreement granting the free right to use of the space designated for Museo de los Niños, Rosario was signed.

During the fiscal years ended June 30, 2005, 2006 and 2007 we made unconditional promises to give money to Fundación IRSA amounted our
donation to Ps. 4.0 million, Ps .2.5 million and Ps. 4.4 million, respectively. These donations are paid in the subsequent year. As of December 17, 2007 donations related to fiscal year ended June 30, 2007 have not
yet been fully paid.

Legal Services

During the years ended June 30, 2005, 2006 and 2007, we and our subsidiaries paid the law firm Zang, Bergel & Viñes an aggregate amount of approximately Ps. 0.5 million, Ps. 0.7 million, and Ps.
1.6 million, respectively as payment for legal services. Our Vice-Chairman Saúl Zang; our alternate directors Juan M. Quintana, Salvador D. Bergel, and Pablo D. Vergara del Carril; our syndic Ángel. D. Vergara del Carril and our
alternate syndic Armando F. Ricci are members of the law firm Zang, Bergel & Viñes.

C. Interests of Experts and Counsel

This section is not applicable.



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|ITEM 8. | Financial Information
|------- | ---------------------

A. Consolidated Statements and Other
Financial Information

See Item 18 for our consolidated financial statements.

Legal or Arbitration Proceedings

Neuquén Project

On July 6, 1999, we acquired 94.6% ownership of Shopping Neuquén for Ps.4.2
million. Shopping Neuquéns sole asset is a parcel of land of approximately 50,000 square meters in which we seek to develop a shopping center. We paid Ps.0.9 million on September 1, 1999, and the remaining Ps.3.3 million
were originally scheduled to be paid on the earlier to occur of July 5, 2001, and the completion of the construction of the shopping center. On August 15, 2003, the former holders of 85.8% of Shopping Neuquén filed a complaint
against us seeking recovery of the unpaid balance of the purchase price, plus interest and legal costs. In September 2003, we answered the complaint and raised several defenses including, plaintiffs non-compliance with her duties under the
contract and the pesification of the purchase price balance pursuant to emergency legislation adopted in 2002. We also filed a counterclaim alleging there should be a readjustment of the terms of the contract which became excessively burdensome
given the 2001 economic, social and political crisis. In November 2003, the plaintiffs replied to our counterclaim alleging that the payment under the purchase agreement was overdue before the economic and social crisis emerged and thus our contract
readjustment claim was inadmissible. On February 2, 2007, we reached an agreement with Shopping Neuquén S.A. former shareholders, in which both parties decided to accept the judges ruling. On that date, and pursuant to the
aforementioned agreement, we paid the amount of US$3.45 million to the former shareholders of Shopping Neuquén S.A., not having the latter anything else to claim to us.

Legal issues with the City Hall of Neuquén

In June 2001, Shopping Neuquén requested that the City Hall of Neuquén allow it to transfer certain parcels of land to third parties so that each participant in the commercial development to be
constructed would be able to build on its own land. The City Hall Executive Branch previously rejected this request under Decree No. 1437/2002 which also established the expiration of the rights arising from Ordinance 5178, including the loss
of any improvement and expenses incurred. As a result, Shopping Neuquén had no right to claim indemnity charges and annulled its buy-sell land contracts.

Shopping Neuquén submitted a written appeal to this decision on January 21, 2003. It also sought permission to submit a revised schedule of time terms, taking account of the current situation and including
reasonable short and medium term projections. The City Hall Executive Branch rejected this request in Decree 585/2003. Consequently, on June 25, 2003, Shopping Neuquén filed an Administrative Procedural Action with the High
Court of Neuquén requesting, among other things, the annulment of Decrees 1,437/2002 and 585/2003 issued by the City Hall Executive Branch. On December 21, 2004, the High Court of Neuquén communicated its decision that the
administrative procedural action that Shopping Neuquén had filed against the City Hall of Neuquén had expired. Shopping Neuquén filed an extraordinary appeal for the case to be sent to the Argentine Supreme Court, which is yet
to be decided.

On December 13, 2006, Shopping Neuquén signed an agreement with both the City Hall and the Province of
Neuquén stipulating a new timetable for construction of the commercial and housing enterprises (the Agreement). Also, Shopping Neuquén was permitted to transfer certain parcels to third parties so that each participant in
the commercial development to be constructed would be able to build on its own land, with the exception of the land in which the shopping center will be constructed. The Legislative Council of the City Hall of Neuquén duly ratified the
Agreement. The City Hall Executive Branch promulgated the ordinance issued on February 12, 2007.



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The Agreement also provides that Shopping Neuquén will submit, within 120 days after the Agreement
is signed, a new urban project draft with an adjustment of the environmental impact survey, together with a map of the property subdivision, which the City Hall of Neuquén will approve or disapprove within 30 days after its presentation. If
the project is approved, Shopping Neuquén will submit the final maps of the works to the City Hall within 150 days of this decision and construction must commence within a maximum period of 90 days thereafter. The first stage of construction
(including minimum construction of 21,000 square meters of the shopping center and 10,000 square meters of the hypermarket) is expected to be completed within a maximum period of 22 months. The Agreement is conditional upon the City Hall declaring
the feasibility of the draft project submitted, and upon the terms and conditions of this decision being accepted by Shopping Neuquén S.A. The City Hall of Neuquén reserves its right to rescind the Agreement and file the legal actions
it deems pertinent if its conditions are contravened.

On March 28, 2007, Shopping Neuquén submitted the new project draft and
revised environmental impact survey to the City Hall of Neuquén. On May 10, 2007, the City Hall of Neuquén, requested certain explanations and made recommendations for our consideration before issuing an opinion on the feasibility
of the draft project. On July 17, 2007, Shopping Neuquén answered the City Halls requests and on September 20, 2007, the City Hall approved the feasibility of the project.

Other Litigation

As of
July 5, 2006, the Federal Administration of Public Revenues (AFIP) filed a preliminary injunction with the Federal Court for Administrative Proceedings for an aggregate amount of Ps. 3,689,485.5, plus an added amount, provisionally
estimated, of Ps. 900,000 in order to respond to legal costs and interests. The main dispute is about the amount due for the admission rights of the income tax. In the first instance, AFIP pleaded for a general restraining order. As of
November 29, 2006, the Federal Court ordered such order to be substituted for an attachment on the plot of land located in Caballito neighborhood, city of Buenos Aires, where we are planning to develop a shopping center.

We are involved in other litigation which derives from the ordinary course of our business. We accrue liabilities when it is probable that future costs
will be incurred and such costs can be reasonably estimated. Such accruals are based on developments to date, our estimates of the outcomes of these matters and the lawyers experience in contesting, litigating and settling other matters. As
the scope of the liabilities becomes better defined, there will be changes in the estimates of future costs, which could have a material effect on our future results of operations and financial condition or liquidity.

Dividend Policy

Pursuant to
Argentine law, the distribution and payment of dividends to shareholders is allowed only if they result from realized and net earnings of the company pursuant to annual financial statements approved by the shareholders. The approval, amount and
payment of dividends are subject to the approval by our shareholders at our annual ordinary shareholders meeting. The approval of dividends requires the affirmative vote of a majority of the shares entitled to vote at the meeting.

In accordance with Argentine law and our by-laws, net and realized profits for each fiscal year are allocated as follows:



| |  |  | 5% of such net profits is allocated to our legal reserve, until such reserve amounts to 20% of our capital stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | a certain amount determined at a shareholders meeting is allocated to compensation of our directors and the members of our Supervisory Committee; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | additional amounts may be allocated for the payment of dividends or to optional reserve funds, or to establish reserves or for whatever other purpose our
shareholders determine.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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According to rules issued by the Comisión Nacional de Valores, cash dividends must be paid
to shareholders within 30 days of the resolution approving their distribution. In the case of stock dividends, the shares must be delivered to shareholders within three months of the annual ordinary shareholders meeting that approved them.

The board of directors proposal for the distribution of a cash dividend amounting to Ps. 55.7 million, of which the
shareholders will collect Ps.0.07125 per share, was approved during the annual shareholders meeting, held on October 25, 2007. The payment was made on November 9, 2007.

The table below presents the dividend payment ratio and the total amount of dividends paid for, each paid entirely in common shares, for the mentioned
years. Figures in Pesos are stated in historical Pesos of their respective payment date.



|              |  |                |  |                 |  |                
|------------- |  | -------------- |  | --------------- |  | ---------------
|Year declared |  | Cash dividends |  | Stock dividends |  | Total per share
|              |  | (Pesos)        |  | (Pesos)         |  | (Pesos)        
|2003          |  | 10,000,000     |  |                |  | 0.0140         
|2004          |  | 17,895,663     |  |                |  | 0.0229         
|2005          |  | 29,000,000     |  |                |  | 0.0371         
|2006          |  | 47,000,000     |  |                |  | 0.0601         
|2007          |  | 55,721,393     |  |                |  | 0.0712         

Although we intend to maintain the adopted dividend policy, there can be no assurance that our
future earnings will not be needed to finance the operations and expansion of our business.

B. Significant changes

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

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

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

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



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

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



|ITEM 9. | The Offer and Listing
|------- | ---------------------

A. The offer and listing details

The following summary provides information concerning our share capital and
briefly describes all material provisions of our bylaws and the Argentine Corporation Law.

Stock Exchanges in which our securities are
listed

Our common shares are listed on the Buenos Aires Stock Market (Bolsa de Comercio de Buenos Aires) and our ADS are listed
on the NASDAQ National Market.

As of November 30, 2007, our authorized capital stock consists of 782,064,214 shares of common stock,
Ps. 0.1 face value per share. In addition, we have issued US$ 50.0 million of Convertible Notes. The Convertible Notes mature on July 19, 2014, accrue interest (payable semiannually) at a fixed annual rate of 10% and are convertible, at
any time at the option of the holder, into common shares of Ps. 0.10 par value per share. The conversion rate per U.S. Dollar is the lesser amount of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion
date by the par value of our common shares.

In the event that all the bondholders were to convert their Convertible Notes, our share
capital would increase from 782,064,214 shares as of November 30, 2007 to approximately 2,239,716,498 shares.

The common stock has
one vote per share. All of the common shares are validly issued, fully paid and non assessable.

The following description of the material
terms of our capital stock is subject to our certificate of incorporation and bylaws, which are included as exhibits to the registration statement of which this Form 20-F forms part, and the provisions of applicable Argentine Law.

Price history of our stock

Our
shares are listed and traded on the BCBA under the denomination APSA. The shares started to be listed on the BCBA on March 26, 1996. Each APSA ADS represents 40 shares of common stock. ADSs in custody are listed and traded on the
NASDAQ under the denomination APSA. ADSs were first listed on the NASDAQ on November 15, 2000, and they were issued by the Bank of New York, Inc. acting as depository of the ADSs. The following chart shows, for the period indicated,
the maximum and minimum closing listed prices of our shares on the BCBA for a face value of Ps 0.10 and on the Nasdaq.



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|                                          |  |                             |  |             |  |        |  |       
|----------------------------------------- |  | --------------------------- |  | ----------- |  | ------ |  | ------
|                                          |  | Buenos Aires Stock Exchange |  | NASDAQ     
|                                          |  | Ps. per Share               |  | US$ per ADS
|                                          |  | High                        |  | Low         |  | High   |  | Low   
|Fiscal Year 2003                          |  |                             |  |             |  |        |  |       
|Annual                                    |  | 0.489                       |  | 0.234       |  | 5.69   |  | 2.03  
|                                          |  |                             |  |            
|Fiscal Year 2004                          |  |                             |  |             |  |        |  |       
|Annual                                    |  | 0.619                       |  | 0.299       |  | 7.26   |  | 3.05  
|                                          |  |                             |  |            
|Fiscal Year 2005                          |  |                             |  |             |  |        |  |       
|1stQuarter                                |  | 0.855                       |  | 0.546       |  | 11.09  |  | 6.07  
|2ndQuarter                                |  | 0.727                       |  | 0.590       |  | 9.71   |  | 6.88  
|3rdQuarter                                |  | 0.678                       |  | 0.546       |  | 9.13   |  | 6.76  
|4thQuarter                                |  | 0.693                       |  | 0.609       |  | 8.82   |  | 7.17  
|Annual                                    |  | 0.855                       |  | 0.546       |  | 11.09  |  | 6.07  
|                                          |  |                             |  |            
|Fiscal Year 2006                          |  |                             |  |             |  |        |  |       
|1stQuarter                                |  | 0.697                       |  | 0.618       |  | 8.53   |  | 6.95  
|2ndQuarter                                |  | 0.672                       |  | 0.539       |  | 8.33   |  | 7.02  
|3rdQuarter                                |  | 0.742                       |  | 0.667       |  | 9.14   |  | 7.08  
|4thQuarter                                |  | 0.946                       |  | 0.781       |  | 11.94  |  | 8.91  
|Annual                                    |  | 0.946                       |  | 0.539       |  | 11.94  |  | 6.95  
|                                          |  |                             |  |            
|Fiscal Year 2007                          |  |                             |  |             |  |        |  |       
|1stQuarter                                |  | 1.125                       |  | 0.886       |  | 13.90  |  | 11.49 
|2ndQuarter                                |  | 1.622                       |  | 0.995       |  | 20.90  |  | 12.63 
|3rdQuarter                                |  | 1.582                       |  | 1.344       |  | 20.56  |  | 15.21 
|4thQuarter                                |  | 1.630                       |  | 1.000       |  | 22.00  |  | 13.30 
|June 2007                                 |  | 1.622                       |  | 1.443       |  | 20.76  |  | 17.32 
|July 2007                                 |  | 1.582                       |  | 1.433       |  | 20.56  |  | 17.11 
|August 2007                               |  | 1.463                       |  | 1.364       |  | 19.00  |  | 15.54 
|September 2007                            |  | 1.393                       |  | 1.344       |  | 17.93  |  | 15.21 
|October 2007                              |  | 1.543                       |  | 1.373       |  | 18.52  |  | 16.61 
|November 2007                             |  | 1.500                       |  | 1.300       |  | 17.70  |  | 15.40 
|December 2007 (through December 18, 2007) |  | 1.255                       |  | 1.230       |  | 15.999 |  | 15.999

Source: Bloomberg



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Due to the aggregate ownership of approximately 92.0% as of June 30, 2007 by our two principal
shareholders, the liquidity of our shares is restricted and may cause our stock not to be traded daily.

B. Plan of Distribution

This section is not applicable.

C. Markets

Comisión Nacional de Valores

The Comisión Nacional de Valores is a separate governmental entity with jurisdiction covering the territory of Argentina. Its main purpose
is to ensure transparency of Argentinas securities markets, to watch over the market price formation process and to protect investors. The Comisión Nacional de Valores supervises corporations authorized to issue securities to the
public, the secondary markets where these securities are traded, and all persons and corporations involved in any capacity in the public offering and trading of these securities. Pension funds and insurance companies are regulated by separate
government agencies. The Argentine markets are governed generally by Law No. 17,811, as amended, which created the Comisión Nacional de Valores and regulates stock exchanges, stockbrokers, market operations and the public
offerings of securities. There is a relatively low level of regulation of the market for Argentine securities and of investors activities in such market, and enforcement of existing regulatory provisions has been extremely limited.
Furthermore, there may be less publicly available information about Argentine companies than is regularly published by or about companies in the United States and certain other countries. However, the Argentine government and the Comisión
Nacional de Valores, taking into consideration the deeper global awareness of the importance of having adequate corporate governance practices and a legal framework to enforce principles such as full information, and
transparency, have issued decree No. 677/2001. This decree has the objective of determining the rights of the financial consumer, increasing market transparency and an adequate legal framework to increase the
investors protection within the capital market. Most of its reforms are in line with world trends pertaining to corporate governance practices that have already been adopted by many emerging markets.

In order to offer securities to the public in Argentina, an issuer must meet certain requirements of the Comisión Nacional de Valores
regarding assets, operating history, management and other matters, and only securities for which an application for a public offering has been approved by the Comisión Nacional de Valores may be listed on the Buenos Aires Stock
Exchange . This approval does not imply any kind of certification or assurance related to the merits or the quality of the securities, or the issuers solvency. Issuers of listed securities are required to file unaudited quarterly financial
statements and audited annual financial statements, as well as various other periodic reports, with the Comisión Nacional de Valores and the Buenos Aires Stock Exchange .

Securities Exchanges in Argentina

There are 10 securities exchanges in Argentina, of which the principal exchange for the Argentine securities market is the Buenos Aires Stock Exchange , which handles approximately 99% of all equity trading in the country.

Buenos Aires Stock Exchange

The
Buenos Aires Stock Exchange is a complex, non-profit and self-regulated organization. Various markets require different self-organizations of brokers within the Buenos Aires Stock Exchange , which is one of its particular characteristics. The most
important and traditional of such markets is Mercado de Valores S.A. (MERVAL).



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The securities that may be listed on the Buenos Aires Stock Exchange are: Stocks, Corporate Bonds,
Convertible Corporate Bonds, Close-ended Investment Funds, Financial Trust, Indexes, Derivatives and Public Bonds. The Buenos Aires Stock Exchange is legally qualified for admission, suspension, and delisting of securities according to its own rules
approved by the Comisión Nacional de Valores. Furthermore, the Buenos Aires Stock Exchange works very closely with the Comisión Nacional de Valores in surveillance activities. Also under a special agreement, registration
and listing applications are directly filed with the Buenos Aires Stock Exchange for simultaneous processing.

MERVAL

The MERVAL is a corporation whose 133 shareholder members are the only individuals and entities authorized to trade, either as principal or as agent, in
the securities listed on the Buenos Aires Stock Exchange . Trading on the Buenos Aires Stock Exchange is conducted by continuous open outcry, or the traditional auction system, from 11:00 a.m. to 5:00 p.m. each business trading day of the year.
Trading on the Buenos Aires Stock Exchange is also conducted through a Sistema Integrado de Negociación Asistida por Computación(SINAC). SINAC is a computer trading system that permits trading in debt securities and
equity securities. SINAC is accessed by brokers directly from workstations located at their offices. Currently, all transactions relating to listed notes and listed government securities can be effected through SINAC.

Over the Counter Market

The
Electronic Open Market (Mercado Abierto Electrónico or MAE) is an exchange organized under the laws of Argentina, which operates as a self-regulatory organization under the supervision of the Comisión
Nacional de Valores.

The MAE works as an electronic environment to process Over The Counter transactions. It is an electronic exchange
where both government securities and corporate bonds are traded through spot and forward contracts.

The MAE has 90 brokers/dealers
members, which include national banks, provincial banks, municipal banks, private national banks, foreign banks, cooperative banks, financial institutions, foreign exchange entities and pure brokers/dealers (exclusively engaged in brokerage
activities). Both Argentine or foreign capital banks and financial institutions may be the MAEs brokers/dealers.

Securities to be
traded must be registered with the pertinent supervising authorities and may be traded in the Mercado Abierto Electrónico, in other exchanges or in both of them concurrently.

Securities Central Depositary

Caja de Valores S.A. is a corporation organized under the laws of Argentina, totally private, which acts as central depositary of public bonds and private securities. It was established in 1974 by Act 20,643, and it is supervised by
the Comisión Nacional de Valores.

Those authorized to make deposits of securities with the Caja de Valoresare
stockbrokers, banking financial institutions, and mutual funds.

The majority shareholders of the Caja de Valores S.A. are the
Buenos Aires Stock Exchange and the MERVAL (49.98% each).

Information regarding the Buenos Aires Stock Exchange



|                                           |  |                    |  |                |  |         |  |         
|------------------------------------------ |  | ------------------ |  | -------------- |  | ------- |  | --------
|                                           |  | As of December 31, |  | As of June 30,
|                                           |  | 2004               |  | 2005           |  | 2006    |  | 2007    
|Market capitalization (Ps. billion)        |  | 689.9              |  | 771.3          |  | 1,229.3 |  | 1,335.91
|Average daily trading volume (Ps. million) |  | 52.6               |  | 74.6           |  | 61.4    |  | 69.9    
|Number of listed companies                 |  | 107                |  | 104            |  | 106     |  | 107     



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Although companies may list all of their capital stock on the Buenos Aires Stock Exchange , in many cases
a controlling block is retained by the principal shareholders resulting in only a relatively small percentage of many companies stock being available for active trading by the public on the Buenos Aires Stock Exchange .

As of June 30, 2007, approximately 107 companies had equity securities listed on the Buenos Aires Stock Exchange . As of June 30, 2007,
approximately 9.63% of the total market capitalization of the Buenos Aires Stock Exchange was represented by the securities of ten national companies.

The Argentine securities markets are substantially more volatile than the securities markets in the United States and certain other developed countries. The MERVAL experienced a 13% increase in 1995, a 25% increase in
1996, a 6% increase in 1997, a 37% decrease in 1998, a 28% increase in 1999, a 24% decrease in 2000, a 29% decrease in 2001, a 77% increase in 2002, a 104% increase in 2003, a 28% increase in 2004, a 13% increase in 2005, a 34% increase in 2006 and
a 5% increase for the six month period ended June 30, 2007. In order to control price volatility, the MERVAL operates a system pursuant to which the negotiation of a particular stock or debt security is suspended for a 15- minute period when
the price of the security registers a variation on its price between 10% and 15% and between 15% and 20%. Any additional 5% variation on the price of the security after that results in additional 10  minute successive suspension periods.

Nasdaq ́s Stock Market.

Our ADS are listed and traded in the Nasdaq National Market of the Nasdaq Stock Market under the trading symbol APSA.

D. Selling Shareholders

This section is not applicable.

E. Dilution

This section is not applicable.

F. Expenses of the Issue

This section is not applicable.



|ITEM 10. | Additional Information
|-------- | ----------------------

A. Share Capital

This section is not applicable.



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B. Memorandum and Articles of Association

Our corporate purpose

Our legal name is Alto Palermo S.A. (APSA). We were organized and incorporated on August 29, 1889 under Argentine law as a stock
corporation (Sociedad Anónima or S.A.). Our by-laws were registered in the Superintendence of Corporations (Inspección General de Justicia) on February 27, 1976 under number 323, on page 6, book 85 of the stock
corporations volume. Pursuant to our bylaws, our term of duration expires on August 28, 2087. Article 4 of our bylaws defines our corporate purpose as follows:



| |  |  | Invest, develop and operate real estate, and specially shopping centers;
| | - |  | ------------------------------------------------------------------------



| |  |  | Invest, develop and operate personal property, and specially securities;
| | - |  | ------------------------------------------------------------------------



| |  |  | Manage real or personal property, whether owned by us or by third parties;
| | - |  | --------------------------------------------------------------------------



| |  |  | Build, recycle or repair real property whether owned by us or by third parties;
| | - |  | -------------------------------------------------------------------------------



| |  |  | Advise third parties with respect to the aforementioned activities;
| | - |  | -------------------------------------------------------------------



| |  |  | Fund projects, undertakings, works and/or real estate transactions of third parties.
| | - |  | ------------------------------------------------------------------------------------

Board of Directors

Voting of proposals in which
Directors have material interest

The Comisión Nacional de Valores enacted Resolution No. 677/01, which establishes
in Section 8 that the directors, administrators and members of the Supervisory Committee of companies whose securities are publicly offered, shall act in a loyal and diligent manner when exercising their functions. In that sense, they have to:



| | (a) | place the corporate interests of the company and the common interest of the shareholders above any other interest, including the controlling shareholders interests;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | refrain from obtaining a personal benefit from the issuer other than the compensation paid for their functions;
| | --- | ---------------------------------------------------------------------------------------------------------------



| | (c) | organize and implement preventive systems and mechanisms to protect the corporate interests, reducing the risk of conflicts of interests, either permanent or temporary, in the
personal relationship with the company or with entities related to the company. This duty specifically refers to activities in competition with the company, the use or imposition of a lien on corporate assets, the determination of compensation or
proposals related thereto, the use of non public information, the use of business opportunities for their own benefit or for the benefit of third parties and, in general, any situation that may generate a conflict of interests affecting the issuer;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | make the necessary arrangements to perform the companys activities and implement the necessary internal control to ensure a careful management and avoid breaches of the duties
established by the applicable regulations; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | act with due diligence when preparing and disclosing the information to the market, and maintain the independence of external auditors.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

The Law of Corporations No 19,550 establishes in Section 271 that directors may contract with the company when the contract is related to the
regular activities of the company and terms and conditions are in accordance to market terms. All other contracts with directors should be approved by the shareholders.



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Further, Section 73 of Resolution No. 677/01 establishes a specific procedure for transactions
of a company whose securities are publicly offered, entered into with its directors, members of the Supervisory Committee, or senior managers and which involve a relevant amount. The transaction is considered to have a relevant amount when it
exceeds: (i) one percent (1%) of the corporate capital, measured pursuant to the last approved financial statements, and (ii) the equivalent of one hundred thousand Pesos (Ps. 100,000).

The related person with an interest in the transaction should submit all the relevant documentation to the approval of the Board of Directors. The
directors must request a report (i) of the audit committee stating if the conditions of the transaction may be reasonably considered adequate according to normal market conditions; or (ii) of two independent evaluating firms that shall
have informed about the same matter and about the other transaction conditions. Immediately after being approved by the Board of Directors the transaction has to be informed to the Comisión Nacional de Valores.

Notwithstanding the above Section 272 of the Law of Corporations N° 19,550 provides that when a director has an opposite interest to that of the
company, he or she should notify that situation to the Board of Directors and the Supervisory Committee and abstain from voting in that respect. The violation of this provision results in the director being jointly and severally liable without
limit.

In the event that the results of the reports are not favorable to the transaction, its approval should be considered by the
shareholders meeting.

Approval of compensation of Directors and Supervisory Committee

Our bylaws do not establish the compensation to be paid to members of the Board of Directors and the supervisory committee, and therefore pursuant to
Section 261 of the Law of Corporations No. 19,550, it should be approved by the majority of the shareholders. The maximum amount that may be paid as compensation to members of the Board of Directors and the supervisory committee should not
exceed 25% of the realized and net earnings of the company and 5% when there is no distribution of dividends. If the company does not distribute the total earnings, the amount of the compensation should be proportional to that distribution and
within the mentioned limits. These limits may only be surpassed by express approval of majority of the shareholders.

Borrowing powers
of Directors

Our bylaws establish, in Section 17, that the board of directors has full and broad powers to organize, manage and
direct us, aimed at fulfilling the corporate purpose.

In case one of our directors borrowed from us, the matter would be subject to the
requirements described above for transactions in which directors have material interest.

Retirement of Directors and ownership of
shares requirement

Our bylaws do not establish any requirements or provisions regarding age limits for directors retirement nor do they require
ownership of a certain number of shares in order to be eligible for appointment as director.

Rights, preferences and restrictions attaching to the
common shares

Dividend rights

The Law of Corporations No. 19,550 establishes that the distribution and payment of dividends to shareholders is valid only if they result from realized and net earnings of the company pursuant to an annual
financial statements approved by the shareholders. The approval, amount and payment of dividends is subject to the approval of our annual ordinary shareholders meeting of the company. That approval requires the affirmative vote of the majority of
the present votes with right to vote at the meeting.



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Pursuant to the Law of Corporations No. 19,550 and Section 28 of our bylaws, liquid and
realized profits of each fiscal year shall be distributed as follows:



| |  |  | allocate 5% of such net profits to legal reserve, until the amount of such reserve equals 20% of the capital stock;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the sum established by the shareholders meeting as remuneration of the of Directors and the supervisory committee;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | dividends, additional dividends to preferred shares if any, or to optional reserve funds or contingency reserves or to a new account, or for whatever purpose the
shareholders meeting determines.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dividends are paid pro rata according to the interests held by
shareholders within thirty days after approval and the right to collection expires upon the expiration of a term of three years since they were made available to shareholders.

The shareholders meeting may authorize payment of dividends on a quarterly basis provided no applicable regulations are violated. In that case, all
and each of the members of the Board of Directors and the supervisory committee will be jointly and severally liable for the refund of those dividends if, as of the end of the respective fiscal year, the realized and net earnings of the company are
not sufficient to allow the payment of dividends.

Voting rights and Staggered Elections

Our stock capital is composed by book-entry common shares with face value of Ps. 0.1 per share and entitled to one vote each.



| |  |  | All directors and alternate directors are elected for a three-year term.
| | - |  | ------------------------------------------------------------------------



| |  |  | Our bylaws do not establish staggered elections.
| | - |  | ------------------------------------------------

Rights to share in APSAs profits

The holders of our common shares have the right to
participate in our net and realized profits on a pro rata basis of their respective interests.

Surplus rights to share in the
event of liquidation

Section 29 of our bylaws determine that, in the event of liquidation, dissolution or winding-up, our assets
(i) will be applied to satisfy liabilities and (ii) will be proportionally distributed among holders of preferred stock if there are any and in accordance with the terms of the preferred stock. If any surplus remains, the holders of common
shares are entitled to receive and share on a pro rata basis in all net assets remaining for distribution.

Procedure to change the
rights of stockholders

The rights of stockholders are established in the Law of Corporations No. 19,550 and in the bylaws. The
rights of shareholders provided for by the Law of Corporations No. 19,550 may not be diminished by the bylaws. Section 235 of the Law of Corporations No. 19,550 establishes that the amendment of the bylaws should be approved by
shareholders in an extraordinary shareholders meeting.

On October 31, 2003 under an annual ordinary and extraordinary meeting decided
not to adhere to the



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Optional Statue of Public Offerings of Compulsory Acquisition (Régimen Estatutario Optativo de Oferta Pública de Adquisición
Obligatoria) established by Decree No. 677/2001. Therefore, shareholders decided to incorporate said provision under section 1 of our bylaws.

Ordinary and extraordinary Shareholders Meeting

General

Shareholders meetings may be ordinary or extraordinary. We are required to hold an ordinary shareholders meeting within four months of the
close of each fiscal year to approve our financial statements, the allocation of net income for the fiscal year, the approval of the reports of the Board of Directors and the audit committee and the election and remuneration of directors and members
of the audit committee. Other matters which may be considered at an ordinary meeting include the responsibility of directors and members of the audit committee, capital increases and the issuance of certain corporate bonds. Extraordinary
shareholders meetings may be called at any time to consider matters beyond the scope of an ordinary meeting, including amendment of the bylaws, issuance of debentures, early dissolution, merger, spin-off, reduction of capital stock and
redemption of shares, changing the limiting or extending the shareholders liability by changing our corporate legal status and limitation of shareholders preemptive rights.

Notices

Notice of shareholders
meetings must be published for five days in the Official Gazette of the Republic of Argentina, in an Argentine newspaper of wide circulation and in the publications of Argentine exchanges or securities markets in which our shares are traded, at
least ten days prior to the date on which the meeting is to be held as per Argentine Corporation Law, and at least 20 days prior to the meeting as per Executive Order 677/01. The notice must include information regarding the type of meeting to be
held, the date, time and place of the meeting and the agenda. If there is no quorum at the meeting, notice for a meeting on second call must be published for three days, at least eight days before the date of the second meeting, and must be held
within 30 days of the date for which the first meeting was called. The first call and second call notices may be sent simultaneously in order for the meeting on second call to be held on the same day as the meeting on first call, but only in the
case of ordinary shareholders meetings. Shareholders meetings may be validly held without notice if all shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote.

The Board of Directors will determine appropriate publications for notice outside Argentina in accordance with requirements of jurisdictions and
exchanges where our shares are traded.

Quorum and Voting Requirements

The quorum for ordinary meetings of shareholders on first call is a majority of the shares entitled to vote, and action may be taken by the affirmative
vote of an absolute majority of the shares present that are entitled to vote on such action. If a quorum is not available, a second call meeting may be held at which action may be taken by the holders of an absolute majority of the shares present,
regardless of the number of such shares. The quorum for extraordinary shareholders meeting on first call is sixty percent of the shares entitled to vote, and if such quorum is not available, a second call meeting may be held, for which there
are no quorum requirements.

Action may be taken at extraordinary shareholders meetings by the affirmative vote of an absolute
majority of shares present that are entitled to vote on such action, except that the approval of a majority of shares with voting rights, without application of multiple votes, is required in both first and second call for: (i) the transfer of
our domicile outside Argentina, (ii) a fundamental change of the corporate purpose set forth in the bylaws, (iii) our anticipated dissolution, (iv) the total or partial repayment of capital, (v) a merger of our company, if we are
not the surviving entity, (vi) a spin-off of our company, or (vii) changing our corporate legal status.

Shareholders
meetings may be called by the Board of Directors or the members of the statutory audit committee whenever required by law or whenever they deem it necessary. Also, the board or the members of



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the statutory audit committee are required to call shareholders meetings upon the request of shareholders representing an aggregate of at least five
percent of our outstanding capital stock. If the board or the statutory audit committee fails to call a meeting following this request, a meeting may be ordered by the Comisión Nacional de Valores or by the courts. In order to attend a
meeting, a shareholder must deposit with us a certificate of book-entry shares registered in his name and issued by Caja de Valores at least three business days prior to the date on which the meeting is to be held. A shareholder may be represented
by proxy. Proxies may not be granted to directors, members of the audit committee or officers or employees of our company.

Conflict of
Interest

A shareholder who votes on a matter involving our Company in which he has a conflicting interest may, under Argentine law, be
liable for damages suffered by the Company as a result of the decision, provided the transaction would not have been approved without his vote.

Limitations to own securities

There are no legal limitations to own securities or exercise voting rights for residents,
non-resident or foreign shareholders.

Ownership threshold above which ownership should be disclosed

The Comisión Nacional de Valores regulations require that transactions, which cause a persons holdings of capital stock of a
registered Argentine company, to equal or exceed 5% of the voting power, should be immediately notified to the Comisión Nacional de Valores. Thereafter, every change in the holdings that represents a multiple of 5% of the voting power
should also be notified.

Directors, senior managers, executive officers, members of the supervisory committee, and controlling
shareholders of an Argentine company whose securities are publicly offered, should notify the Comisión Nacional de Valores on a monthly basis, their beneficial ownership of shares, debt securities, and call and put options related to
securities of such companies and their controlling, controlled or affiliated companies.

Further, the Comisión Nacional de
Valores must be immediately notified of transactions which cause a persons holdings of capital stock of an Argentine company whose securities are publicly offered to equal or exceed 5% of the voting power and every change in the holdings
that represents a multiple of 5% of the voting power. Holders of more than 50% of the common shares or who otherwise control decision making in shareholders meetings, as well as directors, officers and members of the supervisory committee must
provide the Comisión Nacional de Valores with annual reports of their holdings in the capital stock of such companies and monthly reports of any change in their holdings.

Amendment to the by-laws.

On the shareholders meeting held on October 25, 2007, our
shareholders decided to amend the following sections of the by-laws: (i) Section Twelve in order to adapt the performance bonds granted by directors to current rules and regulations, and (ii) Section Fifteen in order to incorporate the
possibility of holding remote board meetings pursuant the provisions of section 65 of Decree 677/01. Such amendment is attached here to as Exhibit 1.2.

Compliance with NASDAQ Listing Standards on Corporate Governance

Significant differences between our corporate governance
practices and US Companies practices under NASDAQ Rules:

Our corporate governance practices are governed by the applicable Argentine
law; particularly, the Business Companies Law, Decree N°677/01 and the Standards of the Comisión Nacional de Valores, as well as by its Bylaws. APSA has securities that are registered with the Securities and Exchange Commission
(the SEC) and are listed on the NASDAQ Stock Market (the NASDAQ), and is therefore subject to corporate governance requirements applicable to NASDAQ-listed non-US companies (a NASDAQ-listed company).



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Pursuant to NASDAQ Marketplace Rule 4350(a), NASDAQ-listed non-U.S. companies that are categorized as
Foreign Private Issuers may follow home country corporate governance practices in lieu of the requirements of Rule 4350, provided that the foreign private issuer complies with certain mandatory sections of Rule 4350, discloses each
requirement of Rule 4350 that it does not follow and describes the home country practice followed in lieu of such requirement. The requirements of Rule 4350 and the Argentine corporate governance practices that the Company follows in lieu thereof
are described below:



|                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NASDAQ Standards for U.S. companies                              |  | APSAs Corporate Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Rule 4350(b)(1)(A) - Distribution of Annual and Interim Reports. |  | In lieu of the requirements of Rule 4350(b)(1)(A), we follow Argentine law, which requires that companies make public an annual report in Spanish, including annual audited consolidated
financial statements prepared in accordance with generally accepted accounting principles in Argentina, by filing such annual report with the Comisión Nacional de Valores and the Buenos Aires Stock Exchange (Bolsa de Comercio de
Buenos Aires), within 70 calendar days of the end of the companys fiscal year. Interim reports must be filed with the Comisión Nacional de Valores and the Bolsa de Comercio de Buenos Aires within 42 calendar days of
the end of each fiscal quarter. The Bolsa de Comercio de Buenos Aires publishes the annual reports and interim reports in the BCBA bulletin and makes the bulletin available for inspection at its offices. In addition, our shareholders can
receive copies of annual reports and any interim reports upon such shareholders request. English language translations of our annual reports and interim reports are furnished to the Securities and Exchange Commission (the SEC). We
also post the English language translation of our annual reports and quarterly press releases on its website. Furthermore, under the terms of the Deposit Agreement, dated November 10, 2000, among us, The Bank of New York, as depositary, and owners
of ADS issued thereunder, we are required to furnish The Bank of New York with, among other things, English language translations of their annual reports. Annual reports are available for inspection by ADR holders at the offices of The Bank of New
York located at, 101 Barclay Street, 22nd Floor, New York, New York. Finally, Argentine law requires that 20 calendar days before the date of a shareholders meeting, the board of directors must provide to our shareholders, at our executive
office or through electronic means, all information relevant to the shareholders meeting, including copies of any documents to be considered by the shareholders (which includes the annual report).



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|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NASDAQ Standards for U.S. companies                             |  | APSAs Corporate Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Rule 4350(c)(1) - Majority of Independent Directors.            |  | In lieu of the requirements of Rule 4350(c)(1), we follow Argentine law which does not require that a majority of the board of directors be comprised of independent directors. Argentine law
instead requires that public companies in Argentina such as the Company must have a sufficient number of independent directors to be able to form an audit committee of at least three members, the majority of which must be independent pursuant to the
criteria established by the Comisión Nacional de Valores.                                                                                                                                                                                                                                                                                                                                                             
|                                                                | 
|Rule 4350(c)(2) - Executive Sessions of the Board of Directors. |  | In lieu of the requirements of Rule 4350(c)(2),we follow Argentine law which does not require independent directors to hold regularly scheduled meetings at which only such independent
directors are present (i.e., executive sessions). Our board of directors as a whole is responsible for monitoring our affairs. In addition, under Argentine law, the Board of Directors may approve the delegation of specific responsibilities to
designated directors or non-director managers of the company. Also, it is mandatory for public companies to form a supervisory committee (composed of syndics) which is responsible for monitoring the legality of the companys actions under
Argentine law and the conformity thereof with its by-laws.                                                                                                                          
|                                                                | 
|Rule 4350(c)(3) - Compensation of Officers.                     |  | In lieu of the requirements of Rule 4350(c)(3), we follow Argentine law which does not require companies to form a compensation committee comprised solely of independent directors. For the
determination of the compensation of the chief executive officer and all other executive officers no decision of a majority of independent directors or a compensation committee comprised solely of independent directors is required under Argentine
law. Under Argentine law, the board of directors is the corporate body responsible for determining the compensation of the chief executive officer and all other executive officers, so long as they are not directors. In addition, under Argentine law,
the audit committee shall give its opinion about the reasonableness of managements proposals on fees and option plans for directors or managers of the Company.
|                                                                | 
|Rule 4350(c)(4) - Nomination of Directors.                      |  | In lieu of the requirements of Rule 4350(c)(4), we follow Argentine law which requires that directors be nominated directly by the shareholders at the shareholders meeting and that they
be selected and recommended by the shareholders themselves. Under Argentine law, it is the responsibility of the ordinary shareholders meeting to appoint and remove directors and to set their compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



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|---------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NASDAQ Standards for U.S. companies            |  | APSAs Corporate Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Rule 4350(d)(1) - Audit Committee Charter.     |  | In lieu of the requirements of Rule 4350(d)(1), we follow Argentine law which requires that audit committees have a charter but does not require that companies certify as to the adoption of
the charter nor does it require an annual review and assessment thereof. Argentine law instead requires that companies prepare a proposed plan or course of action with respect to those matters which are the responsibility of the companys audit
committee. Such plan or course of action could, at the discretion of our audit committee, include a review and assessment of the audit committees charter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                               | 
|Rule 4350(d)(2) - Audit Committee Composition. |  | Argentine law does not require that companies have an audit committee comprised solely of independent directors and it is equally not customary business practice in Argentina to have such a
committee. Argentine law instead requires that companies establish an audit committee with at least three members comprised of a majority of independent directors as defined by Argentine law. Nonetheless, although not required by Argentine law, the
Company has a three member audit committee comprised of entirely independent directors in accordance with Rule 10(A)-3(b)(1) of the General rules and regulations promulgated under the Securities Exchange Act of 1934, as independence is defined in
Rule 10(A)-3(b)(1). Further, Argentine law does not require companies to identify or designate a financial expert. As such, Although all the members of the audit committee have large corporate experience, as of the date of this annual report, the
Board of Directors have not named designated a financial expert in accordance with the relevant SEC rules on the audit committee. Although it is noted that all members of the audit committee have had significant corporate experience. In addition,
the Company has a supervisory committee (comisión fiscalizadora) composed of three syndics which are in charge of monitoring the legality, under Argentine law, of the actions of our board of directors and the
conformity of such actions with our by-laws.
|                                               | 
|Rule 4350(f) - Quorum.                         |  | In lieu of the requirements of Rule 4350(f), the Company follows Argentine law and our bylaws, which distinguish between ordinary meetings and extraordinary meetings and require, in
connection with ordinary meetings, that a quorum consist of a majority of stocks entitled to vote. If no quorum is present at the first meeting, a second meeting may be called, in which the shareholders present, regardless of their number,
constitute a quorum. Resolutions may be adopted by an absolute majority of the votes present. Argentine law, and our bylaws, requires in connection with extraordinary meetings, that a quorum consist of 60% of the stock entitled to vote. However, if
such quorum is not present at the first meeting, our bylaws provide that a second meeting may be called and may be held with the number of shareholders present. In both ordinary and extraordinary meetings, decisions are adopted by an absolute
majority of votes present at the meeting, except for certain fundamental matters (such as mergers and spin-offs (when the Company is not the surviving entity and the surviving entity is not listed on any stock exchange), anticipated liquidation,
change in its domicile outside of                                                                                                                                                                                                                                                    



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|--------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NASDAQ Standards for U.S. companies     |  | APSAs Corporate Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                        |  | Argentina, total or partial recapitalization of its statutory capital following a loss, any transformation in our corporate legal form or a substantial change in our corporate purpose, or the
issue of bonds) which require an approval by vote of the majority of all the stock entitled to vote (all stock being entitled to only one vote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                        | 
|Rule 4350(g) - Solicitation of Proxies. |  | In lieu of the requirements of Rule 4350(g), the Company follows Argentine law which requires that notices of shareholders meetings be published, for five consecutive days, in the
Official Gazette and in a widely published newspaper in Argentina no earlier than 45 calendar days prior to the meeting and at least 20 calendar days prior to such meeting. In order to attend a meeting and be listed on the meeting registry,
shareholders are required to submit evidence of their book-entry share account held at Caja de Valores up to three business days prior to the scheduled meeting date. If entitled to attend the meeting, a shareholder may be represented by proxy
(properly executed and delivered with a certified signature) granted to any other person, with the exception of a director, syndic, member of the Comisión fiscalizadora, manager or employee of the issuer, which are prohibited by Argentine law
from acting as proxies. In addition, our ADS holders receive, prior to the shareholders meeting, a notice listing the matters on the agenda, a copy of the annual report and a voting card.
|                                        | 
|Rule 4350(h) - Conflicts of Interest    |  | In lieu of the requirements of Rule 4350(h), the Company follows Argentine law which requires that related party transactions be approved by the audit committee when the transaction exceeds
one percent (1%) of the corporations net worth, measured pursuant to the last audited balance sheet, so long as the relevant transaction exceeds the equivalent of three hundred thousand Argentine Pesos (Ps. 300,000). Directors can contract
with the corporation only on an arms length basis. If the contract is not in accordance with prevailing market terms, such transaction must be pre-approved by the board of directors (excluding the interested director). In addition, under
Argentine law, a shareholder is required to abstain from voting on a business transaction in which its interests may be in conflict with the interests of the company. In the event such shareholder votes on such business transaction and such business
transaction would not have been approved without such shareholders vote, such shareholder may be liable to the company for damages and the resolution may be declared void.    



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C. Material Contracts

We have not entered into any material contracts outside the ordinary course of business
other than those contracts described in the Related Party Transactions and Our Indebtedness Sections contained in this annual report.

D. Exchange Controls

Currency Exchange Regulation

All foreign currency exchange transactions must be carried out in the free exchange market, in which the Argentine Central Bank participates by purchasing
and selling foreign currency.

Import and Export of Capital

Import of Capital

Currently, there
are no laws, executive orders or regulations nor any exchange controls in force in Argentina which limits the import of capital.

Pursuant
to the Argentine Foreign Investment Law No. 21,382, and Decree No. 1,853/93, enacted in 1993, the purchase by foreign investors (any natural or legal person domiciled out of Argentina or an Argentine company of foreign capital)
of capital participation in a company existing in Argentina (according to the Foreign Investment Act) shall constitute a foreign investment.

At present there are no restrictions on foreign investments in industries other than public broadcasting media, and no prior authorization is required to make foreign investments.

Therefore, no prior authorization is required in order to purchase our securities.

See Item 3: Key Information  Exchange Rates

Export of Capital, including the availability of cash or cash equivalents

From 1989 to
December 3, 2001, there were no exchange controls restricting the peso-U.S. Dollar translation or the remittance of U.S. Dollars abroad. In compliance with the economic measures set forth by the Government by means of Decree
No. 1570/01 dated December 3, 2001 and subsequent amendments thereto, aimed at protecting the integrity of the Argentine financial system, money could not be transferred abroad, unless expressly authorized by the Argentine Central Bank.

For purposes of accessing the funds deposited with financial institutions, clients were allowed to make electronic transfers between
accounts of the same institution or others and in favor of the same holder or other persons; pay expenses by means of debit cards, checks, automatic debits and credit cards. Additionally, the Decree declared that new foreign currency deposits can
only be received as time deposits, and no demand accounts denominated in foreign currency may be opened. Such restrictions were later relaxed and deposits of foreign currency in savings accounts (cajas de ahorro) by residents were
allowed. Law No. 25,561 declared a public emergency in social, economic, administrative, financial and foreign exchange market matters, delegating to the Argentine executive branch until December 10, 2003, the powers to reorganize the
financial, banking and foreign exchange system, reactivate the performance of the economy and improve the employment level and distribution of income, focusing on a program for the development of regional economies, creating the conditions for a
sustainable economic growth, consistent with the public debt restructuring, and restructuring outstanding obligations affected by the new foreign exchange system. Such period was extended until December 31, 2006 by Law No. 26,077. Among
other provisions, this law put an end to the convertibility system that had been in effect since April 1991, whereby pesos were convertible to U.S. Dollars at a rate of Ps. 1.0 per U.S Dollar.



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As a consequence of the enactment of Decree 260/02, as of February 8, 2002 a single and free
exchange market was implemented, through which all foreign currency exchange transactions are made. Exchange transactions are freely entered into by parties, but subject to the regulations and requirements set forth by the Central Bank. The Central
Bank issued Communication A 3471, as amended, establishing restrictions or special requirements for exchange transactions. Lack of compliance with requirements and conditions shall result in the application of sanctions established by
the Criminal Law Exchange Regime.

Such regulation has been modified several times and, therefore, only the most important provisions
currently in force are mentioned below:



| |  |  | Argentine individuals and companies are authorized to buy up to US$ 2,000,000 per month;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | the sale of foreign currency to non-residents, with the exception of international organizations, in an aggregate monthly amount exceeding US$ 5,000 shall also be
previously authorized by the Central Bank, except when it is evidenced that the amounts used to purchase foreign currency (i) come from the payment of a resident to the non-resident which orders the transfer; and (ii) the payment is
performed in relation to import, services, revenues or other commercial transfers for which the resident should have accessed to the exchange market in accordance to the exchange rules that regulated payments abroad to commercial account;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | foreign currency exchange or arbitrage transactions with financial institutions located abroad must be previously authorized by the Central Bank, except where such
financial institutions are located in countries which are members of the Basel Committee and have an international credit rating not lower than A granted by international rating agencies registered with the Central Bank, or where such
transactions are entered into with branches of Argentine official banks located abroad;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | future operations in regulated markets, options or forwards transactions and any other type of derivatives entered into and cancelled in Argentina and settled in
local currency are not subject to any restriction, provided, however, that: (i) such operations do not contemplate any payment or transfer obligation of a resident to a foreign country; (ii) any inflow of foreign currency into the local
exchange market for the purposes of such an operation by a non resident who is party to such a transaction is subject to a non-transferable deposit denominated in U.S. Dollars for an amount equal to 30% of the relevant transaction for a period of
365 days in accordance to such further conditions as indicated below (the Non- Transferable Deposit); and (iii) transfer of foreign currency abroad by a non resident derived from such transactions involving an aggregate monthly
amount exceeding US$ 5,000 shall also be previously authorized by the Central Bank.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Communication A 4285 dated January 17, 2005, relaxed restrictions on foreign currency transactions by abrogating the requirement of prior approval
of the Central Bank for the execution of certain future and forward operations and for the access to the foreign exchange market for their cancellation. These operations include: (i) transactions executed by the financial system for the
acquisition of certain time deposits having variable retribution; (ii) agreements for the coverage of foreign currencies and interest rates, (iii) agreements executed by exporters or importers for the coverage of commodity prices, as long
as they are related to argentine foreign trade transactions; and (iv) the execution of external transactions in the form of Repos provided that they are executed for a term of at least 180 days. With the exception of inflows related to the
external transactions in the form of Repos mentioned in (iv), any other inflow of foreign currency devoted to future or forward operations mentioned in (i) to (iii) is exempted from the obligation to constitute the Non- Transferable
Deposit.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | financial institutions must obtain prior authorization of the Central Bank in order to purchase any kind of asset, where the payment for such a transaction is made
against delivery of foreign currency or any other kind of foreign denominated asset that is part of the General Exchange Position (Posición General de Cambios) (the GEP) of these financial institutions;
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| |  |  | new imports of goods may be fully paid in advance, without consideration of the kind of good, as well as debts for imports with any maturity date;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | access to the free and sole exchange market is allowed for payment of expired capital services originated in financial debts, except for financial entities subject
to advance refinancings and rediscounts granted by the Central Bank and restructuring of its foreign debt (Decree No. 739/03 and Communication A 3940);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | non-residents may have access to the exchange market for purposes of transferring funds in foreign currency collected in Argentina, originated from the amortization
installments from national public bonds issued in foreign currency, to accounts in foreign banks;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | there are no restrictions to make payments abroad for services rendered by non-residents on any basis (freight, insurance, royalties, technical advise, fees, etc.);
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | transfers abroad for the payment of indebtedness of private entities (comprising both financial and non-financial institutions) and government owned entities;
provided that they fulfill certain regulatory requirementsamong otherssuch as (i) a sworn statement affirming the fulfillment of Communication A 3602 informative requirements; (ii) the possession of documents which
evidence the genuineness of the operation being cancelled, i.e., the entry into the country of the finance proceed and/or its use to cancel the financial or commercial debt, etc.; (iii) the amounts to be transferred have been adjusted, as the
case may be, in accordance to Decree 214/02 as amended; and (iv) the fact that the inflows have remained in the country for the legal minimum term (180 days until May 26, 2005 or 365 days for funds entered into after that date) has been
verified;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | effective as of January 8, 2003, Argentine companies may freely transfer corporate profits and dividends corresponding to audited financial statements of local
companies without prior Central Bank approval and transfers of funds abroad in order to pay reinsurance premiums will be subject only to the issuance of a statement from the regulatory authority on insurance matters Superintendencia de Seguros de la
Nación (Superintendent of Insurance Board), with respect to the reason and amount to be transferred;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | there is an obligation to enter the funds received as payment for the export of goods and services into the exchange market and to convert them into local currency
within a time limit established by the Ministry of Economy and Production;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | foreign currency obtained from the collection of exports corresponding to bills of lading shall be sold at the reference exchange rate when the foreign currency so
obtained was not clear at the exchange market within the applicable legal terms, in accordance with applicable regulation.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | before September 2005, inflows of foreign currency which would be applied to export advances and prefinancing were allowed into the local exchange market avoiding
the non-transferable deposit requirement established by Decree No. 616/05, issued on June 10, 2005 by providing a sworn statement stating that foreign funds would be used for a specific purchase transaction entered into with the buyer.
Subsequently, the BCRA by means of the Communication A 4415 substituted the sworn statement requirement with the exhibition of the shipping contract involved in said transaction. Later, on November 22, 2005 BCRAs Communication
A4443 relaxed this requirement exempting exporters from providing such documentary evidence if they proved that the inflow of funds would not exceed more than 25% of the amount they received during the last year for similar transactions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Government, through the Central Bank, holds control over capital inflows and outflows, enacting the applicable rules
in this regard. Decree No. 616/05, issued on June 10, 2005, established that inflows and outflows of foreign currency into the local exchange market, and indebtedness transactions incurred by local residents that may result in a foreign
currency-denominated payment to non-residents, need to be registered



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with the Central Bank. Furthermore, as from May 26, 2005, the following situations will be subject to certain requirements and conditions:
(a) inflows of funds derived from foreign borrowing by the private financial and non financial sector, and (b) inflows of foreign currency by non-residents for the purpose of (i) holding a position in local currency,
(ii) purchasing financial debt or assets and (iii) investing in government bonds in the secondary market. In these situations, the following requirements must be met: (i) inflows must remain in Argentina for 365 days to be computed as
from the day they were negotiated in the local exchange market; (ii) the funds involved in the transactions covered by this decree must be deposited in a local bank account; (iii) a non-transferable deposit denominated in U.S. Dollars for
an amount equal to 30% of the relevant transaction has to be made with the resulting proceeds. This deposit will only be reimbursed after the expiration of a 365 term, cannot bear interest (nor yield any other type of profit) and may not be used as
collateral in any credit transaction. Such requirements do not apply to: (a) foreign direct investment, (b) primary placement of publicly traded debt or equity securities listed in one or more exchange markets, and (c) foreign trade
and export finance debt related transactions.

Subsequently, Resolution No. 365/2005 from the Ministry of Economy and Production
established that non-resident capital inflows destined for the primary subscription of Argentine Central Bank notes and income derived from the sale by residents of foreign assets for an amount greater than US$ 2 million per month, will also be
subject to the aforementioned requirements.

Moreover, said resolution provided certain exemptions to the requirement of making the
non-transferable deposit requirement such as: (i) inflows derived from borrowings extended by multilateral and bilateral financial institutions and official credit agencies, and (ii) inflows derived from financial borrowings extended by
foreign creditors, so long as they are devoted to investments in non-financial assets and the borrowed amounts are repaid at least 24 months after they were granted.

In that sense, non-financial assets include:

(i) investments recorded in the category PP&E
of the financial statements (Notice 42303);

(ii) intangible assets related to mine cost and/or research, prospection and
exploration expenses (Notice 42884);

(iii) acquisition of rights to use that had been recorded for accounting purposes in
the category intangible assets of the companys financial statements ( Notice 44670); and

(iv) investments in assets that
are comparable to intellectual property rights, which are commercialized through the assignment of rights to use and should be recorded for accounting purposes in the category intangible assets of the companys financial statements
(Notice 46394).

This exemption automatically expires when the reported use is modified. In that case, the deposit established in item 6 of
Communication A 4359 must be made within 10 business days of such event.

Communications A 4554 and A
4711, both dated September 24, 2007, established certain requirements and terms to file the documentation evidencing the correct classification of the transaction under the above mentioned exemption.

By contrast, according to Communication C 43075 dated September 26, 2005, inflows of foreign currency caused by a non-resident and
devoted to the cancellation of payment obligations under a purchase agreement (including installment payments thereof) concerning a real estate property under construction may be registered as foreign direct investments provided that certain
conditions are met.

Finally, Resolution No. 637/2005 from the Ministry of Economy and Production dated November 16, 2005
established that any inflow of foreign currency to the local exchange market devoted to the primary subscription of notes, bonds or participation certificates issued by the trustee of a trust, regardless of the channels in which they are traded
(public or private offerings, or listings in self-regulated markets) is subject to the non-transferable deposit requirement established by Decree 616/05 if such requirement would be deemed applicable to the acquisition of the underlying assets of
the trust.



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Reporting requirements on Direct Investments

On March 4, 2005 the Argentine Central Bank issued Communication A 4305 that regulates the reporting system of direct investments and
real estate investments carried out by non-residents in Argentina and by Argentine residents abroad, which had been implemented through Communication A 4237 dated November 10, 2004.

Direct investments in Argentina of non-Argentine residents

Non-Argentine residents are compelled to comply with the reporting regime if the value of their investments in Argentina reaches or surpasses the equivalent of US$ 500,000  measured in terms of the net worth of the company in which
they participate or fiscal value of the real estate owned. If the investments do not reach such amount, the compliance with such regime is optional.

According to Communication A 4237, companies in which non-Argentine residents participate in and administrators of real estate pertaining to non-Argentine residents are those obliged to comply with the
reporting regime.

Direct investments made abroad by Argentine residents

Argentine investors are compelled to comply with the reporting regime if the value of their investments abroad reaches or surpasses the equivalent of US$
1,000,000  measured in terms of net worth of the company in which they participate or the fiscal value of the real estate they own.

If the value of those investments abroad does not exceed the equivalent of US$ 5,000,000, the declaration could be carried out annually instead of semiannually. If the investments do not reach the equivalent of US$ 1,000,000, the compliance
with such regime is optional.

The first declarations will correspond to the semester ended on December 31, 2004, and will have to be
filed within 90 calendar days as of such date.

Conclusion:

While the foreign exchange market system in Argentina has become increasingly flexible under recent regulations, Decree No. 616/05 severely deters short term inflows of foreign currency which are presumed to be
of a speculative nature. Such determination on the part of the government is associated also to another short term economic policy goal and combined measures aimed at pegging or reasonably adjusting the U.S. dollar value around Ps. 3.10 per
U.S. dollar. We cannot assess whether these policies will be maintained in the longer run and how changes made therein may affect the economy and our business perspectives. Furthermore, we cannot predict how changes in the evolution of the world
economy and commodity prices which constitutes an important part of Argentinas exports may influence exchange rates and control policies. Moreover, failure of the government to comply with financial commitments with the IMF or failure to reach
an agreement with said institution may have an impact on the foreign exchange system. No assurance can be made as to the extent to which all such factors may lead to future restrictions that might further tighten foreign exchange controls or
otherwise change the current foreign exchange system.

E. Taxation

United States Taxation

The following summary describes the material United States federal income tax consequences of the



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ownership of shares and ADS as of the date hereof. The discussion set forth below is applicable to U.S. Holders (as defined below). Except where noted, this
discussion deals only with U.S. Holders that hold the shares or ADS as capital assets. This summary does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special
treatment under the United States federal income tax laws, including if you are:



| |  |  | a bank;
| | - |  | -------



| |  |  | a dealer in securities or currencies;
| | - |  | -------------------------------------



| |  |  | a financial institution;
| | - |  | ------------------------



| |  |  | a regulated investment company;
| | - |  | -------------------------------



| |  |  | a real estate investment trust;
| | - |  | -------------------------------



| |  |  | an insurance company;
| | - |  | ---------------------



| |  |  | a tax exempt organization;
| | - |  | --------------------------



| |  |  | a person holding the shares or ADS as part of a hedging, integrated or conversion transaction, constructive sale or straddle;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | a trader in securities that has elected the mark-to-market method of accounting for your securities;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a person liable for alternative minimum tax;
| | - |  | --------------------------------------------



| |  |  | a person who owns 10% or more of the voting stock of our company;
| | - |  | -----------------------------------------------------------------



| |  |  | a partnership or other pass through entity for United States federal income tax purposes; or
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | a person whose functional currency is not the U.S. Dollar.
| | - |  | ------------------------------------------------------------

Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the Code), and
regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in federal income tax consequences different from those discussed below. In addition, this
summary is based, in part, upon representations made by the depositary (the Depositary) to us and assumes that the deposit agreement governing the ADS, and all other related agreements, will be performed in accordance with their terms.
IF YOU ARE CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF SHARES OR ADS YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO YOU AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.

U.S. Holder means a beneficial owner of a share, or ADS that is for United States federal
income tax purposes:



| |  |  | an individual citizen or resident of the United States;
| | - |  | -------------------------------------------------------



| |  |  | a corporation created or organized in or under the laws of the United States or any political subdivision of the United States;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate or the income of which is subject to United States federal income taxation regardless of its source; or
| | - |  | -----------------------------------------------------------------------------------------------------------------



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| |  |  | a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons has authority to control all
substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If a partnership holds shares or ADS, the tax treatment of a partner will generally depend on the status of the partner and the activities of the
partnership. If you are a partner of a partnership holding shares or ADS, you should consult your tax advisors.

ADS

In general, for United States federal income tax purposes, U.S. Holders of ADS will be treated as the owners of the underlying
shares that are represented by the ADS. However, the United States Treasury has expressed concerns that intermediaries in the chain of ownership between the holder of an ADS and the issuer of the security underlying the ADS may be taking actions
that are inconsistent with the claiming of foreign tax credits by the holders of ADS. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to dividends received by certain non-corporate
holders. Accordingly, the analysis of the creditability of Argentine taxes and the availability of the reduced tax rate for dividends received by certain non-corporate U.S. Holders, each discussed below, could be affected by actions taken by
intermediaries in the chain of ownership between the holder of an ADS and our company. Deposits or withdrawals of shares by U.S. Holders for ADS will not be subject to United States federal income tax.

Distributions on Shares or ADS

Subject to the discussion under Passive Foreign Investment Company Rules below, the gross amount of distributions on the shares or ADS, (including amounts withheld to reflect Argentine withholding taxes, if any) will be taxable
as dividends to the extent paid out of our current and accumulated earnings and profits (as determined under United States federal income tax principles). Such income (including withheld taxes) will be includable in your gross income as ordinary
income on the day actually or constructively received by you, in the case of shares, or by the Depositary, in the case of ADS. Such dividends will not be eligible for the dividends-received deduction allowed to corporations under the Code.

With respect to non-corporate United States investors, certain dividends received before January 1, 2011 from a qualified foreign
corporation may be subject to reduced rates of taxation. A foreign corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on shares (or ADS backed by such shares) that are readily tradable
on an established securities market in the United States. United States Treasury Department guidance indicates that our ADS (which are listed on the NASDAQ National Market), but not our Shares, are readily tradable on an established securities
market in the United States. Thus, we do not believe that dividends that we pay on our shares that are not backed by ADS currently meet the conditions required for these reduced tax rates. There can be no assurance that our ADS will be considered
readily tradable on an established securities market in later years. Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as
investment income pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to
dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met.

The amount of any dividend paid in Pesos will equal the U.S. Dollar value of the Pesos received calculated by reference to the exchange rate in
effect on the date the dividend is actually or constructively received by you in the case of shares, or by the Depositary, in the case of ADS, regardless of whether the Pesos are converted into U.S. Dollars. If the Pesos received are not converted
into U.S. Dollars on the day of receipt, you will have a basis in the Pesos equal to their U.S Dollar value on the date of receipt. Any gain or loss you realize on a subsequent conversion or other disposition of the Pesos will be treated as United
States source ordinary income or loss.



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Subject to certain significant conditions and limitations, Argentine tax withheld from dividends, if any,
may be treated as foreign income tax eligible for credit or deduction against your United States federal income tax liability. For purposes of the foreign tax credit, dividends paid on the shares or ADS will be treated as income from sources outside
the United States and will generally constitute passive income. Further, in certain circumstances, if you:



| |  |  | have held ADS or shares for less than a specified minimum period during which you are not protected from risk of loss, or
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | are obligated to make payments related to the dividends,
| | - |  | --------------------------------------------------------



| |  |  | you will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on ADS or shares.
| | - |  | ----------------------------------------------------------------------------------------------------------

The rules governing the foreign tax credit are complex. Investors are urged to consult their tax advisors regarding the availability of the foreign tax
credit under their particular circumstances.

To the extent that the amount of any distribution exceeds our current and accumulated
earnings and profits for a taxable year, as determined under United States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ADS or Shares (thereby
increasing the amount of gain, or decreasing the amount of loss, to be recognized by you on a subsequent disposition of the ADS or Shares), and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange.
Consequently, such distributions in excess of our current and accumulated earnings and profits would generally not give rise to foreign source income and you would generally not be able to use the foreign tax credit arising from any Argentine
withholding tax imposed on such distributions unless such credit can be applied (subject to applicable limitations) against United States federal income tax due on other foreign source income in the appropriate category for foreign tax credit
purposes. However, we do not expect to keep earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be treated as a dividend (as discussed above).

Taxation of Capital Gains

Subject to the discussion under Passive Foreign Investment Company Rules below, upon the sale, exchange or other disposition of shares or ADS, you generally will recognize capital gain or loss equal to the
difference between the U.S. Dollar value of the amount realized upon the sale, exchange or other disposition and the adjusted tax basis of the shares or ADS, determined in U.S. Dollars. The capital gain or loss will be long-term capital gain or
loss if at the time of sale, exchange or other disposition you have held the shares or ADS for more than one year. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of
taxation. The deductibility of capital losses is subject to limitations. Any gain or loss you recognize will generally be treated as United States source gain or loss. Consequently, you may not be able to use the foreign tax credit arising from any
Argentine tax imposed on the disposition of an ADS or Share unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources.

Passive Foreign Investment Company Rules

Although it is an inherently uncertain factual issue, we may be a PFIC for the current or future taxable years.

In general, we will be a PFIC for any taxable year in which, either (i) at least 75% of the gross income of our company for the taxable year is passive income or (ii) at least 50% of the value (determined on the basis of a
quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. For this purpose, passive income generally includes dividends, interest, royalties, rents (other than rents and royalties
derived in the active conduct of a trade or business and not derived from a related person),



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annuities and gains from assets that produce passive income. If we own at least 25% by value of the stock of another corporation, we will be treated for
purposes of the PFIC tests as owning a proportionate share of the assets of the other corporation, and as receiving directly a proportionate share of the other corporations income.

The determination of whether we are a PFIC is made annually. If we are a PFIC for any taxable year during which you hold shares or ADS in our company,
unless you make the mark-to-market election discussed below, you will be subject to special tax rules discussed below.

If we are a PFIC
for any taxable year during which you hold our shares or ADS, you will be subject to special tax rules with respect to any excess distribution received and any gain realized from a sale or other disposition, including a pledge, of such
shares or ADS. Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the equity interests will be treated
as excess distributions. Under these special tax rules (i) the excess distribution or gain will be allocated ratably over your holding period for the equity interests, (ii) the amount allocated to the current taxable year, and any taxable
year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and (iii) the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge
generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

In certain
circumstances, in lieu of being subject to the excess distribution rules discussed above, you may make an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method provided that such stock is regularly traded
on a qualified exchange. Under current law, the mark-to-market election is only available for stock traded on certain designated United States exchanges and foreign exchanges which meet certain trading, listing, financial disclosure and other
requirements to be treated as a qualified exchange under applicable United States Treasury regulations. Consequently, the mark-to-market election may be available to you with respect to the ADS because the ADS will be listed on the Nasdaq, which
constitutes a qualified exchange under the regulations, although there can be no assurance that the ADS will be regularly traded. You should note that only the ADS and not the shares are listed on the Nasdaq. The shares are listed on the Buenos
Aires Stock Exchange. Consequently, the Buenos Aires Stock Exchange would need to meet the trading, listing, financial disclosure and other requirements of the United States Treasury regulations. The ADS or shares would need to be regularly traded
on such exchanges in order for the ADS or shares to be potentially eligible for the mark-to-market election.

If we are a PFIC in any
taxable year in which you hold our shares or ADS, but you do not make a mark-to-market election until a subsequent taxable year, you will be subject to special rules in the taxable year of the election. You should consult your own tax advisors
regarding the application of the mark-to-market election in your particular situation.

If you make an effective mark-to-market election,
you will include in income each year as ordinary income, rather than capital gain, the excess, if any, of the fair market value of your PFIC shares or ADS at the end of the taxable year over your adjusted tax basis in the shares or ADS and will be
permitted an ordinary loss in respect of the excess, if any, of the adjusted basis of such shares or ADS over their fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result
of the mark-to-market election. Your basis in the shares or ADS will be adjusted to reflect any such income or loss amounts. Any gain or loss on the sale of the shares or ADS will be ordinary income or loss, except that such loss will be ordinary
loss only to the extent of the previously included net mark-to-market gain.

If you make a mark-to-market election it will be effective for
the taxable year for which the election is made and all subsequent taxable years unless the shares or ADS are no longer regularly traded on a qualified securities exchange or the IRS consents to the revocation of the election. Under proposed
Treasury regulations, mark-to-market inclusions and deductions will be suspended during taxable years in which are not a PFIC, but would resume if they subsequently become a PFIC. You are urged to consult your own tax advisor about the availability
of making such a mark-to-market election.



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Alternatively, a United States Holder of shares or ADS in a PFIC can sometimes avoid the rules described
above by electing to treat the company as a qualified electing fund under section 1295 of the Code. This option is not available to you because we do not intend to comply with the requirements necessary to permit you to make this
election.

A United States Holder who owns shares or ADS during any year that we are a PFIC must file IRS Form 8621.

You should consult your own tax advisors concerning the United States federal income tax consequences of holding the shares or ADS if we are considered a
PFIC in any taxable year.

Argentine Personal Assets Taxes

Amounts paid on account of the Argentine Personal Assets Taxes, if any, will not be eligible as a credit against your United States federal income tax liability, but may be deductible subject to applicable limitations
in the Code.

Information Reporting and Backup Withholding

In general, information-reporting requirements will apply to distributions on shares or ADS and to the proceeds of sale of a share or ADS paid to you
within the United States (and in certain cases, outside the United States), unless you are an exempt recipient (such as a corporation). Backup withholding may apply to such payments if you fail to provide a correct taxpayer identification number or
certification of foreign or other exempt status or fail to report in full dividend and interest income.

Any amounts withheld under the
backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability provided you furnish the required information to the IRS.

Argentine Taxation

The
following discussion is a summary of certain Argentine tax considerations associated with an investment in, ownership or disposition of, the shares or the ADSs by (i) an individual holder that is resident in Argentina, (ii) an individual
holder that is neither domiciled nor resident in Argentina, (iii) a legal entity organized under the laws of Argentina and (iv) a legal entity that is not organized under the laws of Argentina, that does not have a permanent establishment
in Argentina and is not otherwise doing business in Argentina on a regular basis. The discussion is for general information only and is based on current Argentine tax laws. Moreover, while this summary is considered to be a correct interpretation of
existing laws in force as of the date of this 20-F Form, no assurance can be given that the courts or administrative authorities responsible for the administration of such laws will agree with this interpretation or that changes in such laws or
interpretations will not occur. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES ARISING UNDER ANY TAXING JURISDICTION.

Taxation of Dividends

Dividends, either in cash, shares or kind approved by our shareholders are currently exempt from Argentine withholding or other taxes.

Notwithstanding the foregoing, according to Argentine law, income tax will be applied to the amount of dividends distributed in excess of a companys net taxable income determined in accordance with general income tax regulations for
the fiscal years preceding the date of the distribution of such dividends. The legislation requires that companies withhold 35% of the amount of distributed dividends in excess of the net taxable income of such distribution, as determined in
accordance with the income tax law. The withholding would not be applied to the payment of future dividends derived out of retained earnings obtained in the fiscal years ended prior to December 30, 1998. Dividends distributed by an Argentine
company are not subject to this tax to the extent that those dividends arise from dividend income or other distributions received by such company from other Argentine companies.



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Taxation of Capital Gains

Due to certain amendments made to the Argentine Income Tax Law, it is not entirely clear whether certain amendments concerning payment of income tax on
capital gains arising from the sale, exchange or other disposition of shares are in effect or not. Although Opinion No. 351 of the National Treasury General Attorney Office clarified the legal status of certain matters affecting the tax
treatment of capital gains certain issues still remain unclear.

Resident individuals

Under what we believe to be a reasonable interpretation of existing applicable tax laws and regulations: (i) income derived from the sale, exchange
or other disposition of shares or ADSs by resident individuals who do not sell or dispose of Argentine shares on a regular basis would not be subject to Argentine income tax, and (ii) although there still exists uncertainty regarding this
issue, income derived from the sale, exchange or other disposition of shares or ADSs by resident individuals who sell or disposes of Argentine shares on a regular basis should be exempt from Argentine income tax.

Foreign beneficiaries

Capital gains
obtained by non residents or foreign entities from the sale, exchange or other disposition of shares or ADSs are exempt from income tax. Pursuant to a reasonable interpretation of existing applicable laws and regulations, and although the matter is
not completely free from doubt, such treatment should also apply to those foreign beneficiaries that qualify as offshore entities for Argentine tax law purposes, when the shares are not listed in Argentina or in other jurisdictions. For
this purpose, an offshore entity is any foreign legal entity which pursuant to its by-laws or to the applicable regulatory framework: (i) its principal activity is to invest outside the jurisdiction of its incorporation and/or (ii) cannot
perform in such jurisdiction certain transactions.

Local entities

Capital gains obtained by Argentine entities (generally entities organized or incorporated under Argentine law, certain traders and intermediaries, local
branches of non Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina) derived from the sale, exchange or other disposition of shares or ADSs are subject to income tax at the rate of 35%.

Losses arising from the sale, exchange or other disposition of shares and ADSs can be applied only to offset such capital gains arising
from the sale, exchange or other disposition of these securities.

WE RECOMMEND PROSPECTIVE INVESTORS TO CONSULT THEIR OWN TAX ADVISOR
REGARDING THE PARTICULAR TAX CONSEQUENCES CONCERNING THE SALE OR OTHER DISPOSITIONS OF SHARES AND ADSs.

Value Added Tax

The sale, exchange, disposition, or transfer of shares or ADSs is not subject to Value Added Tax.

Personal Assets Tax

Law
No. 25,585 issued on April 24, 2002 and published in the Official Gazette on May 15, 2002 (and applicable to personal assets held as of December 31, 2002) introduces amendments to Law No. 23,966 and imposes the personal
assets tax on shares and ADSs held by individuals and undivided estates domiciled or located in Argentina or abroad and legal entities not domiciled in Argentina, separately from other assets.



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This amendment imposes the obligation to pay the personal assets tax on the Argentine private issuer of
the shares and ADSs, and authorizes it to seek recovery of the amount so paid, without limitation, by way of withholding or by foreclosing on the assets that gave rise to such payment. The tax is levied on the proportional equity value of the shares
as reflected in the most recent balance sheet closed as of December 31 of the taxable year, at the rate of 0.5% without any non-taxable minimum being applicable.

Minimum Presumed Income Tax (Impuesto a la Ganancia Mínima Presunta, IGMP)

Companies
domiciled in Argentina, partnerships, foundations, sole proprietorships, trusts, certain mutual funds organized in Argentina, and permanent business establishments owned by foreign persons, among other taxpayers, shall apply a 1% rate to the total
value of assets held by such persons, above an aggregate nominal amount of Ps. 200,000. Nevertheless, shares and ADSs issued by entities subject to such tax are exempt from paying the IGMP.

Gross Income Tax

The gross income
tax is a local tax; therefore, the rules of the relevant provincial jurisdiction should be considered, which may levy this tax on the customary purchase and sale, exchange or other disposition of shares and ADSs, and/or the collection of dividends
at an average rate of 3%, unless an exemption is applicable. In the particular case of the City of Buenos Aires, any transaction involving shares and/or the collection of dividends and revaluations is exempt from this tax.

There is no gross income tax withholding system applicable to the payments made to foreign beneficiaries.

Stamp Tax

The stamp tax is a local
tax that is generally levied on the instrumentation of onerous acts executed within a certain territorial jurisdiction or outside a certain territorial jurisdiction but with effects in such jurisdiction.

In the City of Buenos Aires, the stamp tax has been repealed for all those acts that do not imply an onerous conveyance of real property or the lease of
real property. However, most provincial tax authorities maintain this tax in effect for all acts in general; therefore, the instruments which implement onerous transactions (including issuance, subscription, placement and transfer) involving the
shares or ADSs, executed in other jurisdictions, or with effects in those jurisdictions, could be deemed to be subject to this tax.

Tax
on Credits and Debits in Bank Accounts

This tax is levied upon debits and credits in bank accounts and upon other transactions which,
due to their special nature and characteristics, are similar or could be used in substitution for a checking account, such as payments on behalf of or in the name of third parties, procedures for the collection of securities or documents, drafts and
transfers of funds made by any means, when these transactions are performed by local banks.

The tax law and its regulations provide
several exemptions to this tax. For example, it does not apply to entities recognised as exempt from income tax, to debits and credits relating to salaries, to retirement and pension emoluments credited directly by banking means and withdrawals made
in connection with such credits, to credits in checking accounts originating from bank loans, and to transfers of cheques by endorsement.

The general rate of the tax is 0.6%. An increased rate of 1.2% applies in cases in which there has been a substitution for the use of a checking account.

Pursuant to Argentine Regulatory Decree 380/2001, as amended, 34% of the tax paid on credits levied at the 0.6% rate and 17% of the tax paid on transactions levied at the 12% tax rate can be used, to its exhaustion,
as a credit against income tax, tax on minimum notional income and/or the special contribution on cooperatives capital.



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Court and Other Taxes

In the event that it becomes necessary to institute legal actions in relation to the shares or ADSs in Argentina, a court tax (currently at a rate
of 3.0%) will be imposed on the amount of any claim brought before the Argentine courts sitting in the City of Buenos Aires.

The City of
Buenos Aires imposes a special contribution to the Lawyers Social Security System (CASSABA Contribution), in addition to the court tax of 3.0%. The CASSABA Contribution will be equal to 3.0% of the amount of the court tax imposed
as a result of the claim.

Argentina imposes neither an estate nor gift tax on a decedent, donor, legatee or donee. No Argentine tax is
imposed on the deposit or withdrawal of shares in exchange for ADSs. Other than the taxes discussed above, no other Argentine taxes are applicable to an investment in shares or ADSs. At present, there is no national tax specifically applicable to
the transfer of securities.

Tax Treaties

Argentina has entered into tax treaties with several countries. There is currently no tax treaty or convention in effect between Argentina and the United States.

F. Dividends and Paying Agents

This section is not applicable.

G. Statement by Experts

This section is not applicable.

H. Documents on Display

We file annual, quarterly and other information with the SEC. You may read and copy
any document that we file at the public reference rooms of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain information on the operation of the public reference
rooms by calling the SEC at 1-800-SEC-0330. Our Internet address is http://www.apsacc.com.ar. You may request a copy of these filings at no cost, by writing to: finanzas@altopalermo.com.ar or calling the office at +54(11) 4323-7440.

I. Subsidiary Information

This section is not applicable.



|ITEM 11. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Market risk represents the risk of loss that may impact our consolidated financial position, results of operations or cash flows due to adverse changes in financial and commodity market prices and interest rates. We are exposed to market
risk in the areas of interest rates and foreign currency exchange rates. This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors.
Uncertainties that are either nonfinancial or nonquantifiable, such as political, economic, tax, other regulatory or credit risks are not included in the following assessment of our market risks.



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Interest Rate Risk

Our exposure to market risk associated with changes in interest rate risk is limited to the exposure related to our current investments and floating rate debt.

We place our cash and current investments in high quality financial institutions in Argentina and the United States. Our policy is to limit exposure with
any institution. Our investment portfolio primarily consists of money market, mutual funds and short term deposits. As of June 30, 2007 we had cash and cash equivalents of Ps. 485.5 million. In view of the nature of our total portfolio, an
immediate 100 BPs parallel shift change in the interest rate curve would not have a significant impact on the value of our investment portfolio.

We are exposed to changes in interest rates primarily as a result of our borrowing activities, which include short-term, medium-term and long-term debt used to maintain liquidity and fund for our business operations.

Our medium and long term debts are the following:



| |  |  | Convertible Note
| | - |  | ----------------



| |  |  | Series I and Series II notes
| | - |  | ----------------------------



| |  |  | Standard Bank Loan
| | - |  | ------------------

In August 2002
the Company issued US$ 50 million of Convertible Notes. Under US GAAP, the Company applied APB 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants, which requires that no portion of the proceeds be
allocated to the conversion feature if the convertible debt securities are convertible into common stock of the issuer at a specified price at the option of the holder and are sold at a price or have a value at issuance not significantly in excess
of the face amount. In considering the accounting treatment of the Convertible Notes under US GAAP the Company took account of the guidance provided in EITF 98-5. EITF 98-5 requires that embedded beneficial conversion features present in
convertible securities be valued separately at issuance when the non-detachable conversion feature is in-the-money at the commitment date. The embedded beneficial conversion feature should be recognized and measured by allocating to
additional paid-in capital a portion of the proceeds equal to the intrinsic value of that feature. That amount is calculated at the commitment date as the difference between the conversion price and the fair value of the common stock or other
securities into which the security is convertible, multiplied by the number of shares into which the security is convertible (intrinsic value). As a result of the analysis the Company performed, no proceeds were allocated to the embedded conversion
feature since it was out-the-money at the commitment date (i.e. the intrinsic value at the commitment date was zero).

The
terms of the convertible debt instrument were modified to extend the maturity date through July 19, 2014. Argentine GAAP requires that an exchange of debt instruments with substantially different terms be considered a debt extinguishment and
that the old debt instrument be derecognized. Argentine GAAP clarifies that from a debtors perspective, an exchange of debt instruments between, or a modification of a debt instrument by, a debtor and a creditor shall be deemed to have been
accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms
of the original instrument. The new debt instrument should be initially recorded at fair value and that amount should be used to determine the debt extinguishment gain or loss to be recognized. Fair value should be determined by the present value of
the future cash flows to be paid under the terms of the new debt instrument discounted at a rate commensurate with the risks of the debt instrument and time value of money. If it is determined that the original and new debt instruments are not
substantially different, then a new effective interest rate is to be determined based on the carrying amount of the original debt instrument and the revised cash flows. Based on the analysis performed, the Company concluded that the instruments were
not substantially different and accordingly the old instrument was not derecognized. The outstanding balance was reclassified to non-current in these consolidated financial statements.



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Under US GAAP, in November 2006, the EITF reached a final consensus in EITF Issue 06-6
Debtors Accounting for a Modification (or Exchange) of Convertible Debt Instruments. EITF 06-6 reconsidered the original consensus in Issue 05-7 Accounting for Modification to Conversion Options Embedded in Debt Instruments
and Related Issues that the change in fair value of an embedded conversion option should be included in the cash flow analysis under EITF Issue 96-19, Debtors Accounting for a Modification or Exchange of Debt Instruments, in
determining whether a debt instrument has been modified or extinguished. This Issue considers the accounting for a modification of debt terms (or exchange in debt instruments) when a change in the fair value of an embedded conversion option has
occurred or an embedded conversion option has been added or eliminated from the debt instrument. This Issue also amended the guidance in EITF Issue 96-19.

The consensus stipulates that, in evaluating whether a convertible debt instrument has been modified or extinguished, three aspects of the modification (or exchange of debt instruments) must be considered.

1. Change in cash flows: If the change in cash flows as prescribed by the analysis under Issue 96-19 is greater than 10% of the
carrying value of the original debt instrument, the modification (or exchange of debt instruments) should be accounted for as an extinguishment. This test would not include any changes in fair value to the embedded conversion option.

2. Change in fair value of the embedded conversion option: If the change in the fair value of the embedded conversion option is greater
than 10% of the carrying value of the original debt instrument immediately before the change (or exchange of debt instruments), the modification (or exchange) should be accounted for as an extinguishment.

3. Addition or removal of an embedded conversion option: The addition or removal of a substantive conversion option would
automatically result in extinguishment accounting. Whether an embedded conversion option is substantive would be assessed as of the modification date and would be based on the definition of substantive in EITF Issue 05-1, Accounting for the
Conversion of an Instrument That Becomes Convertible upon the Issuers Exercise of a Call Option.

Any one of the three criteria
needs to be met to account for the modification of the debt instrument (or exchange of debt instruments) as an extinguishment. When the result of the three-pronged evaluation above results in a conclusion that a convertible debt instrument has been
modified (and not extinguished), the Task Force affirmed as a final consensus that any increase in the fair value of the embedded conversion option should reduce the carrying value of the debt instrument (with a corresponding increase to additional
paid-in capital), but any decrease in the fair value of the embedded conversion option is ignored.

Based on the analysis performed,
neither of criteria 1, 2 or 3 above are met. Accordingly, the change of the debt instrument has not been accounted for as an extinguishment. Thus, the increase in the fair value of the conversion option reduced the carrying value of the debt
instrument with a corresponding increase to additional paid-in-capital. This resulted in an increase in interest expense prospectively. As of June 30, 2007 the fair market value in pesos equivalent of Convertible Note was Ps. 2.118 million.
Such fair value was determined based on the market price of the shares assuming full conversion of the notes at year-end. Because of convertion condition is deep in the money Convertible Note fair value is almost not sensitive to interest rate
movements.

On May 11, 2007, Alto Palermo issued two new series of notes in an aggregate principal amount of US$170 million. Series I
consists of US$120 million of notes due on May 11, 2017, which accrue interest at a fixed rate of 7.875% payable semi-annually on May 11 and November 11 of each year, commencing on November 11, 2007. The Series I notes mature in
a single installment on May 11, 2017. As of June 30, 2007 the fair market value in pesos equivalent of Series I was Ps. 375 million (includes accrued interest).



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As a mesure of sensitivity, an upward shift of 100 Bps in general interest level would implie a dicrease
of 6% in Series I fair market value. Also, rise of 1% in Pesos / dollars exchange rate increases our interest expenses in Ps. 0,3 million annually.

Series II consists of Ps.154 million (equivalent to US$50 million) of notes which mature in seven, equal and consecutive semi-annual installments commencing on June 11, 2009, and which accrue interest at 11% per annum, payable on
June 11 and December 11 of each year commencing on December 11, 2007. As of June 30, 2007 the fair market value of Series II was Ps. 156 million (includes accrued interest).

As a mesure of sensitivity, an upward shift of 100 Bps in general interest level would implie a dicrease of 2% in Series II fair market value.

On November 24, 2006 Standard Bank S.A. granted us a Ps. 40.0 million loan accruing a monthly fixed interest rate of 11.9%. The
loan was cancelled in one installment of Ps. 40.0 million plus a fee of 0.4% (Ps. 0.16 million) on November 26, 2007.

Our
current debt expenses are not sensitive to changes in the general level of interest rates because they are determinated by fixed interest rates.

For our debt obligations, the following table presents principal cash flows and related weighted average interest rates by expected maturity dates.



|                                                   |  |                                                                    |   |  |        |   |  |        |   |  |                |   |  |        |   |  |       |   |  |             
|-------------------------------------------------- |  | ------------------------------------------------------------------ | - |  | ------ | - |  | ------ | - |  | -------------- | - |  | ------ | - |  | ----- | - |  | ------------
|                                                   |  | June 30, 2007 Expected Maturity Date (U.S.$
Equivalent in million)
|Significant liabilities                            |  | FY2008                                                             |   |  | FY2009 |   |  | FY2010 |   |  | FY2011toFY2016 |   |  | FY2017 |   |  | Total |   |  | FairValue(4)
|Fixed Rate Debt (US$). Principal Payment (1)       |  |                                                                    |   |  |        |   |  |        |   |  | 47.23          |   |  |        |   |  | 47.23 |   |  | 684.81      
|Average interest rate                              |  | 10                                                                 | % |  | 10     | % |  | 10     | % |  | 10             | % |  |        |   |  | 10    | % |  |             
|Fixed Rate Debt (US$). Principal Payment(2)        |  |                                                                    |   |  |        |   |  |        |   |  |                |   |  | 120    |   |  | 120   |   |  | 121.31      
|Average interest rate                              |  | 7.875                                                              | % |  | 7.875  | % |  | 7.875  | % |  | 7.875          | % |  | 7.875  | % |  | 7.875 | % |  |             
|Fixed Rate Debt (Pesos). Principal Payment (2) (3) |  |                                                                    |   |  | 7.11   |   |  | 14.23  |   |  | 28.46          |   |  |        |   |  | 49.80 |   |  | 50.56       
|Average interest rate(3)                           |  | 11                                                                 | % |  | 11     | % |  | 11     | % |  | 11             | % |  |        |   |  |       |   |  |             
|Standard Bank Loan (Pesos). Principal Payments (3) |  | 3.65                                                               |   |  |        |   |  |        |   |  |                |   |  |        |   |  | 3.65  |   |  | 3.65        
|Average interest rate (3)                          |  | 11.9                                                               | % |  |        |   |  |        |   |  |                |   |  |        |   |  |       |   |  |             

---

|(1) | It corresponds to Convertible Note.
|--- | -----------------------------------

|(2) | It corresponds to the series I Note due 2017.
|--- | ---------------------------------------------

|(3) | Peso-denominated loans were converted to U.S. Dollar at an exchange rate of Ps. 3.093 per U.S. Dollar.
|--- | ------------------------------------------------------------------------------------------------------

|(4) | It includes accrued interest.
|--- | -----------------------------

As a matter of policy,
from time to time, we use derivative instruments only to minimize our financing costs. However, there can be no assurance that such risks would be managed in the future through a variety of strategies, including the use of hedging transactions. We
do not use derivative instruments for trading or speculative purposes.

During the year ended June 30, 2007 the Company celebrated seven
NDF (non Deliverable Forward),



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two of them were settled before June 30, 2007 producing a gain of Ps. 55,000 (US$ 17,7821). As of June 30, 2007 we had a short position in NDF of US$25 million with an average price of 3.086 Ps. per US$ and an average tenor of 37.2 days.

Foreign Exchange Exposure

We transact
our business primarily in Pesos. Accordingly, our earnings are subject to exposure from adverse movements in currency exchange rates primarily related to our U.S. Dollar denominated debt.

Historically, volatility has been caused by currency devaluation, among other factors. Most of theses factors have occurred at various times in the last
two decades in Argentina.

From April 1, 1991, until the beginning of year 2002, the Convertibility Law No. 23,928 was applicable
in Argentina. This law established a fixed exchange rate, under which the Argentine Central Bank was forced to sell U.S. Dollars to any person at a fixed rate of Ps. 1.00 per US$ 1.00. Accordingly, the foreign currency fluctuations were reduced
to a minimum level during this period.

The primarily economic change implemented by the Argentine government in January 2002 was the
announcement of the devaluation of the Peso. Most of our lease contracts and most of our liabilities were denominated in U.S. Dollars. Decree No. 214/02 and Decree No. 762/02 mandatorily converted into Pesos all monetary obligations in
U.S. Dollars entered into between parties under Argentine Law. Consequently, all of our leases and most of our liabilities were pesified at a one-to-one exchange rate and, additionally, those leases and liabilities would be adjusted by the CER index
(a daily compounding of the Consumer Price Index).

Both Convertible Notes (due 2014) and serie I Note due 2017 are denominated in US
Dollars. Currently all of our revenues are derived from our operations in Argentina and foreign exchange volatility will probably affect our Peso-denominated revenues, making it more burdensome for us to pay our U.S. Dollar-denominated debt.

Foreign currency exchange fluctuations may additionally affect the risk of default on our leases and services and other receivables, as
any of our customers that have Peso-denominated revenue streams may experience a relative increase in their U.S. Dollar-denominated liabilities compared to their Peso-denominated revenues. Foreign currency exchange restrictions hereafter
imposed by the Argentine government could prevent or restrict our access to U.S. Dollars, affecting our ability to service our U.S. Dollar-denominated liabilities.

Our strategies may prove ineffective to address the effect of foreign currency exchange movement on our financial condition. We have experienced net losses in the past, and we could experience such losses in the
future to the extent that foreign exchange rates shift in excess of the risk covered by derivative financial instruments. In entering into foreign currency contracts, we bear the credit risk of counterparties being unable to meet the terms of their
contracts; and we may be unable to recover damages from any such defaulting counterparty through legal enforcement actions due to laws affording bankruptcy or protection to insolvent obligors, foreign laws limiting cross-border enforcement actions
or otherwise.

Due to the fact that our income stream is basically in pesos our exposure to foreign exchange risk is derived from our
liabilities. To see our exposure to such Dollar denominated liabilities please refer to the above table.

---

|1 | Converted to U.S. Dollar at an exchange rate of Ps. 3.093 per U.S. Dollar
|- | -------------------------------------------------------------------------



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|ITEM 12. | Description of Securities Other than Equity Securities
|-------- | ------------------------------------------------------

This item is not applicable.

PART II



|ITEM 13. | Defaults, Dividend Arrearages and Delinquencies
|-------- | -----------------------------------------------

This item is not applicable.



|ITEM 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds
|-------- | ----------------------------------------------------------------------------

This item is not applicable.



|ITEM 15. | 
|-------- | 

A. Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit
under the Securities and Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is
accumulated and communicated to management, including our Chief Executive Officer, Chief Financial Officer and Chief Administrative Officer, as appropriate, to allow timely decisions regarding required disclosure. In connection with the
preparation of this Annual Report on Form 20-F, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial Officer and Chief Administrative Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2007. Based upon this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were effective as of the end of fiscal year 2007.

B. Managements Annual Report on Internal Control Over Financial Reporting

The management of Alto Palermo
S.A. (APSA) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable generally accepted accounting principles.

Management assessed the effectiveness of the Companys internal control over financial reporting as of June 30, 2007. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal ControlIntegrated Framework. Based on this assessment and the criteria set forth in
Internal ControlIntegrated Framework, management concluded that, as of the end of fiscal year 2007, our internal control over the financial reporting was effective.

C. Attestation Report of the Registered Public Accounting Firm

This annual report does not include an
attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report on internal control over financial reporting was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only managements report on internal control over financial reporting in this annual report.



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D. Changes in Internal Control Over Financial Reporting

During the period covered by this Annual Report on
Form 20 F, the company has implemented a new ERP software. The Companys internal control over financial reporting has been adopted accordingly, for the change in our accounting system. After carrying out an evaluation under the supervision and
with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures, the Company concludes that our disclosure controls and procedures were effective.



|ITEM 16. | 
|-------- | 

A. Audit Committee Financial Expert

In our annual ordinary shareholders meeting held on October 31,
2003, the audit committee plan was unanimously approved. Pursuant to this plan, the Board of Directors shall appoint the members of the audit committee. The Board of Directors established that the Audit Committee shall be a Committee of the Board of
Directors. The Audit Committee will focus on assisting the Board in exercising its duty of care, the enforcement of accounting policies, disclosure requirements, the management of our business risk, the management of our internal control systems,
the ethical conduct of the companys business, maintenance of the integrity of our financial statements, compliance with legal provisions, the independence and capability of our independent auditors and the performance of our internal audit
function and of our external auditors.

On November 7, 2007, our board of directors officially appointed Leonardo Fernández,
Abraham Perelman and Enrique Antonini, all of them whom are independent members, as members of the audit committee in accordance with Rule 10(A)-3(b)(1) of the General rules and regulations promulgated under the Securities Exchange Act of 1934. We
have a fully independent audit committee as per the standard provided in Rule 10(A)-3(b)(1). Although all of them have large corporate experience, as of the date of this annual report, the Board of Directors have not named a financial expert in
accordance with the relevant SEC rules. Argentine law does not require companies to identify or designate a financial expert. As such, the Board of Directors have not designated a financial expert on the audit committee. Although it is noted that
all members of the audit committee have had significant corporate experience.

B. Code of Ethics

We have adopted a code of ethics that applies to our directors, officers and employees. On
date July 25 2005, our Code of Ethics was amended by our Board of Directors. The reformed Code was informed by means of a 6K Form filing on August 1, 2005. Our code of ethics is available on our web site at www.apsacc.com.

An Ethics Committee comprised by three members of the board of directors how will be responsible for the solution of issues related to the
Code of Ethics for Directors and officers and shall determine the appropriate disciplinary action for any violation of such Code of Ethics.

If we make any substantive amendment to the code of ethics, we will disclose the nature of such amendment on our website, www.apsacc.com or in our next Form 20-F. If we grant any waivers, including any implicit waiver, from a
provision of the code of ethics, we will disclose the nature of such waiver in a Form 6-K or in our next Form 20-F.

C. Principal Accountant Fees and Services

Audit Fees

During fiscal years ended June 30, 2007 and 2006, we were billed for a total amount of Ps. 0.9 million and Ps. 0.5 million, respectively,
for professional services rendered by our principal accountants for the audit of our annual financial statements and other services normally provided in connection with regulatory filings or engagements, such as the review of our interim financial
statements.



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Audit-Related Fees

During fiscal years ended June 30, 2007 and 2006, we were billed for a total amount of Ps. 0.4 million and Ps. 0.04 million, respectively, for professional services rendered by our principal accountants
related to the performance of the audit or review of our financial statements, not included in the Audit Fees category, such as internal control reviews.

Tax Fees

During both fiscal years ended June 30, 2007 and 2006, we were billed for a total amount of Ps.
0.03 million each year for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.

All Other
Fees

During fiscal year ended June 30, 2007, we were billed for a total amount of Ps. 4,500 for other professional services
rendered by our principal accountants, mainly including fees related to previsional advice. During fiscal year ended June 30, 2006, we were not billed for such services.

Audit Committee Pre-Approval Policies and Procedures

Our audit committee approves, in advance, the
engagement of auditors and their fees for audit and non-audit services pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

Our Audit Committee pre-approves all services, fees and services provided by the external auditors to ensure auditors independence. One of the main tasks of the Audit Committee is to give it opinion in relation to the appointment of
the external auditors, proposed by the Board of Directors to the General Shareholders Meeting. In order to accomplish such task, the Audit Committee shall:

Require any additional and complementary documentation related to this analysis.



| |  |  | Verify the independence of the external auditors;
| | - |  | -------------------------------------------------



| |  |  | Analyze different kinds of services that the external auditor would provide to the company. This description must also include an estimate of the fees payable for
such services, specifically in order to maintain the principle of independence;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inform the fees billed by the external auditor, separating the services related to the Audit Committee and other special services that could be not included as fees
related to the Audit Committee;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Take notice of any strategy proposed by of the external auditors and review it in accordance with the reality other business and the risks involved;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Analyze and supervise the working plan of the external auditors considering the business reality and the estimated risks;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | Propose adjustments (if necessary) to such working plan;
| | - |  | --------------------------------------------------------



| |  |  | Hold meetings with the external auditors in order to: (a) analyze the difficulties, results and conclusions of the proposed working plan; (b) analyze
eventual possible conflicts of interests, related party transactions, compliance with the legal framework and information transparency;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Evaluate the performance of external auditors and their opinion regarding the Financial Statements.
| | - |  | ---------------------------------------------------------------------------------------------------

D. Exemption from the Listing Standards for Audit Committees

This section is not applicable.

E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers

There were no repurchases of shares
or other units of any class of our equity securities that are registered pursuant to Section 12 of the Exchange Act during fiscal years 2005, 2006 and 2007.

PART III



|ITEM 17. | Financial Statements
|-------- | --------------------

Our Financial Statements have
been prepared in accordance with Item 18 hereof.



|ITEM 18. | Financial Statements
|-------- | --------------------

Reference is made to pages
F-1 through F-74.



|ITEM 19. | Exhibits
|-------- | --------

INDEX OF EXHIBITS



|            |  |                                                                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                                                 
|1.1*        |  | Estatutos of the registrant, which serve as the registrants articles of incorporation and bylaws, and an English translation thereof.                                 
|            | 
|1.2         |  | English translation of the amendment to the bylaws.                                                                                                                    
|            | 
|2.1*        |  | Form of Deposit Agreement among the Company, The Bank of New York, as Depositary, and the holders from time to time of American Depositary Receipts issued there under.
|            | 
|2.2*        |  | Shareholders Agreement, dated November 18, 1997, among IRSA International Limited, Parque Arauco S.A. and Sociedad Anónima Mercado de Abasto Proveedor (SAMAP).        
|            | 
|2.3*        |  | Put Option Agreement dated November 17, 1997, among IRSA Inversiones y Representaciones Sociedad Anónima and GSEM/AP                                                   
|            | 
|2.4*        |  | Offering Circular, dated March 24, 2000, regarding the issuance of Ps. 85,000,000 of the Companys 14.875% Notes due 2005.                                             
|            | 
|2.5         |  | Indenture dated May 11, 2007, between the Company as Issuer, The Bank of New York as trustee, Co-Registrar, Principal Paying Agent and Transfer Agent, and Banco       



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|        |  |                                                                                                                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | Santander Río S.A. as Registrar, Paying Agent, Transfer Agent and Representative of the Trustee in Argentina for the US$ 200,000,000 Global Note Program for Notes due no less than 30 days
from date of original issue.
|        | 
|4.1**   |  | Agreement for the exchange of Corporate Service between the Company, IRSA and Cresud dated June 30, 2004.                                                                                                               
|        | 
|4.2     |  | English translation of the Amendment to the Agreement for the exchange of Corporate Service between the Company, IRSA and Cresud dated August 23, 2007.                                                                 
|        | 
|11.1*** |  | Code of Ethics of the Company.                                                                                                                                                                                          
|        | 
|12.1    |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act 2002                                                                                                                                                    
|        | 
|12.2    |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act 2002                                                                                                                                                    
|        | 
|13.1    |  | Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                         
|        | 
|13.2    |  | Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                         

---

|* | Incorporated herein by reference to the same-numbered exhibit to the registrants registration statement on Form 20-F (File No. 000-30982)
|- | ------------------------------------------------------------------------------------------------------------------------------------------

|** | Incorporated herein by reference to the registrants registration statement on Form 6-K (SEC File No. 000-30982).
|-- | -----------------------------------------------------------------------------------------------------------------

|*** | Incorporated herein by reference to the registrants registration statement on Form 6-K reported on August 1, 2005.
|--- | -------------------------------------------------------------------------------------------------------------------



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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and
that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



ALTO PALERMO S.A. (APSA)/s/ Alejandro G. ElsztainAlejandro G. Elsztain Chief Executive
Officer


Date: December 27, 2007



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Alto Palermo S.A. (APSA)

Index to Consolidated Financial Statements



|                                                                                                            |  |     
|----------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                            |  | Page
|Report of Independent Registered Public Accounting Firm                                                     |  | F-2 
|Consolidated Balance Sheets as of June 30, 2007 and 2006                                                    |  | F-3 
|Consolidated Statements of Income for the years ended June 30, 2007, 2006 and 2005                          |  | F-4 
|Consolidated Statements of Changes in Shareholders Equity for the years ended June 30, 2007, 2006 and 2005 |  | F-5 
|Consolidated Statements of Cash Flows for the years ended June 30, 2007, 2006 and 2005                      |  | F-6 
|Notes to the Consolidated Financial Statements                                                              |  | F-8 



F-1



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Alto Palermo S.A. (APSA)

In our opinion, the accompanying consolidated
balance sheets and the related consolidated statements of income, of changes in shareholders equity and of cash flows present fairly, in all material respects, the financial position of Alto Palermo S.A. (APSA) and its subsidiaries at
June 30, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2007 in conformity with accounting principles generally accepted in Argentina. These financial
statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

Accounting principles generally accepted in Argentina vary in certain
significant respects from accounting principles generally accepted in the United States of America and as allowed by Item 18 to Form 20-F. Information relating to the nature and effect of such differences is presented in Note 19 to the
consolidated financial statements.



|                              |  |          
|----------------------------- |  | ---------
|PRICE WATERHOUSE & Co. S.R.L.
|                              | 
|By                            |  | (Partner)
|Andrés Suarez                

Buenos Aires, Argentina

August 31, 2007, except for Notes 18 and 19,

as to which the date is December 17, 2007



F-2



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Consolidated Balance Sheets

as of June 30, 2007 and 2006

(In
Argentine Pesos, except as otherwise indicated)



|                                                                 |  |      |               |   |      |     |              
|---------------------------------------------------------------- |  | ---- | ------------- | - | ---- | --- | -------------
|                                                                 |  | 2007 |               |   | 2006
|ASSETS                                                           |  |      |               |   |      |     |              
|Current Assets                                                   |  |      |               |   |      |     |              
|Cash and banks (Notes 4.a and 20.f)                              |  | Ps.  | 31,829,851    |   |      | Ps. | 38,222,036   
|Other investments, net (Notes 4.b and 20.f)                      |  |      | 485,408,600   |   |      |     | 32,250,484   
|Accounts receivable, net (Note 4.d and 20.f)                     |  |      | 151,098,736   |   |      |     | 104,312,709  
|Other receivables and prepaid expenses, net (Notes 4.e and 20.f) |  |      | 52,215,741    |   |      |     | 30,929,095   
|Inventory, net (Notes 4.f and 20.e)                              |  |      | 7,292,187     |   |      |     | 7,989,246    
|                                                                 |  |      |               |   |      |     |              
|Total current assets                                             |  |      | 727,845,115   |   |      |     | 213,703,570  
|                                                                 |  |      |               |   |      |     |              
|Non-Current Assets                                               |  |      |               |   |      |     |              
|Accounts receivable, net (Note 4.d and 20.f)                     |  |      | 41,967,948    |   |      |     | 32,539,707   
|Other receivables and prepaid expenses, net (Note 4.e and 20.f)  |  |      | 32,130,923    |   |      |     | 13,254,535   
|Fixed assets, net (Note 20.a)                                    |  |      | 1,168,027,197 |   |      |     | 912,795,140  
|Investments (Note 4.c)                                           |  |      |              |   |      |     | 129,474      
|Other investments, net (Note 4.b and 20.f)                       |  |      | 125,504,382   |   |      |     | 167,842,865  
|Intangible assets, net (Note 20.b)                               |  |      | 1,713,927     |   |      |     | 3,222,276    
|                                                                 |  |      |               |   |      |     |              
|Subtotal                                                         |  |      | 1,369,344,377 |   |      |     | 1,129,783,997
|                                                                 |  |      |               |   |      |     |              
|(Negative goodwill) / Goodwill (Note 20.c)                       |  |      | (3,478,942    | ) |      |     | 11,557,921   
|                                                                 |  |      |               |   |      |     |              
|Total non-current assets                                         |  |      | 1,365,865,435 |   |      |     | 1,141,341,918
|                                                                 |  |      |               |   |      |     |              
|Total Assets                                                     |  | Ps.  | 2,093,710,550 |   |      | Ps. | 1,355,045,488
|                                                                 |  |      |               |   |      |     |              
|                                                                 |  |     
|LIABILITIES                                                      |  |      |               |   |      |     |              
|Current Liabilities                                              |  |      |               |   |      |     |              
|Trade accounts payable (Notes 4.g and 20.f)                      |  | Ps.  | 179,489,405   |   |      | Ps. | 101,949,564  
|Short-term debt (Notes 4.h and 20.f)                             |  |      | 77,210,054    |   |      |     | 90,816,638   
|Salaries and social security payable (Note 4.i)                  |  |      | 19,598,757    |   |      |     | 10,885,364   
|Taxes payable (Note 4.j)                                         |  |      | 44,714,889    |   |      |     | 23,761,968   
|Customer advances (Notes 4.k and 20.f)                           |  |      | 58,548,037    |   |      |     | 48,052,765   
|Related parties (Notes 6 and 20.f)                               |  |      | 6,657,550     |   |      |     | 6,383,668    
|Dividends payable                                                |  |      | 926,400       |   |      |     |             
|Other liabilities (Note 4.l and 20.f)                            |  |      | 15,463,188    |   |      |     | 11,200,163   
|                                                                 |  |      |               |   |      |     |              
|Total debts                                                      |  |      | 402,608,280   |   |      |     | 293,050,130  
|                                                                 |  |      |               |   |      |     |              
|Provisions (Notes 4.m and 20.d)                                  |  |      | 733,400       |   |      |     | 506,714      
|                                                                 |  |      |               |   |      |     |              
|Total current liabilities                                        |  |      | 403,341,680   |   |      |     | 293,556,844  
|                                                                 |  |      |               |   |      |     |              
|Non-Current Liabilities                                          |  |      |               |   |      |     |              
|Trade accounts payable (Notes 4.g and 20.f)                      |  |      | 20,804        |   |      |     | 1,010,150    
|Long-term debt (Notes 4.h and 20.f)                              |  |      | 678,751,885   |   |      |     | 145,853,844  
|Taxes payable (Note 4.j)                                         |  |      | 27,660,854    |   |      |     | 13,707,025   
|Customer advances (Note 4.k)                                     |  |      | 65,725,449    |   |      |     | 41,535,275   
|Related parties (Notes 6 and 20.f)                               |  |      |              |   |      |     | 925,800      
|Other liabilities (Note 4.l and 20.f)                            |  |      | 10,433,503    |   |      |     | 10,959,031   
|                                                                 |  |      |               |   |      |     |              
|Total debts                                                      |  |      | 782,592,495   |   |      |     | 213,991,125  
|                                                                 |  |      |               |   |      |     |              
|Provisions (Notes 4.m and 20.d)                                  |  |      | 12,441,286    |   |      |     | 10,667,309   
|                                                                 |  |      |               |   |      |     |              
|Total non-current liabilities                                    |  |      | 795,033,781   |   |      |     | 224,658,434  
|                                                                 |  |      |               |   |      |     |              
|Total Liabilities                                                |  |      | 1,198,375,461 |   |      |     | 518,215,278  
|                                                                 |  |      |               |   |      |     |              
|Minority interest                                                |  |      | 71,427,862    |   |      |     | 29,989,705   
|                                                                 |  |      |               |   |      |     |              
|SHAREHOLDERS EQUITY                                             |  |      | 823,907,227   |   |      |     | 806,840,505  
|                                                                 |  |      |               |   |      |     |              
|Total Liabilities and Shareholders Equity                       |  | Ps.  | 2,093,710,550 |   |      | Ps. | 1,355,045,488
|                                                                 |  |      |               |   |      |     |              

The accompanying notes are an integral part of these consolidated financial statements.



F-3



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Consolidated Statements of Income for the years ended June 30, 2007, 2006 and
2005

(In Argentine Pesos, except as otherwise indicated)



|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|---------------------------------------------------------------------- |  | ---- | ------------ | - | ---- | --- | ------------ | ---- |  | --- | ----------- | -
|                                                                       |  | 2007 |              |   | 2006 |     |              | 2005 | 
|Revenues                                                               |  | Ps.  | 483,231,154  |   |      | Ps. | 361,355,913  |      |  | Ps. | 230,157,321 |  
|Costs (Note 20.e)                                                      |  |      | (168,306,568 | ) |      |     | (139,065,376 | )    |  |     | (92,510,366 | )
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Gross profit                                                           |  |      | 314,924,586  |   |      |     | 222,290,537  |      |  |     | 137,646,955 |  
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Selling expenses (Note 20.g).                                          |  |      | (84,311,995  | ) |      |     | (46,905,328  | )    |  |     | (24,774,356 | )
|Administrative expenses (Note 20.g)                                    |  |      | (79,872,872  | ) |      |     | (52,773,070  | )    |  |     | (31,875,300 | )
|Net income from retained interest in securitized receivables (Note 11) |  |      | 3,253,789    |   |      |     | 2,625,001    |      |  |     | 423,508     |  
|Gain from recognition of inventories at net realizable value           |  |      | 545,400      |   |      |     | 3,497,632    |      |  |     |            |  
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Operating income                                                       |  |      | 154,538,908  |   |      |     | 128,734,772  |      |  |     | 81,420,807  |  
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Loss on equity investees                                               |  |      | (678,569     | ) |      |     | (678,881     | )    |  |     | (706,619    | )
|Amortization of goodwill (Note 20.c)                                   |  |      | (4,366,356   | ) |      |     | (4,739,675   | )    |  |     | (4,826,798  | )
|Financial results, net (Note 7)                                        |  |      | (19,466,411  | ) |      |     | (15,633,866  | )    |  |     | 2,411,200   |  
|Other expenses, net (Note 8)                                           |  |      | (3,347,466   | ) |      |     | (9,761,768   | )    |  |     | (7,381,960  | )
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Income before taxes and minority interest                              |  |      | 126,680,106  |   |      |     | 97,920,582   |      |  |     | 70,916,630  |  
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Income tax expense (Note 14)                                           |  |      | (56,252,932  | ) |      |     | (48,457,137  | )    |  |     | (33,615,874 | )
|Minority interest                                                      |  |      | (6,370,610   | ) |      |     | (4,784,413   | )    |  |     | (4,045,356  | )
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Net income                                                             |  | Ps.  | 64,056,564   |   |      | Ps. | 44,679,032   |      |  | Ps. | 33,255,400  |  
|                                                                       |  |      |              |   |      |     |              |      |  |     |             |  
|Earnings per share (Note 13):                                          |  |      |              |   |      |     |              |      |  |     |             |  
|Basic net income per common share                                      |  | Ps.  | 0.08         |   |      | Ps. | 0.06         |      |  | Ps. | 0.04        |  
|Diluted net income per common share                                    |  | Ps.  | 0.03         |   |      | Ps. | 0.03         |      |  | Ps. | 0.02        |  

The accompanying notes are an integral part of these consolidated financial statements.



F-4



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Consolidated Statements of Changes in Shareholders Equity

for the years ended June 30, 2007, 2006 and 2005

(In Argentine Pesos, except as otherwise indicated)



|                                                                         |  |                             |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                         |           |                               |     |            |                      |     |            |  |     |             |   |  |     |             |  
|------------------------------------------------------------------------ |  | --------------------------- | ---------- | -------------------------------------------- | --- | ------------------------- |  | ----- | ----------- | ------------------------------- | --- | ------------------------------------- |  | ----------------------- | --------- | ----------------------------- | --- | ---------- | -------------------- | --- | ---------- |  | --- | ----------- | - |  | --- | ----------- | -
|                                                                         |  | Shareholders contributions |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                        
|                                                                         |  | Common stock(Note 5.a.)     |            | Inflationadjustmentof commonstock(Note 5.b.) |     | Additionalpaid-in-capital |  | Total |             | Appraisalrevaluation(Note 3.f.) |     | Reserve for newdevelopments(Note 5.d) |  | Legalreserve(Note 5.c.) |           | Accumulated retained earnings |     |            | Shareholders equity |    
|Balances as of June 30, 2004                                             |  | Ps.                         | 72,768,225 |                                              | Ps. | 84,620,909                |  | Ps.   | 522,805,043 |                                 | Ps. | 680,194,177                           |  | Ps.                     | 3,952,571 |                               | Ps. |           |                      | Ps  | 8,050,591  |  | Ps. | 78,176,359  |   |  | Ps. | 770,373,698 |  
|                                                                         |  |                             |            |                                              |     |                           |  |       |            
|Conversion of debt into common stock                                     |  |                             | 5,274,138  |                                              |     |                          |  |       |            |                                 |     | 5,274,138                             |  |                         |          |                               |     |           |                      |     |           |  |     |            |   |  |     | 5,274,138   |  
|Increase in legal reserve                                                |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     | 941,877    |  |     | (941,877    | ) |  |     |            |  
|Cash dividends                                                           |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     |           |  |     | (17,895,663 | ) |  |     | (17,895,663 | )
|Net income for the year                                                  |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     |           |  |     | 33,255,400  |   |  |     | 33,255,400  |  
|                                                                         |  |                             |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                         |           |                               |     |            |                      |     |            |  |     |             |   |  |     |             |  
|Balances as of June 30, 2005                                             |  | Ps.                         | 78,042,363 |                                              | Ps. | 84,620,909                |  | Ps.   | 522,805,043 |                                 | Ps. | 685,468,315                           |  | Ps.                     | 3,952,571 |                               | Ps. |           |                      | Ps. | 8,992,468  |  | Ps. | 92,594,219  |   |  | Ps. | 791,007,573 |  
|                                                                         |  |                             |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                         |           |                               |     |            |                      |     |            |  |     |             |   |  |     |             |  
|Conversion of debt into common stock                                     |  |                             | 153,900    |                                              |     |                          |  |       |            |                                 |     | 153,900                               |  |                         |          |                               |     |           |                      |     |           |  |     |            |   |  |     | 153,900     |  
|Increase in legal reserve                                                |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     | 1,662,770  |  |     | (1,662,770  | ) |  |     |            |  
|Cash dividends                                                           |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     |           |  |     | (29,000,000 | ) |  |     | (29,000,000 | )
|Net income for the year                                                  |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     |           |  |     | 44,679,032  |   |  |     | 44,679,032  |  
|                                                                         |  |                             |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                         |           |                               |     |            |                      |     |            |  |     |             |   |  |     |             |  
|Balances as of June 30, 2006                                             |  | Ps.                         | 78,196,263 |                                              | Ps. | 84,620,909                |  | Ps.   | 522,805,043 |                                 | Ps. | 685,622,215                           |  | Ps.                     | 3,952,571 |                               | Ps. |           |                      | Ps. | 10,655,238 |  | Ps. | 106,610,481 |   |  | Ps. | 806,840,505 |  
|                                                                         |  |                             |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                         |           |                               |     |            |                      |     |            |  |     |             |   |  |     |             |  
|Conversion of debt into common stock                                     |  |                             | 10,158     |                                              |     |                          |  |       |            |                                 |     | 10,158                                |  |                         |          |                               |     |           |                      |     |           |  |     |            |   |  |     | 10,158      |  
|Increase in legal reserve                                                |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     | 2,233,952  |  |     | (2,233,952  | ) |  |     |            |  
|Cash dividends                                                           |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     |           |  |     | (47,000,000 | ) |  |     | (47,000,000 | )
|Transfer of retained earnings to reserve for new developments (Note 5.d) |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     | 57,376,529 |                      |     |           |  |     | (57,376,529 | ) |  |     |            |  
|Net income for the year                                                  |  |                             |           |                                              |     |                          |  |       |            |                                 |     |                                      |  |                         |          |                               |     |           |                      |     |           |  |     | 64,056,564  |   |  |     | 64,056,564  |  
|                                                                         |  |                             |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                         |           |                               |     |            |                      |     |            |  |     |             |   |  |     |             |  
|Balances as of June 30, 2007                                             |  | Ps.                         | 78,206,421 |                                              | Ps. | 84,620,909                |  | Ps.   | 522,805,043 |                                 | Ps. | 685,632,373                           |  | Ps.                     | 3,952,571 |                               | Ps. | 57,376,529 |                      | Ps. | 12,889,190 |  | Ps. | 64,056,564  |   |  | Ps. | 823,907,227 |  
|                                                                         |  |                             |            |                                              |     |                           |  |       |             |                                 |     |                                       |  |                         |           |                               |     |            |                      |     |            |  |     |             |   |  |     |             |  

The accompanying notes are an integral part of these consolidated financial statements.



F-5



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Consolidated Statements of Cash Flows

for the years ended June 30, 2007, 2006 and 2005

(In Argentine Pesos, except as otherwise indicated)



|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|-------------------------------------------------------------------------------------------------------- |  | ---- | ------------ | - | ---- | --- | ------------ | ---- |  | --- | ------------ | -
|                                                                                                         |  | 2007 |              |   | 2006 |     |              | 2005 | 
|Cash flows from operating activities:                                                                    |  |      |              |   |      |     |              |      |  |     |              |  
|Net income for the year                                                                                  |  | Ps.  | 64,056,564   |   |      | Ps. | 44,679,032   |      |  | Ps. | 33,255,400   |  
|Adjustments to reconcile net income to cash flows from operating activities:                             |  |      |              |   |      |     |              |      |  |     |              |  
|Financial results                                                                                        |  |      | (4,216,937   | ) |      |     | 11,186,017   |      |  |     | (4,273,908   | )
|Depreciation and amortization                                                                            |  |      | 74,607,645   |   |      |     | 68,573,879   |      |  |     | 63,433,541   |  
|Impairment losses                                                                                        |  |      |             |   |      |     | 395,599      |      |  |     |             |  
|Reversal of impairment losses                                                                            |  |      | (2,273,181   | ) |      |     | (9,894,355   | )    |  |     | (13,093,117  | )
|Loss from sale of fixed assets                                                                           |  |      |             |   |      |     | 70,512       |      |  |     |             |  
|Holding gain of non current assets                                                                       |  |      | 1,532,512    |   |      |     |             |      |  |     |             |  
|Provision for contingencies                                                                              |  |      | 3,340,844    |   |      |     | 1,201,459    |      |  |     | 2,022,504    |  
|Allowance for doubtful accounts                                                                          |  |      | 24,006,543   |   |      |     | 10,897,356   |      |  |     | 2,883,259    |  
|Loss on fire damages (net of insurance recoveries)                                                       |  |      | (1,773,131   | ) |      |     | 5,787,577    |      |  |     |             |  
|Unreimbursed expenses                                                                                    |  |      | 298,491      |   |      |     | 1,743,141    |      |  |     |             |  
|Gain on repurchase of debt                                                                               |  |      |             |   |      |     |             |      |  |     | (1,640,411   | )
|Loss on equity investees                                                                                 |  |      | 678,569      |   |      |     | 678,881      |      |  |     | 706,619      |  
|Other provisions                                                                                         |  |      | 13,956,000   |   |      |     | 10,302,706   |      |  |     | 8,972,414    |  
|Easement income                                                                                          |  |      |             |   |      |     | (2,427,718   | )    |  |     |             |  
|Gain from recognition of inventories at net realizable value                                             |  |      | (545,400     | ) |      |     | (3,497,632   | )    |  |     |             |  
|Net loss in credit card trust                                                                            |  |      | 9,597,117    |   |      |     | 882,782      |      |  |     | 1,047,546    |  
|Minority interest                                                                                        |  |      | 6,370,610    |   |      |     | 4,784,413    |      |  |     | 4,045,356    |  
|Income tax                                                                                               |  |      | 56,252,932   |   |      |     | 48,457,137   |      |  |     | 33,615,874   |  
|Changes in certain assets and liabilities, net of non-cash transactions and the effects of acquisitions: |  |      |              |   |      |     |              |      |  |     |              |  
|Increase in accounts receivable                                                                          |  |      | (69,770,120  | ) |      |     | (78,447,914  | )    |  |     | (46,410,340  | )
|Increase in other receivables and prepaid expenses                                                       |  |      | (49,377,747  | ) |      |     | (5,964,490   | )    |  |     | (11,972,767  | )
|Increase in intangible assets                                                                            |  |      |             |   |      |     | (50,000      | )    |  |     | (2,023,118   | )
|Decrease (increase) in inventory                                                                         |  |      | (188,856     | ) |      |     | 18,066,785   |      |  |     | (111,108     | )
|Increase in trade accounts payable                                                                       |  |      | 73,606,530   |   |      |     | 51,054,057   |      |  |     | 15,265,076   |  
|Increase in customer advances                                                                            |  |      | 17,268,324   |   |      |     | 14,017,132   |      |  |     | 25,367,124   |  
|Decrease in taxes payable                                                                                |  |      | (40,165,780  | ) |      |     | (16,387,507  | )    |  |     | (6,693,227   | )
|Increase in salaries and social security payable                                                         |  |      | 8,430,139    |   |      |     | 2,441,425    |      |  |     | 2,497,217    |  
|(Decrease) increase in provision for contingencies                                                       |  |      | (180,526     | ) |      |     | (2,666,057   | )    |  |     | 347,348      |  
|Decrease in other liabilities                                                                            |  |      | (10,252,788  | ) |      |     | (10,120,650  | )    |  |     | (7,089,728   | )
|Increase in due to related parties                                                                       |  |      | (6,555       | ) |      |     | 2,611,646    |      |  |     | 2,100,558    |  
|Increase (decrease) in accrued interest                                                                  |  |      | 4,459,719    |   |      |     | 2,290,873    |      |  |     | (7,151,518   | )
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|Net cash provided by operating activities                                                                |  |      | 179,711,518  |   |      |     | 170,666,086  |      |  |     | 95,100,594   |  
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|Cash flows from investing activities:                                                                    |  |      |              |   |      |     |              |      |  |     |              |  
|Acquisition of fixed assets                                                                              |  |      | (95,756,516  | ) |      |     | (30,261,398  | )    |  |     | (50,607,966  | )
|Guarantee deposit                                                                                        |  |      | 9,111,000    |   |      |     | (8,610,000   | )    |  |     |             |  
|Shares purchase advances                                                                                |  |      | (1,108,239   | ) |      |     |             |      |  |     |              |  
|Insurance recoveries from fire damage in Alto Avellaneda                                                 |  |      | 592,610      |   |      |     |             |      |  |     |             |  
|Acquisition of minority interest                                                                         |  |      |             |   |      |     | (163,952     | )    |  |     |             |  
|Acquisition of undeveloped parcels of land                                                               |  |      | (577,908     | ) |      |     | (61,312,261  | )    |  |     | (680,941     | )
|Loans granted to third parties                                                                           |  |      |             |   |      |     | (375,000     | )    |  |     |             |  
|Net proceeds from sales of fixed assets                                                                  |  |      |             |   |      |     | 484,800      |      |  |     |             |  
|Payment for acquisition of Empalme / PAMSA transaction, net of cash acquired                             |  |      | (44,429,476  | ) |      |     |             |      |  |     | (4,163,271   | )
|Increase in investments                                                                                  |  |      | (52,014,079  | ) |      |     | (23,785,702  | )    |  |     | (6,024,728   | )
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|Net cash used in investing activities                                                                    |  |      | (184,182,608 | ) |      |     | (124,023,513 | )    |  |     | (61,476,906  | )
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|Cash flows from financing activities:                                                                    |  |      |              |   |      |     |              |      |  |     |              |  
|Proceeds from short-term and long-term debt                                                              |  |      | 176,707,659  |   |      |     | 38,426,054   |      |  |     | 83,667,000   |  
|Payments of short-term bank loans                                                                        |  |      | (152,142,359 | ) |      |     |             |      |  |     |             |  
|Cash proceeds from the issuance of Notes, net of expenses                                                |  |      | 519,471,041  |   |      |     |             |      |  |     |             |  
|Payment of short-term and long-term debt                                                                 |  |      | (37,105,350  | ) |      |     | (41,954,440  | )    |  |     | (126,368,358 | )
|Payment of loans granted by related parties                                                              |  |      | (918,300     | ) |      |     | (765,000     | )    |  |     | (6,925,340   | )
|Proceeds from settlement of swap agreement                                                               |  |      |             |   |      |     |             |      |  |     | 15,840,364   |  
|Dividends paid by subsidiaries to minority shareholders                                                  |  |      | (584,492     | ) |      |     | (39,000      | )    |  |     | (523,678     | )
|Payment to ERSAs minority shareholders for reduction of common stock                                    |  |      |             |   |      |     | (1,470,178   | )    |  |     |             |  
|Payment of seller financing of Empalme                                                                   |  |      | (10,131,054  | ) |      |     |             |      |  |     |             |  
|Payment of seller financing of Shopping Neuquen S.A.                                                     |  |      | (9,250,600   | ) |      |     |             |      |  |     |             |  
|Payment of seller financing of Mendoza Plaza Shopping S.A.                                               |  |      | (5,483,731   | ) |      |     | (5,149,834   | )    |  |     |             |  
|Payment of cash dividends                                                                                |  |      | (47,000,000  | ) |      |     | (29,000,000  | )    |  |     | (17,895,663  | )
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|Net cash provided by (used in) financing activities                                                      |  |      | 433,562,814  |   |      |     | (39,952,398  | )    |  |     | (52,205,675  | )
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|Increase (decrease) in cash and cash equivalents                                                         |  |      | 429,091,724  |   |      |     | 6,690,175    |      |  |     | (18,581,987  | )
|Cash and cash equivalents as of the beginning of the year                                                |  |      | 56,404,655   |   |      |     | 49,714,480   |      |  |     | 68,296,467   |  
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  
|Cash and cash equivalents as of the end of the year                                                      |  | Ps.  | 485,496,379  |   |      | Ps. | 56,404,655   |      |  | Ps. | 49,714,480   |  
|                                                                                                         |  |      |              |   |      |     |              |      |  |     |              |  

The accompanying notes are an integral part of these consolidated financial statements.



F-6



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##### Table of Contents

Alto Palermo S.A. (APSA)

Consolidated Statements of Cash Flows

for the years ended June 30, 2007,
2006 and 2005 (continued)

(In Argentine Pesos, except as otherwise indicated)



|                                                                                           |  |      |             |   |      |     |            |  |     |             |  
|------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | --- | ---------- |  | --- | ----------- | -
|                                                                                           |  | 2007 |             |   | 2006 |     | 2005       | 
|Supplemental cash flow information                                                         |  |      |             |   |      |     |            |  |     |             |  
|Cash paid during the year for:                                                             |  |      |             |   |      |     |            |  |     |             |  
|Interest                                                                                   |  | Ps.  | 33,406,785  |   |      | Ps. | 24,680,120 |  | Ps. | 30,790,090  |  
|Income tax                                                                                 |  |      | 11,798,439  |   |      |     | 11,094,593 |  |     | 1,417,966   |  
|Non-cash investing and financing activities:                                               |  |      |             |   |      |     |            |  |     |             |  
|Liquidation of interest in credit card receivables                                         |  |      | 8,873,125   |   |      |     | 10,364,005 |  |     | 3,348,278   |  
|Increase in inventory through a decrease in other investments                              |  |      |            |   |      |     | 3,827,433  |  |     |            |  
|Retained interest in credit card receivables                                               |  |      |            |   |      |     | 3,555,119  |  |     | 13,976,125  |  
|Increase in Trust debt securities through a decrease in credit card receivable             |  |      |            |   |      |     | 1,524,325  |  |     | 222,860     |  
|Increase in fixed assets through an increase in other receivables and prepaid expenses     |  |      |            |   |      |     | 348,521    |  |     |            |  
|Conversion of Convertible Notes into common shares                                         |  |      | 10,158      |   |      |     | 153,900    |  |     | 5,274,138   |  
|Increase in other receivables through a decrease in fixed assets                           |  |      |            |   |      |     | 71,092     |  |     |            |  
|Increase in other receivables and prepaid expenses through a decrease in intangible assets |  |      |            |   |      |     | 11,800     |  |     |            |  
|Increase in fixed assets through a decrease in other investments                           |  |      | 59,912,260  |   |      |     | 8,097      |  |     |            |  
|Increase in other investments through a decrease in fixed assets                           |  |      |            |   |      |     |           |  |     | 3,882,712   |  
|Increase in fixed assets through an increase in trade accounts payable                     |  |      |            |   |      |     |           |  |     | 925,610     |  
|Increase in intangible assets through a decrease in fixed assets                           |  |      |            |   |      |     |           |  |     | 1,555,070   |  
|Increase in other investments through a decrease in intangible assets                      |  |      |            |   |      |     |           |  |     | 18,332      |  
|Increase in financial bank loans trough a decrease in provisions                           |  |      | 2,614,228   |   |      |     |           |  |     |            |  
|Increase in issuance expenses of Notes through a decrease in accounts payable              |  |      | 1,691,034   |   |      |     |           |  |     |            |  
|Increase in fixed assets through a decrease in other receivables and prepaid expenses      |  |      |            |   |      |     |           |  |     | 103,318     |  
|Increase in fixed assets through a decrease in equity investments                          |  |      |            |   |      |     |           |  |     | 596,076     |  
|                                                                                           |  |      |            
|                                                                                           |  | 2007 |             |   | 2006 |     | 2005       | 
|Acquisition of Empalme / PAMSA transaction (Note 2.h.):                                    |  |      |             |   |      |     |            |  |     |             |  
|Cash and cash equivalents acquired                                                         |  |      | 29,416,401  |   |      |     |           |  |     | 1,238,417   |  
|Fair value of non-cash assets acquired                                                     |  |      | 165,461,384 |   |      |     |           |  |     | 85,674,963  |  
|Fair value of other assets acquired                                                        |  |      |            |   |      |     |           |  |     | 11,902,483  |  
|Fair value of liabilities assumed                                                          |  |      | (46,445,797 | ) |      |     |           |  |     | (67,516,352 | )
|                                                                                           |  |      |             |   |      |     |            |  |     |             |  
|Net assets acquired                                                                        |  | Ps.  | 148,431,988 |   |      | Ps. |           |  | Ps. | 31,299,511  |  
|Minority interest                                                                          |  |      | (36,029,344 | ) |      |     |           |  |     | (16,310,400 | )
|                                                                                           |  |      |             |   |      |     |            |  |     |             |  
|Purchase price                                                                             |  | Ps.  | 112,402,644 |   |      | Ps. |           |  | Ps. | 14,989,111  |  
|Negative goodwill                                                                          |  |      | (10,035,616 | ) |      |     |           |  |     |            |  
|Seller financing                                                                           |  |      | (28,521,151 | ) |      |     |           |  |     | (9,587,423  | )
|                                                                                           |  |      |             |   |      |     |            |  |     |             |  
|Purchase price paid                                                                        |  |      | 73,845,877  |   |      |     |           |  |     | 5,401,688   |  
|Cash and cash equivalents acquired                                                         |  |      | (29,416,401 | ) |      |     |           |  |     | (1,238,417  | )
|                                                                                           |  |      |             |   |      |     |            |  |     |             |  
|Net cash paid for the acquisition                                                          |  | Ps.  | 44,429,476  |   |      | Ps. |           |  | Ps. | 4,163,271   |  
|                                                                                           |  |      |             |   |      |     |            |  |     |             |  

The accompanying notes are an integral part of these consolidated financial statements.



F-7



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements

(In Argentine Pesos, except as otherwise indicated)



|1. | Organization and description of business
|-- | ----------------------------------------

Alto
Palermo S.A. (APSA) (formerly Sociedad Anónima Mercado de Abasto Proveedor (SAMAP)), an Argentine real estate holding company incorporated under the laws of Argentina, and subsidiaries (collectively, APSA or the
Company) are primarily involved in the acquisition, development and operation of shopping center properties in Argentina. APSA was formed in 1889 and, until 1984, was the operator of the principal fresh product market in the city of
Buenos Aires, Argentina. The Companys principal asset during this period was the historic Mercado de Abasto building which served as the location of the market from 1889 to 1984, when the Company largely ceased operations. In July 1994,
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) acquired a controlling interest in the Company and, subsequently, the Company resumed its real estate operations. In December 1994, IRSA sold part of its holdings in the
Company to Parque Arauco S.A. (Parque Arauco). As of June 30, 2007, the Companys direct and indirect principal shareholders are IRSA (62.5%) and Parque Arauco (29.6%). The Companys shares are listed and traded on
the Buenos Aires Stock Exchange. Effective November 2000, the Companys shares are listed and traded on the NASDAQ under the ticker symbol APSA.

Since recommencing operations, the Company has continued to grow through a series of acquisitions and developments. As of June 30, 2007, the Company owns a majority interest in, and operates, a portfolio of ten
shopping centers in Argentina, of which five are located in the City of Buenos Aires (Abasto Shopping, Paseo Alcorta, Alto Palermo Shopping, Patio Bullrich and Buenos Aires Design), one is located in Greater Buenos Aires (Alto Avellaneda) and the
other four are located in the cities of Rosario (Alto Rosario), Mendoza (Mendoza Plaza Shopping), Salta (Alto Noa) and Córdoba (Córdoba Shopping Villa Cabrera). (See Note 2.h for details). The Company also constructs residential
apartment buildings for sale.

Through Tarshop S.A. (Tarshop), a majority-owned subsidiary of the Company, the Company
originates credit card accounts, which makes it more attractive for customers to purchase goods and services from the Companys shopping centers retail, services businesses, hypermarkets and street stores. Tarshop is a limited purpose credit
card company and is not affiliated with any bank. As of June 30, 2007, Tarshop card, the credit card, accounted for approximately 52% of the total accounts receivable of the Company. Tarshop has ongoing securitization programs
through which it transfers a portion of the Companys credit card customer receivable balances to master trusts that issue certificates to public and private investors. See Note 11 for details.

Effective March 1, 2007, the Company discontinued selling products through its website altocity.com.



|2. | Preparation of financial statements
|-- | -----------------------------------



| | a. | Basis of presentation
| | -- | ---------------------

The consolidated financial
statements of the Company have been prepared in accordance with generally accepted accounting principles used in Argentina, as set forth by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (FACPCE)
and as implemented, adapted, amended, revised and/or supplemented by the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires (CPCECABA) (collectively Argentine GAAP). In addition, the Company
must comply with the regulations of the Comisión Nacional de Valores (CNV), the National Securities Commission in Argentina, which differ in certain significant respects from generally accepted accounting principles in the United
States of America (US GAAP). Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by US GAAP and Regulation S-X of the Securities and
Exchange Commission (SEC). A description of the significant differences between Argentine GAAP and US GAAP as they relate to the Company are set forth in Note 19 to these consolidated financial statements.

As discussed in Note 2.d., in order to comply with regulations of the CNV, the Company discontinued inflation accounting as from February 28, 2003.
The application of such CNV regulations represented a departure from Argentine GAAP. However, such departure did not have a material effect on the accompanying consolidated financial statements.

In addition, in accordance with the CNV regulations, deferred income taxes have been accounted for on an undiscounted basis. The CNV resolution
represented a departure from Argentine GAAP for the years ended June 30, 2006 and 2005. Such departure did not have a significant impact on these consolidated financial statements. However, as further discussed in Note 2.e. below, the CPCECABA
issued revised accounting standards. One of these standards requires companies to account for deferred income taxes on an undiscounted basis, thus aligning the accounting to that of the CNV. Since the CNV adopted the CPCECABA standards effective for
fiscal years beginning January 1, 2006, there is no longer a difference on this subject between Argentine GAAP and the CNV regulations for the year ended June 30, 2007.



F-8



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|2. | Preparation of financial statements (continued)
|-- | -----------------------------------------------



| | b. | Basis of consolidation
| | -- | ----------------------

The consolidated financial
statements include the accounts of APSA and its subsidiaries over which APSA has effective control. Investments in companies in which the Company exercises significant influence, but not control, are accounted for under the equity method.
Investments in jointly controlled operations in which the Company exercises joint control are accounted for under the proportionate consolidation method. All significant intercompany balances and transactions have been eliminated in consolidation.

In accordance with Argentine GAAP, the presentation of the parent companys individual financial statements is mandatory.
Consolidated financial statements are to be included as supplementary information to the individual financial statements. For the purpose of these financial statements, individual financial statements have been omitted since they are not required
for SEC reporting purposes.

A description of the subsidiaries with their respective percentage of capital stock owned is presented as
follows:



|                                        |      |                                                     |   |      |     |  
|--------------------------------------- | ---- | --------------------------------------------------- | - | ---- | --- | -
|Subsidiaries                            |      | Percentage of capital stock ownedas of June 30, (a) |  
|                                        | 2007 |                                                     |   | 2006 |    
|Emprendimiento Recoleta S.A. (ERSA)     |      | 54                                                  | % |      | 54  | %
|Tarshop S.A. (Tarshop).                 |      | 80                                                  | % |      | 80  | %
|Shopping Neuquén S.A. .                 |      | 95                                                  | % |      | 95  | %
|Inversora del Puerto S.A.               |      | 100                                                 | % |      | 100 | %
|Shopping Alto Palermo S.A. (SAPSA)      |      | 100                                                 | % |      | 100 | %
|Fibesa S.A. (Fibesa)                    |      | 100                                                 | % |      | 100 | %
|Mendoza Plaza Shopping S.A. .           |      | 85                                                  | % |      | 85  | %
|Empalme S.A.I.C.F.A. y G. (Empalme) (i) |      | 100                                                 | % |      |    |  
|Panamerican Mall S.A. (PAMSA) (ii)      |      | 80                                                  | % |      |    |  
|E-commerce Latina S.A. (iii) .          |      | 100                                                 | % |      | 50  | %

---

|(a) | Percentage of equity interest owned has been rounded.
|--- | -----------------------------------------------------

|(i) | Acquired on December 27, 2006. See Note 2.h for details. As of June 30, 2007 the amount of Ps. 32.6 million is recorded for pledged shares of Empalme.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | Formed in December 2006. See Note 2.h for details.
|---- | --------------------------------------------------

|(iii) | The Company had a 50% ownership interest in E-commerce Latina S.A., through which the Company offered its products via internet on the altocity.com website. Effective March 1,
2007, the website was deactivated. However, E-commerce Latina S.A. started new business activities. On January, 2007, the Company acquired the remaining 50% in E-commerce Latina S.A. See Note 2.h for details. The Company gained control of E-commerce
Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | Proportionate consolidation
| | -- | ---------------------------

The Company exercises
joint control over Metroshop. As required by Technical Resolution No. 21 Equity Method of Accounting, Consolidation of Financial Statements and Related Party Transactions (RT No. 21), under Argentine GAAP, the
Company accounted for this investment under the proportionate consolidation method. Accordingly, these financial statements reflect the Companys pro rata equity interest in this investment on a line-by-line basis.



F-9



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|2. | Preparation of financial statements (continued)
|-- | -----------------------------------------------



| | d. | Presentation of financial statements in constant Argentine pesos
| | -- | ----------------------------------------------------------------

On August 22, 1995, the Argentine government issued Decree No. 316/95 discontinuing the requirement that financial information be restated for inflation for any date or period after August 31, 1995.
Effective September 1, 1995 in accordance with CNV resolutions and Argentine GAAP, the Company began accounting for its financial transactions on a historical cost basis, without considering the effects of inflation. Prior to September 1,
1995, the financial statements were prepared on the basis of general price level accounting, which reflected changes in purchasing power of the Argentine Peso in the historical financial statements. The financial statement information of periods
prior to August 31, 1995 was restated to pesos of general purchasing power as of August 31, 1995. The August 31, 1995 balances, adjusted to the general purchasing power of the Peso at that date, became the historical cost basis for
subsequent accounting and reporting.

However, as a result of the inflationary environment in Argentina in 2002, the CPCECABA, approved on
March 6, 2002, a resolution reinstating the application of inflation accounting in financial statements as from January 1, 2002. This resolution provided that all recorded amounts restated for inflation through August 31, 1995, as
well as those arising between that date and December 31, 2001 are to be considered stated in currency as of December 31, 2001.

On July 16, 2002, the Argentine Government issued a decree, instructing the CNV to issue the necessary regulations for the acceptance of financial statements prepared in constant currency. On July 25, 2002, the CNV reinstated the
requirement to submit financial statements in constant currency.

However, after considering inflation levels for the second half of 2002
and the first months of 2003, on March 25, 2003, the Argentine government repealed the provisions of the previous decree related to the inflation adjustment and instructed the CNV to issue the necessary regulations to preclude companies under
its supervision from presenting price-level restated financial statements. Therefore, on April 8, 2003, the CNV issued a resolution providing for the discontinuance of inflation accounting as of March 1, 2003. The Company complied with the
CNV resolution and accordingly recorded the effects of inflation until February 28, 2003.

Since Argentine GAAP required companies to
discontinue inflation accounting as from October 1, 2003, the application of the CNV resolution represented a departure from generally accepted accounting principles. However, due to the low level of inflation rates during the period from March
to September 2003, such a departure has not had a material effect on the accompanying consolidated financial statements.



| | e. | Adoption by CNV of accounting standards
| | -- | ---------------------------------------

The CNV
issued General Resolutions No. 485 and No. 487 on December 29, 2005 and January 26, 2006, respectively which adopted, with certain modifications, the new accounting standards previously issued by CPCECABA through its Resolution
CD 93/2005. These standards were effective for the fiscal year ended June 30, 2007.

The most significant changes included in the
accounting standards adopted by the CNV relate to (i) changes in the impairment test of long-lived assets and (ii) changes to deferred income tax accounting. The new standards provide for the accounting treatment of differences between the
tax basis and book basis of non-monetary items for deferred income tax calculation purposes when companies prepare price-level restated financial statements. The new accounting mandates companies to treat these differences as temporary differences.
However, the standard allows a one-time accommodation to continue treating the differences between the tax basis and indexed book basis of non-monetary items as permanent differences. As such, the Company elected to continue treating differences as
permanent. In addition, deferred income taxes should be accounted on an undiscounted basis. As of June 30, 2007, the estimated effect of treating differences as temporary will be a decrease in shareholders equity of approximately Ps.
141.1 million against retained earnings.

Also, under the new standards, the carrying value of a long-lived asset is considered
impaired by the Company when the expected cash flows from such asset is separately identifiable and less than its carrying value. Expected cash flows are determined primarily using the anticipated cash flows discounted at a rate commensurate with
the risk involved.



F-10



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|2. | Preparation of financial statements (continued)
|-- | -----------------------------------------------



| | f. | Reclassifications
| | -- | -----------------

Certain reclassifications of
prior year information have been made to conform to the current year presentation.



| | g. | Use of estimates
| | -- | ----------------

The preparation of the
consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Significant estimates include those required in the accounting for the allowance for doubtful accounts, the
depreciation, amortization and impairment of long-lived assets, the provision for contingencies and income taxes. Actual results could differ from those estimates and evaluations made at the date of preparation of these financial statements.



| | h. | Significant acquisitions, dispositions and development of businesses
| | -- | --------------------------------------------------------------------

Panamerican Mall project

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

Córdoba Shopping

On December 27, 2006, the Company acquired 100% interest in the Cordoba Shopping Villa Cabrera located in Cordoba, Argentina, owned by Empalme. The
property, which is located in the Villa Cabrera neighbourhood of the city of Cordoba, is a 35,000 square meter shopping center comprising 106 stores, a 12 movie theatre complex and a 1,500-vehicle parking lot. The interest was acquired for US$ 13.3
million. The Company paid US$ 7.3 million in cash and financed the remaining portion of the purchase price in three equal installments of US$ 2 million each due every six months as from December 2007. This financing accrues interest at a
fixed rate of 6% per annum. Governmental approval was obtained in December 2006.

The Companys purchase of Empalme has been
accounted for following the guidance in Technical Resolution No. 18 (RT No. 18), as explained in Note 3.i. The purchase price was allocated based on the fair value of each component. However, since the sum of the individual fair values of
the identifiable tangible and intangible assets exceeded the purchase price paid, negative goodwill exists. Under Argentine GAAP, when negative goodwill exists after an acquiring entity initially assigns values to all assets acquired and liabilities
assumed, RT No. 18 states that the entity must first reassess whether all acquired assets and assumed liabilities have been identified and properly valued. If an amount of negative goodwill still results after this reassessment, intangible
assets acquired (including above and below market leases, in-place leases and tenant relationships, as applicable), are subject to reduction. If after all of these intangible assets are reduced to zero and an amount of negative goodwill still
remains, the remaining unallocated negative goodwill is amortized under the straight-line method over the weighted average useful life of the main tangible assets acquired.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|2. | Preparation of financial statements (continued)
|-- | -----------------------------------------------



| | h. | Significant acquisitions, dispositions and development of businesses (continued)
| | -- | --------------------------------------------------------------------------------



Purchase of additional 50% of E-Commerce Latina S.A.

On January, 2007 the Company acquired the remaining 50% in E-commerce Latina S.A., through which the Company offered its products via internet on the
altocity.com website. Effective March 1 2007, the website was deactivated. However, E-commerce Latina S.A. started new business activities. E-Commerce Latina S.A. restructured its business activities away from internet-based operations.
Activity was not significant as of June 30, 2007.

Bid for the acquisition of Patio Olmos

In November 2006, the Company submitted a bid for the acquisition of a property known as Edificio Ex Escuela Gobernador Vicente de Olmos
(Olmos) located in Cordoba, Argentina for Ps. 32.5 million. The Company made a down payment of Ps. 9.7 million under the terms of the bidding process. The property, which is located in the City of Cordoba, is a 5,147 square meter
four-story building comprising commercial space, parking lots and movie theatres. The property is subject to a 40-year concession contract granted to an unrelated party for the commercial use of the building. Pursuant to the concession granted in
1990 from the Provincial Government of Cordoba, the licensee should pay the owner of the building a monthly concession fee actually amounting to Ps. 10,052 increasing in Ps. 2,513 every 47 months. The closing of the purchase is subject to several
regulatory approvals. On January 15, 2007, the Company was served notice of certain objections from the Argentine Antitrust Authority seeking to enjoin the Company from completing the bid. In addition, in January 2007, the National Commission
for the Defense of Competition notified the Company of two claims filed against it. One claim was filed by an individual and the other by the actual licensee of the concession. As of the date of these financial statements, these claims are still
pending resolution.

Sale of the Alcorta Plaza plot of land

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

This transaction has
been included in the Others line of the Segment information (Note 9).



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|2. | Preparation of financial statements (continued)
|-- | -----------------------------------------------



| | h. | Significant acquisitions, dispositions and development of businesses (continued)
| | -- | --------------------------------------------------------------------------------



Mendoza Plaza Shopping

On September 29, 2004, the Company entered into a purchase agreement pursuant to which the Company acquired an additional 49.9% ownership interest in
Mendoza Plaza Shopping for US$ 5.3 million. The Company paid US$ 1.77 million on December 2, 2004 and the remaining balance was paid in two equal annual installments of US$ 1.77 million each on September 29, 2006 and 2005.
Through this acquisition, the Company became the holder record of 68.8% of the capital stock of Mendoza Plaza Shopping, the main activity of which is the operation of the Mendoza Plaza Shopping center in the city of Mendoza. The Company also entered
into the following contracts in connection with debt owed by Mendoza Plaza Shopping:

i) Put option with Banco de Chile S.A. (Banco
de Chile), whereby Banco de Chile was entitled, although not obliged, to assign to the Company two defaulted credit agreements amounting to US$ 18 million originally granted to Mendoza Plaza Shopping. As a result of the economic measures
issued in Argentina in 2002, these financial agreements had been converted into Argentine pesos at the exchange rate of Ps. 1.0 per US Dollar and indexed based on the reference stabilization index (CER). On March 30, 2005 Banco de Chile
executed the put option, transferring all the rights of the credit facilities to the Company in exchange for US$ 8.5 million (Ps. 24.8 million).

(ii) Call option with HSBC Bank Argentina S.A., whereby the Company was entitled, although not obliged, to acquire, and HSBC Bank Argentina S.A. was obliged to transfer, a defaulted loan agreement originally granted
to Mendoza Plaza Shopping amounting to US$ 7.0 million. As a result of the economic measures issued in Argentina in 2002, this financial agreement was converted into Argentine pesos at the exchange rate of Ps. 1.0 per US Dollar and indexed by
the reference stabilization index (CER). On March 29, 2005 the Company transferred the purchase option to Mendoza Plaza Shopping, which exercised the option paying Ps. 6.8 million for the settlement of the loan (corresponding to the
exercise price of Ps. 7.2 million net of rental fees collected by HSBC Bank Argentina S.A. as guarantee amounting to Ps. 0.4 million). This cash payment was funded through a loan granted by the Company.

The Company also entered into an agreement with Inversiones Falabella Argentina S.A. (Falabella), the remaining minority shareholder of
Mendoza Plaza Shopping, pursuant to which, among other things, Falabella has the irrevocable right to sell to the Company (put option) its ownership interest in Mendoza Plaza Shopping for a total consideration of US$ 3.0 million. The put option can
be exercised until the last business day of October 2008. As of the date of issuance of these financial statements, such option has not been exercised.

On May 31, 2005 the shareholders of Mendoza Plaza Shopping approved the conversion of debt owed to the Company totaling Ps. 36.1 million into common shares. As a result of this transaction, the Company
increased its ownership interest in Mendoza Plaza Shopping from 68.8% to 85.4%.



| | i. | Compensation plan for executive management
| | -- | ------------------------------------------

During
fiscal year 2007, the Company has developed a special compensation plan for its key managers (the Plan) by means of contributions to be made by the employees and by the Company.

Such Plan is directed to key managers and aims to retain them by increasing their total compensation package, granted to those who have met certain
conditions. Participation and contributions under the Plan are voluntary. Once the invitation to participate has been accepted by the employee (the Participant), he/she is required to make two kinds of contributions: monthly
contributions (salary based) and extraordinary contribution (annual bonus based). The suggested contribution to be made by Participants is up to 2.5% of their monthly salary and up to 15% of their annual bonus.

This Plan is intended to improve the compensation benefits of the key management employees who are encouraged to increase his/her compensation package by
getting an extraordinary reward at the end of the Plan for those who have met certain conditions mentioned below.

The Companys
contribution will be 200% of the employees monthly contributions and 300% of the extraordinary employees contributions.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|2. | Preparation of financial statements (continued)
|-- | -----------------------------------------------



| | i. | Compensation plan for executive management (continued)
| | -- | ------------------------------------------------------



The funds arising out of the Participants contributions are transferred to a special
independent vehicle created and located in Argentina as a Investment Fund approved by the National Securities Commission (CNV). Such funds (including the rents derived thereof) are freely redeemable upon request of the participants.

Funds arising out of contributions made by the Company under the Plan are transferred to another separate and independent vehicle (e.g., a trust
fund).

Participants or their assigns, as the case may by, will have access to 100% of the benefits of the Plan (that is, the
Companys contributions made on their behalf to the specially created vehicle) under the following circumstances:



| | (i) | ordinary retirement in accordance with applicable labor regulations;
| | --- | --------------------------------------------------------------------



| | (ii) | total or permanent incapacity or disability;
| | ---- | --------------------------------------------



| | (iii) | death.
| | ----- | ------

In case of resignation or termination without
good cause, the manager will get the amounts arising out of the Companys contribution only if he or she has participated in the Plan for at least 5 years.

As of June 30, 2007 the Companys contributions amounted to Ps. 0.9 million.



|3. | Significant accounting policies
|-- | -------------------------------

The following is a
summary of significant accounting policies followed by the Company in the preparation of these consolidated financial statements.



| | a. | Revenue recognition
| | -- | -------------------

The Company primarily derives
its revenues from leases and services operations, the sale and development of properties, credit card operations and to a lesser extent, from e-commerce activities. See Note 9 for details on the Companys business segments.



| |  |  | Leases and services
| | - |  | -------------------

Leases with
tenants are accounted for as operating leases. Tenants are generally charged a rent, which consists of the higher of: (i) a monthly base rent (the Base Rent) and (ii) a specified percentage of the tenants monthly gross
retail sales (the Percentage Rent) (which generally ranges between 4% and 8% of tenants gross sales). Furthermore, pursuant to the rent escalation clause in most leases, a tenants Base Rent generally increases between 4% and
7% each year during the term of the lease. For the years ended June 30, 2007, 2006 and 2005, the majority of the tenants were charged with the Percentage Rent.

Certain lease agreements contain provisions, which provide for rents based on a percentage of sales or based on a percentage of sales volume above a specified threshold. The Company determines the compliance with
specific targets and calculates the additional rent on a monthly basis as provided for in the contracts. Thus, these contingent rents are not recognized until the required thresholds are exceeded.

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



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | a. | Revenue recognition (continued)
| | -- | -------------------------------



The Company also charges its tenants a monthly administration fee, prorated among the tenants
according to their leases, which varies from shopping center to shopping center, relating to the administration and maintenance of the common area and the administration of contributions made by tenants to finance promotional efforts for the overall
shopping centers operations. Administration fees are recognized monthly when earned.

In addition to rent, tenants are generally
charged admission rights, a non-refundable admission fee that tenants may be required to pay upon entering into a lease and upon lease renewal. Admission right is normally paid in one lump sum or in a small number of monthly
installments. Admission rights are recognized using the straight-line method over the life of the respective lease agreements.

The Company
also derives revenues for parking lot fees charged to visitors. Parking revenues are recognized as services are performed.

In September
2000, the Company completed the acquisition of the 99.99% equity interest of Fibesa. Fibesa acts as the leasing agent for the Company bringing together the Company and potential lessees for the retail space available in certain of the Companys
shopping centers. Fibesas revenues are derived primarily from success fees paid by tenants calculated as a percentage of the final rental income value for both the lessee and the Company. Revenues related to success fees are recognized at the
time that the transaction is successfully concluded. A transaction is considered successfully concluded when both parties have signed the related lease contract.



| |  |  | Sales and development properties
| | - |  | --------------------------------

The Company records revenue from the sale of properties when all of the following criteria are met:



| | (i) | the sale has been consummated;
| | --- | ------------------------------



| | (ii) | the Company has determined that the buyers initial and continuing investments are adequate to demonstrate a commitment to pay for the property;
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the Companys receivable is not subject to future subordination; and
| | ----- | --------------------------------------------------------------------



| | (iv) | the Company has transferred to the buyer the risk of ownership.
| | ---- | ---------------------------------------------------------------



| |  |  | Credit card operations
| | - |  | ----------------------

The Company,
through its subsidiary, Tarshop, derives revenues from credit card transactions which primarily are comprised of (i) merchant discount fees which are recognized when transactional information is received and processed by the Company;
(ii) data processing services which consist of processing and printing cardholders statement of accounts, and which are recognized as services are provided; (iii) life and disability insurance charges to cardholders which are recognized on
an accrual basis, and (iv) interest income generated by financing and lending activities.



| | b. | Cash and cash equivalents
| | -- | -------------------------

For purposes of the
statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of mutual funds, and time deposits with original maturities of less than
three months at date of purchase. Mutual funds are considered to be cash equivalents since original maturity is determined by reference to the frequency with which liquidity is available according to current Argentine GAAP guidance and practice.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | c. | Other investments, net
| | -- | ----------------------



| | (i) | Current
| | --- | -------

Current investments include mutual funds,
government and mortgage bonds, and time deposits. Mutual funds and government and mortgage bonds are carried at their market value with unrealized gains and losses recorded within Financial results, net in the consolidated statements of
income. Time deposits are valued at cost plus accrued interest at year-end.

Current investments also include retained interests in
securitized receivables pursuant to the securitization programs of the Companys subsidiary, Tarshop (See Note 11 for details).



| | (ii) | Non-current
| | ---- | -----------

Undeveloped parcels of land are valued at
acquisition cost, restated in accordance with Note 2.d.

Non-current investments also include the non-current portion of the Companys
retained interests in securitized receivables (CPs) and trust debt securities (TDFs) pursuant to the securitization programs of credit card receivables (See Note 11 for details).

The Company acquired undeveloped properties as land reserves located in strategic areas for the future development of shoppings centers,
residential apartment complex and others.

During the years ended June 30, 2002 and 2006, the Company had recognized impairment losses
amounting to Ps. 15.9 million and Ps. 0.2 million, respectively, in connection with Caballito Project and other properties. As a result of increases in their fair market values, during fiscal years 2003, 2004, 2005 and 2006 the Company
partially reversed the impairment losses, recognizing a gain of Ps. 0.2 million, Ps. 5.1 million, Ps. 2.7 million and Ps 6.4 million, respectively. The impairment losses and the gains associated with the reversal of previously
impairment losses have been included within Financial results, net in the accompanying consolidated statements of income.



| | d. | Investments
| | -- | -----------

The Company had a 50% ownership
interest in E-commerce Latina S.A. as of June 30, 2006 and 2005. As discussed in Note 2.h, on January, 2007, the Company acquired the remaining 50% in E-commerce Latina S.A. The Company gained control of E-commerce Latina S.A. through this
acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.

During the year
ended June 30, 2003, the Company had recognized an impairment loss related to the equity investment in Mendoza Plaza Shopping amounting to Ps. 7.5 million. During fiscal years 2004 and 2005, the Company reversed Ps. 0.3 million and Ps.
6.6 million, respectively, of this impairment loss as a result of increases in their recoverable values. The impairment charge has been included within Gain (loss) on equity investees in the accompanying consolidated statements of
income. The impairment reversal recognized in 2005 has been included within Financial results, net in the accompanying consolidated statements of income due to the consolidation of Mendoza Plaza Shopping as from October 1, 2004.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | e. | Inventory
| | -- | ---------

Properties acquired for purposes of its
development and subsequent sale are classified as inventory. Inventory is stated at cost adjusted for inflation as described in Note 2.d less accumulated impairment charges, except in certain circumstances as described further below. The cost of
inventory is comprised of all direct contract costs, such as land, materials and construction fees associated with development properties, as well as capitalized interest when applicable. No interest cost was capitalized in inventory during the
years ended June 30, 2007, 2006 and 2005 since there were no developments during these periods. Inventory is classified as current or non-current based on the estimated date of sale and the time at which the related receivables are expected to
be collected.

Inventory is charged to the statement of income as cost of revenues as the related revenue is recognized, using the
percentage-of-completion method.

Certain inventories for which preliminary sale agreement were entered into by the Company and down
payments were received are valued at net realizable value at year-end. Gains are shown in the line item Gain from recognition of inventories at net realizable value.

During the year ended June 30, 2002, the Company recognized an impairment loss amounting to Ps. 2.2 million in connection with the Alcorta
Plaza plot of land. As a result of increases in the fair market value, such impairment losses were subsequently reversed during fiscal years 2003, 2004 and 2005, recognizing gains of Ps. 0.1 million, Ps. 1.6 million and Ps.
0.5 million, respectively. Alcorta Plaza was sold in March 2006. See Note 2.h for details.

In addition, an impairment charge of Ps.
0.2 million was recognized in 2006 in connection with Torres de Abasto. During the year ended June 30, 2007, the Company partially reversed such impairment recognizing a gain of Ps. 0.1 million.



| | f. | Fixed assets, net
| | -- | -----------------

Properties purchased for rental
purposes are classified as fixed assets. Fixed assets are stated at cost, adjusted for inflation (as described in Note 2.d), less accumulated depreciation and impairment charges, except for a parcel of land acquired prior to June 30, 1986,
which was originally recorded at its appraised value as of such date. This appraisal increased the carrying value of the land by Ps. 4.0 million, which was recorded against an appraisal revaluation reserve account within shareholders
equity. This appraisal revaluation reserve will be charged against income once the land is disposed of or its value becomes impaired.

Depreciation expense has been determined using the straight-line method over the estimated useful lives of the related assets as specified below:



|                         |  |                              
|------------------------ |  | -----------------------------
|Asset                    |  | Estimated useful life (years)
|- Properties:            |  |                              
|Shopping centers         |  | Between 16 and 34            
|Other                    |  | Between 16 and 50            
|- Leasehold improvements |  | 3                            
|- Facilities             |  | 10                           
|- Furniture and fixtures |  | Between 3 and 10             
|- Vehicles               |  | 5                            
|- Computer equipment     |  | 3                            
|- Software               |  | 3                            
|- Other                  |  | 10                           



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | f. | Fixed assets, net (continued)
| | -- | -----------------------------



The Company capitalizes interest on real estate development projects. The Company capitalized
interest costs amount to Ps. 7.1 million and Ps. 2.1 million during the years ended June 30, 2007 and 2005, respectively.

The cost of maintenance and repairs is charged to expense as incurred. The cost of significant renewals and improvements are added to the carrying amount of the respective asset.

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or
loss is reflected in the consolidated statement of income.

During the years ended June 30, 2002 and 2003, the Company had recognized
impairment losses amounting to Ps. 44.7 million and Ps. 5.2 million, respectively, in connection with Alto Avellaneda, Alto Noa, Abasto, Shopping Neuquén, Alto Rosario and other properties. As a result of increases in their fair
market values, during fiscal years 2003, 2004, 2005, 2006 and 2007, the Company partially reversed the impairment losses, recognizing a gain of Ps. 15.4 million, Ps. 20.2 million, Ps. 3.3 million, Ps. 3.5 million and Ps.
2.2 million, respectively. The impairment losses and the gains associated with the reversal of previously recognized impairments have been included within Financial results, net in the accompanying consolidated statements of income.
In addition, amortization related to the impairment charges amounted to Ps. 2.9 million, Ps. 1.6 million, Ps. 0.6 million and Ps. 0.3 million during the years ended June 30, 2003, 2004, 2005 and 2006 respectively.



| | g. | Software obtained or developed for internal use
| | -- | -----------------------------------------------

The Company capitalizes certain costs associated with the development of computer software for internal use. Costs capitalized during the years ended June 30, 2007, 2006 and 2005 were Ps. 6.3 million, Ps. 2.4 million and Ps.
0.4 million, respectively. These costs are being amortized on a straight-line basis over 3 years.



| | h. | Intangible assets, net
| | -- | ----------------------

Intangible assets are
stated at cost, adjusted for inflation (as described in Note 2.d), less accumulated amortization.



| | (i) | Trademarks
| | --- | ----------

Fees and expenses related to the registration
of trademarks are amortized on a straight-line basis over 10 years.



| | (ii) | Preoperating expenses
| | ---- | ---------------------

Represent primarily expenses
incurred relating to pre-opening activities of certain shopping centers. These expenses are amortized on a straight-line basis over a three-year period commencing upon the opening of the shopping center.



| | i. | Negative goodwill and goodwill
| | -- | ------------------------------

Goodwill represents
the difference between the purchase price paid and the fair market value of net assets acquired, adjusted for inflation as mentioned in Note 2.d, goodwill is amortized by the straight-line method over a term not exceeding 10 years. Goodwill was
generated by Tarshop, E-Commerce S.A., Fibesa and ERSA acquisitions.

When the sum of the individual fair values of the identifiable
tangible and intangible assets exceeds the purchase price paid, negative goodwill exists. Under Argentine GAAP, when negative goodwill exists after an acquiring entity initially assigns values to all assets acquired and liabilities assumed, RT
No. 18 states that the entity must first reassess whether all acquired assets and assumed liabilities have been identified and properly valued. If an amount of negative goodwill still results after this reassessment, intangible assets acquired
(including above and below market leases, in-place leases and tenant relationships, as applicable), are subject to reduction. If after all of these intangible assets are reduced to zero and an amount of negative goodwill still remains, the remaining
unallocated negative goodwill is amortized under the straight-line method over the weighted average useful life of the main tangible assets acquired. Negative goodwill was generated by the Empalme acquisition.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | j. | Foreign currency assets and liabilities
| | -- | ---------------------------------------

Assets and
liabilities denominated in foreign currencies are translated at the prevailing exchange rates as of year-end. Transactions denominated in foreign currencies are translated into Argentine pesos at the prevailing exchange rates on the date of
transaction settlement. Foreign currency transaction gains and losses are recorded within Financial results, net in the consolidated statements of income.



| | k. | Income tax
| | -- | ----------

The subsidiaries of the Company
calculate their income taxes on a separate basis. The Company did not either calculate or pay income taxes on a consolidated basis for any of the years presented. The statutory income tax rate was 35% for all years presented.

The Company records income taxes using the deferred tax method required by Technical Resolution No. 17 (RT 17) Overall
Considerations for the Preparation of Financial Statements. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recorded or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the fiscal years that includes the enactment date. A valuation allowance is recognized for that component of net deferred tax
assets which is not recoverable.

As discussed in Note 2.e., the Company has treated the differences between the price-level
restated amounts of assets and liabilities and their historical basis as permanent differences for deferred income tax calculation purposes.

In accordance with CNV regulations, deferred tax assets and liabilities have not been discounted. Since Argentine GAAP required (for the Companys fiscal years ended June 30, 2006 and 2005) the accounting for deferred tax assets
and liabilities on a discounted basis, the application of the CNV resolution represented a departure from Argentine GAAP until the Companys fiscal year ended June 30, 2006. However, such a departure did not have a significant effect on
the 2006 and 2005 consolidated financial statements. As from July 1, 2006, there is no such difference between CNV regulations and Argentine GAAP, as discussed in Note 2.e.



| | l. | Minimum Presumed Income Tax (MPIT)
| | -- | ----------------------------------

The Company and
its subsidiaries are subject to the Minimum Presumed Income Tax Law (Impuesto a la Ganancia Mínima Presunta or MPIT). The MPIT is calculated on an individual entity basis at the statutory tax rate of 1%, and is based
upon the taxable assets of each Argentine entity as of the end of the year. This tax is complementary to income tax and the Company is required to pay the greater of the income tax or the MPIT. Any excess of the MPIT over the income tax may be
carried forward and recognized as a payment on account of any excess of income tax over MPIT occurring within the subsequent ten years. In the opinion of management, it is probable that the Company will utilize such asset against future taxable
income charges within the next ten years and, as a result, the Company has recognized the accumulated MPIT charge within Other receivables and prepaid expenses, net, as appropriate, in the accompanying consolidated balance sheet.



| | m. | Customer advances
| | -- | -----------------

Customer advances represent
payments received in advance in connection with the lease of properties. Customer advances include admission rights paid by tenants upon entering into a lease and upon lease renewal. See Note 3.a for details.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | n. | Provisions for contingencies and allowances
| | -- | -------------------------------------------

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

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



| | o. | Advertising expenses
| | -- | --------------------

The Company generally
expenses advertising and promotion costs as incurred with the exception of advertising and promotion expenses incurred to launch new shopping centers. Advertising and promotion expenses net of recovery collective promotion fund were approximately
Ps. 27.8 million, Ps. 16.5 million and Ps. 9.2 million for the years ended June 30, 2007, 2006, and 2005, respectively.

Advertising and promotion expenses to launch new shopping centers are capitalized as preoperating expenses, within intangible assets.



| | p. | Deferred debt costs
| | -- | -------------------

Deferred debt costs consist of
fees and costs incurred to issue the Non-Convertible Notes. These fees and costs are shown as a deduction of the corresponding liability in Note 4.h. These costs and fees are being amortized over the term of the respective Series I and II
Non-Convertible Notes, applying effective interest method. Deferred debt costs totaled Ps. 5.8 million, net of accumulated amortization at June 30, 2007.



| | q. | Impairment of long-lived assets
| | -- | -------------------------------

The Company
periodically evaluates the carrying value of its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying value of a long-lived asset is considered
impaired by the Company when the expected discounted cash flows, from such asset is separately identifiable and less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market
value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals.

Under Argentine GAAP, the impairment loss is recorded in the income statement against a liability account. This liability account is a contra account to
fixed assets, which means that it is presented on the balance sheet as a direct reduction from the book value of the fixed assets to arrive at the fixed assets carrying value at any particular point in time. The liability account is
depreciated over the useful life of the related asset decreasing depreciation expense each period. Under Argentine GAAP, a previously recognized impairment loss should only be reversed when there is a subsequent change in estimates used to compute
the fair market value of the asset. In that event, the new carrying amount of the asset should be the lower of its fair market value or the net carrying amount the asset would have had if no impairment had been recognized. Both the impairment charge
and the impairment reversal are recognized in earnings.



F-20



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | r. | Impairment of inventories and undeveloped parcels of land
| | -- | ---------------------------------------------------------

The Company periodically evaluates the carrying value of its inventories and undeveloped parcels of land for impairment. Such evaluation is performed by comparing the respective carrying values against market values determined on the basis
of comparable property values. As discussed in note 3.q., if there are increases in the fair market value of the assets previously impaired, assets are restored and reversals are shown in financial results, net.



| | s. | Vacation expenses
| | -- | -----------------

Vacation expenses are fully
accrued in the year the employee renders services to earn such vacation.



| | t. | Derivative financial instruments
| | -- | --------------------------------

As part of its
risk management strategy, the Company may use derivative financial instruments. The Company does not engage in trading or other speculative use of these financial instruments and does not utilize financial instruments to hedge anticipated
transactions. The Company applies Technical Resolution No. 20 (RT No. 20), Accounting for Derivative Instruments and Hedging Activities, which establishes accounting and reporting standards for derivative
instruments and for hedging activities. RT No. 20 requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The accounting for changes in the fair value
of a derivative depends on the intended use of the derivative and how it is designated. RT No. 20 prescribes that changes in the fair value of effective cash flow hedges are deferred as a separate component of the balance sheet and subsequently
reclassified into earnings when the hedged items affect earnings. Gains and losses from fair value hedges are recognized in earnings in the period of any changes in the fair value of the related recognized asset or liability. Gains and losses on
derivative instruments that are not designated as a hedging instrument are recognized in earnings in the period of change. RT No. 20 requires that a company must formally document, designate, and assess the effectiveness of transactions that
receive hedge accounting. During the years ended June 30, 2007 and 2006, the Company did not have any derivative activity.



| | u. | Monetary assets and liabilities
| | -- | -------------------------------

Monetary assets
and liabilities are stated at their face value plus or minus the related financial gain or loss.



| | v. | Receivables from leases and services and trade payables
| | -- | -------------------------------------------------------

Receivables from leases and services and trade payables have been valued at the price applicable to spot operations at the time of the transaction plus interest and implicit financial components accrued at the internal rate of return
determined at that moment.



| | w. | Financial receivables and payables
| | -- | ----------------------------------

Financial
receivables and payables have been valued at the amount deposited and collected, respectively, net of related costs, plus accrued interest based on the interest rate estimated at the time of the transaction. In the case, the Company has the
intention and feasibility of selling financial receivables after the year-end, those receivables are valued at their net realizable value.

Deferred debt costs consist of fees and costs incurred to issue the Non-Convertible Notes. These fees and costs are shown as a deduction of the corresponding liability in Note 4.h. These costs and fees are being amortized over the term of
the respective Series I and II Non-Convertible Notes, which approximates the effective interest method. Deferred debt costs totaled Ps. 5.8 million, net of accumulated amortization at June 30, 2007.



F-21



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|3. | Significant accounting policies (continued)
|-- | -------------------------------------------



| | x. | Other receivables and liabilities
| | -- | ---------------------------------

MPIT credits
have been measured based on the best estimate of the amount receivable discounted at the interest rate applicable to freely available savings accounts published by the Argentine Central Bank in effect at the time of incorporation to the balance
sheet. The remaining other receivables and liabilities have been valued at their nominal value plus interest, if any.



| | y. | Related party balances
| | -- | ----------------------

Receivables and liabilities
with related parties generated by financial transactions and other sundry transactions have been valued in accordance with the terms agreed by the parties.



| | z. | Earnings per share
| | -- | ------------------

The Company is required to
disclose earnings per share information for all years presented. Basic earnings per share (basic EPS) are computed by dividing the net income available to common shareholders for the year by the weighted-average number of common shares
outstanding during the year. Diluted earnings per share (diluted EPS) are computed by dividing the adjusted net income for the year by the weighted-average number of common shares and potential common shares outstanding during the year.

In computing diluted EPS, income available to common shareholders used in the basic EPS calculation is adjusted to add back the after-tax
amount of interest recognized for the year with respect to any debt convertible to common stock. Additional adjustments are made for any other income or loss items that would result from the assumed conversion of potential common shares. The
weighted-average number of common shares outstanding is adjusted to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Diluted EPS is based on the most
advantageous conversion rate or exercise price over the entire term of the instrument from the standpoint of the security holder. The calculation of diluted EPS excludes potential common shares if their effect is anti-dilutive. The Company has
considered the dilutive effect of the outstanding convertible debt in calculating diluted EPS.



F-22



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions
|-- | ------------------------------



| | a. | Cash and banks:
| | -- | ---------------



|                                                              |  |                |             |      |     |            
|------------------------------------------------------------- |  | -------------- | ----------- | ---- | --- | -----------
|                                                              |  | As of June 30,
|                                                              |  | 2007           |             | 2006
|Cash in local currency                                        |  | Ps.            | 2,819,359   |      | Ps. | 1,896,305  
|Cash in foreign currency (Note 20.f)                          |  |                | 310,513     |      |     | 2,164,853  
|Bank accounts in local currency                               |  |                | 13,382,258  |      |     | 6,205,496  
|Bank accounts in foreign currency (Note 20.f)                 |  |                | 12,268,479  |      |     | 26,311,435 
|Bank interest-bearing account                                 |  |                | 3,049,242   |      |     | 1,643,947  
|                                                              |  |                |             |      |     |            
|                                                              |  | Ps.            | 31,829,851  |      | Ps. | 38,222,036 
|                                                              |  |                |             |      |     |            
|                                                              |  |               
|b.      Other investments, net:                               |  |                |             |      |     |            
|                                                              | 
|                                                              |  | As of June 30,
|                                                              |  | 2007           |             | 2006
|Current                                                       |  |                |             |      |     |            
|Time deposits                                                 |  |                | 5,024,231   |      |     | 4,201,818  
|Mutual funds                                                  |  | Ps.            | 448,642,297 |      | Ps. | 13,980,801 
|Retained interests in securitized receivables (i) (ii)        |  |                | 22,103,730  |      |     | 10,318,797 
|NOBACS bonds (ii)                                             |  |                | 6,158,500   |      |     | 602,640    
|Mortgage bonds issued by Banco Hipotecario S.A. (ii) (Note 6) |  |                | 1,661,969   |      |     | 2,170,258  
|Garantizar S.G.R. (ii).                                       |  |                | 1,380,420   |      |     |           
|TDFs (ii)                                                     |  |                |            |      |     | 324,325    
|Other government bonds (ii)                                   |  |                | 437,453     |      |     | 651,845    
|                                                              |  |                |             |      |     |            
|                                                              |  | Ps.            | 485,408,600 |      | Ps. | 32,250,484 
|                                                              |  |                |             |      |     |            
|                                                              | 
|                                                              |  | As of June 30,
|                                                              |  | 2007           |             | 2006
|Non-current                                                   |  |                |             |      |     |            
|Undeveloped parcels of land                                   |  |                |             |      |     |            
|-Caballito plot of land (iii)                                 |  | Ps.            | 36,680,754  |      | Ps. | 36,622,004 
|-Torres Rosario                                               |  |                | 16,110,481  |      |     | 16,079,162 
|-Air Space Supermercado Coto  Agüero 616                     |  |                | 13,143,445  |      |     | 13,143,445 
|-General Paz plot of land (iv)                                |  |                |            |      |     | 59,837,466 
|-Other real estate                                            |  |                | 2,778,468   |      |     | 2,347,423  
|Retained interests in securitized receivables (i)             |  |                | 55,682,995  |      |     | 37,814,171 
|Shares purchase advances                                     |  |                | 1,108,239   |      |     |           
|TDFs.                                                         |  |                |            |      |     | 752,114    
|Others                                                        |  |                |            |      |     | 1,247,080  
|                                                              |  |                |             |      |     |            
|                                                              |  | Ps.            | 125,504,382 |      | Ps. | 167,842,865
|                                                              |  |                |             |      |     |            

---

|(i) | As part of its credit card securitization programs, the Company transfers credit card receivables to trusts in exchange for cash and certificates representing undivided interests in
such receivables. Trusts debt securities represent debt certificates (TDFs) issued by trusts which are valued at amortized cost. Retained interests in transferred credit card receivables represent equity certificates (CPs) issued by trusts which are
accounted for under the equity method of accounting (See Note 11 for details).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | Not considered as cash equivalents for purposes of the consolidated statements of cash flows.
|---- | ---------------------------------------------------------------------------------------------

|(iii) | Encumbered in relation with a tax claim from the Federal Administration of Public Revenues (AFIP).
|----- | ----------------------------------------------------------------------------------------------------

|(iv) | Transferred to fixed assets.
|---- | ----------------------------



F-23



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions (continued)
|-- | ------------------------------------------



| | c. | Investments:
| | -- | ------------



|                                      |  |                |   |      |     |        
|------------------------------------- |  | -------------- | - | ---- | --- | -------
|                                      |  | As of June 30,
|                                      |  | 2007           |   | 2006
|Non-current                           |  |                |   |      |     |        
|E-Commerce Latina S.A. (i) (Note 6) p |  | Ps.            |  |      | Ps. | 129,474
|                                      |  |                |   |      |     |        
|                                      |  | Ps.            |  |      | Ps. | 129,474
|                                      |  |                |   |      |     |        

---

|(i) | The Company had a 50% ownership interest in E-commerce Latina S.A. as of June 30, 2006 and 2005. As discussed in Note 2.h, on January, 2007, the Company acquired the remaining
50% in E-commerce Latina S.A. The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d. | Accounts receivable, net:
| | -- | -------------------------



|                                                     |  |                |             |   |      |     |             |  
|---------------------------------------------------- |  | -------------- | ----------- | - | ---- | --- | ----------- | -
|                                                     |  | As of June 30, |            
|                                                     |  | 2007           |             |   | 2006 |    
|Current                                              |  |                |             |   |      |     |             |  
|Credit card receivable                               |  | Ps.            | 86,333,343  |   |      | Ps. | 58,315,941  |  
|Checks to be deposited                               |  |                | 31,626,070  |   |      |     | 26,154,553  |  
|Leases and services receivable                       |  |                | 40,568,938  |   |      |     | 22,152,659  |  
|Debtors under legal proceedings                      |  |                | 21,567,616  |   |      |     | 22,635,986  |  
|Pass-through expenses receivable (i)                 |  |                | 15,342,081  |   |      |     | 10,013,772  |  
|Receivable from the sale of Alcorta Plaza land (iii) |  |                | 6,008,654   |   |      |     | 5,863,550   |  
|Notes receivable                                     |  |                | 2,599,610   |   |      |     | 2,230,951   |  
|Mortgages receivable (ii)                            |  |                | 467,107     |   |      |     | 380,490     |  
|Less:                                                |  |                |             |   |      |     |             |  
|Allowance for doubtful accounts (Note 20.d)          |  |                | (53,414,683 | ) |      |     | (43,435,193 | )
|                                                     |  |                |             |   |      |     |             |  
|                                                     |  | Ps.            | 151,098,736 |   |      | Ps. | 104,312,709 |  
|                                                     |  |                |             |   |      |     |             |  
|Non-current                                          |  |                |             |   |      |     |             |  
|Credit card receivable  Tarjeta Shopping            |  | Ps.            | 42,531,777  |   |      | Ps. | 21,076,452  |  
|Receivable from the sale of Alcorta Plaza land       |  |                |            |   |      |     | 11,991,670  |  
|Mortgages receivable (ii)                            |  |                | 413,658     |   |      |     | 578,155     |  
|Leases and services receivable                       |  |                | 36,270      |   |      |     |            |  
|Notes receivable                                     |  |                | 940,788     |   |      |     | 226,248     |  
|Less:                                                |  |                |             |   |      |     |             |  
|Allowance for doubtful accounts (Note 20.d)          |  |                | (1,954,545  | ) |      |     | (1,332,818  | )
|                                                     |  |                |             |   |      |     |             |  
|                                                     |  | Ps.            | 41,967,948  |   |      | Ps. | 32,539,707  |  
|                                                     |  |                |             |   |      |     |             |  

---

|(i) | Represents receivables for common area maintenance and other operating expenses charged to tenants of shopping centers.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(ii) | Mortgages receivable consist of fixed-rate mortgage receivables from several borrowers. At June 30, 2007 the amount due from the largest individual borrower was Ps. 73,445 at a
contractual interest rate of 14%. (See Note 19.II.r).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | As of June 30, 2007, relates to one pending installment of US$ 1.9 million accruing interest at a rate of 7.5% per annum.
|----- | -------------------------------------------------------------------------------------------------------------------------



F-24



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions (continued)
|-- | ------------------------------------------



| | e. | Other receivables and prepaid expenses, net:
| | -- | --------------------------------------------



|                                                       |  |                |            |   |      |     |            |  
|------------------------------------------------------ |  | -------------- | ---------- | - | ---- | --- | ---------- | -
|                                                       |  | As of June, 30 |           
|                                                       |  | 2007           |            |   | 2006 |    
|Current                                                |  |                |            |   |      |     |            |  
|Related parties (Note 6)                               |  | Ps.            | 14,277,423 |   |      | Ps. | 6,716,890  |  
|Guarantee deposits (i)                                 |  |                | 306,357    |   |      |     | 9,381,584  |  
|Receivables from trust guarantee funds (ii)            |  |                | 2,925,726  |   |      |     | 1,099,855  |  
|Prepaid expenses                                       |  |                | 12,883,270 |   |      |     | 4,271,499  |  
|MPIT                                                   |  |                | 3,734,988  |   |      |     | 3,171,734  |  
|Prepaid services                                       |  |                | 5,327,165  |   |      |     | 2,139,765  |  
|Other tax credits                                      |  |                | 1,448,873  |   |      |     | 1,691,759  |  
|Prepaid gross revenue tax                              |  |                | 963,185    |   |      |     | 766,949    |  
|Income tax credits, net                                |  |                | 212,010    |   |      |     | 839,624    |  
|Other prepaid taxes                                    |  |                | 445,031    |   |      |     | 401,901    |  
|Valued added tax (VAT)                                 |  |                | 7,444,500  |   |      |     |           |  
|Gross revenue tax, receivable                          |  |                | 1,158,026  |   |      |     |           |  
|Others                                                 |  |                | 1,089,187  |   |      |     | 447,535    |  
|                                                       |  |                |            |   |      |     |            |  
|                                                       |  | Ps.            | 52,215,741 |   |      | Ps. | 30,929,095 |  
|                                                       |  |                |            |   |      |     |            |  
|                                                       | 
|                                                       |  | As of June, 30 |           
|                                                       |  | 2007           |            |   | 2006 |    
|Non-Current                                            |  |                |            |   |      |     |            |  
|Receivables from trust guarantee funds (ii)            |  |                | 18,975,778 |   |      |     | 5,369,883  |  
|Guarantee deposits                                     |  | Ps.            | 503,571    |   |      | Ps. | 274,097    |  
|Deferred income tax (Note 14)                          |  |                | 10,730,404 |   |      |     | 5,917,757  |  
|Mortgages receivable (iii)                             |  |                | 2,208,275  |   |      |     | 2,208,275  |  
|Allowance for doubtful mortgage receivable (Note 20.d) |  |                | (2,208,275 | ) |      |     | (2,208,275 | )
|MPIT                                                   |  |                | 399,445    |   |      |     | 266,113    |  
|Prepaid gross revenue tax                              |  |                | 1,149,495  |   |      |     | 882,620    |  
|Other taxes, receivable                                |  |                | 139,398    |   |      |     | 208,440    |  
|Others                                                 |  |                | 232,832    |   |      |     | 335,625    |  
|                                                       |  |                |            |   |      |     |            |  
|                                                       |  | Ps.            | 32,130,923 |   |      | Ps. | 13,254,535 |  
|                                                       |  |                |            |   |      |     |            |  

---

|(i) | As of June 30, 2007 includes restricted deposits amounting to Ps. 0.1 million related mainly to labor claims. As of June 30, 2006, the balance mainly relates to a
guarantee deposit held by Deutsche Bank in favor of the owner of an undeveloped land, Argentimo S.A. amounting to US$ 3 million. The deposit was part of an agreement between the Company, Argentimo and a developer, Constructora San José S.A.,
pursuant to which the Company acquired a parcel of land to build a commercial center and/or office buildings. The guarantee deposit was released on December 26, 2006.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | The accounts receivable financial trusts as credit protection for investors include the contingency funds of financial trust that as of June 30, 2007 amounted to Ps. 11.9
million. They are restricted availability credits until settlement in accordance with the respective prospectuses.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | Corresponds to a loan granted to an unaffiliated third party, which is collateralized by a mortgage on certain properties. During fiscal year 2001, this debtor filed for bankruptcy.
As a result, the Company has recognized an allowance for the entire balance based on the opinion of its legal counsel.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-25



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions (continued)
|-- | ------------------------------------------



| | f. | Inventory, net
| | -- | --------------



|                      |  |                |           |      |     |          
|--------------------- |  | -------------- | --------- | ---- | --- | ---------
|                      |  | As of June 30,
|                      |  | 2007           |           | 2006
|Current               |  |                |           |      |     |          
|Torres de Rosario (i) |  | Ps.            | 6,337,953 |      | Ps. | 7,325,065
|Torres de Abasto (ii) |  |                | 621,628   |      |     | 312,000  
|Resale merchandise    |  |                | 332,606   |      |     | 340,707  
|Others                |  |                |          |      |     | 11,474   
|                      |  |                |           |      |     |          
|                      |  | Ps.            | 7,292,187 |      | Ps. | 7,989,246
|                      |  |                |           |      |     |          

---

|(i) | Valued at net realizable value. See Note 4.k.ii) for details.
|--- | -------------------------------------------------------------

|(ii) | Net of impairment allowance. See Note 20.d) for details.
|---- | --------------------------------------------------------



| | g. | Trade accounts payable:
| | -- | -----------------------



|                  |  |                |             |      |     |            
|----------------- |  | -------------- | ----------- | ---- | --- | -----------
|                  |  | As of June 30,
|                  |  | 2007           |             | 2006
|Current           |  |                |             |      |     |            
|Suppliers (i)     |  | Ps.            | 154,615,086 |      | Ps. | 89,923,116 
|Accruals          |  |                | 23,399,481  |      |     | 10,348,668 
|Foreign suppliers |  |                | 1,009,975   |      |     | 1,023,961  
|Others            |  |                | 464,863     |      |     | 653,819    
|                  |  |                |             |      |     |            
|                  |  | Ps.            | 179,489,405 |      | Ps. | 101,949,564
|                  |  |                |             |      |     |            
|Non-current       |  |                |             |      |     |            
|Foreign suppliers |  | Ps.            | 20,804      |      | Ps. | 1,010,150  
|                  |  |                |             |      |     |            
|                  |  | Ps.            | 20,804      |      | Ps. | 1,010,150  
|                  |  |                |             |      |     |            

---

|(i) | As of June 30, 2007 and 2006, includes accounts payable to merchants for credit card operations of Ps. 152.1 million and Ps. 85.9 million, respectively
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | h. | Short-term and long-term debt:
| | -- | ------------------------------

Short-term debt
consists of the following:



|                                                                     |  |                |            |   |      |     |           
|-------------------------------------------------------------------- |  | -------------- | ---------- | - | ---- | --- | ----------
|                                                                     |  | As of June 30,
|                                                                     |  | 2007           |            |   | 2006
|Syndicated loan including accrued interest (i)                       |  |                |           |   |      |     | 25,581,973
|Deutsche Bank Trust Company Americas including accrued interest (ii) |  |                |           |   |      |     | 9,601,200 
|Uncollateralized loans including accrued interest (iii) (vii)        |  |                | 51,025,585 |   |      |     | 34,512,703
|Accrued interest on Notes (iv) (Note 6)                              |  |                | 12,896,019 |   |      |     | 6,588,951 
|Interest payable to credit card trust                                |  |                | 1,108,691  |   |      |     | 1,489,767 
|Seller financing for acquisitions including accrued interest (v)     |  |                | 12,381,279 |   |      |     | 12,843,639
|Mortgage loans (vi)                                                  |  |                | 105,754    |   |      |     | 41,791    
|Deferred debt costs (Note 3.p)                                       |  |                | (1,016,499 | ) |      |     |          
|Others                                                               |  |                | 709,225    |   |      |     | 156,614   
|                                                                     |  |                |            |   |      |     |           
|                                                                     |  | Ps.            | 77,210,054 |   |      | Ps. | 90,816,638
|                                                                     |  |                |            |   |      |     |           



F-26



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions (continued)
|-- | ------------------------------------------



| | h. | Short-term and long-term debt (continued)
| | -- | -----------------------------------------



Long-term debt consists of the following:



|                                                                            |  |                |             |   |      |     |            
|--------------------------------------------------------------------------- |  | -------------- | ----------- | - | ---- | --- | -----------
|                                                                            |  | As of June 30,
|                                                                            |  | 2007           |             |   | 2006
|Convertible Notes (iv)                                                      |  | Ps.            | 146,076,000 |   |      | Ps. | 145,755,576
|Non-Convertible Notes (iv)                                                  |  |                | 525,180,000 |   |      |     |           
|Uncollateralized loans (vii)                                                |  |                | 5,597,357   |   |      |     |           
|Deferred debt costs (Note 3.p)                                              |  |                | (4,823,494  | ) |      |     |           
|Seller financing for acquisitions including accrued interest (v) (Note 2.h) |  |                | 6,186,000   |   |      |     |           
|Others                                                                      |  |                | 536,022     |   |      |     | 98,268     
|                                                                            |  |                |             |   |      |     |            
|                                                                            |  | Ps.            | 678,751,885 |   |      | Ps. | 145,853,844
|                                                                            |  |                |             |   |      |     |            

---

|(i) | As of June 30, 2006, related to a Ps. 50 million syndicated loan granted by two financial institutions. This loan was amortized in four six-month equal and consecutive
installments beginning October 5, 2005. The syndicated loan accrued interest at a 7.875% fixed rate during the first year and at a variable rate (Encuesta) plus 3% during the second year. The loan included various restrictive covenants, which
among other things required the Company to maintain certain financial ratios. Proceeds from this loan were used to repay the outstanding liabilities for Ps. 48.4 million. The loan was fully paid on April 9, 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | As of June 30, 2006, related to a US$ 11.0 million loan granted by Deutsche Bank S.A. This loan accrued interest at LIBOR plus 3.25%. The loan was fully paid on
August 1, 2006.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | Generally, the Companys short-term borrowings are in the form of overdraft facilities and/or bank loans with original maturities of less than one year. The weighted average
interest rates on short-term debt were 10.1% and 9.5% as of June 30, 2007 and 2006, respectively. The Company generally used the proceeds from these borrowings for working capital needs and other general corporate purposes. The Company had
unused lines of credit under the short-term bank lines of Ps. 381.4 million at June 30, 2007.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iv) | See Note 15, for details of the issuance of Convertible and Non-Convertible Notes.
|---- | ----------------------------------------------------------------------------------

|(v) | As of June 30, 2007 represents seller financing for the acquisition of Empalme. This amount accrues 6% nominal annual interest payable in three installments of US$
2.0 million each, due on December, 2007; June, 2008 and December, 2008. As of June 30, 2006 the balances were primarily comprised of (a) Ps. 3.3 million of principal plus Ps. 3 million of CER-indexing and Ps.
1.2 million of accrued interest relating to the seller financing obtained in the acquisition of Shopping Neuquén, which accrued interest at six-month LIBOR (4.99% as of June 30, 2006), and (b) Ps. 5.4 million relating to
the seller financing obtained in the acquisition of Mendoza Plaza Shopping (including imputed interest).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(vi) | Related to a debt from Shopping Neuquén S.A. which is guaranteed by a mortgage over the plot of land.
|---- | -----------------------------------------------------------------------------------------------------

|(vii) | The banking and financial loans accounts include a loan from Banco de la Ciudad de Buenos Aires to Tarshop for Ps. 5.0 million, which is secured by Certificates of
Participation related to the Fideicomisos Financieros Tarjeta Shopping Series XII, XIV, XVI and XVIII. Additionally, Certificates of Participation related to Fideicomisos Financieros Tarjeta Shopping Series XXI, XXIII, XXV and XXVI for Ps.
11.7 million were granted as a pledge to the Standard Bank (formerly Bank Boston N.A.) as guarantee.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-27



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions (continued)
|-- | ------------------------------------------



| | i. | Salaries and social security payable:
| | -- | -------------------------------------



|                                   |  |                |            |      |     |           
|---------------------------------- |  | -------------- | ---------- | ---- | --- | ----------
|                                   |  | As of June 30,
|                                   |  | 2007           |            | 2006
|Provision for vacation and bonuses |  | Ps.            | 14,820,470 |      | Ps. | 8,289,725 
|Social security payable            |  |                | 3,468,431  |      |     | 2,232,366 
|Salaries payable                   |  |                | 643,815    |      |     | 85,770    
|Others                             |  |                | 666,041    |      |     | 277,503   
|                                   |  |                |            |      |     |           
|                                   |  | Ps.            | 19,598,757 |      | Ps. | 10,885,364
|                                   |  |                |            |      |     |           



| | j. | Taxes payable:
| | -- | --------------



|                                                     |  |                |            |      |     |           
|---------------------------------------------------- |  | -------------- | ---------- | ---- | --- | ----------
|                                                     |  | As of June 30,
|                                                     |  | 2007           |            | 2006
|Current                                              |  |                |            |      |     |           
|Income tax, net                                      |  | Ps.            | 26,214,599 |      | Ps. | 13,182,274
|VAT payable, net                                     |  |                | 9,465,250  |      |     | 5,378,086 
|Other tax withholdings                               |  |                | 3,918,065  |      |     | 2,524,548 
|Gross revenue tax payable                            |  |                | 2,162,088  |      |     | 954,062   
|Provision for tax on personal assets of shareholders |  |                | 274,939    |      |     | 268,494   
|Gross revenue tax withholdings                       |  |                | 502,190    |      |     | 353,864   
|Asset tax payable, net                               |  |                | 643,533    |      |     | 248,286   
|Gross revenue tax accrued                            |  |                | 176,714    |      |     | 175,907   
|Property tax payable                                 |  |                |           |      |     | 407       
|Tax amnesty plan for gross revenue tax payable       |  |                | 181,761    |      |     | 166,173   
|Others                                               |  |                | 1,175,750  |      |     | 509,867   
|                                                     |  |                |            |      |     |           
|                                                     |  | Ps.            | 44,714,889 |      | Ps. | 23,761,968
|                                                     |  |                |            |      |     |           
|Non-current                                          |  |                |            |      |     |           
|Deferred income tax (Note 14)                        |  | Ps.            | 26,177,713 |      | Ps. | 11,690,310
|Tax amnesty plan for gross revenue tax payable       |  |                | 1,483,141  |      |     | 1,664,902 
|Gross revenue tax accrued                            |  |                |           |      |     | 351,813   
|                                                     |  |                |            |      |     |           
|                                                     |  | Ps.            | 27,660,854 |      | Ps. | 13,707,025
|                                                     |  |                |            |      |     |           



| | k. | Customer advances:
| | -- | ------------------



|                                                         |  |                |  |              
|-------------------------------------------------------- |  | -------------- |  | -------------
|                                                         |  | As of June 30,
|                                                         |  | 2007           |  | 2006         
|Current                                                  |  |                |  |              
|Admission rights                                         |  | Ps.29,939,070  |  | Ps.23,659,140
|Lease advances (i)                                       |  | 24,605,928     |  | 19,710,934   
|Advance for the sale of Torres Rosario plot of land (ii) |  | 2,510,520      |  | 2,365,800    
|Guarantee deposits                                       |  | 1,492,519      |  | 2,316,891    
|                                                         |  |                |  |              
|                                                         |  | Ps.58,548,037  |  | Ps.48,052,765
|                                                         |  |                |  |              
|Non-current                                              |  |                |  |              
|Admission rights                                         |  | Ps.35,531,056  |  | Ps.29,802,684
|Lease advances (i)                                       |  | 30,194,393     |  | 11,679,327   
|Guarantee deposits                                       |  |               |  | 53,264       
|                                                         |  |                |  |              
|                                                         |  | Ps.65,725,449  |  | Ps.41,535,275
|                                                         |  |                |  |              

---

|(i) | Lease advances include current and non-current balances of Ps. 1.2 million and Ps. 3.7 million as of June 30, 2007, respectively, and Ps. 1.2 million and Ps.
5.0 million as of June 30, 2006, respectively, related to advances received from Hoyts Cinemas (Hoyts) for the construction of the movie theater complexes at the Abasto and Alto Noa Shopping Centers. These advances accrue
interest at the six-month LIBOR plus 2-2.25%. As of June 30, 2007 the six-month LIBOR was 5.38688%. Based on the agreement between the Company and Hoyts, the Company settles the advances by offsetting them against lease expense owed by Hoyts
for the spaces it rents. As mentioned in Note 17, as of June 30, 2007 includes Ps. 16.3 million related to advances received from NAI International II, Inc. for the construction of a movie theater complex and a portion of parking
facilities in the Cordoba Shopping.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-28



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions (continued)
|-- | ------------------------------------------



| | k. | Customer advances (continued):
| | -- | ------------------------------



|(ii) | As of both June 30, 2007 and 2006, represents a payment received from Villa Hermosa S.A. in connection with a preliminary sale contract for a plot of land that is currently an
integral part of the property located in Rosario (Torres de Rosario), on which the Company plans to build a residential building. The liability is disclosed net of expenses incurred by the Company on behalf of Villa Hermosa S.A.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | l. | Other liabilities:
| | -- | ------------------



|                                           |  |                |            |   |      |     |            |  
|------------------------------------------ |  | -------------- | ---------- | - | ---- | --- | ---------- | -
|                                           |  | As of June 30, |           
|                                           |  | 2007           |            |   | 2006 |    
|Current                                    |  |                |            |   |      |     |            |  
|Accrual for directors fees (Note 6)       |  | Ps.            | 10,547,301 |   |      | Ps. | 8,117,840  |  
|Fees advanced to directors (Note 6)        |  |                | (954,771   | ) |      |     | (315,134   | )
|Provision for donations committed (Note 6) |  |                | 4,363,470  |   |      |     | 2,500,000  |  
|Contributed leasehold improvements (i)     |  |                | 525,525    |   |      |     | 525,525    |  
|Withholdings and guarantee deposits        |  |                | 220,264    |   |      |     | 237,161    |  
|Others                                     |  |                | 761,399    |   |      |     | 134,771    |  
|                                           |  |                |            |   |      |     |            |  
|                                           |  | Ps.            | 15,463,188 |   |      | Ps. | 11,200,163 |  
|                                           |  |                |            |   |      |     |            |  
|Non-current                                |  |                |            |   |      |     |            |  
|Contributed leasehold improvements (i)     |  | Ps.            | 10,421,404 |   |      | Ps. | 10,946,931 |  
|Directors guarantee deposits (Note 6)     |  |                | 12,000     |   |      |     | 12,000     |  
|Others                                     |  |                | 99         |   |      |     | 100        |  
|                                           |  |                |            |   |      |     |            |  
|                                           |  | Ps.            | 10,433,503 |   |      | Ps. | 10,959,031 |  
|                                           |  |                |            |   |      |     |            |  

---

|(i) | Contributed leasehold improvements relate to improvements made by tenants in Abasto Shopping Center and Mendoza Plaza Shopping. The Company has recorded the improvements as fixed
assets based on construction costs incurred with a corresponding deferred liability. Contributed leasehold improvements are amortized to income over the term of lease. Such amortization, net of the related depreciation of the leasehold improvement,
was not significant for the years ended June 30, 2007 and 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | m. | Provisions:
| | -- | -----------



|                                                 |  |                |            |      |     |           
|------------------------------------------------ |  | -------------- | ---------- | ---- | --- | ----------
|                                                 |  | As of June 30,
|                                                 |  | 2007           |            | 2006
|Current                                          |  |                |            |      |     |           
|Provision for contingencies (i) (Note 20.d)      |  | Ps.            | 733,400    |      | Ps. | 506,714   
|                                                 |  |                |            |      |     |           
|                                                 |  | Ps.            | 733,400    |      | Ps. | 506,714   
|                                                 |  |                |            |      |     |           
|Non-current                                      |  |                |            |      |     |           
|Provision for contingencies (i) (ii) (Note 20.d) |  | Ps.            | 12,441,286 |      | Ps. | 10,667,309
|                                                 |  |                |            |      |     |           
|                                                 |  | Ps.            | 12,441,286 |      | Ps. | 10,667,309
|                                                 |  |                |            |      |     |           

---

|(i) | This reserve primarily relates to tax, labor and other miscellaneous matters. In addition, this balance includes Ps. 0.7 million for the claims related to Shopping
Neuquén S.A. as further explained in (ii) below. In the opinion of management and based on consultation with external legal counsel, the Company has established provisions for amounts which are probable of adverse occurrence and which,
according to estimates developed by the Companys legal counsel, would meet all related contingencies and corresponding fees relating to these claims.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-29



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|4. | Breakdown of the main captions (continued)
|-- | ------------------------------------------



| | m. | Provisions (continued)
| | -- | ----------------------



|(ii) | The Companys subsidiary, Shopping Neuquén S.A.s sole asset is a 50,000 square meter undeveloped parcel of land located in Neuquén, Argentina, where the
Company intends to develop a commercial project including the construction of a shopping center, a hypermarket, a hotel and residential buildings. In June 2001, Shopping Neuquén requested the Neuquén Municipality the extension of
original deadlines for the completion of the project and the authorization to sell to third parties certain parcels of the acquired plot. The Municipal Government of Neuquén had originally rejected the request and had declared that the
purchase of the plot was void. Accordingly, in January 2003, Shopping Neuquén requested an injunction measure and submitted all pertinent documents sustaining the reasons underlying the delay of the project. Shopping Neuquén also
requested permission to submit a new schedule considering the economic situation of the country after the 2002 crisis. Since this new request had also been rejected by the Municipal Government, Shopping Neuquén filed an action before the
Supreme Court of Neuquén seeking to declare all municipal decrees and resolutions against the Company null and void. In December 2004, Shopping Neuquén was served notice by the Supreme Court of Neuquén of the rejection of the
Companys action against the Municipal Government. Accordingly, Shopping Neuquén filed a petition seeking the case be brought before the National Supreme Court. This petition has not been resolved yet.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In December 2006, Shopping Neuquén signed an agreement of understanding (the Agreement) with the Municipality of Neuquén and
the Provincial Government pursuant to which the rescheduling of the projects deadline as well as the sale of parcels to third parties was authorized and accepted. The Municipal Government of Neuquén enacted the ordinance on
January 12, 2007. The Agreement provides for the submission of a new urban project and updated environmental studies within 120 days as from the date of the Agreement. The new project and studies were submitted by Shopping Neuquén on
March 28, 2007. The Agreement establishes that Shopping Neuquén should submit all construction plans within a 150-day period after approval of the project plan by the Municipal Government. On May 10, 2007, the Municipal Government
requested further explanations and delivered comments and recommendations on the projects plan. On July 17, 2007, the Company answered the Municipal Governments requests and is currently waiting for the Municipal Governments
decision over the feasibility of the project. When the construction plans are approved and registered with the Municipal Government, construction has to begin within a 90-day as from the registration date. The first stage of the project should
comprise the construction of 21,000 square meter of the shopping center plus 10,000 square meter of the hypermarket, both to be completed within 22 months as from the commencement of construction. Should the Company default on the Agreements
obligations, the Agreement is declared null and void regardless of any potential actions brought against the Company by the Municipal and Provincial Governments.

Pursuant to the Agreement, on December 13, 2006, Shopping Neuquén subscribed a pre-purchase agreement with an unrelated party, P.Y.E. S.A., to sell 4,332 square meter parcel of land of the plot, for US$
0.2 million. The sale is conditioned to the purchaser to construct a hotel building on the land. The transaction is also subject to suspensive clauses, such as the municipal approval of the entire project as described in the preceding paragraph.



F-30



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|5. | Shareholders equity
|-- | --------------------



| | a. | Common stock
| | -- | ------------

As of June 30, 2007, the Company
had 782.1 million authorized and outstanding shares of common stock, having a par value of Ps. 0.10 per share. Holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of
shareholders. During fiscal years 2005, 2006 and 2007, certain holders of the Convertible Notes exercised their conversion rights and, as a result, the Company issued 52.7 million, 1.5 million and 0.1 million shares of common stock,
respectively.



| | b. | Inflation adjustment of common stock
| | -- | ------------------------------------

As discussed
in Note 2.d., the Companys consolidated financial statements were prepared on the basis of general price-level accounting which reflects changes in the purchase price of the peso in the historical financial statements through February 28,
2003. The inflation adjustment related to common stock was appropriated to an inflation adjustment reserve that forms part of shareholders equity. According to CNV Rules, the balance of the inflation adjustment reserve may be applied only
towards the issuance of common stock to shareholders of the Company.



| | c. | Restrictions on distribution of profits (Legal reserve)
| | -- | -------------------------------------------------------

In accordance with the Argentine Corporations Law and the Companys by-laws, 5% of the net and realized profit for the year calculated in accordance with Argentine GAAP plus (less) prior year adjustments must be appropriated by
resolution of shareholders to a legal reserve until such reserve equals 20% of the Companys outstanding capital. This legal reserve may be used only to absorb losses.



| | d. | Reserve for new developments
| | -- | ----------------------------

Pursuant to a
resolution of the Inspección General de Justicia, companies should indicate the intended use of the accumulated retained earnings balance of the year. Accordingly, a special reserve labeled as Reserve for New Developments is
created. The accumulated retained earnings balance is transferred to this equity account. This reclassification has no impact on the total shareholders equity of the Company.



F-31



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|6. | Balances and transactions with related parties
|-- | ----------------------------------------------

The following is a
summary of the balances and transactions with related parties:



|                                                                         |  |                                                                           |      |                                                              |  |                                                                                  |             |   |                                            |     |             |      |  |     |            |   |  |     |             |   |  |             |  
|------------------------------------------------------------------------ |  | ------------------------------------------------------------------------- | ---- | ------------------------------------------------------------ |  | -------------------------------------------------------------------------------- | ----------- | - | ------------------------------------------ | --- | ----------- | ---- |  | --- | ---------- | - |  | --- | ----------- | - |  | ----------- | -
|Company                                                                  |  | Relation                                                                  |      | Description ofTransaction / caption                          |  | (Expense) income included in the statement of income for the year ended June 30, |             |   | Balance receivable(payable) as of June 30, |    
|                                                                         |  |                                                                           | 2007 |                                                              |  | 2006                                                                             |             |   | 2005                                       |     |             | 2007 |  |     | 2006       |  
|                                                                         |  | SHAREHOLDERS                                                              |      |                                                              |  |                                                                                  |             |   |                                            |     |             |      |  |     |            |   |  |     |             |   |  |             |  
|IRSA Inversiones y Representaciones Sociedad Anónima                     |  | Shareholder                                                               |      | Other current receivables                                    |  | Ps.                                                                              |            |   |                                            | Ps. |            |      |  | Ps. |           |   |  | Ps. | 2,849,470   |   |  | Ps. 479,243 |  
|IRSA Inversiones y Representaciones Sociedad Anónima                     |  | Shareholder                                                               |      | Interest and exchange differences with related parties       |  |                                                                                  | (10,024,582 | ) |                                            |     | (15,972,539 | )    |  |     | (6,909,676 | ) |  |     |            |   |  |            |  
|IRSA Inversiones y Representaciones Sociedad Anónima                     |  | Shareholder                                                               |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (1,391,606  | ) |  | (267,760    | )
|IRSA Inversiones y Representaciones Sociedad Anónima                     |  | Shareholder                                                               |      | Short-term debt (i)                                          |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (4,356,976  | ) |  | (4,427,618  | )
|IRSA Inversiones y Representaciones Sociedad Anónima                     |  | Shareholder                                                               |      | Long-term debt (i)                                           |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (98,166,444 | ) |  | (97,944,277 | )
|IRSA Inversiones y Representaciones Sociedad Anónima                     |  | Shareholder                                                               |      | Shared services - Salaries and bonuses                       |  |                                                                                  | 1,544,955   |   |                                            |     | 305,997     |      |  |     | 89,517     |   |  |     |            |   |  |            |  
|IRSA Inversiones y Representaciones Sociedad Anónima.                    |  | Shareholder                                                               |      | Shared services - Salaries and bonuses                       |  |                                                                                  | (504,769    | ) |                                            |     | (26,143     | )    |  |     | (69,219    | ) |  |     |            |   |  |            |  
|IRSA Inversiones y Representaciones Sociedad Anónima.                    |  | Shareholder                                                               |      | Interest income from related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     | 2,774      |   |  |     |            |   |  |            |  
|Parque Arauco S.A.                                                       |  | Shareholder                                                               |      | Short-term debt                                              |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (2,124,029  | ) |  | (2,158,468  | )
|Parque Arauco S.A.                                                       |  | Shareholder                                                               |      | Long-term debt                                               |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (47,856,232 | ) |  | (47,747,925 | )
|Parque Arauco S.A.                                                       |  | Shareholder                                                               |      | Interest and exchange differences with related parties       |  |                                                                                  | (4,887,002  | ) |                                            |     | (7,786,627  | )    |  |     | (4,035,186 | ) |  |     |            |   |  |            |  
|Other shareholders                                                       |  | Shareholder                                                               |      | Other expenses, net - Tax on personal assets of shareholders |  |                                                                                  | (556,587    | ) |                                            |     | (572,263    | )    |  |     | (1,663,051 | ) |  |     |            |   |  |            |  
|                                                                         | 
|                                                                         |  | SUBSIDIARIES AND EQUITY INVESTEES                                         |     
|                                                                         |  |                                                                           |      |                                                              |  |                                                                                  |            
|E-Commerce Latina S.A.                                                   |  | Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07                     |      | Other current receivables                                    |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  | 24,666      |  
|E-Commerce Latina S.A.                                                   |  | Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07                     |      | Administration fees                                          |  |                                                                                  | 3,000       |   |                                            |     | 6,000       |      |  |     | 6,000      |   |  |     |            |   |  |            |  
|E-Commerce Latina S.A.                                                   |  | Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07                     |      | Equity loss from related companies                           |  |                                                                                  | (678,569    | ) |                                            |     | (678,881    | )    |  |     | (626,684   | ) |  |     |            |   |  |            |  
|E-Commerce Latina S.A.                                                   |  | Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07                     |      | Equity Investment                                            |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  | 129,474     |  
|Empalme                                                                  |  | Subsidiary of Alto Palermo S.A. (APSA) since 12.27.06                     |      | Interest income from related parties                         |  |                                                                                  | 47,860      |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  |            |  
|Comercializadora Los Altos S.A. (Altocity.com S.A.s continuing company) |  | Subsidiary of E-Commerce Latina S.A.                                      |      | Other current receivables and prepaid expenses               |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  | 596,240     |  
|Comercializadora Los Altos S.A. (Altocity.com S.A.s continuing company) |  | Subsidiary of E-Commerce Latina S.A.                                      |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  | (470,511    | )
|Comercializadora Los Altos S.A. (Altocity.com S.A.s continuing company) |  | Subsidiary of E-Commerce Latina S.A.                                      |      | Administration fees                                          |  |                                                                                  | 10,500      |   |                                            |     | 42,000      |      |  |     | 42,000     |   |  |     |            |   |  |            |  
|Comercializadora Los Altos S.A. (Altocity.com S.A.s continuing company) |  | Subsidiary of E-Commerce Latina S.A.                                      |      | Interest income from related parties                         |  |                                                                                  | 61,916      |   |                                            |     | 15,185      |      |  |     |           |   |  |     |            |   |  |            |  
|Mendoza Plaza Shopping S.A.                                              |  | Equity investee until September 2004                                      |      | Related parties results                                      |  |                                                                                  |            |   |                                            |     |            |      |  |     | (79,935    | ) |  |     |            |   |  |            |  
|                                                                         | 
|                                                                         |  | OTHER RELATED PARTIES                                                     |     
|                                                                         |  |                                                                           |      |                                                              |  |                                                                                  |            
|Inversora Bolívar S.A.                                                   |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima        |      | Other current receivables                                    |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | 2,717       |   |  | 40          |  
|Inversora Bolívar S.A.                                                   |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima        |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (160,014    | ) |  | (132,254    | )
|Inversora Bolívar S.A.                                                   |  | Subsidiaries of IRSA Inversiones y Representaciones Sociedad Anónima      |      | Leases                                                       |  |                                                                                  | (576,987    | ) |                                            |     | (407,533    | )    |  |     | (394,538   | ) |  |     |            |   |  |            |  
|Dalor S.A.                                                               |  | Related company of a minority shareholder of Tarshop                      |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  | (100,137    | )
|Dalor S.A.                                                               |  | Related company of a minority shareholder of Tarshop                      |      | Accrued interest                                             |  |                                                                                  |            |   |                                            |     |            |      |  |     | (36,655    | ) |  |     |            |   |  |            |  
|Leon Halac                                                               |  | Tarshop Sshareholder (minority interest)                                  |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  | (771,212    | )
|Cresud S.A.C.I.F. y A.                                                   |  | Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima       |      | Other current receivables and prepaid expenses               |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | 1,883,805   |   |  | 827,692     |  
|Cresud S.A.C.I.F. y A.                                                   |  | Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima       |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (918,967    | ) |  | (1,377,090  | )
|Cresud S.A.C.I.F. y A                                                    |  | Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima       |      | Shared services - Salaries and bonuses                       |  |                                                                                  | 2,120,752   |   |                                            |     | 607,262     |      |  |     | 222,871    |   |  |     |            |   |  |            |  
|Cresud S.A.C.I.F. y A.                                                   |  | Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima       |      | Shared services  Salaries and bonuses                       |  |                                                                                  | (242,764    | ) |                                            |     |            |      |  |     |           |   |  |     |            |   |  |            |  
|Nuevas Fronteras S.A                                                     |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima        |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (3,123      | ) |  | (291        | )
|Nuevas Fronteras S.A                                                     |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima        |      | Other current receivables and prepaid expenses               |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | 3,106       |   |  |            |  
|Estudio Zang, Bergel y Viñes (legal advisor)                             |  | Shareholders of law firm are directors and/or shareholders of the Company |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (208,530    | ) |  | (179,284    | )
|Estudio Zang, Bergel y Viñes (legal advisor)                             |  | Shareholders of law firm are directors and/or shareholders of the Company |      | Fees for legal services                                      |  |                                                                                  | (1,586,494  | ) |                                            |     | (724,271    | )    |  |     | (503,034   | ) |  |     |            |   |  |            |  
|Metroshop S.A.                                                           |  | Equity investee of Tarshop                                                |      | Other current receivables and prepaid expenses               |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | 8,320,183   |   |  | 4,057,462   |  
|Metroshop S.A.                                                           |  | Equity investee of Tarshop                                                |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (2,226,369  | ) |  | (1,241,926  | )
|Metronec S.A.                                                            |  | Metroshop S.A. shareholder                                                |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (728,906    | ) |  | (854,543    | )
|Loans to personnel                                                       |  | Employees                                                                 |      | Other current receivables and prepaid expenses               |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | 768,765     |   |  | 556,552     |  
|Personnel                                                                |  | Employees                                                                 |      | Interest income from related parties                         |  |                                                                                  | 48,065      |   |                                            |     |            |      |  |     |           |   |  |     |            |   |  |            |  
|Personnel                                                                |  | Employees                                                                 |      | Interest and exchange differences with related parties       |  |                                                                                  | (4          | ) |                                            |     |            |      |  |     |           |   |  |     |            |   |  |            |  
|Personnel                                                                |  | Employees                                                                 |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (4,609      | ) |  |            |  
|Falabella S.A.                                                           |  | Mendoza Plaza Shopping S.A. Shareholder (minority interest)               |      | Other current receivables                                    |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | 268,174     |   |  | 164,175     |  
|Falabella S.A.                                                           |  | Mendoza Plaza Shopping S.A. Shareholder (minority interest)               |      | Current payable with related parties                         |  |                                                                                  |            |   |                                            |     |            |      |  |     |           |   |  |     | (959,196    | ) |  | (988,660    | )



F-32



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|6. | Balances and transactions with related parties (continued)
|-- | ----------------------------------------------------------



|                                    |  |                                                                         |      |                                                        |  |                                                                                  |   |  |                                            |   |  |            |   |  |            |   |  |            |  
|----------------------------------- |  | ----------------------------------------------------------------------- | ---- | ------------------------------------------------------ |  | -------------------------------------------------------------------------------- | - |  | ------------------------------------------ | - |  | ---------- | - |  | ---------- | - |  | ---------- | -
|Company                             |  | Relation                                                                |      | Description of Transaction / caption                   |  | (Expense) income included in the statement of income for the year ended June 30, |   |  | Balance receivable (payable) as ofJune 30, |  
|                                    |  |                                                                         | 2007 |                                                        |  | 2006                                                                             |   |  | 2005                                       |   |  | 2007       |   |  | 2006       |  
|Falabella S.A.                      |  | Mendoza Plaza Shopping S.A. Shareholder (minority interest)             |      | Non current payable with related parties               |  |                                                                                 |   |  |                                           |   |  |           |   |  |           |   |  | (925,800   | )
|Falabella S.A.                      |  | Mendoza Plaza Shopping S.A. Shareholder (minority interest)             |      | Interest and exchange differences with related parties |  | (79,910                                                                          | ) |  | (305,026                                   | ) |  | (78,837    | ) |  |           |   |  |           |  
|Falabella S.A.                      |  | Mendoza Plaza Shopping S.A. Shareholder (minority interest)             |      | Leases and services                                    |  | 1,587,692                                                                        |   |  | 1,333,433                                  |   |  | 1,114,617  |   |  |           |   |  |           |  
|Directors                           |  | Directors                                                               |      | Short-term debt                                        |  |                                                                                 |   |  |                                           |   |  |           |   |  | (1,373     | ) |  | (1,010     | )
|Directors                           |  | Directors                                                               |      | Long-term debt                                         |  |                                                                                 |   |  |                                           |   |  |           |   |  | (30,930    | ) |  | (41,031    | )
|Directors                           |  | Directors                                                               |      | Interest and exchange differences with related parties |  | (3,159                                                                           | ) |  | (6,692                                     | ) |  | (15,870    | ) |  |           |   |  |           |  
|Directors and management            |  | Directors and management                                                |      | Other current receivables                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | 5,450      |   |  | 820        |  
|Directors                           |  | Directors                                                               |      | Other current liabilities                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | (9,592,530 | ) |  | (7,802,706 | )
|Directors                           |  | Directors                                                               |      | Other non current liabilities                          |  |                                                                                 |   |  |                                           |   |  |           |   |  | (12,000    | ) |  | (12,000    | )
|Directors                           |  | Directors                                                               |      | Directors fees                                        |  | (11,751,793                                                                      | ) |  | (8,883,474                                 | ) |  | (8,950,771 | ) |  |           |   |  |           |  
|Fundación IRSA                      |  | Related to IRSA Inversiones y Representaciones Sociedad Anónima         |      | Other current liabilities - Donations payable          |  |                                                                                 |   |  |                                           |   |  |           |   |  | (2,300,000 | ) |  | (2,500,000 | )
|Fundación IRSA                      |  | Related to IRSA Inversiones y Representaciones Sociedad Anónima         |      | Other current receivables                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | 3,951      |   |  |           |  
|Fundación IRSA                      |  | Related to IRSA Inversiones y Representaciones Sociedad Anónima         |      | Other expenses, net - Donations                        |  | (2,300,000                                                                       | ) |  | (2,549,506                                 | ) |  | (4,012,457 | ) |  |           |   |  |           |  
|Abril S.A.                          |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima      |      | Other current receivables and prepaid expenses         |  |                                                                                 |   |  |                                           |   |  |           |   |  |           |   |  | 16         |  
|Banco Hipotecario S.A.              |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Current investments                                    |  |                                                                                 |   |  |                                           |   |  |           |   |  | 1,661,969  |   |  | 2,170,258  |  
|Banco Hipotecario S.A.              |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Other current receivables and prepaid expenses         |  |                                                                                 |   |  |                                           |   |  |           |   |  | 102,522    |   |  |           |  
|Banco Hipotecario S.A.              |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Current payable with related parties                   |  |                                                                                 |   |  |                                           |   |  |           |   |  | (55,800    | ) |  |           |  
|Museo de los niños                  |  | Related to IRSA Inversiones y Representaciones Sociedad Anónima         |      | Other current receivables and prepaid expenses         |  |                                                                                 |   |  |                                           |   |  |           |   |  | 57,138     |   |  | 5,816      |  
|Banco Hipotecario S.A. Directors    |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Short-term debt                                        |  |                                                                                 |   |  |                                           |   |  |           |   |  | (995       | ) |  | (1,855     | )
|Banco Hipotecario S.A. Directors    |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Long-term debt                                         |  |                                                                                 |   |  |                                           |   |  |           |   |  | (22,394    | ) |  | (22,343    | )
|Banco Hipotecario S.A. Directors    |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Interest and exchange differences with related parties |  | (2,274                                                                           | ) |  | (3,642                                     | ) |  | (1,815     | ) |  |           |   |  |           |  
|Owners Consortium of Libertador 498 |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima      |      | Other current receivables                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | 1,408      |   |  |           |  
|Consultores Assets Management S.A.  |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima      |      | Other current receivables                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | 3,422      |   |  |           |  
|Cactus S.A.                         |  | Subsidiary of Cresud S.A.                                               |      | Other current receivables                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | 5,301      |   |  |           |  
|Cactus S.A                          |  | Subsidiary of Cresud S.A.                                               |      | Current payable with related parties                   |  |                                                                                 |   |  |                                           |   |  |           |   |  | (64        | ) |  |           |  
|Futuros y Opciones.com S.A.         |  | Subsidiary of Cresud S.A.                                               |      | Other current receivables                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | 1,059      |   |  |           |  
|Ritelco S.A.                        |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima      |      | Current payable with related parties                   |  |                                                                                 |   |  |                                           |   |  |           |   |  | (366       | ) |  |           |  
|Ritelco S.A.                        |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima      |      | Interest income from related parties                   |  |                                                                                 |   |  |                                           |   |  | 2,554      |   |  |           |   |  |           |  
|Canteras Natal Crespo               |  | Related to IRSA Inversiones y Representaciones Sociedad Anónima         |      | Other current receivables                              |  |                                                                                 |   |  |                                           |   |  |           |   |  | 952        |   |  | 4,168      |  

---

|(i) | As discussed in Note 15, in August 2002 the Company issued US$ 50 million of Convertible Notes, of which US$ 30 million were purchased by IRSA, the principal shareholder
of the Company. In addition, during the years ended June 30, 2004 and 2005 IRSA acquired US$ 1 million and US$ 2 million of Convertible Notes, respectively. Also, during the year ended June 30, 2005 IRSA exercised its conversion
rights and converted US$ 1.3 million of Convertible Notes. As a result, at June 30, 2007 and 2006 IRSA holds US$ 31.7 million of the Companys Convertible Notes, respectively. For details of the issuance, see Note 15.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-33



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|6. | Balances and transactions with related parties (continued)
|-- | ----------------------------------------------------------



The following is a summary of the expenses and services recovered with related parties:



|                                                                    |  |                                                                     |      |                                      |      |                                                           |      |                                                               |      |         |      |           |      |         |  |          
|------------------------------------------------------------------- |  | ------------------------------------------------------------------- | ---- | ------------------------------------ | ---- | --------------------------------------------------------- | ---- | ------------------------------------------------------------- | ---- | ------- | ---- | --------- | ---- | ------- |  | ---------
|Company                                                             |  | Relation                                                            |      | Description of transaction           |      | Sale of goods and/or services for the year ended June 30, |      | Purchase of goods and/or services for the year ended June 30,
|                                                                    |  |                                                                     | 2007 |                                      | 2006 |                                                           | 2005 |                                                               | 2007 |         | 2006 |           | 2005
|IRSA Inversiones y representaciones Sociedad Anónima                |  | Shareholder                                                         |      | Expenses and Services recovery       |      | 3,126,034                                                 |      | 1,915,596                                                     |      | 506,571 |      | 1,986,058 |      | 696,044 |  | 1,355,687
|IRSA Inversiones y representaciones Sociedad Anónima                |  | Shareholder                                                         |      | Interest                             |      |                                                          |      |                                                              |      | 2,774   |      |          |      |        |  | 385,437  
|Ritelco S.A.                                                        |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima  |      | Expenses recovery                    |      | 497                                                       |      |                                                              |      | 141     |      |          |      |        |  |         
|                                                                    |  |                                                                     |      | Interest                             |      |                                                          |      |                                                              |      | 2,554   |      |          |      |        |  |         
|Canteras Natal Crespo SA                                            |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima  |      | Expenses recovery                    |      | 2,189                                                     |      | 996                                                           |      |        |      |          |      |        |  |         
|Futuros y Opciones S.A.                                             |  | Subsidiary of Cresud S.A.                                           |      | Expenses recovery                    |      | 789                                                       |      | 4,246                                                         |      |        |      |          |      |        |  |         
|Cactus S.A.                                                         |  | Subsidiary of Cresud S.A.                                           |      | Expenses recovery                    |      | 4,573                                                     |      | 250                                                           |      | 16      |      |          |      |        |  |         
|Consultores Asset Management S.A                                    |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima  |      | Expenses recovery                    |      | 3,860                                                     |      | 1,998                                                         |      | 200     |      |          |      |        |  |         
|Consorcio de Propietarios Libertador 498                            |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima  |      | Expenses recovery                    |      | 1,164                                                     |      |                                                              |      |        |      |          |      |        |  |         
|Cresud S.A.                                                         |  | Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima |      | Expenses and Services recovery       |      | 3,276,365                                                 |      | 1,782,707                                                     |      | 519,555 |      | 1,096,466 |      | 497,717 |  | 294,905  
|Tarshop S.A.                                                        |  | Subsidiary                                                          |      | Expenses and Services recovery       |      |                                                          |      |                                                              |      |        |      | 1,092,939 |      | 471,366 |  | 197,059  
|E-Commerce Latina S.A.                                              |  | Subsidiary                                                          |      | Expenses and Services recovery       |      | 36,631                                                    |      | 6,000                                                         |      | 6,000   |      |          |      |        |  |         
|Empalme S.A.I.C.F.A. Y G.                                           |  | Subsidiary                                                          |      | Interest                             |      | 47,860                                                    |      |                                                              |      |        |      |          |      |        |  |         
|Empalme S.A.I.C.F.A. Y G.                                           |  | Subsidiary                                                          |      | Expenses recovery                    |      | 70,660                                                    |      |                                                              |      |        |      |          |      |        |  |         
|Comercializadora Los Altos S.A. (continuadora de Altocity.com S.A.) |  | Subsidiary of E-Commerce Latina S.A.                                |      | Expenses and Services recovery       |      | 221,509                                                   |      | 60,534                                                        |      | 77,693  |      | 20,435    |      | 31,726  |  | 49,530   
|Comercializadora Los Altos S.A. (continuadora de Altocity.com S.A.) |  | Subsidiary of E-Commerce Latina S.A.                                |      | Interest income from related parties |      | 107,114                                                   |      | 18,885                                                        |      |        |      |          |      |        |  |         
|Inversora Bolivar S.A.                                              |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima  |      | Expenses recovery                    |      | 1,706                                                     |      | 874                                                           |      | 127     |      |          |      |        |  |         



F-34



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|                             |  |                                                                         |      |                                      |      |                                                           |      |                                                               |      |         |      |   |      |   |  |  
|---------------------------- |  | ----------------------------------------------------------------------- | ---- | ------------------------------------ | ---- | --------------------------------------------------------- | ---- | ------------------------------------------------------------- | ---- | ------- | ---- | - | ---- | - |  | -
|Company                      |  | Relation                                                                |      | Description of transaction           |      | Sale of goods and/or services for the year ended June 30, |      | Purchase of goods and/or services for the year ended June 30,
|                             |  |                                                                         | 2007 |                                      | 2006 |                                                           | 2005 |                                                               | 2007 |         | 2006 |   | 2005
|León Halac                   |  | Tarshop S.A. shareholder (minority interest)                            |      | Expenses recovery                    |      |                                                          |      | 83                                                            |      |        |      |  |      |  |  | 
|Nuevas Fronteras S.A.        |  | Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima      |      | Expenses recovery                    |      | 15,567                                                    |      |                                                              |      |        |      |  |      |  |  | 
|Estudio Zang, Bergel y Viñes |  | Related to the Board of Directors                                       |      | Expenses recovery                    |      |                                                          |      | 578                                                           |      |        |      |  |      |  |  | 
|Falabella S.A.               |  | Mendoza Plaza Shopping S.A. Shareholder (minority interest)             |      | Expenses and Services recovery       |      | 2,570,335                                                 |      | 2,343,184                                                     |      | 666,306 |      |  |      |  |  | 
|Falabella S.A.               |  | Mendoza Plaza Shopping S.A. Shareholder (minority interest)             |      | Interest income from related parties |      | 114,551                                                   |      | 537                                                           |      |        |      |  |      |  |  | 
|Fundación IRSA               |  | Related to IRSA Inversiones y Representaciones Sociedad Anónima         |      | Expenses recovery                    |      | 1,021                                                     |      |                                                              |      |        |      |  |      |  |  | 
|Banco Hipotecario S.A.       |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Expenses and Services recovery       |      | 271,208                                                   |      |                                                              |      |        |      |  |      |  |  | 
|Banco Hipotecario S.A.       |  | Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima |      | Interest income from related parties |      | 201                                                       |      |                                                              |      |        |      |  |      |  |  | 
|Museo de los niños           |  | Related to IRSA Inversiones y Representaciones Sociedad Anónima         |      | Expenses and Services recovery       |      | 418,906                                                   |      | 240,721                                                       |      | 197,079 |      |  |      |  |  | 
|Loans to personnel           |  | Employees                                                               |      | Interest                             |      | 25,281                                                    |      | 23,412                                                        |      | 2,108   |      |  |      |  |  | 
|Directors                    |  | Directors                                                               |      | Expenses recovery                    |      | 12,000                                                    |      | 4,623                                                         |      | 45      |      |  |      |  |  | 



F-35



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|7. | Financial results, net
|-- | ----------------------



|                                                                |  |                      |             |   |      |     |             |      |  |     |             |  
|--------------------------------------------------------------- |  | -------------------- | ----------- | - | ---- | --- | ----------- | ---- |  | --- | ----------- | -
|                                                                |  | Years ended June 30, |            
|                                                                |  | 2007                 |             |   | 2006 |     |             | 2005 | 
|Generated by assets:                                            |  |                      |             |   |      |     |             |      |  |     |             |  
|Impairment losses                                               |  |                      |            |   |      |     | (395,599    | )    |  |     |            |  
|Reversal of impairment losses                                   |  | Ps.                  | 2,273,181   |   |      | Ps. | 9,894,355   |      |  | Ps. | 13,093,117  |  
|Interest income                                                 |  |                      | 14,752,631  |   |      |     | 6,802,699   |      |  |     | 4,776,876   |  
|Exchange differences and holding losses                         |  |                      | (3,787,803  | ) |      |     | 1,251,757   |      |  |     | 350,766     |  
|Interest income from related parties (Note 6)                   |  |                      | 157,841     |   |      |     | 15,185      |      |  |     | 5,328       |  
|                                                                |  |                      |             |   |      |     |             |      |  |     |             |  
|                                                                |  | Ps.                  | 13,395,850  |   |      | Ps. | 17,568,397  |      |  | Ps. | 18,226,087  |  
|                                                                |  |                      |             |   |      |     |             |      |  |     |             |  
|Generated by liabilities:                                       |  |                      |             |   |      |     |             |      |  |     |             |  
|Interest expense                                                |  | Ps.                  | (15,937,666 | ) |      | Ps. | (7,336,013  | )    |  | Ps. | (12,366,004 | )
|Gain from settlement of swap agreement (Note 12)                |  |                      |            |   |      |     |            |      |  |     | 5,222,271   |  
|Gain on repurchase of debt                                      |  |                      |            |   |      |     |            |      |  |     | 1,991,629   |  
|Exchange differences                                            |  |                      | (1,927,664  | ) |      |     | (1,791,724  | )    |  |     | 378,601     |  
|Interest and exchange differences with related parties (Note 6) |  |                      | (14,996,931 | ) |      |     | (24,074,526 | )    |  |     | (11,041,384 | )
|                                                                |  |                      |             |   |      |     |             |      |  |     |             |  
|                                                                |  | Ps.                  | (32,862,261 | ) |      | Ps. | (33,202,263 | )    |  | Ps. | (15,814,887 | )
|                                                                |  |                      |             |   |      |     |             |      |  |     |             |  
|                                                                |  | Ps.                  | (19,466,411 | ) |      | Ps. | (15,633,866 | )    |  | Ps. | 2,411,200   |  
|                                                                |  |                      |             |   |      |     |             |      |  |     |             |  



|8. | Other expenses, net
|-- | -------------------



|                                                              |  |                      |            |   |      |     |            |      |  |     |            |  
|------------------------------------------------------------- |  | -------------------- | ---------- | - | ---- | --- | ---------- | ---- |  | --- | ---------- | -
|                                                              |  | Years ended June 30, |           
|                                                              |  | 2007                 |            |   | 2006 |     |            | 2005 | 
|Donations (Note 6)                                            |  | Ps.                  | (4,444,411 | ) |      | Ps. | (2,549,506 | )    |  | Ps. | (4,012,457 | )
|Easement income (i)                                           |  |                      |           |   |      |     | 2,427,718  |      |  |     |           |  
|Recovery (loss) on fire damages (net of insurance recoveries) |  |                      | 1,773,131  |   |      |     | (5,787,577 | )    |  |     |           |  
|Unreimbursed expenses (ii)                                    |  |                      | (298,491   | ) |      |     | (1,743,141 | )    |  |     |           |  
|Charges for contingencies, net                                |  |                      | (3,016,544 | ) |      |     | (236,945   | )    |  |     | (1,356,740 | )
|Tax on personal assets of shareholders (Note 6)               |  |                      | (556,587   | ) |      |     | (572,263   | )    |  |     | (1,663,051 | )
|Gain on cancellation of liabilities                           |  |                      | 3,126,935  |   |      |     |           |      |  |     |           |  
|Other taxes                                                   |  |                      |           |   |      |     | (872,467   | )    |  |     |           |  
|Others                                                        |  |                      | 68,501     |   |      |     | (427,587   | )    |  |     | (349,712   | )
|                                                              |  |                      |            |   |      |     |            |      |  |     |            |  
|                                                              |  | Ps.                  | (3,347,466 | ) |      | Ps. | (9,761,768 | )    |  | Ps. | (7,381,960 | )
|                                                              |  |                      |            |   |      |     |            |      |  |     |            |  

---

|(i) | As of June 30, 2006, the charge relates to the termination of the easement agreement with Riocruz S.C.S. On February 2, 1999, Mendoza Plaza Shopping had entered into an
easement agreement with one anchor tenant, C&A, for an aggregate purchase price of US$ 2.9 million. Easement revenue was amortized to income under the straight-line method over the term of the agreement. In September 2005, Mendoza Plaza Shopping
acquired from Riocruz the retail space where the C&A store was located, and consequently, the easement agreement was terminated.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | As of both June 30, 2007 and 2006, mainly belongs to expenses incurred by the Company when constructing Alto Rosario Shopping. Certain expenses were going to be borned by Coto
(a hypermarket beside the shopping center). Coto rejected the expenses and the Company deemed them as not recoverable.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-36



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|9. | Segment information
|-- | -------------------

General information

The Company is required to disclose segment information in accordance with Technical Resolution No. 18 (RT 18)
Specific Considerations for the Preparation of Financial Statements. RT 18 establishes standards for reporting information about operating segments in annual financial statements and requires reporting of selected information about
operating segments in interim financial reports issued to shareholders. Operating segments are components of a company about which separate financial information is available that is regularly evaluated by the chief operating decision maker(s) in
deciding how to allocate resources and assess performance. The statement also establishes standards for related disclosures about a companys products and services, geographical areas and major customers. The Company has determined that its
reportable segments are those that are based on the Companys method of internal reporting. The Company has three reportable segments. These segments are Leases and Services, Credit Card Operations and
Others. Others primarily include sales and development of properties.

A general description of each segment follows:



| |  |  | Leases and Services
| | - |  | -------------------

This segment
includes the operating results of the Companys shopping centers principally comprised of lease and service revenues from tenants.



| |  |  | Credit Card Operations
| | - |  | ----------------------

This segment
includes revenues derived from credit card transactions that consist of commissions, financing income, results from securitized receivables operations and life and disability insurance charges to cardholders.



| |  |  | Others
| | - |  | ------

This segment includes the
operating results of the Companys construction and sale of residential properties. As discussed in Note 2.h, the Company had a 50% ownership interest in E-commerce Latina S.A., through which the Company offered its products via internet on the
altocity.com website. Effective March 1, 2007, the website was deactivated. However, E-commerce Latina S.A. started new business activities (see Note 2.h for details). On January, 2007, the Company acquired the remaining 50% in E-commerce
Latina S.A. (See Note 2.h for details). The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.

The Companys primary operations are located in Argentina. All revenues and long-lived assets are attributable to the Companys country of
domicile.

The Company measures its reportable segments based on net income. Inter-segment transactions are accounted for at current market
prices. The Company evaluates performance of its segments and allocates resources to them based on net income. The Company is not dependent on any single customer.

The accounting policies of the segments are the same as those described in Note 3. The column titled eliminations includes the eliminations of inter-segment activities.



F-37



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|9. | Segment information (continued)
|-- | -------------------------------



As of and for the year ended June 30, 2007:



|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|------------------------------------------------------------ |  | ------------------ | ------------- | --------------------- | --- | ------------ |  | ----------------------- | ----------- | ------------ | --- | --------------------------------------------- |  | --- | ------------------ |  | --- | -------------
|                                                             |  | Leases andservices |               | Credit cardOperations |     | Others       |  | Totalreportablesegments |             | Eliminations |     | Total as of andfor the yearended June 30,2007
|Revenues                                                     |  | Ps.                | 271,248,380   |                       | Ps. | 212,965,332  |  | Ps.                     | 395,507     |              | Ps. | 484,609,219                                   |  | Ps  | (i) (1,378,065)    |  | Ps. | 483,231,154  
|Costs                                                        |  |                    | (90,644,235)  |                       |     | (77,417,344) |  |                         | (1,411,386) |              |     | (169,472,965)                                 |  |     | (i) (ii) 1,166,397 |  |     | (168,306,568)
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Gross profit (loss)                                          |  | Ps.                | 180,604,145   |                       | Ps. | 135,547,988  |  | Ps.                     | (1,015,879) |              | Ps. | 315,136,254                                   |  | Ps. | (211,668)          |  | Ps. | 314,924,586  
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Selling expenses                                             |  |                    | (20,003,558)  |                       |     | (61,966,341) |  |                         | (2,342,096) |              |     | (84,311,995)                                  |  |     |                   |  |     | (84,311,995) 
|Administrative expenses                                      |  |                    | (33,548,025)  |                       |     | (46,234,062) |  |                         | (378,785)   |              |     | (80,160,872)                                  |  |     | (i) 288,000        |  |     | (79,872,872) 
|Net income from retained interest in securitized receivables |  |                    |              |                       |     | 3,253,789    |  |                         |            |              |     | 3,253,789                                     |  |     |                   |  |     | 3,253,789    
|Gain from recognition of inventories at net realizable value |  |                    |              |                       |     |             |  |                         | 545,400     |              |     | 545,400                                       |  |     |                   |  |     | 545,400      
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Operating income (loss)                                      |  | Ps.                | 127,052,562   |                       | Ps. | 30,601,374   |  | Ps.                     | (3,191,360) |              | Ps. | 154,462,576                                   |  | Ps. | 76,332             |  | Ps. | 154,538,908  
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Equity loss from related companies                           |  |                    |              |                       |     |             |  |                         | (678,569)   |              |     | (678,569)                                     |  |     |                   |  |     | (678,569)    
|Amortization of goodwill                                     |  |                    | (4,366,356)   |                       |     |             |  |                         |            |              |     | (4,366,356)                                   |  |     |                   |  |     | (4,366,356)  
|Financial results, net                                       |  |                    | (19,458,713)  |                       |     | 825,313      |  |                         | (756,679)   |              |     | (19,390,079)                                  |  |     | (ii) (76,332)      |  |     | (19.466.411) 
|Other (expense) income, net                                  |  |                    | (6,738,157)   |                       |     | 3,034,256    |  |                         | 356,435     |              |     | (3,347,466)                                   |  |     |                   |  |     | (3,347,466)  
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Income before taxes and minority interest                    |  | Ps.                | 96,489,336    |                       | Ps. | 34,460,943   |  | Ps.                     | (4,270,173) |              | Ps. | 126,680,106                                   |  | Ps. |                   |  | Ps. | 126,680,106  
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Income tax (expense) income                                  |  |                    | (45,243,616)  |                       |     | (15,454,533) |  |                         | 4,445,217   |              |     | (56,252,932)                                  |  |     |                   |  |     | (56,252,932) 
|Minority interest                                            |  |                    | (2,569,327)   |                       |     | (3,801,283)  |  |                         |            |              |     | (6,370,610)                                   |  |     |                   |  |     | (6,370,610)  
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Net income                                                   |  | Ps.                | 48,676,393    |                       | Ps. | 15,205,127   |  | Ps.                     | 175,044     |              | Ps. | 64,056,564                                    |  | Ps. |                   |  | Ps. | 64,056,564   
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Depreciation and amortization                                |  |                    | 71,130,983    |                       |     | 2,841,691    |  |                         | 634,971     |              |     | 74,607,645                                    |  |     |                   |  |     | 74,607,645   
|Acquisitions of fixed assets                                 |  |                    | 88,375,632    |                       |     | 7,380,884    |  |                         |            |              |     | 95,756,516                                    |  |     |                   |  |     | 95,756,516   
|Operating assets                                             |  |                    | 1,289,959,675 |                       |     | 139,656,913  |  |                         | 21,189,223  |              |     | 1,450,805,811                                 |  |     |                   |  |     | 1,450,805,811
|Non operating assets                                         |  |                    | 524,291,349   |                       |     | 118,598,921  |  |                         | 14,469      |              |     | 642,904,739                                   |  |     |                   |  |     | 642,904,739  
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              
|Total Assets                                                 |  | Ps.                | 1,814,251,024 |                       | Ps. | 258,255,834  |  | Ps.                     | 21,203,692  |              | Ps. | 2,093,710,550                                 |  | Ps. |                   |  | Ps. | 2,093,710,550
|                                                             |  |                    |               |                       |     |              |  |                         |             |              |     |                                               |  |     |                    |  |     |              

---

|(i) | Represents inter-segment lease revenues and expenses.
|--- | -----------------------------------------------------

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



F-38



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|9. | Segment information (continued)
|-- | -------------------------------



As of and for the year ended June 30, 2006:



|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|------------------------------------------------------------ |  | ------------------- | ------------- | --------------------- | --- | ------------ |  | ------------------------ | ------------ | ------------ | --- | ---------------------------------------------- |  | --- | ------------------ |  | --- | -------------
|                                                             |  | Leases and services |               | Credit cardOperations |     | Others       |  | Total reportablesegments |              | Eliminations |     | Total as of and forthe year endedJune 30, 2006
|Revenues                                                     |  | Ps.                 | 215,894,651   |                       | Ps. | 122,968,616  |  | Ps.                      | 23,384,250   |              | Ps. | 362,247,517                                    |  | Ps  | (i) (891,604)      |  | Ps. | 361,355,913  
|Costs                                                        |  |                     | (76,634,274)  |                       |     | (45,532,952) |  |                          | (18,497,882) |              |     | (140,665,108)                                  |  |     | (i) (ii) 1,599,732 |  |     | (139,065,376)
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Gross profit                                                 |  | Ps.                 | 139,260,377   |                       | Ps. | 77,435,664   |  | Ps.                      | 4,886,368    |              | Ps. | 221,582,409                                    |  | Ps. | 708,128            |  | Ps. | 222,290,537  
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Selling expenses                                             |  |                     | (15,296,283)  |                       |     | (30,900,024) |  |                          | (709,021)    |              |     | (46,905,328)                                   |  |     |                   |  |     | (46,905,328) 
|Administrative expenses                                      |  |                     | (26,415,282)  |                       |     | (26,349,116) |  |                          | (8,672)      |              |     | (52,773,070)                                   |  |     |                   |  |     | (52,773,070) 
|Net income from retained interest in securitized receivables |  |                     |              |                       |     | 2,625,001    |  |                          |             |              |     | 2,625,001                                      |  |     |                   |  |     | 2,625,001    
|Gain from recognition of inventories at net realizable value |  |                     |              |                       |     |             |  |                          | 3,497,632    |              |     | 3,497,632                                      |  |     |                   |  |     | 3,497,632    
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Operating income                                             |  | Ps.                 | 97,548,812    |                       | Ps. | 22,811,525   |  | Ps.                      | 7,666,307    |              | Ps. | 128,026,644                                    |  | Ps. | 708,128            |  | Ps. | 128,734,772  
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Equity loss from related companies                           |  |                     |              |                       |     |             |  |                          | (678,881)    |              |     | (678,881)                                      |  |     |                   |  |     | (678,881)    
|Amortization of goodwill                                     |  |                     | (4,516,101)   |                       |     | (223,574)    |  |                          |             |              |     | (4,739,675)                                    |  |     |                   |  |     | (4,739,675)  
|Financial results, net                                       |  |                     | (16,477,323)  |                       |     | 106,367      |  |                          | 1,445,218    |              |     | (14,925,738)                                   |  |     | (ii) (708,128)     |  |     | (15,633,866) 
|Other expenses, net                                          |  |                     | (9,634,483)   |                       |     | (124,863)    |  |                          | (2,422)      |              |     | (9,761,768)                                    |  |     |                   |  |     | (9,761,768)  
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Income before taxes and minority interest                    |  | Ps.                 | 66,920,905    |                       | Ps. | 22,569,455   |  | Ps.                      | 8,430,222    |              | Ps. | 97,920,582                                     |  | Ps. |                   |  | Ps. | 97,920,582   
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Income tax expense                                           |  |                     | (34,284,744)  |                       |     | (8,238,421)  |  |                          | (5,933,972)  |              |     | (48,457,137)                                   |  |     |                   |  |     | (48,457,137) 
|Minority interest                                            |  |                     | (1,873,491)   |                       |     | (2,910,922)  |  |                          |             |              |     | (4,784,413)                                    |  |     |                   |  |     | (4,784,413)  
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Net income                                                   |  | Ps.                 | 30,762,670    |                       | Ps. | 11,420,112   |  | Ps.                      | 2,496,250    |              | Ps. | 44,679,032                                     |  | Ps. |                   |  | Ps. | 44,679,032   
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Depreciation and amortization                                |  |                     | 66,692,169    |                       |     | 1,881,710    |  |                          |             |              |     | 68,573,879                                     |  |     |                   |  |     | 68,573,879   
|Acquisitions of fixed assets                                 |  |                     | 26,675,136    |                       |     | 3,586,262    |  |                          |             |              |     | 30,261,398                                     |  |     |                   |  |     | 30,261,398   
|Investment in equity method investee                         |  |                     |              |                       |     |             |  |                          | 129,474      |              |     | 129,474                                        |  |     |                   |  |     | 129,474      
|Operating assets                                             |  |                     | 890,806,541   |                       |     | 74,147,989   |  |                          | 25,838,333   |              |     | 990,792,863                                    |  |     |                   |  |     | 990,792,863  
|Non operating assets                                         |  |                     | 272,448,684   |                       |     | 65,933,904   |  |                          | 29,352,085   |              |     | 367,734,673                                    |  |     | (iii) (3,482,048)  |  |     | 364,252,625  
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              
|Total Assets                                                 |  | Ps.                 | 1,163,255,225 |                       | Ps. | 140,081,893  |  | Ps.                      | 55,190,418   |              | Ps. | 1,358,527,536                                  |  | Ps. | (3,482,048)        |  | Ps. | 1,355,045,488
|                                                             |  |                     |               |                       |     |              |  |                          |              |              |     |                                                |  |     |                    |  |     |              

---

|(i) | Represents inter-segment lease revenues and expenses.
|--- | -----------------------------------------------------

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

|(iii) | Represents other inter-segment receivables eliminated in consolidation.
|----- | -----------------------------------------------------------------------



F-39



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|9. | Segment information (continued)
|-- | -------------------------------



As of and for the year ended June 30, 2005:



|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|------------------------------------------------------------ |  | ------------------ | ------------- | --------------------- | --- | ------------ |  | ----------------------- | ---------- | ------------ | --- | ---------------------------------------------- |  | --- | ------------------ |  | --- | -------------
|                                                             |  | Leases andservices |               | Credit cardOperations |     | Others       |  | Totalreportablesegments |            | Eliminations |     | Total as of andfor the yearended June 30, 2005
|Revenues                                                     |  | Ps.                | 165,824,082   |                       | Ps. | 64,557,977   |  | Ps.                     | 121,430    |              | Ps. | 230,503,489                                    |  | Ps  | (i) (346,168)      |  | Ps. | 230,157,321  
|Costs                                                        |  |                    | (69,203,912)  |                       |     | (24,474,324) |  |                         | (204,586)  |              |     | (93,882,822)                                   |  |     | (i) (ii) 1,372,456 |  |     | (92,510,366) 
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Gross profit (loss)                                          |  | Ps.                | 96,620,170    |                       | Ps. | 40,083,653   |  | Ps.                     | (83,156)   |              | Ps. | 136,620,667                                    |  | Ps. | 1,026,288          |  | Ps. | 137,646,955  
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Selling expenses                                             |  |                    | (11,027,272)  |                       |     | (13,496,245) |  |                         | (250,839)  |              |     | (24,774,356)                                   |  |     |                   |  |     | (24,774,356) 
|Administrative expenses                                      |  |                    | (16,948,434)  |                       |     | (14,890,490) |  |                         | (36,376)   |              |     | (31,875,300)                                   |  |     |                   |  |     | (31,875,300) 
|Net income from retained interest in securitized receivables |  |                    |              |                       |     | 423,508      |  |                         |           |              |     | 423,508                                        |  |     |                   |  |     | 423,508      
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Operating income (loss)                                      |  | Ps.                | 68,644,464    |                       | Ps. | 12,120,426   |  | Ps.                     | (370,371)  |              | Ps. | 80,394,519                                     |  | Ps. | 1,026,288          |  | Ps. | 81,420,807   
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Equity loss from related companies                           |  |                    | (79,935)      |                       |     |             |  |                         | (626,684)  |              |     | (706,619)                                      |  |     |                   |  |     | (706,619)    
|Amortization of goodwill                                     |  |                    | (4,584,543)   |                       |     | (242,255)    |  |                         |           |              |     | (4,826,798)                                    |  |     |                   |  |     | (4,826,798)  
|Financial results, net                                       |  |                    | 1,525,233     |                       |     | 96,316       |  |                         | 1,815,939  |              |     | 3,437,488                                      |  |     | (ii) (1,026,288)   |  |     | 2,411,200    
|Other expenses (income), net                                 |  |                    | (7,383,867)   |                       |     | 55,526       |  |                         | (53,619)   |              |     | (7,381,960)                                    |  |     |                   |  |     | (7,381,960)  
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Income before taxes and minority interest                    |  | Ps.                | 58,121,352    |                       | Ps. | 12,030,013   |  | Ps.                     | 765,265    |              | Ps. | 70,916,630                                     |  | Ps. |                   |  | Ps. | 70,916,630   
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Income tax expense                                           |  |                    | (28,874,276)  |                       |     | (4,864,295)  |  |                         | 122,697    |              |     | (33,615,874)                                   |  |     |                   |  |     | (33,615,874) 
|Minority interest                                            |  |                    | (2,563,762)   |                       |     | (1,481,594)  |  |                         |           |              |     | (4,045,356)                                    |  |     |                   |  |     | (4,045,356)  
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Net income                                                   |  | Ps.                | 26,683,314    |                       | Ps. | 5,684,124    |  | Ps.                     | 887,962    |              | Ps. | 33,255,400                                     |  | Ps. |                   |  | Ps. | 33,255,400   
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Depreciation and amortization                                |  |                    | 62,260,039    |                       |     | 1,173,502    |  |                         |           |              |     | 63,433,541                                     |  |     |                   |  |     | 63,433,541   
|Acquisitions of fixed assets                                 |  |                    | 49,070,871    |                       |     | 2,462,705    |  |                         |           |              |     | 51,533,576                                     |  |     |                   |  |     | 51,533,576   
|Investment in equity method investee                         |  |                    |              |                       |     |             |  |                         | 808,355    |              |     | 808,355                                        |  |     |                   |  |     | 808,355      
|Operating assets                                             |  |                    | 959,338,889   |                       |     | 31,537,807   |  |                         | 51,255,612 |              |     | 1,042,132,308                                  |  |     |                   |  |     | 1,042,132,308
|Non operating assets                                         |  |                    | 167,880,436   |                       |     | 42,889,870   |  |                         | 1,382,121  |              |     | 212,152,427                                    |  |     | (iii) (6,389,917)  |  |     | 205,762,510  
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              
|Total Assets                                                 |  | Ps.                | 1,127,219,325 |                       | Ps. | 74,427,677   |  | Ps.                     | 52,637,733 |              | Ps. | 1,254,284,735                                  |  | Ps. | (6,389,917)        |  | Ps. | 1,247,894,818
|                                                             |  |                    |               |                       |     |              |  |                         |            |              |     |                                                |  |     |                    |  |     |              

---

|(i) | Represents inter-segment lease revenues and expenses.
|--- | -----------------------------------------------------

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

|(iii) | Represents other inter-segment receivables eliminated in consolidation
|----- | ----------------------------------------------------------------------



F-40



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|10. | Additional information on assets and liabilities
|--- | ------------------------------------------------

The aging of main assets and liabilities as of June 30, 2007 is as follows:



|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|------------------------------------------- |  | --------------------------------- | ----------- | ----------------------------------- | --- | ----------------------------- |  | ------------------------------- | ---------- | ------------------------------ | --- | ---------- | ----------- | --- | ----------- | ------------- |  | ----- | ----------- | - |  | --- | ------------- |  | --- | -------------
|                                            |  | To mature in3 months              |             | To maturebetween 4 and6 months      |     | To maturebetween 7and 9months |  | To maturebetween 10and 12months |            | To mature ingreater than 1year |     |            | Past due    |     |             | No fixed term |  | Total
|Assets                                      |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|Other Investments (1)                       |  | Ps.                               | 460,831,464 |                                     | Ps. | 5,961,625                     |  | Ps.                             | 3,721,380  |                                | Ps. | 8,701,881  |             | Ps. | 55,682,995  |               |  | Ps.   |            |   |  | Ps. | 6,192,250     |  | Ps. | 541,091,595  
|Accounts receivable, net                    |  |                                   | 60,103,116  |                                     |     | 16,151,890                    |  |                                 | 16,865,076 |                                |     | 12,081,214 |             |     | 41,967,948  |               |  |       | 45,757,096  |   |  |     | 140,344       |  |     | 193,066,684  
|Other receivables and prepaid expenses, net |  |                                   | 30,217,332  |                                     |     | 10,286,006                    |  |                                 | 3,070,866  |                                |     | 5,345,091  |             |     | 20,771,865  |               |  |       | 2,621,530   |   |  |     | 12,033,974    |  |     | 84,346,664   
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|                                            |  | Ps.                               | 551,151,912 |                                     | Ps. | 32,399,521                    |  | Ps.                             | 23,657,322 |                                | Ps. | 26,128,186 |             | Ps. | 118,422,808 |               |  | Ps.   | 48,378,626  |   |  | Ps. | 18,366,568    |  | Ps. | 818,504,943  
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|Liabilities                                 |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|Trade accounts payable                      |  | Ps.                               | 162,592,732 |                                     | Ps. | 11,662,067                    |  | Ps.                             | 1,685,945  |                                | Ps. | 2,226,020  |             | Ps. | 20,804      |               |  | Ps.   | 1,322,641   |   |  | Ps. |              |  | Ps. | 179,510,209  
|Customer advances                           |  |                                   | 21,262,774  |                                     |     | 10,759,873                    |  |                                 | 10,756,265 |                                |     | 10,755,779 |             |     | 65,725,449  |               |  |       | 4,956,896   |   |  |     | 56,450        |  |     | 124,273,486  
|Short-term and long-term debt               |  |                                   | 52,113,877  |                                     |     | 14,815,523                    |  |                                 | 1,635,100  |                                |     | 8,554,776  |             |     | 678,751,885 |               |  |       |            |   |  |     | 90,778        |  |     | 755,961,939  
|Related parties                             |  |                                   | 6,615,700   |                                     |     | 13,950                        |  |                                 | 13,950     |                                |     | 13,950     |             |     |            |               |  |       |            |   |  |     |              |  |     | 6,657,550    
|Other liabilities (2)                       |  |                                   | 36,294,554  |                                     |     | 36,534,357                    |  |                                 | 3,258,398  |                                |     | 4,615,924  |             |     | 11,904,545  |               |  |       |            |   |  |     | 39,364,499    |  |     | 131,972,277  
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|                                            |  | Ps.                               | 278,879,637 |                                     | Ps. | 73,785,770                    |  | Ps.                             | 17,349,658 |                                | Ps. | 26,166,449 |             | Ps. | 756,402,683 |               |  | Ps.   | 6,279,537   |   |  | Ps. | 39,511,727    |  | Ps. | 1,198,375,461
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|                                            |  |                                   |             |                                     |    
|                                            |  | Accruing interest at a fixed rate |             | Accruing interest at avariable rate |     | Not accruing interest         |  |                                 |            |                                |    
|                                            |  | Current                           |             | Non-Current                         |     | Current                       |  | Non-Current                     |            | Current                        |     |            | Non-Current |     |             | Total         |  |      
|Assets                                      |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|Investments (1)                             |  | Ps.                               | 461,924,450 |                                     | Ps. |                              |  | Ps.                             | 23,484,150 |                                | Ps. | 55,682,995 |             | Ps. |            |               |  | Ps.   |            |   |  | Ps. | 541,091,595   |  |     |              
|Accounts receivable, net                    |  |                                   |            |                                     |     |                              |  |                                 | 6,475,761  |                                |     | 413,658    |             |     | 144,622,975 |               |  |       | 41,554,290  |   |  |     | 193,066,684   |  |     |              
|Other receivables and prepaid expenses, net |  |                                   | 780,998     |                                     |     |                              |  |                                 |           |                                |     |           |             |     | 51,434,743  |               |  |       | 32,130,923  |   |  |     | 84,346,664    |  |     |              
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|                                            |  | Ps.                               | 462,705,448 |                                     | Ps. |                              |  | Ps.                             | 29,959,911 |                                | Ps. | 56,096,653 |             | Ps. | 196,057,718 |               |  | Ps.   | 73,685,213  |   |  | Ps. | 818,504,943   |  |     |              
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|Liabilities                                 |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|Trade accounts payable                      |  | Ps.                               |            |                                     | Ps. |                              |  | Ps.                             | 1,009,975  |                                | Ps. |           |             | Ps. | 178,479,430 |               |  | Ps.   | 20,804      |   |  | Ps. | 179,510,209   |  |     |              
|Customer advances                           |  |                                   |            |                                     |     |                              |  |                                 | 1,220,000  |                                |     | 3,685,684  |             |     | 57,328,037  |               |  |       | 62,039,765  |   |  |     | 124,273,486   |  |     |              
|Short-term and long-term debt               |  |                                   | 65,754,496  |                                     |     | 677,389,379                   |  |                                 | 12,472,057 |                                |     | 6,186,000  |             |     | (1,016,499  | )             |  |       | (4,823,494  | ) |  |     | 755,961,939   |  |     |              
|Related parties                             |  |                                   | 947,562     |                                     |     |                              |  |                                 |           |                                |     |           |             |     | 5,709,988   |               |  |       |            |   |  |     | 6,657,550     |  |     |              
|Other liabilities (2)                       |  |                                   | 181,761     |                                     |     | 1,483,142                     |  |                                 |           |                                |     |           |             |     | 81,254,873  |               |  |       | 49,052,501  |   |  |     | 131,972,277   |  |     |              
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              
|                                            |  | Ps.                               | 66,883,819  |                                     | Ps. | 678,872,521                   |  | Ps.                             | 14,702,032 |                                | Ps. | 9,871,684  |             | Ps. | 321,755,829 |               |  | Ps.   | 106,289,576 |   |  | Ps. | 1,198,375,461 |  |     |              
|                                            |  |                                   |             |                                     |     |                               |  |                                 |            |                                |     |            |             |     |             |               |  |       |             |   |  |     |               |  |     |              

---

|(1) | Represents mutual funds, time deposits, government bonds, mortgage bonds, trust debt securities, retained interest in transferred credit card receivables and others.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents salaries and social security payable, taxes payable, dividends payable, other liabilities and provisions.
|--- | --------------------------------------------------------------------------------------------------------------------



|11. | Tarshop credit card receivables securitization
|--- | ----------------------------------------------

The
Company has ongoing revolving year securitization programs through which Tarshop, a majority-owned subsidiary of the Company, transfers a portion of its customer credit card receivable balances to master trusts that issue certificates to public and
private investors.

Under the securitization programs, the trusts may issue two types of certificates representing undivided interests in
the Trust  Títulos de Deuda Fiduciaria (TDF) and Certificados de Participación (CP),which represent debt, and equity certificates, respectively. Interest and principal services are
paid periodically to the TDF holders throughout the life of the security. CPs are subordinated securities which entitle the CP holders to share pro rata in the cash flows of the securitized credit card receivables, after principal and interest on
the TDFs and other fees and expenses have been paid. During the revolving period no payments are made to TDF and CP holders. Principal collections of the underlying financial assets are used by the Trust to acquire additional credit card receivables
throughout the revolving period. Once the revolving period ends, a period of liquidation occurs during which: (i) no further assets are purchased and (ii) all cash collections are used to fulfill the TDF service requirements and
(iii) the remaining proceeds are used to fulfill the CPs service requirements.

At the time of the securitization, Tarshop transfers
credit card receivables to the trust in exchange for cash and retained interests in the trust (CPs). Part of the proceeds is retained by the trustee and maintained as a cash reserve to serve as collateral for the payment of amounts due on the TDFs.
Cash reserves flow back to Tarshop on a monthly basis according to a schedule until all TDFs are fully paid. Cash reserves are stated at cost and are classified as guarantee deposits within the caption Other receivables and prepaid
expenses in the accompanying consolidated balance sheets. CPs are carried at



F-41



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|11. | Tarshop credit card receivables securitization (continued)
|--- | ----------------------------------------------------------



their equity value based on financial statements issued by the trusts and classified as investments in the accompanying consolidated balance sheets. Gain or
losses on CPs are reported as a component of net income in credit card trust. Tarshop recognizes a result on the sale of receivables when the carrying value of transferred credit card receivables differs from the amount of cash and CPs received.
Results recognized on the sale of receivables are reported as a component of Net income from retained interest in securitized receivables in the accompanying statements of income. Expenses related to the securitization of receivables are
expensed as incurred.

At June 30, 2007 the Company has twenty securitization programs outstanding, pursuant to which Tarshop has sold
an aggregate amount of Ps. 751.7 million of its customer credit card receivable balances to Trusts in exchange for Ps. 642.0 million in cash proceeds, Ps. 43.3 million variable rate interest TDFs, and Ps. 66.4 million nominal
value subordinated CPs. Under the securitization programs, the Trusts issued Ps. 27.5 million 10.25% fixed-rate interest TDFs, Ps. 18.2 million 11.50% fixed-rate interest TDFs, Ps. 60.5 million 12.00% fixed-rate interest TDFs, Ps.
253.4 million 12.50% fixed-rate interest TDFs and Ps. 282.4 million 13.00% fixed-rate interest TDFs. Except for certain TDFs acquired by Tarshop as mentioned above, the TDFs were sold to other investors through a public offering in
Argentina. As mentioned above, as a credit protection for investors, the trusts has established cash reserves for losses amounting to Ps. 11.9 million.



|12. | Derivative financial instruments
|--- | --------------------------------

The Company did
not have any derivative activity for the years ended June 30, 2007 and 2006. In March 2001, the Company entered into an interest rate swap agreement, with a notional amount of Ps. 85 million for a four-year term, effectively converting a
portion of the outstanding peso-denominated fixed-rate debt to a variable rate. Following the Argentine crisis in 2001, the swap agreement was revised for a notional amount of US$ 69.1 million. The Company deposited US$ 50 million as with the
counterparty as collateral for the agreement. The Company settled the swap agreement during the year ended June 30, 2005 recognizing a net gain of Ps. 5.2 million.



F-42



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|13. | Earnings per share
|--- | ------------------

The following tables set forth
the computation of basic and diluted net income per share under Argentine GAAP for all periods presented:



|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|-------------------------------------------------------------------- |  | ------------------- | ------------- | - | ---- | --- | ------------- | ---- |  | --- | ------------- | -
|                                                                     |  | Year ended June 30, |              
|                                                                     |  | 2007                |               |   | 2006 |     |               | 2005 | 
|Numerator:                                                           |  |                     |               |   |      |     |               |      |  |     |               |  
|Net income available to common shareholders                          |  | Ps.                 | 64,056,564    |   |      | Ps. | 44,679,032    |      |  | Ps. | 33,255,400    |  
|Plus (less): income (loss) impact of assumed conversions:            |  |                     |               |   |      |     |               |      |  |     |               |  
|Interest expense on Convertible Notes                                |  |                     | 14,586,496    |   |      |     | 14,360,936    |      |  |     | 12,217,475    |  
|Foreign currency exchange loss (gain) on convertible debt            |  |                     | 330,596       |   |      |     | 9,408,565     |      |  |     | (2,999,252    | )
|Income tax effects                                                   |  |                     | (5,220,982    | ) |      |     | (8,319,325    | )    |  |     | (3,226,378    | )
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Net income available to common shareholders plus assumed conversions |  | Ps.                 | 73,752,674    |   |      | Ps. | 60,129,208    |      |  | Ps. | 39,247,245    |  
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|                                                                     | 
|                                                                     |  | Year ended June 30, |              
|                                                                     |  | 2007                |               |   | 2006 |     |               | 2005 | 
|Denominator:                                                         |  |                     |               |   |      |     |               |      |  |     |               |  
|Weighted-average number of shares outstanding                        |  | Ps.                 | 782,056,978   |   |      | Ps. | 780,432,065   |      |  | Ps. | 777,017,782   |  
|Plus: incremental shares of assumed conversions:                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Convertible Notes                                                    |  |                     | 1,457,454,043 |   |      |     | 1,363,565,610 |      |  |     | 1,365,009,110 |  
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Adjusted weighted-average number of shares                           |  | Ps.                 | 2,239,511,021 |   |      | Ps. | 2,143,997,675 |      |  | Ps. | 2,142,026,892 |  
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Basic and diluted EPS:                                               |  |                     |               |   |      |     |               |      |  |     |               |  
|Basic net income per common share                                    |  | Ps.                 | 0.08          |   |      | Ps. | 0.06          |      |  | Ps. | 0.04          |  
|Diluted net income per common share                                  |  | Ps.                 | 0.03          |   |      | Ps. | 0.03          |      |  | Ps. | 0.02          |  



F-43



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|14. | Income taxes
|--- | ------------

The Company accounts for income taxes
using the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax based assets and liabilities and are measured using the enacted tax rates.

Income tax expense for the years ended June 30, 2007, 2006 and 2005 consisted of the following:



|                                      |  |      |            |   |      |     |            |  |     |            |  
|------------------------------------- |  | ---- | ---------- | - | ---- | --- | ---------- |  | --- | ---------- | -
|                                      |  | 2007 |            |   | 2006 |     | 2005       | 
|Current income tax expense            |  | Ps.  | 60,845,043 |   |      | Ps. | 41,564,638 |  | Ps. | 34,678,072 |  
|Deferred income tax expense (benefit) |  |      | (4,592,111 | ) |      |     | 6,892,499  |  |     | (1,062,198 | )
|                                      |  |      |            |   |      |     |            |  |     |            |  
|Income tax expense                    |  | Ps.  | 56,252,932 |   |      | Ps. | 48,457,137 |  | Ps. | 33,615,874 |  
|                                      |  |      |            |   |      |     |            |  |     |            |  

The tax effects of temporary differences that give rise to the Companys deferred tax assets
and liabilities at June 30, 2007 and 2006 are presented below:



|                                       |  |                             |            |   |                          |     |             |                             |  |     |             |  
|-------------------------------------- |  | --------------------------- | ---------- | - | ------------------------ | --- | ----------- | --------------------------- |  | --- | ----------- | -
|                                       |  | Balances as ofJune 30, 2006 |            |   | Changesfor the year (ii) |     |             | Balances as ofJune 30, 2007 | 
|Deferred tax assets (liabilities):     |  |                             |            |   |                          |     |             |                             |  |     |             |  
|Accounts receivable                    |  | Ps.                         | 5,937,648  |   |                          | Ps. | 3,820,705   |                             |  | Ps. | 9,758,353   |  
|Other receivables and prepaid expenses |  |                             | (564,231   | ) |                          |     | 1,687,949   |                             |  |     | 1,123,718   |  
|Inventory                              |  |                             | (5,752,440 | ) |                          |     | 3,552,189   |                             |  |     | (2,200,251  | )
|Undeveloped parcels of land            |  |                             | (431,961   | ) |                          |     | 431,961     |                             |  |     |            |  
|Investments                            |  |                             | (93,740    | ) |                          |     | (3,001,837  | )                           |  |     | (3,095,577  | )
|Fixed assets                           |  |                             | (9,568,455 | ) |                          |     | (16,476,803 | )                           |  |     | (26,045,258 | )
|Intangible assets                      |  |                             | (583,069   | ) |                          |     | 436,415     |                             |  |     | (146,654    | )
|Salaries and social security payable   |  |                             | 100,905    |   |                          |     | 117,025     |                             |  |     | 217,930     |  
|Short-term and long-term debt          |  |                             |           |   |                          |     | (2,043,997  | )                           |  |     | (2,043,997  | )
|Trade accounts payable                 |  |                             | 400,092    |   |                          |     | (260,092    | )                           |  |     | 140,000     |  
|Other liabilities                      |  |                             | 1,220,941  |   |                          |     | 1,117,531   |                             |  |     | 2,338,472   |  
|Provisions                             |  |                             | 1,332,646  |   |                          |     | 771,998     |                             |  |     | 2,104,644   |  
|Tax loss carryforwards (i)             |  |                             | 2,402,208  |   |                          |     | 1,697,671   |                             |  |     | 4,099,879   |  
|Valuation allowance                    |  |                             | (173,097   | ) |                          |     | (1,525,471  | )                           |  |     | (1,698,568  | )
|                                       |  |                             |            |   |                          |     |             |                             |  |     |             |  
|Net deferred income tax liability      |  | Ps.                         | (5,772,553 | ) |                          | Ps. | (9,674,756  | )                           |  | Ps. | (15,447,309 | )
|                                       |  |                             |            |   |                          |     |             |                             |  |     |             |  

---

|(i) | As of June 30, 2007 the Company and its subsidiaries had accumulated tax loss carryforwards of approximately Ps. 11.7 million, which expire at various dates through 2013.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | Includes the effect of deferred taxes of the acquisition of Empalme and the PAMSA transaction, which do not impact earnings of the year.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------

Income tax expense for the years ended June 30, 2007, 2006 and 2005 differed from the amounts computed by applying the Companys statutory
income tax rate to pre-tax income as a result of the following:



|                                                          |  |      |            |   |      |     |            |      |  |     |            |  
|--------------------------------------------------------- |  | ---- | ---------- | - | ---- | --- | ---------- | ---- |  | --- | ---------- | -
|                                                          |  | 2007 |            |   | 2006 |     |            | 2005 | 
|Income tax expense at statutory tax rate on pretax income |  | Ps.  | 44,338,036 |   |      | Ps. | 34,272,204 |      |  | Ps. | 24,820,821 |  
|Non-deductible expenses                                   |  |      | 5,438,821  |   |      |     | 2,192,646  |      |  |     | 2,310,072  |  
|Loss on equity investees                                  |  |      | 236,305    |   |      |     | 237,608    |      |  |     | 247,317    |  
|Change in valuation allowance                             |  |      | (3,566,244 | ) |      |     | (1,390,120 | )    |  |     | (3,221,633 | )
|Inflation adjustment                                      |  |      | 9,092,978  |   |      |     | 12,338,654 |      |  |     | 8,002,704  |  
|Others, net                                               |  |      | 713,036    |   |      |     | 806,145    |      |  |     | 1,456,593  |  
|                                                          |  |      |            |   |      |     |            |      |  |     |            |  
|Income tax expense                                        |  | Ps.  | 56,252,932 |   |      | Ps. | 48,457,137 |      |  | Ps. | 33,615,874 |  
|                                                          |  |      |            |   |      |     |            |      |  |     |            |  



F-44



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|15. | Issuance of Convertible and Non-Convertible Notes
|--- | -------------------------------------------------

In May 2007, the Company issued an aggregate amount of US$ 170.0 million of non-convertible notes (the Non-Convertible Notes ) under the Global Program for up to US$ 200 million authorized by the CNV on April 19, 2007. The
Non-Convertible Notes were issued at par in two series. Out of the total amount, US$ 120.0 million were issued as Series I of Non-Convertible Notes due May 11, 2017 and Ps. 154.0 million (equivalent to US$ 50.0 million) were issued as
Series II of Non-Convertible Notes due June 11, 2012. Series I bear interest at a fixed rate of 7.875% per annum and Series II bear interest at a fixed rate of 11.0% per annum. Series I of Non-Convertible Notes pay interest in cash
semi-annually in arrears on May 11 and November 11 of each year, beginning on November 11, 2007. Series II of Non-Convertible Notes pay interest in cash semi-annually in arrears on June 11 and December 11 of each year,
beginning on December 11, 2007. Principal on the Series I Non-Convertible Notes is fully paid at maturity while principal on the Series II Non-Convertible Notes is paid semi-annually in seven equal and consecutive installments beginning on
June 11, 2009.

On August 20, 2002, the Company issued an aggregate amount of US$ 50 million of uncollateralized convertible
notes (the Convertible Notes) in exchange for cash and the settlement of certain liabilities. The issuance was approved by the meeting of shareholders on December 4, 2001 and subsequently by the CNV on March 15, 2002. The
issuance was authorized for listing on the Buenos Aires Stock Exchange on July 8, 2002. Proceeds from the issuance were used to repay certain short-term debt aggregating Ps. 27.3 million and the redemption of previously issued Senior
Notes for a principal amount of Ps. 52.8 million. The Convertible Notes accrue interest at a fixed annual interest rate of 10%, are convertible at any time at the option of the holder into common shares of Ps. 0.10 par value per share and
originally matured on July 19, 2006. A meeting of noteholders resolved to extend the maturity date of the Convertible Notes through July 19, 2014 although the remaining terms and conditions were left unchanged. Argentine GAAP requires that
an exchange of debt instruments with substantially different terms be considered a debt extinguishment and that the old instrument be derecognized. Argentine GAAP clarifies that from a debtors perspective, an exchange of debt instruments
between, or a modification of a debt instrument by, a debtor and a creditor shall be deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt
instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The new debt instrument should be initially recorded at fair value and that amount should be used to determine
the debt extinguishment gain or loss to be recognized. Fair value should be determined by the present value of the future cash flows to be paid under the terms of the new debt instrument discounted at a rate commensurate with the risks of the debt
instrument and time value of money. If it is determined that the original and new debt instruments are not substantially different, then a new effective interest rate is to be determined based on the carrying amount of the original debt instrument
and the revised cash flows. Based on the analysis performed, the Company concluded that the instruments were not substantially different and accordingly, the old instrument was not derecognized. The outstanding balance was classified as non-current
in these consolidated financial statements.

During fiscal years 2007, 2006 and 2005, holders of approximately US$ 0.01 million, US$
0.05 million and US$ 1.7 million Convertible Notes exercised their conversion rights and, as a result, the Company issued 101,580, 1,539,000 and 52,741,380 common shares, respectively. At June 30, 2007 the outstanding balance of
Convertible Notes amounted to US$ 47.2 million.



F-45



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|16. | Damages in Alto Avellaneda
|--- | --------------------------

On March 5, 2006,
one of the shopping centers of the Company, Alto Avellaneda Shopping Mall was affected by a fire caused by an electrical failure in one of the stores. The fire produced no injuries to persons, or casualties, but caused significant damages to the
property. The total area damaged by the fire represented 36 stores or 15.7% of the square meters built. The area was reopened for normal business between June and August 2006. The Company carries insurance coverage which covers fire damage. Days
after June 30, 2007 part of the liquidation process related with the reconstruction work has been finished. The final indemnification amount obtained for this item amounts to Ps. 6.8 million. As of the issuance date of the financial statements,
the final liquidation process is pending because of other items in the policies mentioned above, and the amount of Ps. 0.3 million has been collected as early payment.



|17. | Financing and Occupation Agreement with Nai Internacional II, Inc.
|--- | ------------------------------------------------------------------

As discussed in Note 2.h, the Company acquired Empalme in December, 2006. Prior to the Companys acquisition, back in August 1996, Empalme had entered into a Financing and Occupancy Agreement with NAI
INTERNACIONAL II, INC. (NAI) (the NAI Agreement) pursuant to which NAI financed the construction of a movie theatre complex and a portion of parking facilities in the Cordoba Shopping for up to US$ 8.2 million. The financing
accrued interest at LIBOR plus 1.5%. As part of the NAI Agreement, NAI had the right to occupy a portion of the building for a period of 10 years as from the commencement of NAI operations in October 1997, renewable for four additional periods of 5
years each. Interest payments under the NAI Agreement were to be offset against the lease payments to be received from NAI. The NAI Agreement originally established that in the event that any outstanding loan balance remained unpaid after the total
lease period (together with renewals and extensions), the NAI Agreement would be further extended for the lower of a 10-year period or the period necessary to settle the loan. Any unpaid outstanding balance after that extension was to be forgiven by
NAI. In July 2002, following the Argentine crisis, the NAI Agreement was amended to, among other matters, (i) pesify the payments, (ii) establish a CER-adjustment indexing clause, and (iii) impose restrictions to Empalme and/or third
parties on the use of the space occupied by NAI.



|18. | Subsequent events
|--- | -----------------

Call option exercised

During August 2007, the Company exercised a call option for the acquisition of the 75% of the capital stock and votes of a company primarily dedicated to
the development of a cultural and recreational property in the Palermo neighborhood in the City of Buenos Aires.

Said option is subject to
the accomplishment of certain basic conditions as the approvement of the project by the respective authorities and the acquisition transaction by the Argentine Antitrust Authority, among others, which are pending as of the date of issuance of these
financial statements.

The call option price was set in the amount of US$ 0.6 million, which was fully offset as of the date of
issuance of these financial statements. Should the conditions above-mentioned timely and properly complied with, the Company will make a total investment of US$ 24.4 million to be performed not before than year 2008.

Neuquén Project

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

Patio Olmos Building

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



F-46



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|18. | Subsequent events (continued)
|--- | -----------------------------



Torres Rosario, City of Rosario

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

On October 11, 2007, the Company subscribed with Condominios del Alto S.A. a barter agreement whereby Condominios del Alto S.A. proposed to acquire
plot G, located in the City of Rosario, Province of Santa Fe, Argentina, belonging to the Company, for the construction at its own expense and under its own responsibility of a housing building. As consideration for the barter over the plot,
Condominios de Alto S.A. agreed to deliver: (i) fifteen (15) housing units, with an own constructed surface of 1,504.45 square meters, which represent and will further represent jointly 14.85% of the own covered square meters of housing
units of the real estate that Condominios del Alto S.A. will build in Plot G, and (ii) fifteen (15) garages, which represent and will further represent jointly 15% of the own covered square meters of garage units in the same building.

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

Finally, the Company granted to Condominios del Alto S.A. an option of acquisition through barter on Plot 2h, close to the transferred plot.

Meeting of Shareholders held on October 25, 2007

On October 25, 2007 the Annual Meeting of Shareholders by majority resolved the following items:



| |  | Approval of the financial statements for the fiscal year ended June 30, 2007.
|- |  | -----------------------------------------------------------------------------



| |  | Appropriation of a cash dividend of Ps. 55,721,393 prior to deducting 5% from the results for legal reserve and the remnant to be allocated to the Reserve for
New Projects account.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Fees payable to the Board of Directors for Ps. 8,200,000 for the year ended June 30, 2007.
|- |  | ------------------------------------------------------------------------------------------



| |  | The reform of sections 12 (adjust the regulation referred to guarantee to Directors) and 15 (make possible that the Board of Directors meeting be held at a
distance).
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-47



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP
|--- | ----------------------------------------------

The Companys consolidated financial statements have been prepared in accordance with Argentine GAAP and the regulations of the CNV, which differ in certain significant respects from US GAAP. Such differences involve methods of
measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by US GAAP and Regulation S-X of the SEC.

As discussed in Note 2.d., in order to comply with regulations of the CNV, the Company discontinued inflation accounting as from February 28, 2003. The application of these CNV regulations represented a departure
from Argentine GAAP. However, such departure has not had a material effect on the accompanying consolidated financial statements.



| | I. | Difference in measurement methods
| | -- | ---------------------------------

The
following reconciliation to US GAAP does not include the reversal of the adjustments to the financial statements for the effects of inflation through February 28, 2003, because the application of this standard represents a comprehensive
measure of the effects of price level changes in the Argentine economy.

The principal differences, other than inflation accounting,
between Argentine GAAP and US GAAP are described below, together with an explanation, where appropriate, of the method used in the determination of the necessary adjustments.



|                                                                                               |  |                     |            |   |      |     |            |      |  |     |             |  
|---------------------------------------------------------------------------------------------- |  | ------------------- | ---------- | - | ---- | --- | ---------- | ---- |  | --- | ----------- | -
|                                                                                               |  | Year ended June 30, |           
|                                                                                               |  | 2007                |            |   | 2006 |     |            | 2005 | 
|Reconciliation of net income:                                                                  |  |                     |            |   |      |     |            |      |  |     |             |  
|Net income as reported under Argentine GAAP                                                    |  | Ps.                 | 64,056,564 |   |      | Ps. | 44,679,032 |      |  | Ps. | 33,255,400  |  
|US GAAP adjustments:                                                                           |  |                     |            |   |      |     |            |      |  |     |             |  
|- Pre-operating expenses                                                                       |  |                     |            |   |      |     |            |      |  |     |             |  
|Original value (Note 19.I.b)                                                                   |  |                     |           |   |      |     | 93,649     |      |  |     | (4,281,731  | )
|Amortization (Note 19.I.b)                                                                     |  |                     | 1,454,578  |   |      |     | 1,018,954  |      |  |     | 880,289     |  
|- Software developed or obtained for internal use (Note 19.I.c)                                |  |                     | 5,477      |   |      |     | (100,831   | )    |  |     | (48,282     | )
|- Purchase accounting amortization and depreciation expenses (Note 19.I.e)                     |  |                     | 4,401,825  |   |      |     | 4,269,276  |      |  |     | 4,548,659   |  
|- Effect of US GAAP adjustments on equity investees (Note 19.I.f)                              |  |                     |           |   |      |     |           |      |  |     | 17,485      |  
|- Accounting for increasing rate debt (Note 19.I.g)                                            |  |                     | 203,482    |   |      |     | (9,510     | )    |  |     | (193,972    | )
|- Reversal of the result from recognition of inventories at net realizable value (Note 19.I.h) |  |                     | 987,112    |   |      |     | (3,497,632 | )    |  |     |            |  
|- Securitization accounting (Note 19.I.j)                                                      |  |                     | 581,731    |   |      |     | (8,338,782 | )    |  |     | 2,154,801   |  
|- Available-for-sale securities (Note 19.I.k)                                                  |  |                     | (3,661,442 | ) |      |     | (48,034    | )    |  |     | (85,060     | )
|- Debtors accounting for a modification of convertible debt instruments (Note 19.I.l)         |  |                     | (354,765   | ) |      |     | (46,056    | )    |  |     |            |  
|- Amortization of fees related to the Senior Notes (Note 19.I.m)                               |  |                     |           |   |      |     |           |      |  |     | 401,670     |  
|- Present-value accounting (Note 19.I.n)                                                       |  |                     | 246,290    |   |      |     | 5,656      |      |  |     | (602,796    | )
|- Reversal of previously recognized impairment losses (Note 19.I.o)                            |  |                     | 2,683,426  |   |      |     | (5,157,096 | )    |  |     | (10,424,685 | )
|- Deferred revenues  insurance & fees (Note 19.I.p)                                           |  |                     | (5,330,042 | ) |      |     | (8,219,285 | )    |  |     |            |  
|- Reversal of capitalized exchange differences (Note 19.I.s)                                   |  |                     | (431,616   | ) |      |     |           |      |  |     |            |  
|- Revenue recognition  deferred commissions (Note 19.I.u)                                     |  |                     | (2,131,670 | ) |      |     |           |      |  |     |            |  
|- Revenue recognition  scheduled rent increases (Note 19.I.u)                                 |  |                     | 2,765,979  |   |      |     |           |      |  |     |            |  
|- Deferred income tax (Note 19.I.q)                                                            |  |                     | 9,394,102  |   |      |     | 20,221,740 |      |  |     | 11,121,422  |  
|- Minority interest (Note 19.I.r)                                                              |  |                     | 871,027    |   |      |     | 2,136,735  |      |  |     | (574,231    | )
|                                                                                               |  |                     |            |   |      |     |            |      |  |     |             |  
|- Net income under US GAAP                                                                     |  | Ps.                 | 75,742,058 |   |      | Ps. | 47,007,816 |      |  | Ps. | 36,168,969  |  
|                                                                                               |  |                     |            |   |      |     |            |      |  |     |             |  
|Earnings per share under US GAAP (Note 19.II.i):                                               |  |                     |            |   |      |     |            |      |  |     |             |  
|Basic net income per common share                                                              |  | Ps.                 | 0.10       |   |      | Ps. | 0.06       |      |  | Ps. | 0.05        |  
|Diluted net income per common share                                                            |  | Ps.                 | 0.04       |   |      | Ps. | 0.03       |      |  | Ps. | 0.02        |  



F-48



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



|                                                                                               |  |                     |              |   |      |     |              |  
|---------------------------------------------------------------------------------------------- |  | ------------------- | ------------ | - | ---- | --- | ------------ | -
|                                                                                               |  | As of June 30,      |             
|                                                                                               |  | 2007                |              |   | 2006 |    
|Reconciliation of shareholders equity:                                                        |  |                     |              |   |      |     |              |  
|Total shareholders equity under Argentine GAAP                                                |  | Ps.                 | 823,907,227  |   |      | Ps. | 806,840,505  |  
|US GAAP adjustments:                                                                           |  |                     |              |   |      |     |              |  
|- Appraisal revaluation of fixed assets (Note 19.I.a)                                          |  |                     | (3,952,571   | ) |      |     | (3,952,571   | )
|- Pre-operating expenses                                                                       |  |                     |              |   |      |     |              |  
|Original value (Note 19.I.b)                                                                   |  |                     | (9,488,442   | ) |      |     | (15,558,214  | )
|Accumulated amortization (Note 19.I.b)                                                         |  |                     | 6,992,732    |   |      |     | 11,607,926   |  
|- Software developed or obtained for internal use (Note 19.I.c)                                |  |                     | (173,039     | ) |      |     | (178,516     | )
|- Differences in basis relating to purchase accounting                                         |  |                     |              |   |      |     |              |  
|Original value (Note 19.I.d)                                                                   |  |                     | 23,856,024   |   |      |     | 23,856,024   |  
|Accumulated amortization and depreciation (Note 19.I.e)                                        |  |                     | 18,139,633   |   |      |     | 13,737,808   |  
|- Accounting for increasing rate debt (Note 19.I.g)                                            |  |                     |             |   |      |     | (203,482     | )
|- Reversal of the result from recognition of inventories at net realizable value (Note 19.I.h) |  |                     | (2,510,520   | ) |      |     | (3,497,632   | )
|- Securitization accounting (Note 19.I.j)                                                      |  |                     | 2,635,248    |   |      |     | 53,803       |  
|- Debtors accounting for a modification of convertible debt instruments (Note 19.I.l)         |  |                     | 2,478,606    |   |      |     | 2,833,371    |  
|- Present-value accounting (Note 19.I.n)                                                       |  |                     | 307,790      |   |      |     | 61,500       |  
|- Reversal of previously recognized impairment losses (Note 19.I.o)                            |  |                     | (53,524,986  | ) |      |     | (56,208,412  | )
|- Deferred revenuesinsurance & fees (Note 19.I.p)                                             |  |                     | (13,549,327  | ) |      |     | (8,219,285   | )
|- Reversal of capitalized exchange differences (Note 19 I.s)                                   |  |                     | (431,616     | ) |      |     |             |  
|- Cumulative effect of initial application of SAB No. 108 (Note 19 I.t)                        |  |                     | (7,814,316   | ) |      |     |             |  
|- Revenue recognition  deferred commissions (Note 19.I.u)                                     |  |                     | (2,131,670   | ) |      |     |             |  
|- Revenue recognition  scheduled rent increases (Note 19.I.u)                                 |  |                     | 2,765,979    |   |      |     |              |  
|- Deferred income tax (Note 19.I.q)                                                            |  |                     | (124,689,971 | ) |      |     | (132,102,668 | )
|- Minority interest (Note 19.I.r)                                                              |  |                     | 5,257,679    |   |      |     | 4,776,875    |  
|                                                                                               |  |                     |              |   |      |     |              |  
|- Shareholders equity under US GAAP                                                           |  | Ps.                 | 668,074,460  |   |      | Ps. | 643,847,032  |  
|                                                                                               |  |                     |              |   |      |     |              |  
|                                                                                               | 
|Description of changes in shareholders equity under US GAAP:                                  |  |                     |              |  
|                                                                                               |  | Year ended June 30, |             
|                                                                                               |  | 2007                |              |   | 2006 |    
|- Shareholders equity as of the beginning of the year                                         |  | Ps.                 | 643,847,032  |   |      | Ps. | 619,975,784  |  
|- Cash dividends                                                                               |  |                     | (47,000,000  | ) |      |     | (29,000,000  | )
|- Conversion of debt into common stock                                                         |  |                     | 10,158       |   |      |     | 153,900      |  
|- Additional Paid in Capital                                                                   |  |                     |             |   |      |     | 2,879,427    |  
|- Other comprehensive income (See Note 19.II.o)                                                |  |                     | 3,289,528    |   |      |     | 2,830,105    |  
|- Cumulative effect of initial application of SAB 108 (Note 19.I.t.)                           |  |                     | (7,814,316   | ) |      |     |             |  
|- Net income under US GAAP                                                                     |  |                     | 75,742,058   |   |      |     | 47,007,816   |  
|                                                                                               |  |                     |              |   |      |     |              |  
|- Shareholders equity as of the end of the year                                               |  | Ps.                 | 668,074,460  |   |      | Ps. | 643,847,032  |  
|                                                                                               |  |                     |              |   |      |     |              |  



F-49



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | a) | Appraisal revaluation of fixed assets
| | -- | -------------------------------------

As discussed
in Note 3.f., under Argentine GAAP, the Company recognized a parcel of land acquired prior to June 30, 1986 at its appraised value as of such date. This appraisal increased the carrying value of the land by approximately Ps. 4.0 million,
which was recorded against an appraisal revaluation reserve account in the shareholders equity. Under Argentine GAAP, this appraisal revaluation reserve will be amortized to income once the land is disposed of or its value becomes impaired.
Under US GAAP, this parcel of land was recorded at original cost and therefore, this reserve has been reversed.



| | b) | Pre-operating expenses
| | -- | ----------------------

Under Argentine GAAP, the
Company capitalizes certain costs related to pre-opening activities of the Companys shopping centers. These costs are generally amortized under the straight-line basis over 3 years. Under US GAAP, these costs are expensed as incurred.



| | c) | Software developed or obtained for internal use
| | -- | -----------------------------------------------

During the year ended June 30, 2006, under Argentine GAAP, the Company capitalized certain costs amounting to Ps. 0.1 million, which would be expensed under US GAAP pursuant to the provisions of Statement of Position 98-1
Accounting for the Costs of Computer Software Developed or Obtained for Internal Use (SOP 98-1). The US GAAP adjustment for the year 2006 represents the net effect of (i) expense such costs and (ii) reversal of
depreciation charges for 2006 and previously capitalized costs under Argentine GAAP and expensed under US GAAP.



| | d) | Differences in basis relating to purchase accounting
| | -- | ----------------------------------------------------

The reconciling item of PS. 23.9 million relates to various adjustments related to purchase accounting for business combinations which occurred prior to 2001. These adjustments resulted in a difference between the amount of goodwill
recorded under Argentine GAAP and US GAAP.

In addition, as discussed in Note 3.i., under Argentine GAAP, the Company followed the guidance
in RT No. 18 in accounting for the acquisition of Empalme. The purchase price was allocated based on the relative fair value of each component. A portion of the purchase price was allocated to tangible assets considering the value of the
property as if it were vacant. In addition, a portion of the purchase price was allocated to below-market leases and in-place leases. No customer relationships were identified as part of the in-place leases. The sum of the individual fair values of
the identifiable tangible and intangible assets exceeded the purchase price paid. Under Argentine GAAP, the amount of negative goodwill was fully allocated to reduce the value of intangible assets acquired to zero. The remaining amount of negative
goodwill is amortized under the straight-line method over a seventeen year term. Under US GAAP, upon acquisitions of real estate, the Company also assesses the fair value of acquired assets and acquired liabilities in accordance with Statement
of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, and allocates purchase price based on these assessments. There is no difference between US GAAP and
Argentine GAAP in the purchase price allocation process. However, under US GAAP, when negative goodwill exists, eligible assets (tangible and intangible) are subject to pro rata reduction. Accordingly, under US GAAP, a liability for
below-market leases and intangible assets for in-place leases amounting to Ps. 2.4 million and Ps. 7.3 million, respectively, were recognized. The fair value of below market leases is recorded as deferred income and amortized as additional
lease revenue over the remaining contractual lease period and any renewal option periods included in the valuation analysis. Intangible assets associated with at-market in-place leases are amortized as additional expense over the remaining
contractual lease term. There is no US GAAP adjustment to equity for this item. The US GAAP adjustment to net income as described in Note 19.I.e. represents the net effect of (i) reversing the amortization of the negative goodwill
recorded under Argentine GAAP; (ii) lower depreciation charges on fixed assets under US GAAP and (iii) amortization charges for intangible assets recognized under US GAAP.



F-50



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | d) | Differences in basis relating to purchase accounting (continued)
| | -- | ----------------------------------------------------------------



For disclosure purposes, under US GAAP the estimated fair values of assets acquired and
liabilities assumed are summarized as follows (in millions):



|                                  |  |     |       |  
|--------------------------------- |  | --- | ----- | -
|Working capital deficiency        |  | Ps. | (17.7 | )
|Fixed assets                      |  |     | 57.6  |  
|Below market leases               |  |     | (2.4  | )
|In-place leases                   |  |     | 7.3   |  
|Deferred income tax               |  |     | (4.0  | )
|                                  |  |     |       |  
|Fair value of net assets acquired |  | Ps. | 40.8  |  
|                                  |  |     |       |  

Also, in May 2006, the Company acquired an additional 2.7% in ERSA. Under Argentine GAAP, the
unallocated portion of negative goodwill is amortized over the average remaining useful lives of tangible assets acquired, mainly the shopping center property. Under US GAAP, a pro rata reduction was performed following the guidance in SFAS
No. 141. This reduction resulted in lower depreciation charges under US GAAP. Since the amortization of negative goodwill under Argentine GAAP equals the lower depreciation charge of the assets acquired under US GAAP (after pro rata
reduction), there is no effect in the US GAAP reconciliation.

Since the sum of the individual fair values of the identifiable
tangible and intangible assets exceed the purchase price, a pro rata reduction of the allocated amounts was performed in accordance with paragraph 44 of FAS 141.



| | e) | Purchase accounting - Amortization and depreciation expense
| | -- | -----------------------------------------------------------

This reconciling item includes adjustments related to purchase accounting for business combinations which occurred prior to 2001. These adjustments resulted in a difference between the amount of goodwill recorded under Argentine GAAP and US
GAAP. Therefore, the differences in the carrying amount of goodwill between Argentine GAAP and US GAAP of Ps. 23.9 million gave rise to differences in amortization expense until June 30, 2002. Annual amortization expense recorded in
this connection totaled Ps. 5.4 million. Effective July 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets and, as such, discontinued amortization of goodwill as from that date. Consequently,
amortization expense recorded under Argentine GAAP was reversed under US GAAP in the amount of Ps. 5.4 million for all of the years presented.

In addition, the differences in the carrying amount of fixed assets and intangible assets acquired between Argentine GAAP and US GAAP and the reversing of the amortization of the negative goodwill recorded under
Argentine GAAP for the Empalme acquisition gave rise to (i) higher amortization charges, (ii) lower depreciation charges and (iii) the reversal of the negative goodwill amortization recorded under Argentine GAAP amounting to a net
higher expense of Ps. 1.0 million and Ps. 0.5 million during fiscal years 2007 and 2006, respectively.



F-51



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | f) | Effect of US GAAP adjustments on equity investees
| | -- | -------------------------------------------------

Under Argentine GAAP, investments in companies in which the Company exercises significant influence, but not control, are accounted for by the equity method. For purposes of this reconciliation, the Company has assessed the impact of
US GAAP adjustments on the Argentine GAAP financial statements of its equity investees. As of June 30, 2005 the adjustment relates to a difference in Mendoza Plaza Shopping.



| | g) | Accounting for increasing rate debt
| | -- | -----------------------------------

The syndicated
loan discussed in Note 4.h accrued interest at a fixed rate of 7.875% per annum during the first year and Encuesta variable rate plus 3% thereafter. The outstanding balance of the syndicated loan was fully paid in April 2007. Under
Argentine GAAP, interest was recognized based on the interest rate applicable to each interest period. Under US GAAP, the Company followed the guidance in EITF 86-15 Increasing Rate Debt. In EITF 86-15, the Task Force reached a
consensus that the borrowers periodic interest cost should be determined using the interest method based on the estimated outstanding term of the debt.



| | h) | Reversal of the result from recognition of inventories at net realizable value
| | -- | ------------------------------------------------------------------------------

As discussed in Note 4.k.(ii), during fiscal year 2006 the Company entered into an agreement to sell a plot of land. This sale transaction was consummated as of June 30, 2007. Under Argentine GAAP, however, since
the Company received a down payment which fixed the sale price and the terms and conditions of the transaction, the Company valued this plot of land at its estimated net realizable value. As a result, the Company recognized a loss of Ps.
1.0 million and a gain of Ps. 3.5 million, respectively, during the years ended June 30, 2007 and 2006.

Under US GAAP,
inventories are valued at cost. As such, the US GAAP adjustment represents the reversal of the result recognized under Argentine GAAP.



| | i) | Stock option agreement with CIM
| | -- | -------------------------------

E-Commerce Latina
entered into a stock option agreement with Consultores Internet Managers Ltd. (CIM), pursuant to which options were granted, to purchase class B shares of Altocity.Com, representing 15% of its common stock. CIM is a special-purpose
Cayman Islands corporation created to act on behalf of the Companys management and is represented by an independent attorney-in-fact. Pursuant to the terms of the agreement, options were granted for a period up to eight years and at an
exercise price to be determined by the quotient of (i) the original value of class B shares at the time of the contribution to Altocity.Com by the holding company, plus interest accrued at an annual fixed interest rate of 14% through the
exercise date of the option over (ii) the total number of class B shares owned by the holding company at the exercise date of the option. CIM has a vested interest in 50% of the underlying shares within 30 days after the grant date and the
remaining 50% will vest upon the third anniversary of the grant date. The option was granted to CIM to be allocated by it among the management of Altocity.com as an incentive compensation for their services. Upon exercise of the option, CIMs
sole asset will be its 15% interest in Altocity.Com. As of the date of these financial statements, the options were not individually allocated. As such, there was no grant date established.

In December 2004, the FASB issued SFAS No. 123R (Share-Based Payment). SFAS No. 123R revises SFAS No. 123 and requires entities to
recognize compensation expense for all share-based payment transactions in an amount equal to the fair value of share-based payments granted to employees. SFAS No. 123R requires a company to record compensation expense for all awards granted
after the date of adoption of SFAS No. 123R and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. The revised statement generally requires that an entity account for those transactions using
the fair-value-based method, and eliminates the intrinsic value method of accounting in APB 25, which was permitted under SFAS No. 123, as originally issued. The Company will apply the provisions of SFAS No. 123R as from the grant date of
the options which will be established when they will be allocated to management on an individual basis.



F-52



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | j) | Securitization Accounting
| | -- | -------------------------

As discussed in Note 11,
the Company enters into two-year revolving-period securitization programs, through which Tarshop, a majority-owned subsidiary of the Company, transfers credit card receivables to the trust in exchange for cash and retained interests in the trust
(CPs). Part of the proceeds is retained by the trustee and maintained as a cash reserve to serve as collateral for the payment of amounts due on the TDFs. Cash reserves flow back to Tarshop on a monthly basis according to a schedule until all TDFs
are fully paid.

Under Argentine GAAP, the Company recognizes a gain or loss on the sale of receivables when the carrying value of
transferred credit card receivables differs from the amount of cash and CPs received. Results recognized on the sale of receivables are reported as a component of Net income from retained interest in securitized receivables in the
accompanying statements of income. Cash reserves are stated at cost and are classified as receivables from trust guarantee funds within the caption Other receivables and prepaid expenses in the accompanying consolidated
balance sheets. CPs are carried at their equity value based on financial statements issued by the trusts and classified as investments in the accompanying consolidated balance sheets. Certain expenses associated with the securitization of credit
card receivables are capitalized and amortized over the term of the agreements.

Under US GAAP, the Company adopted Statement of
Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS No. 140). SFAS No. 140 was issued in September 2000 and replaced, in
its entirety, SFAS No. 125. The Company was required to adopt the provisions of SFAS No. 140 prospectively for transactions beginning after March 31, 2001. Although SFAS No. 140 has changed many of the rules regarding
securitizations under SFAS No. 125, it continues to require an entity to recognize the financial and servicing assets it controls and the liabilities it has incurred and to derecognize financial assets when control has been surrendered. The
proceeds of securitized financial assets are allocated to the assets sold, the servicing asset or liability and retained interest, based on their relative estimated fair values at the transfer date in determining the gain on the securitization
transaction. SFAS No. 140 and SFAS No. 125 also require an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service financial assets that have been securitized and amortize it over the
period of estimated net servicing income or loss. The Company has not recognized any servicing asset or liability since the estimated fair value of the servicing right was de minimus. In determining the estimated fair value, the Company considered
the fees received as adequate compensation for its servicing responsibilities (i.e. the fees received as compensation for the services rendered are similar to those that would be paid to a substitute servicer, should one be required, according to
estimated market values).

The retained interests in securitized credit card receivables are treated as a debt security classified as
available-for-sale in accordance with Statement of Financial Accounting Standards No. 115 (SFAS No. 115), Accounting for Certain Investments in Debt and Equity Securities, and are carried at fair value. At the time
of securitization, the retained interest is initially recorded at the basis allocated in accordance with SFAS No. 140. This original cost basis is periodically adjusted to fair value, which is based on the discounted anticipated future cash
flows on a cash out basis. The cash out method projects cash collections to be received only after all amounts owed to investors have been paid. Adjustments to fair value (net of related deferred income taxes) are recorded as a component
of other comprehensive income. SFAS No. 115 also states that for individual securities classified as available-for-sale an enterprise shall determine whether a decline in fair value below the amortized cost basis is other than temporary. In
such event, accumulated unrealized losses included in other comprehensive income shall be reclassified into the statement of income. Cash reserves are considered retained interests and as such they are considered in calculating the gain or loss on
the sale of receivables under US GAAP.

Provided below is an analysis of the securitization accounting adjustments, including a description
of each significant component, where appropriate.



F-53



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | j) | Securitization Accounting (continued)
| | -- | -------------------------------------



The shareholders equity adjustments represent the difference in the valuation of the
Companys retained interests in the trusts related to securitization programs that qualified for sale treatment under US GAAP. Under Argentine GAAP, retained interests in the trusts are carried at their equity value. Under US GAAP those
retained interests are considered available-for-sale securities in accordance with SFAS 115 and, as a result, are carried at their estimated fair market value. The US GAAP adjustments affecting shareholders equity at June 30, 2007
and 2006 are as follows:



|                                                                                                                                           |  |      |             |   |      |     |             |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | ---- | --- | ----------- | -
|                                                                                                                                           |  | 2007 |             |   | 2006 |    
|Equity value as reported under Argentine GAAP                                                                                              |  | Ps.  | 73,352,618  |   |      | Ps. | 47,228,091  |  
|Less: retained interests related to securitization programs that did not qualify as a sale under US GAAP                                   |  |      | (14,379,230 | ) |      |     | (20,009,994 | )
|                                                                                                                                           |  |      |             |   |      |     |             |  
|Equity value reported under Argentine GAAP of retained interests related to securitization programs that qualified as a sale under
US GAAP |  | Ps.  | 58,973,388  |   |      | Ps. | 27,218,097  |  
|Estimated fair market value of retained interests related to securitization programs that qualified as a sale under
US GAAP                |  |      | 61,608,636  |   |      |     | 27,271,900  |  
|                                                                                                                                           |  |      |             |   |      |     |             |  
|US GAAP adjustment                                                                                                                         |  | Ps.  | 2,635,248   |   |      | Ps. | 53,803      |  
|                                                                                                                                           |  |      |             |   |      |     |             |  

- The US GAAP adjustments affecting net income as reported under Argentine GAAP for the years
ended June 30, 2007, 2006 and 2005 are as follows:



|                                                        |  |      |            |   |      |     |             |      |  |     |          
|------------------------------------------------------- |  | ---- | ---------- | - | ---- | --- | ----------- | ---- |  | --- | ---------
|                                                        |  | 2007 |            |   | 2006 |     |             | 2005
|Reversal of results recognized under Argentine GAAP (1) |  | Ps.  | 1,875,478  |   |      | Ps. | (450,274)   |      |  | Ps. | 641,103  
|Recognition of results under US GAAP (2)                |  |      | (1,293,747 | ) |      |     | (7,888,508  | )    |  |     | 1,513,698
|                                                        |  |      |            |   |      |     |             |      |  |     |          
|US GAAP adjustment                                      |  | Ps.  | 581,731    |   |      | Ps. | (8,338,782) |      |  | Ps. | 2,154,801
|                                                        |  |      |            |   |      |     |             |      |  |     |          

---

|(1) | Includes the reversal of results reported in Net income from retained interest in securitized receivables in the Companys consolidated statements of income as well
as the reversal of inflation accounting results reported within Financial results, net in the Companys consolidated statements of income.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Primarily includes the gain or loss recorded on the sale of receivables plus unrealized losses on retained interests considered other-than-temporary.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

Regarding receivables transferred in connection with the Companys securitization programs that qualified for sale treatment under US GAAP,
neither the Company nor the trustee have responsibility over any shortfall or failure in collecting the receivables which are the source of cash payment for the TDF holders. Furthermore, the agreements relating to the securitization stipulate that
the rights of the beneficiaries (TDF holders) will not be affected by any financial or liquidity failure of either the trustee or the Company. The agreements also state that the transfer qualifies as a non-recourse transfer of receivables since if
receivables are not collected in full, neither the trustee nor the Company is obligated to use its own cash flows to cover any potential shortfall or collection failure.



F-54



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | j) | Securitization Accounting (continued)
| | -- | -------------------------------------



The following summarizes the changes in the balance of the Companys retained interests for the
years ended June 30, 2007, 2006 and 2005:



|                                  |  |      |             |   |                                 |     |            |  |     |             |  
|--------------------------------- |  | ---- | ----------- | - | ------------------------------- | --- | ---------- |  | --- | ----------- | -
|                                  |  | Cost |             |   | Estimatedunrealized gain (loss) |     | Fair value | 
|Balance at June 30, 2004          |  | Ps.  | 7,880,081   |   |                                 | Ps. | 1,999,979  |  | Ps. | 9,880,060   |  
|Increase in retained interest     |  |      | 12,909,592  |   |                                 |     |           |  |     | 12,909,592  |  
|Liquidation of retained interests |  |      | (1,976,942  | ) |                                 |     |           |  |     | (1,976,942  | )
|Change in unrealized gain         |  |      |            |   |                                 |     | 2,187,057  |  |     | 2,187,057   |  
|                                  |  |      |             |   |                                 |     |            |  |     |             |  
|Balance at June 30, 2005          |  | Ps.  | 18,812,731  |   |                                 | Ps. | 4,187,036  |  | Ps. | 22,999,767  |  
|Increase in retained interest     |  |      | 10,833,191  |   |                                 |     |           |  |     | 10,833,191  |  
|Liquidation of retained interests |  |      | (11,999,233 | ) |                                 |     |           |  |     | (11,999,233 | )
|Change in unrealized gain         |  |      |            |   |                                 |     | 5,438,175  |  |     | 5,438,175   |  
|                                  |  |      |             |   |                                 |     |            |  |     |             |  
|Balance at June 30, 2006          |  | Ps.  | 17,646,689  |   |                                 | Ps. | 9,625,211  |  | Ps. | 27,271,900  |  
|Increase in retained interest     |  |      | 39,062,135  |   |                                 |     |           |  |     | 39,062,135  |  
|Liquidation of retained interests |  |      | (6,725,113  | ) |                                 |     |           |  |     | (6,725,113  | )
|Change in unrealized gain         |  |      |            |   |                                 |     | 1,999,714  |  |     | 1,999,714   |  
|                                  |  |      |             |   |                                 |     |            |  |     |             |  
|Balance at June 30, 2007          |  | Ps.  | 49,983,711  |   |                                 | Ps. | 11,624,925 |  | Ps. | 61,608,636  |  
|                                  |  |      |             |   |                                 |     |            |  |     |             |  

---

|(i) | Unrealized gains for the years ended June 30, 2004, 2005, 2006 and 2007 were included as a component of Accumulated Other Comprehensive Income in shareholders
equity.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The key economic assumptions used in measuring the fair value of retained interests at the time of and subsequent to
a securitization are the estimated cash flows and the discount rate. The estimated cash flows have been discounted at rates that include charges for losses. The following represents the sensitivity of the current fair value of retained interest in
securitizations at June 30, 2007 to changes to key assumptions:



|                                   |  |                           |             |                            |     |            
|---------------------------------- |  | ------------------------- | ----------- | -------------------------- | --- | -----------
|                                   |  | Impact on fair value of a
|                                   |  | 5% interest rate increase |             | 10% interest rate increase
|Rates including charges for losses |  | Ps.                       | (4,376,266) |                            | Ps. | (8,480,915)

The above sensitivities are hypothetical and should be used with caution. As the amounts indicate,
changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a
particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities.

The Companys managed credit card receivables consist of retained interest in credit card receivable securitizations and
investors share of securitizations sold to unrelated parties without recourse. The Company records its retained interest in credit card receivable securitizations on the balance sheet.



F-55



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | k) | Available-for-sale securities
| | -- | -----------------------------

Under Argentine
GAAP, investments in mutual funds and government and mortgage bonds are carried at market value, with unrealized gains and losses recorded in income. Under US GAAP, pursuant to SFAS No. 115, Accounting for Certain Investments in Debt
and Equity Securities, these investments are classified as available-for-sale securities, and accordingly unrealized gains and losses are excluded from income and reported as a separate component of shareholders equity.



| | l) | Debtors accounting for a modification of convertible debt instruments
| | -- | ----------------------------------------------------------------------

As indicated in Note 15, in August 2002 the Company issued US$ 50 million of Convertible Notes. Under US GAAP, the Company applied APB 14, Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants, which requires that no portion of the proceeds be allocated to the conversion feature if the convertible debt securities are convertible into common stock of the issuer at a specified price at the option of the holder and
are sold at a price or have a value at issuance not significantly in excess of the face amount. In considering the accounting treatment of the Convertible Notes under US GAAP the Company took account of the guidance provided in EITF 98-5. EITF
98-5 requires that embedded beneficial conversion features present in convertible securities be valued separately at issuance when the non-detachable conversion feature is in-the-money at the commitment date. The embedded beneficial
conversion feature should be recognized and measured by allocating to additional paid-in capital a portion of the proceeds equal to the intrinsic value of that feature. That amount is calculated at the commitment date as the difference between the
conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible (intrinsic value). As a result of the analysis the Company
performed, no proceeds were allocated to the embedded conversion feature since it was out-the-money at the commitment date (i.e. the intrinsic value at the commitment date was zero).

The terms of the convertible debt instrument were modified to extend the maturity date through July 19, 2014. Argentine GAAP requires that an
exchange of debt instruments with substantially different terms be considered a debt extinguishment and that the old debt instrument be derecognized. Argentine GAAP clarifies that from a debtors perspective, an exchange of debt instruments
between, or a modification of a debt instrument by, a debtor and a creditor shall be deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt
instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The new debt instrument should be initially recorded at fair value and that amount should be used to determine
the debt extinguishment gain or loss to be recognized. Fair value should be determined by the present value of the future cash flows to be paid under the terms of the new debt instrument discounted at a rate commensurate with the risks of the debt
instrument and time value of money. If it is determined that the original and new debt instruments are not substantially different, then a new effective interest rate is to be determined based on the carrying amount of the original debt instrument
and the revised cash flows. Based on the analysis performed, the Company concluded that the instruments were not substantially different and accordingly the old instrument was not derecognized. The outstanding balance was reclassified to non-current
in these consolidated financial statements.

Under US GAAP, in November 2006, the EITF reached a final consensus in EITF Issue 06-6
Debtors Accounting for a Modification (or Exchange) of Convertible Debt Instruments. EITF 06-6 reconsidered the original consensus in Issue 05-7 Accounting for Modification to Conversion Options Embedded in Debt Instruments
and Related Issues that the change in fair value of an embedded conversion option should be included in the cash flow analysis under EITF Issue 96-19, Debtors Accounting for a Modification or Exchange of Debt Instruments, in
determining whether a debt instrument has been modified or extinguished. This Issue considers the accounting for a modification of debt terms (or exchange in debt instruments) when a change in the fair value of an embedded conversion option has
occurred or an embedded conversion option has been added or eliminated from the debt instrument. This Issue also amended the guidance in EITF Issue 96-19.



F-56



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | l) | Debtors accounting for a modification of convertible debt instruments (continued)
| | -- | ----------------------------------------------------------------------------------



The consensus stipulates that, in evaluating whether a convertible debt instrument has been modified
or extinguished, three aspects of the modification (or exchange of debt instruments) must be considered.



| | 1. | Change in cash flows: If the change in cash flows as prescribed by the analysis under Issue 96-19 is greater than 10% of the carrying value of the original debt instrument, the
modification (or exchange of debt instruments) should be accounted for as an extinguishment. This test would not include any changes in fair value to the embedded conversion option.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Change in fair value of the embedded conversion option: If the change in the fair value of the embedded conversion option is greater than 10% of the carrying value of the original
debt instrument immediately before the change (or exchange of debt instruments), the modification (or exchange) should be accounted for as an extinguishment.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Addition or removal of an embedded conversion option: The addition or removal of a substantive conversion option would automatically result in extinguishment accounting.
Whether an embedded conversion option is substantive would be assessed as of the modification date and would be based on the definition of substantive in EITF Issue 05-1, Accounting for the Conversion of an Instrument That Becomes Convertible
upon the Issuers Exercise of a Call Option.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Any one of the three criteria needs to be met to account for the
modification of the debt instrument (or exchange of debt instruments) as an extinguishment. When the result of the three-pronged evaluation above results in a conclusion that a convertible debt instrument has been modified (and not extinguished),
the Task Force affirmed as a final consensus that any increase in the fair value of the embedded conversion option should reduce the carrying value of the debt instrument (with a corresponding increase to additional paid-in capital), but any
decrease in the fair value of the embedded conversion option is ignored.

Based on the analysis performed, neither of criteria 1, 2 or 3
above are met. Accordingly, the change of the debt instrument has not been accounted for as an extinguishment. Thus, the increase in the fair value of the conversion option reduced the carrying value of the debt instrument with a corresponding
increase to additional paid-in-capital. This resulted in an increase in interest expense prospectively.



| | m) | Amortization of fees related to the Senior Notes
| | -- | ------------------------------------------------

For the year ended June 30, 2005, under Argentine GAAP, fees and expenses relating to the Senior Notes were amortized on a straight-line method over the term of the agreement. Under US GAAP, such costs were amortized over the same
period but using the effective interest method of amortization. The Senior Notes were paid in January and April, 2005.



| | n) | Present-value accounting
| | -- | ------------------------

As indicated in Note
3.x., under Argentine GAAP, certain tax credits are present-valued as of year-end. Under US GAAP, present valuing or discounting of these assets is precluded.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | o) | Reversal of previously recognized impairment losses
| | -- | ---------------------------------------------------

As a result of increases in the fair market value of property and equipment and inventories, and as required by Argentine GAAP, during 2005, 2006 and 2007 the Company partially reversed impairment losses recognized in 2002. Amounts reversed
in 2005, 2006 and 2007 amounted to Ps. 13.1 million, Ps. 9.9 million and Ps. 2.3 million, respectively, giving rise to higher depreciation charges under Argentine GAAP. Under US GAAP, reversal of a previously recognized
impairment loss is prohibited. When an impairment loss is recognized, the adjusted carrying amount of the asset becomes the new cost basis, which is depreciated over the remaining useful life of the asset. Depreciation expense reversed under
US GAAP for the years ended June 30, 2005, 2006 and 2007 amounted to Ps. 2.7 million, Ps. 4.7 million and Ps. 4.9 million, respectively, and are shown netted against the reversal of impairment losses under Argentine GAAP.



| | p) | Deferred revenues - insurance & fees
| | -- | ------------------------------------

Under Argentine GAAP, the Company, through its subsidiary Tarshop, accounts for revenues from life and disability insurance and origination fees, on an up-front basis.

Under US GAAP, said revenues from life and disability insurance and origination fees are recognized to income on an straight-line basis over the
term of the respective financial receivable.



| | q) | Deferred income tax
| | -- | -------------------

The Company accounts for
income taxes using the liability method under both Argentine GAAP and US GAAP. Argentine GAAP is similar to the guidance in SFAS No. 109 Accounting for Income Taxes. However, as discussed in Note 2.e, following CNV Resolutions
N° 485 and N° 487, the Company elected to continue treating the differences between book basis and inflation-adjusted basis of non-monetary balance sheet items as permanent for deferred income tax calculation purposes.

Under US GAAP, the Company applies EITF 93-9, Application of FASB Statement No.109 in Foreign Financial Statements Restated for General
Price-Level Changes, which requires such differences to be treated as temporary.

In addition, the US GAAP adjustment includes
the effect on deferred income taxes of the reconciling items, as appropriate.



| | r) | Minority interest
| | -- | -----------------

This adjustment represents the
effect on minority interest of the reconciling items, as appropriate.



| | s) | Reversal of capitalized exchange differences
| | -- | --------------------------------------------

Under
Argentine GAAP, the Company capitalized financial costs comprising of interest and foreign exchange differences for the year ended June 30, 2007. The capitalization related to the PAMSA project. The Company did not capitalize any financial
costs for the year ended June 30, 2006. Under US GAAP, the Company applied the provisions of Statement of Financial Accounting Standards No. 34, Capitalization of Interest Cost (SFAS No. 34), which requires interest
capitalization on assets which have a period of time to get them ready for their intended use. Capitalization of foreign exchange differences is not allowed under SFAS No. 34. The US GAAP reconciling item represents the effect of reversing
the foreign exchange differences capitalized under Argentine GAAP related to the acquisition of PAMSA for an amount of Ps. 0.4 million.



F-58



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | t) | Cumulative effect of the initial application of SAB No. 108
| | -- | -----------------------------------------------------------

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB No. 108), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements, which provides guidance on quantifying financial statement misstatements. SAB No. 108 was issued in order to eliminate the diversity of practice surrounding how public companies quantify financial statement
misstatements. SAB No. 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006.

Traditionally, there have been two widely recognized methods for quantifying the effects of financial statement misstatements: the roll-over method and the iron curtain method. The roll-over method focuses primarily on the impact of a
misstatement on the income statement, including the reversing effect of prior year misstatements, but its use can lead to the accumulation of misstatements in the balance sheet. The iron-curtain method, on the other hand, focuses primarily on the
effect of correcting the period-end balance sheet with less emphasis on the reversing effects of prior year errors on the income statement. Prior to the Companys application of the guidance in SAB No. 108, the Companys management
used the roll-over method for quantifying financial statement misstatements both for Argentine GAAP and US GAAP purposes.

In SAB
No. 108, the SEC staff established an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the companys financial statements and the related financial statement
disclosures. This model is commonly referred to as a dual approach because it requires quantification of errors under both the iron curtain and the roll-over methods.

SAB No. 108 permits existing public companies to initially apply its provisions either by (i) restating prior financial statements as if the dual approach had always been applied or (ii) recording the
cumulative effect of initially applying the dual approach as adjustments to the carrying values of assets and liabilities with an offsetting adjustment recorded to the opening balance of retained earnings. Under US GAAP, the Company elected to
record the effects of applying SAB No. 108 using the cumulative effect transition method. The misstatements that have been corrected are described below.

As discussed in Note 3.a., the Company primarily derives its revenues from leases and services. Tenants are generally charged a rent, which consists of the higher of: (i) a monthly base rent (the Base
Rent) and (ii) a specified percentage of the tenants monthly gross retail sales (the Percentage Rent) (which generally ranges between 4% and 8% of tenants gross sales). Furthermore, pursuant to the rent escalation
clause in most leases, a tenants Base Rent generally increases between 4% and 7% each year during the term of the lease. Under US GAAP, prior to the application of SAB No. 108, rental revenue was recognized when the escalated rental
payment was due rather than recognizing the effects of scheduled rent increases on a straight-line basis over the lease term in accordance with SFAS No. 13 and FTB 85-3. This accounting treatment results in an understatement of rental revenue
at a given month-end. However, due to occupancy rates and sales volumes in all of the Companys properties, the majority of the tenants were charged the percentage rent for all of the periods presented. In those cases, percentage rents charged
were higher than amounts derived from straight-line recognition of scheduled rent increases. Hence, the understatement of rental revenue only affects those property rentals where the Base Rent is higher than the Percentage Rent. The Companys
management previously quantified these errors under the roll-over method and concluded that they were immaterial. In its initial application of SAB No. 108, the Company corrected the errors by increasing the balance of accounts receivable
against retained earnings in the amount of Ps. 1.5 million. The correction also required adjustment for deferred income taxes and minority interest.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | I. | Difference in measurement methods
| | -- | ---------------------------------



| | t) | Cumulative effect of initial application of SAB No. 108 (continued)
| | -- | -------------------------------------------------------------------



Additionally, as discussed in Note 3.a., the Company derives revenues from brokerage commissions paid
by tenants calculated as a percentage of the final rental income value for both the lessee and the Company. Under US GAAP, prior to the application of SAB 108, brokerage commissions were recognized at the time that the transaction was
successfully concluded, rather than defer and amortize them over the term of the lease. A transaction is considered successfully concluded when both parties have signed the related lease contract. This accounting treatment resulted in an
overstatement of rental revenue. The Companys management previously quantified these errors under the roll-over method and concluded that they were immaterial. In its initial application of SAB No. 108, the Company corrected the errors by
increasing deferred revenues against retained earnings in the amount of Ps. 12.4 million. The correction also required adjustment for deferred income taxes and minority interest.

In addition, as further explained in Note 3.a., the Company, through its subsidiary Tarshop, derives revenues from life and disability insurance and
origination fees. Under US GAAP, prior to the application of SAB 108, revenues from life and disability insurance and origination fees related to securitized receivables which did not qualify as a sale under US GAAP, were recognized
up-front, rather than deferred and recognized in income over the term of the financial receivable. This accounting treatment resulted in an overstatement of revenues. The Companys management previously quantified this error under the roll-over
method and concluded that it was immaterial. In its initial application of SAB No. 108, the Company corrected the error by increasing deferred revenues against retained earnings in the amount of Ps. 1,5 million. The correction also required
adjustment for deferred income taxes and minority interest. Effective July 1, 2006, the Company defers said revenues from life and disability insurance and origination fees over the term of the respective securitized receivables.

These correcting entries and the balance sheet line items that were affected and the respective amounts before tax effects are summarized in the
following table:



|                                                        |  |                                       |              |  
|------------------------------------------------------- |  | ------------------------------------- | ------------ | -
|Adjustment                                              |  | Adjustment recorded as ofJuly 1, 2006 |             
|Revenue Recognition  Deferred commissions              |  | Ps.                                   | (12,435,399) |  
|Revenue Recognition  Scheduled rent increases          |  |                                       | 1,517,044    |  
|Deferred Revenues  insurance & fees                    |  |                                       | (1,479,706   | )
|Minority interest                                       |  |                                       | 376,035      |  
|Deferred income tax                                     |  |                                       | 4,207,710    |  
|                                                        |  |                                       |              |  
|Cumulative effect of initial application of SAB No. 108 |  |                                       | (7,814,316   | )
|                                                        |  |                                       |              |  



| | u) | Revenue recognition
| | -- | -------------------

As discussed in Note 3.a.,
pursuant to rent escalation clauses in most leases, a tenants Base Rent generally increases between 4% and 7% each year during the term of the lease. Under Argentine GAAP, rental revenue pursuant to rent escalation clauses is recognized when
the escalated payment is due rather than recognizing the effects of the scheduled rent increases under the straight-line method over the lease term. Under US GAAP, effective July 1, 2006, the Company applied the provisions of SFAS
No. 13 and FTB 85-3 and accordingly, recognized escalated rental revenue under the straight-line method over the term of the leases.

As discussed in Note 3.a., under Argentine GAAP, brokerage commissions earned are recognized at the time a transaction is successfully completed. Under US GAAP, brokerage commissions are deferred and amortized to income over the term
of the respective leases.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | a) | Disclosure of maturities of long-term debt
| | -- | ------------------------------------------

Scheduled maturities of the long-term debt for the next years (excluding current portion), as of June 30, 2007, are as follows:



|     |  |     |                
|---- |  | --- | ---------------
|2009 |  | Ps. | 32,929,314     
|2010 |  |     | 45,398,636     
|2011 |  |     | 44,005,714     
|2012 |  |     | 44,005,714     
|2015 |  |     | 146,076,000    
|2017 |  |     | 371,160,000    
|     |  |     |                
|     |  | Ps. | (1) 683,575,378
|     |  |     |                

---

|(1) | Not including deferred debt issuance costs in the amount of Ps. 4,823,493.
|--- | --------------------------------------------------------------------------



| | b) | Disclosure of operating lease information
| | -- | -----------------------------------------

The
Company enters into cancelable commercial leases with its tenants for terms ranging from three to ten years, with most leases having terms of no more than five years. Tenants are generally charged a rent, which consists of the higher of (i) the
base rent and (ii) the percentage rent (which generally ranges between 4% and 8% of the tenants sales). Furthermore, pursuant to the rent escalation clause in most leases, a tenants base rent generally increases between 4% and 7% each
year during the term of the lease.

Included in lease revenues for the years ended June 30, 2007, 2006 and 2005 were contingent
rentals of Ps. 51.9 million, Ps. 40.9 million and Ps. 29.4 million, respectively.



| | c) | Disclosure of related parties transactions
| | -- | ------------------------------------------

The
following additional disclosures of transactions with related parties are required under US GAAP:

Donations: For the years ended
June 30, 2007, 2006 and 2005, the Company made unconditional promises to give money to Fundación IRSA amounting to Ps. 2.3 million, Ps. 2.5 million and Ps. 4.0 million, respectively. Unconditional promises are paid in the
subsequent year.

Fundación IRSA is a charitable, non-profit organization whose Chairman is Eduardo S. Elsztain and whose Secretary,
is Mariana Carmona de Elsztain, Mr. Elsztains wife. The Companys Chairman Eduardo S. Elsztain is also the Chairman of IRSA, shareholder of the Company. In addition, the Company granted Fundación Museo de los Niños a
30-year free right to use a determined area of its Abasto and Rosario shopping centers to host an interactive learning center for children and adults.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | c) | Disclosure of related parties transactions (continued)
| | -- | ------------------------------------------------------



Loans from Major Shareholders:As of June, 2007 IRSA and Parque Arauco owned US$31.7 million
and US$ 15.5 million, respectively, of the Companys Convertible Notes. As of June 30, 2007, IRSA owned 62.5% of the common shares. Assuming IRSA exercises its conversion rights of all of its Convertible Notes and no exercise of such
rights by any of the other bondholders, IRSA would own 83.3% of the common shares. In the case all shareholders exercise their conversion rights and IRSA exercises them as well, IRSA would own 65.6% of the common stock.

The Convertible Notes originally matured on July 19, 2006. A meeting of noteholders resolved to extend the maturity date of the Convertible Notes
through July 19, 2014 although the remaining terms and conditions were left unchanged. The Convertible Notes accrue interest (payable semiannually) at a fixed annual rate of 10% and are convertible, at any time at the option of the holder, into
common shares of Ps.0.10 par value per share. The conversion rate per U.S. dollar is the lesser of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion date by the par value of the common shares.

Conversion of the Convertible Notes by the Companys Major Shareholders:During November and December 2003, Eduardo Elsztain exercised his
option to convert 0.03 million aggregate of principal amount of the Convertible Notes. As a result of this conversion, Eduardo Elsztain received 0.3 million of the common shares. In March 2004, Parque Arauco exercised its option to convert
0.8 million aggregate of principal amount of the Convertible Notes. As a result of this conversion, Parque Arauco has received 7.8 million of the common shares. Furthermore in July 2004, Parque Arauco exercised its option to convert
1.4 million aggregate of principal amount of the Convertible Notes, receiving 14.3 million of the common shares. During July 2004, IRSA exercised its option to convert 3.7 million aggregate of principal amount of Convertible Notes. As
a result of this conversion, IRSA have received 37.4 million of the common shares.

Lease of office property:

The Company leases its headquarters and parking spaces from Inversora Bolivar, a subsidiary of IRSA, shareholder of the Company, The Companys
headquarters is located in the Intercontinental Plaza Building. Persuant to two agreements signed in December 2003 and January 2005, the Company pay monthly rental expenses of U$S 5,958 and U$S 5,386, respectively. The agreements have an initial
duration of 60 months and 46 months, respectively, and renewable for an additional period of 36 months.

Lease of the
Chairmans offices:The Company leases Mr. Eduardo S. Elsztains offices, Chairman of the Company, from Isaac Elsztain e Hijos S.C.A., a company controlled by relatives of Eduardo S. Elsztain, and also from Hamonet
S.A., a company controlled by Fernando A. Elsztain (Director) and certain of his relatives under a 120month operating lease agreement expiring in March 2014. Monthly rent expense amounts to Ps.8,490. The Company, IRSA and Cresud each pay
one-third of such rent in amount of Ps. 2,830 each.

Corporate services:In order to reduce administrative expenses and to
achieve a more efficient allocation of corporate resources, a program for partial operating integration was implemented on June 30, 2003 by the Company, Cresud and IRSA (the Parties). The areas now involved are Shared Corporate
Services, Human Resources, Finance, Institutional Relations, Administration, Systems, Insurance, Purchasing, Contracts, Operations and Internal Audit, among others. This program was implemented to reduce operating costs by optimizing the individual
administrative efficiencies of each Party.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



c) Disclosure of related parties transactions (continued)



On the basis of this program, the Parties entered into the Exchange of Operating Services Agreement
on June 30, 2004, a two-year agreement (being renewed for an equal period of time unless any of the Parties decides to terminate it) by which tasks are performed by one or more Parties for the benefit of one or more other Parties in exchange
for a fee to be paid primarily through the provision of services in other areas. Through this agreement, each party continues to maintain its strategic and commercial independence while increasing operating efficiency.

In the ordinary course of business, the Company shares corporate services (finance, human resources, procurement, internal audit, systems,
administration, etc.) with IRSA and Cresud under an Exchange of Operating Services Agreement entered into by all three companies in 2004. The Company pays a fee, primarily through the provision of services to the other parties.

Options to Purchase Shares of Comercializadora Los Altos S.A. (Altocity.com S.A.s continuing company): see Note 19.I.i. for details.

In January 2000, E-Commerce Latina S.A., granted Consultores Internet Managers Ltd. an option to purchase certain of its class B shares of
Altocity.com. Consultores Internet Managers Ltd. is a special-purpose Cayman Islands corporation created to act on behalf of its management and is represented by an independent attorney-in-fact. The option granted to Consultores Internet
Managers represents 15% of the capital stock of Altocity and was granted for a period of eight years.

Pursuant to the terms of the
agreement, the exercise price is equal to the quotient of (i) the original value of class B shares at the time of the contribution to Altocity.com by E-Commerce Latina S.A., plus interest accrued at an annual fixed interest rate of 14% through
the exercise date of the option, over (ii) the total number of class B shares owned by E-Commerce Latina S.A. at the exercise date of the option.

The option was granted to Consultores Internet Managers Ltd. to be allocated by it among the management of Comercializadora Los Altos S.A. (Altocity.com S.A.s continuing company) as an incentive compensation for
their services, but as of today, no individual awards have been determined for participating employees under this option. Upon exercise of the option, Consultores Internet Managers Ltd.s sole asset will be its 15% interest in Altocity.com.

Agreement with Inversiones Falabella Argentina S.A.: The Company has entered into an agreement with Inversiones Falabella Argentina
S.A. (Falabella), the minority shareholder of Mendoza Plaza Shopping, pursuant to which, among other things, Falabella has the irrevocable right to sell to the Company (put option) its ownership interest in Mendoza Plaza Shopping for a
total consideration of U$S 3 million. The put option can be exercised until the last business day of October 2008. At the date of issuance of these financial statements, Falabella has no exercised the put option.

Legal Services:During the years ended June 30, 2005, 2006 and 2007, the Company and the subsidiaries were charged by the law firm
Zang, Bergel & Viñes an aggregate amount of approximately Ps.0.5 million, Ps.0.7 million, and Ps. 1.6 million, respectively as fees for legal services.

The Companys Vice-Chairman Saúl Zang; the alternate Directors Juan M. Quintana, Salvador D. Bergel, and Pablo D.Vergara del Carril; the
Syndic Ángel. D. Vergara del Carril and the alternate Syndic Armando F. Ricci are members of the law firm Zang, Bergel & Viñes.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | d) | Disclosure about fair value of financial instruments
| | -- | ----------------------------------------------------

Under Argentine GAAP, there are no specific rules regarding disclosure of fair value of financial instruments.

Under
US GAAP, SFAS No. 105 requires reporting entities to disclose certain information about financial instruments with off-balance sheet risk of accounting loss. SFAS No. 107, Disclosures About Fair Value of Financial
Instruments, requires disclosure of fair value information about financial instruments whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Financial instruments include such items as cash and
cash equivalents and accounts receivable and other instruments. SFAS No. 107 excludes from its disclosure requirements lease contracts and various significant assets and liabilities that are not considered to be financial instruments. SFAS
No. 119 requires reporting entities to disclose certain information for derivative financial instruments. SFAS No. 133 superseded SFAS No. 105 and SFAS No. 119 and amended SFAS No. 107 to include in SFAS No. 107 the
disclosure requirements of credit risk concentrations from SFAS No. 105. See Note 19.II.e) for details of concentration of credit risk.

Fair value estimates are made as of a specific point in time based on the characteristics of the financial instruments and the relevant market information. Where available, quoted market prices are used. In other cases, fair values are
based on estimates using other valuation techniques, such as discounting estimated future cash flows using a rate commensurate with the risks involved or other acceptable methods. These techniques involve uncertainties and are significantly affected
by the assumptions used and the judgments made regarding risk characteristics of various financial instruments, prepayments, discount rates, estimates of future cash flows, future expected loss experience, and other factors. Changes in assumptions
could significantly affect these estimates. Derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in an immediate sale of the instrument. Also, because of differences in
methodologies and assumptions used to estimate fair value, the Companys fair values should not be compared to those of other companies.

Under this statement, fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial
instruments.

Accordingly, the aggregate fair value amount presented does not represent the underlying value of the Company. For certain
assets and liabilities, the information required under this statement is supplemental with additional information relevant to an understanding of the fair value.

The methods and assumptions used to estimate the fair values of each class of financial instruments as of June 30, 2007 and 2006 are as follows:



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | d) | Disclosure about fair value of financial instruments (continued)
| | -- | ----------------------------------------------------------------



Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less, consisting of mutual funds and time deposits, to be
cash and cash equivalents. The carrying amount reported in the consolidated balance sheet approximates their fair value.

Mortgages and
leases receivable, net

The carrying amount of mortgages and leases receivables reported in the consolidated balance sheet approximates
their fair value.

Accounts and notes receivable, net

Carrying amounts are considered to approximate fair value. All amounts that are assumed to be uncollectible within a reasonable time are written off and/or reserved.

Retained interests in transferred credit card receivables

Fair value is estimated by discounting anticipated future cash flows using a discount rate based on specific factors. The anticipated future cash flows are projected on a cash out basis to reflect the
restriction of cash flows until the investors have been fully paid. As of June 30, 2007 and 2006, the fair value of retained interests in transferred credit card receivables amounted to Ps. 61.6 million and Ps. 27.3 million,
respectively.

Accounts and notes payable

The carrying amount of accounts and notes payable reported in the consolidated balance sheet approximates their fair value.

Short-term debt

The carrying amount of short-term debt reported in the consolidated balance sheet
approximates fair value due to its short-term nature.

Long-term debt

As of June 30, 2007 and 2006, except for the Companys Convertible Notes as discussed below, the carrying amount of long-term debt reported in
the consolidated balance sheet approximates their fair value.

The fair value of the Companys Convertible Notes was Ps.
2,118.1 million and Ps. 976.6 million as of June 30, 2007 and 2006, respectively. Such fair value was determined based on the market price of the shares assuming full conversion of the notes at year-end.

Other receivables and other liabilities

The carrying amount of other receivables and other liabilities reported in the consolidated balance sheet approximates fair value due to their short-term nature.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | e) | Credit risk
| | -- | -----------

Financial instruments that potentially
subject the Company to a concentration of credit risk primarily consist of cash and current investments. The Company places its cash and current investments in high quality financial institutions that are located in Argentina and in the United
States of America.

The Companys policy is to limit the exposure with any one institution. As of June 30, 2006, cash and banks
and short-term investments amounted to Ps. 52.3 million held in more than 38 financial institutions. As of June 30, 2007, cash and banks and short-term investments amounted to Ps. 483.7 million. The Company continues with this policy and
maintains most of its current financial needs with several financial institutions. However, as discussed in Note 15, most of the net proceeds of the Companys Non-Convertible Notes are held with one high-quality financial institution, Citibank.
The Company expects to use these available funds in the near term and does not believe that there is a risk of default by the counterparty.

Credit card receivables arise primarily under open-end revolving credit accounts used to finance purchases of goods and services offered by the Companys shopping centers, hypermarkets and street stores, and financing and lending
activities. These accounts have various billing and payment structures, including varying minimum payment levels and finance charge rates. Credit card receivables are shown net of an allowance for uncollectible accounts. The Company provides an
allowance for uncollectible accounts based on impaired accounts, historical charge-off patterns and management judgment.

As of
June 30, 2007 the Company has sold credit card receivables of Ps. 751.7 million through securitization programs outstanding, for which the Companys credit risk exposure is contractually limited to the subordinated CPs held by the
Company representing Ps. 77.8 million (equity value) and a Ps. 11.9 million escrow reserves for losses.



| | f) | Recently issued accounting standards
| | -- | ------------------------------------

In February
2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, which resolves issues addressed in FASB SFAS No. 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial
Interests in Securitized Financial Assets. Among other things, it permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. This statement is effective
for all instruments acquired, issued, or subject to a remeasurement event occurring after the beginning of an entitys first fiscal year that begins after September 15, 2006. This standard will be effective for the Companys fiscal
year ended June 30, 2008. As of the date of these financial statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of operations.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, which permits an entity to choose either the
amortization method or fair value method for each class of separately recognized servicing assets and servicing liabilities. This statement is effective for an entitys first fiscal year that begins after September 15, 2006. This standard
will be effective for the Companys fiscal year ended June 30, 2008. As of the date of these financial statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of
operations.

In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes
(FIN 48). FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprises financial statements in accordance with FASB Statement
No. 109, Accounting for Income Taxes (SFAS No. 109). Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48
and in subsequent periods. FIN 48 will be effective for fiscal years beginning after December 15, 2006 and the provisions of FIN 48 will be applied to all tax positions accounted for under SFAS No. 109 upon initial adoption. The standard
will be effective for the Companys fiscal year ended June 30, 2008. The cumulative effect of applying the provisions of FIN 48 will be reported as an adjustment to the opening balance of retained earnings for that fiscal year.
The Company is currently in the process of evaluating the provisions of FIN 48 and its impact, if any, on its consolidated financial statements.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | f) | Recently issued accounting standards (continued)
| | -- | ------------------------------------------------



In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement, which
provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosures about the use of fair value to measure assets and liabilities. This statement emphasizes that fair value is a market-based
measurement, not an entity-specific measurement, and sets about a fair value hierarchy with the highest priority being quoted prices in active markets. Under the Statement, fair value measurements are disclosed by level within the hierarchy. While
the statement does not add any new fair value measurements, it does change current practice. Changes to practice include (a) a requirement for an entity to include its own credit standing in the measurement of its liabilities, (b) a
modification of the transaction price presumption, (c) a prohibition on the use of block discounts when valuing large blocks of securities for broker-dealers and investment companies, (d) a requirement to adjust the value of restricted
stock for the effect of the restriction even if the restriction lapses within one year. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. This standard will be effective for the
Companys fiscal year ended June 30, 2009. As of the date of these financial statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of operations.

In September 2006, the EITF issued EITF 06-07 Issuers Accounting for a Previously Bifurcated Conversion Option in a Convertible Debt Instrument
When the Conversion Option No Longer Meets the Bifurcation Criteria in FASB Statement No. 133 which states that an issuer should account for a previously bifurcated conversion option in a convertible debt instrument if the embedded
conversion option no longer meets the bifurcation criteria in Statement 133 by reclassifying the carrying value of the liability for the conversion option to shareholders equity. Any debt discount recorded at the issuance of the convertible
debt should continue to be amortized. The guidance in this Issue should be applied to all previously bifurcated conversion options in convertible debt instruments that no longer meet the bifurcation criteria in Statement 133 in the interim or annual
periods beginning after December 15, 2006 irrespective of whether the debt instrument was entered into prior or subsequent to the effective date of this Issue.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities -including an amendment of FASB Statement No. 115. This Statement permits
entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Boards long-term measurement
objectives for accounting for financial instruments, and will be effective for the Company as from July 1, 2008. This standard will be effective for the Companys fiscal year ended June 30, 2009. As of the date of these financial
statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of operations. As of the issuance date of these financial statements, the Company is evaluating the impact of the
adoption of such standard.



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | g) | Risks and uncertainties
| | -- | -----------------------

The Companys
operations are subject to risks and uncertainties with respect to:

Risks associated with Argentine operations. All Companys
operations and properties are located in Argentina. As a result, the Company financial condition and results of operations depend to a significant extent on macroeconomic and political conditions prevailing in Argentina.

Shopping center operating risks: The development, administration and profitability of shopping centers are impacted by various factors including:
the accessibility and the attractiveness of the area where the shopping center is located, the intrinsic attractiveness of the shopping center, the flow of people and the level of sales of each shopping center rental unit within the Companys
shopping centers, the amount of rent collected from each shopping center rental unit and the fluctuations in occupancy levels in the shopping centers. In the event that there is an increase in operational costs, caused by inflation or other factors,
it could have a material adverse effect on the Company if its tenants are unable to pay their higher rent obligations due to the increase in expenses.

Since May 28, 1997, Law No. 24,808 provides that tenants may rescind commercial lease agreements after the initial six months upon not less than sixty days written notice, subject to penalties of only
one-and-a-half months rent if the tenant rescinds during the first year of the lease, and one-month rent if the tenant rescinds after the first year of the lease. The exercise of such rescission rights could materially and adversely affect the
Company.

Real estate market operating risks: The Companys property is currently and will continue to be subject to risks
incident to the ownership and operation of commercial real estate and residential development properties. The Companys lease sales from its real estate operations may be adversely affected by (i) local or national economic conditions in
the areas in which the properties are located; (ii) oversupply of retail space or a reduction in demand for retail space; (iii) increased competition from other real estate operators; (iv) changes in the ability of the Company or the
tenants to provide for adequate maintenance and/or insurance; (v) increases in operating expenses; and/or (vi) adverse changes in the regional or national economy. Other risks include the inability to collect rent due to bankruptcy or
insolvency of tenants or otherwise, the need to periodically renovate, repair and release space and the costs thereof and the ability of a tenant to provide adequate maintenance and insurance. In addition, the failure to sell the property to be
constructed (General Paz Project, Caballito Project, Coto Residential Project and Rosario Project), could have a material adverse effect on the Company.

An economic downturn in the areas in which the shopping centers are located might adversely affect the Companys sales (through bankruptcy of tenants and reduction in the shopping center sales due to lower
variable income). Increases in operating costs due to inflation and other factors may result in some tenants being unable or unwilling to pay rent or expense increases. In addition, the Company has several tenants occupying space in more than one
shopping center and, as a result, if any of such tenants should experience financial difficulties and cease paying rent, the Companys operating results could be adversely affected. Furthermore, as leases on properties expire, the Company may
be unable to find new tenants or tenants may enter into new leases on terms that are less favorable to the Company. The failure to lease such properties could have a material adverse effect on the Company.

Credit card operating risks: Credit card operations are subject to federal legislation and regulation. From time to time, such legislation, as
well as competitive conditions, may affect, among other things, credit card finance charges. While the Company cannot predict the effect of future competitive conditions and legislation or the measures the Company might take in response thereto, a
significant reduction in the finance charges imposed by Tarshop would have an adverse effect on the Company. In addition, changes in general Argentine economic conditions, including, but not limited to, higher interest rates and increases in
delinquencies, charge-offs and personal bankruptcies could have an adverse effect on the Company.



F-68



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | h) | Statement of cash flows classification differences
| | -- | --------------------------------------------------

The statements of cash flows presented in the primary financial statements are prepared based on Argentine GAAP amounts.

Following SFAS No. 95 provisions, the total amounts of cash and cash equivalents at the beginning and end of the years shown in the statement of cash flows are required to be the same amounts as similarly titled line items shown in the
balance sheets as of those dates.



|                                                                  |  |                |   |  |             |   |  |             |  
|----------------------------------------------------------------- |  | -------------- | - |  | ----------- | - |  | ----------- | -
|                                                                  |  | As of June 30, |  
|                                                                  |  | 2007           |   |  | 2006        |   |  | 2005        |  
|Cash and banks                                                    |  | 31,829,851     |   |  | 38,222,036  |   |  | 24,961,116  |  
|Current investments                                               |  | 485,408,600    |   |  | 32,250,484  |   |  | 41,712,702  |  
|                                                                  |  |                |   |  |             |   |  |             |  
|Total cash and banks and current investments as per balance sheet |  | 517,238,451    |   |  | 70,472,520  |   |  | 66,673,818  |  
|Less: Items not considered cash and cash equivalents              |  |                |   |  |             |   |  |             |  
|- Retained interests in transferred credit card receivables       |  | (22,103,730    | ) |  | (10,318,797 | ) |  | (10,411,456 | )
|- Mortgage bonds issued by Banco Hipotecario S.A.                 |  | (1,661,969     | ) |  | (2,170,258  | ) |  | (2,841,985  | )
|- Government bonds                                                |  | (6,595,953     | ) |  | (1,254,485  | ) |  | (3,483,037  | )
|- Trust debt securities                                           |  |               |   |  | (324,325    | ) |  |            |  
|- Others                                                          |  | (1,380,420     | ) |  |            |   |  | (222,860    | )
|                                                                  |  |                |   |  |             |   |  |             |  
|Cash and cash equivalents as shown in the statement of cash flows |  | 485,496,379    |   |  | 56,404,655  |   |  | 49,714,480  |  
|                                                                  |  |                |   |  |             |   |  |             |  

Under Argentine GAAP, the Company considers all short-term, highly liquid investments that are
readily convertible to known amounts of cash and with original maturities of three months or less to be cash equivalents. Under Argentine GAAP, mutual funds are considered to be cash equivalents since original maturity is determined by reference to
the frequency with which liquidity is available according to current Argentine GAAP guidance and practice. However, under SFAS No. 95 Statement of Cash Flows, the original maturity is determined by reference to the stated term of
the security or the timeframe for exercising any put features to the issuer, not by reference to the frequency with which liquidity may be available through an auction, a put feature to a third party, or otherwise.

Therefore, for US GAAP purposes, certain mutual funds are not considered to be cash equivalents. As a result, differences exist between the total
amount of the increase or decrease in cash and cash equivalents reported in the primary financial statements and the same totals that would be reported in a statement of cash flows prepared following SFAS 95 provisions.



|                                                                  |  |                |   |  |             |   |  |             |  
|----------------------------------------------------------------- |  | -------------- | - |  | ----------- | - |  | ----------- | -
|                                                                  |  | As of June 30, |  
|                                                                  |  | 2007           |   |  | 2006        |   |  | 2005        |  
|Cash and banks                                                    |  | 31,829,851     |   |  | 38,222,036  |   |  | 24,961,116  |  
|Current investments                                               |  | 485,408,600    |   |  | 32,250,484  |   |  | 41,712,702  |  
|                                                                  |  |                |   |  |             |   |  |             |  
|Total cash and banks and current investments as per balance sheet |  | 517,238,451    |   |  | 70,472,520  |   |  | 66,673,818  |  
|Less: Items not considered cash and cash equivalents              |  |                |   |  |             |   |  |             |  
|- Mutual Funds                                                    |  | (438,106,629   | ) |  |            |   |  |            |  
|- Retained interests in transferred credit card receivables       |  | (22,103,730    | ) |  | (10,318,797 | ) |  | (10,411,456 | )
|- Mortgage bonds issued by Banco Hipotecario S.A.                 |  | (1,661,969     | ) |  | (2,170,258  | ) |  | (2,841,985  | )
|- Government bonds                                                |  | (6,595,953     | ) |  | (1,254,485  | ) |  | (3,483,037  | )
|- Trust debt securities                                           |  |               |   |  | (324,325    | ) |  |            |  
|- Others                                                          |  | (1,380,420     | ) |  |            |   |  | (222,860    | )
|                                                                  |  |                |   |  |             |   |  |             |  
|Cash and cash equivalents as shown in the statement of cash flows |  | 47,389,750     |   |  | 56,404,655  |   |  | 49,714,480  |  
|                                                                  |  |                |   |  |             |   |  |             |  



F-69



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | h) | Statements of cash flows classification differences (continued)
| | -- | ---------------------------------------------------------------



The following tables set forth the amounts of cash and cash equivalents at the beginning and end of
each year and corresponding increases and/or decreases that would be reported in a statement of cash flows following SFAS 95 provisions:



|                                                                        |  |                |   |  |            |  |             |  
|----------------------------------------------------------------------- |  | -------------- | - |  | ---------- |  | ----------- | -
|                                                                        |  | As of June 30, |  
|                                                                        |  | 2007           |   |  | 2006       |  | 2005        |  
|Cash and cash equivalents under US GAAP as of the beginning of the year |  | 56,404,655     |   |  | 49,714,480 |  | 68,296,467  |  
|Cash and cash equivalents under US GAAP as of year-end                  |  | 47,389,750     |   |  | 56,404,655 |  | 49,714,480  |  
|                                                                        |  |                |   |  |            |  |             |  
|Net (decrease) increase in cash and cash equivalents under US GAAP      |  | (9,014,905     | ) |  | 6,690,175  |  | (18,581,987 | )

Differences exist between cash flows from operating, investing and financing activities reported
in the primary financial statements and the cash flows from operating, investing and financing activities that would be reported under SFAS No. 95. Due to the difference in the definition of cash and cash equivalents, cash flows from purchasing
and selling of mutual funds would be reported as cash flows from investing activities following SFAS 95 provisions.

In addition, under
Argentine GAAP the effect of exchange rate changes on cash and cash equivalents were not disclosed by presenting a fourth cash flow statement category as required by US GAAP.

The following tables set forth the condensed statements of cash flows prepared in accordance with US GAAP:



|                                                             |  |                     |              |   |      |     |              |      |  |     |             |  
|------------------------------------------------------------ |  | ------------------- | ------------ | - | ---- | --- | ------------ | ---- |  | --- | ----------- | -
|                                                             |  | Year ended June 30, |             
|                                                             |  | 2007                |              |   | 2006 |     |              | 2005 | 
|Net cash provided by operating activities                    |  | Ps.                 | 178,981,849  |   |      | Ps. | 169,521,946  |      |  | Ps. | 95,239,538  |  
|Net cash used in investing activities                        |  |                     | (622,289,237 | ) |      |     | (124,023,513 | )    |  |     | (61,390,153 | )
|Net cash provided by (used in) financing activities          |  |                     | 433,562,814  |   |      |     | (39,952,398  | )    |  |     | (52,205,675 | )
|Effect of exchange rate changes on cash and cash equivalents |  |                     | 729,669      |   |      |     | 1,144,140    |      |  |     | (225,697    | )

Additionally, under Argentine GAAP, the Company consolidates the accounts of Metroshop S.A. on a
pro rata basis. Under US GAAP, proportionate consolidation is not appropriate since the Company does not exercise control over this investment. As a result, differences exist between the amount of cash and cash equivalents reported in the
primary financial statements and the amount of cash and cash equivalents that would be reported in a statement of cash flows prepared under US GAAP using Argentine GAAP numbers. For this reason, cash flows from operating, investing and
financing activities would be different in a statement of cash flows prepared under US GAAP using Argentine GAAP since each line item would exclude the pro rata equity interest of the accounts of Metroshop S.A.



F-70



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | i) | Earnings per share
| | -- | ------------------

Under Argentine GAAP the
Company is required to disclose earnings per share information in accordance with RT 18 for all periods presented. Note 13 to the consolidated financial statements disclose the computation of basic and diluted net income per common share under
Argentine GAAP. Guidance set forth in RT 18 is similar to the basic principles set forth in SFAS No. 128 Earnings per Share (SFAS No.128). See Note 3.z., for details.

Under US GAAP, basic and diluted earnings per share are presented in conformity with SFAS No. 128.

The following tables set forth the computation of basic and diluted net income per common share under US GAAP for all periods presented:



|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|-------------------------------------------------------------------- |  | ------------------- | ------------- | - | ---- | --- | ------------- | ---- |  | --- | ------------- | -
|                                                                     |  | Year ended June 30, |              
|                                                                     |  | 2007                |               |   | 2006 |     |               | 2005 | 
|Numerator:                                                           |  |                     |               |   |      |     |               |      |  |     |               |  
|Net income available to common shareholders                          |  | Ps.                 | 75,742,058    |   |      | Ps. | 47,007,816    |      |  | Ps. | 36,168,969    |  
|Plus (less): income (loss) impact of assumed conversions:            |  |                     |               |   |      |     |               |      |  |     |               |  
|Interest expense on convertible debt                                 |  |                     | 14,941,261    |   |      |     | 14,406,991    |      |  |     | 12,217,475    |  
|Foreign currency exchange loss (gain) on convertible debt            |  |                     | 330,596       |   |      |     | 9,408,565     |      |  |     | (2,999,252    | )
|Income tax effects                                                   |  |                     | (5,220,982    | ) |      |     | (8,319,325    | )    |  |     | (3,226,378    | )
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Net income available to common shareholders plus assumed conversions |  | Ps.                 | 85,792,933    |   |      | Ps. | 62,504,047    |      |  | Ps. | 42,160,814    |  
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Denominator:                                                         |  |                     |               |   |      |     |               |      |  |     |               |  
|Weighted-average number of shares outstanding                        |  |                     | 782,056,978   |   |      |     | 780,432,065   |      |  |     | 777,017,782   |  
|Plus: incremental shares of assumed conversions:                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Convertible debt                                                     |  |                     | 1,457,454,043 |   |      |     | 1,363,565,610 |      |  |     | 1,365,009,110 |  
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Adjusted weighted-average number of shares                           |  | Ps.                 | 2,239,511,021 |   |      | Ps. | 2,143,997,675 |      |  |     | 2,142,026,892 |  
|                                                                     |  |                     |               |   |      |     |               |      |  |     |               |  
|Basic and diluted EPS:                                               |  |                     |               |   |      |     |               |      |  |     |               |  
|Basic net income per common share                                    |  | Ps.                 | 0.10          |   |      | Ps. | 0.06          |      |  | Ps. | 0.05          |  
|Diluted net income per common share                                  |  |                     | 0.04          |   |      |     | 0.03          |      |  |     | 0.02          |  



F-71



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | j) | Severance indemnities
| | -- | ---------------------

Under Argentine law and
labor agreements, the Company is required to make minimum severance payments to its dismissed employees without cause and employees leaving its employment in certain other circumstances. Under Argentine GAAP, severance payments are expensed as
incurred. Under US GAAP, the Company follows the guidelines established by SFAS No. 112, Employers Accounting for Post-employment Benefits, and SFAS No. 43, Accounting for Compensated Absences, which
requires the accrual of severance costs if they relate to services already rendered, are related to rights that accumulate or vest, are probable of payment and are reasonably estimable. While the Company expects to make severance payments in the
future, it is impossible to estimate the number of employees that will be dismissed without proper cause in the future, if any, and accordingly the Company has not recorded such liability.



| | k) | Balance sheet classification differences
| | -- | ----------------------------------------

Under
Argentine GAAP, assets and liabilities are classified either as current or non-current, principally depending on the expected settlement dates. Under US GAAP, real estate companies generally do not present a classified balance sheet.

Under Argentine GAAP, the net deferred tax position by company has been classified as a non-current other receivable or as a non-current
tax payable. Under US GAAP, the classification of deferred taxes is determined by the classification of the current/non-current asset or liability for financial reporting to which the temporary difference is related. A temporary difference is
related to an asset or liability if reduction of the asset or liability causes the temporary difference to reverse. For deferred tax balances not related to an asset or liability for financial reporting (e.g. tax loss carryforwards), the
classification is based on the expected realization date. As of June 30, 2007 and 2006, Ps. 13.6 million and Ps. 7.7 million, respectively, would have been classified as current assets; Ps. 6.2 million and Ps. 3.7 million,
respectively, would have been classified as non-current assets; and Ps. 30.2 million and Ps. 16.5 million, respectively, would have been classified as non-current liabilities. As of June 30, 2007 and 2006, Ps. 5.0 million and
Ps.0.7 million would have been classified as current liabilities, respectively.

Under Argentine GAAP, deferred debt costs related to the
issuance of the Senior Notes were amortized under the straight-line method over the term of the agreement. Under US GAAP, these costs were deferred and amortized over the same period using the effective interest method. The Senior Notes were
fully settled as of June 30, 2005.

Under Argentine GAAP, deferred debt costs are shown as a deduction of the corresponding liability.
Under US GAAP, in accordance with APB Opinion No. 21 Interest on Receivables and Payables, issue costs should be reported as deferred charges in the balance sheet.



F-72



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | l) | Statement of income classification differences
| | -- | ----------------------------------------------

Should a US GAAP income statement be presented, certain items shown in some line items of the income statement under Argentine GAAP would have to be reclassified to affect other line items. The following reclassifications are intended
to present Argentine GAAP numbers using a different criterion of classification under US GAAP. The numbers included below are not US GAAP numbers.

Gross vs. net presentation

As part of the lease agreements, tenants are required to pay their
proportionate share of common area maintenance expenses. The Company does not charge any mark up on reimbursable costs. These expenses are incurred and paid by the Company and then passed through to tenants as reimbursable costs.

Under Argentine GAAP, pass-through expenses, such as these reimbursable costs, are accounted for on a net basis and, as such, excluded from revenues and
expenses in the consolidated financial statements. However, Note 4.d. shows the total amount of expenses passed through to tenants by expense category with the corresponding offsetting amount therefore having no impact in the consolidated costs of
the Company. No amount is shown as revenues.

Under US GAAP, the Company accounts for pass-through revenue and expenses in accordance
with Emerging Issues Task Force, or EITF, Issue 01-14, Income Statement Characterization of Reimbursements Received for Out of Pocket Expenses Incurred, and include these costs incurred as a component of revenue and as a component of
operating expenses in the statement of income. These costs, which are pass-through expenses to tenants included in both revenues and expenses were Ps. 116.4 million, Ps. 87.9 million and Ps. 64.8 million for the years ended
June 30, 2007, 2006 and 2005, respectively. As these expenses are fully reimbursed, without mark-up, by the tenants, there is no impact on operating income, net income, EPS, cash flows or the balance sheet.

Should the EITF 01-14 be applied to the Argentine GAAP income statement, net revenues under Argentine GAAP would have been Ps. 599.6 million, Ps.
449.3 million and Ps. 295.0 million for the years ended June 30, 2007, 2006 and 2005, respectively.

Operating income

Certain expense and/or income items included within Other expenses, net and Financial results, net of the
Argentine GAAP income statement would have been included in the determination of operating income under US GAAP. In addition, under Argentine GAAP, the recovery of certain allowances and provisions has been included within Other expenses,
net. Under US GAAP, such items would have been classified as a reversal to the amounts in the line items, which were originally recorded.

Should certain other expenses, financial results and the recovery of allowances and provisions be reclassified into/out of operating income, as applicable, operating income under Argentine GAAP would have been Ps.
155.4 million, Ps. 126.9 million and Ps. 95.5 million for the years ended June 30, 2007, 2006 and 2005, respectively.



F-73



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | m) | Condensed balance sheet information on equity investees
| | -- | -------------------------------------------------------

The Company used the equity method of accounting for its investments over which the Company exercises significant influence. As such, these investments were recorded at the amount of the underlying equity in their net assets and adjusted to
recognize the Companys share of the undistributed earnings or losses. The Company had a 50% ownership interest in E-commerce Latina S.A as of June 30, 2006 and 2005. In January 2007, the Company acquired the remaining 50% in E-commerce
Latina S.A. (See Note 2 for details). The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date. The Companys
share of the losses of this company was Ps. 0.7 million and Ps. 0.6 million during the years ended June 30, 2006 and 2005, respectively, and its investment in this company totaled 0.1 million at June 30, 2006. Summarized
financial information of this affiliate (on a 100% basis) was as follows:



|                        |  |                    |          
|----------------------- |  | ------------------ | ---------
|E-Commerce Latina       |  | As of June 30,2006
|Current assets          |  | Ps.                | 1,547,667
|Non-current assets      |  |                    | 1,675,012
|                        |  |                    |          
|Total assets            |  |                    | 3,222,679
|                        |  |                    |          
|Current liabilities     |  |                    | 2,963,222
|Non-current liabilities |  |                    | 500      
|                        |  |                    |          
|Total liabilities       |  |                    | 2,963,722
|                        |  |                    |          
|Minority interest       |  |                    | 5        
|                        |  |                    |          
|Shareholders equity    |  | Ps.                | 258,952  
|                        |  |                    |          



|               |  |                             |             |   |      |     |            |  
|-------------- |  | --------------------------- | ----------- | - | ---- | --- | ---------- | -
|               |  | For the year ended June 30, |            
|               |  | 2006                        |             |   | 2005 |    
|Revenues       |  | Ps.                         | 5,593,472   |   |      | Ps. | 2,636,028  |  
|Operating loss |  |                             | (1,298,919  | ) |      |     | (1,287,525 | )
|Net loss       |  | Ps.                         | (1,357,755) |   |      | Ps. | (1,253,367 | )

As of June 30, 2006 and 2005 accumulated losses of E-Commerce Latina totaled Ps.
1.4 million and Ps. 42.4 million, respectively. On February 6, 2006 the Extraordinary Shareholders Meeting approved a capital increase for the amount of Ps. 22,010,575 through the capitalization of additional paid-in-capital.
The Company issued 22,010,575 nominative common stock of Ps. 1 nominal value each and 1 vote per share. As a result, the capital stock increased to Ps. 22,034,275.



F-74



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | n) | Investments in debt and equity securities
| | -- | -----------------------------------------

In
accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, the Company has classified its investments in mutual funds as well as its investments in government and mortgage bonds outstanding at
June 30, 2007, 2006 and 2005 as available-for-sale securities. The following are additional disclosure requirements in accordance with SFAS No. 115:

Available-for-sale securities

The amortized cost, gross unrealized holding gains or losses and fair
value of the available-for-sale securities by major security type at June 30, 2007 and 2006 were as follows:



|                  |  |             |  |                |  |             |  |            |  |                |   |  |           
|----------------- |  | ----------- |  | -------------- |  | ----------- |  | ---------- |  | -------------- | - |  | ----------
|                  |  | 2007        |  | 2006          
|Instrument        |  | Cost        |  | Unrealizedgain |  | Fair value  |  | Cost       |  | Unrealizedgain |   |  | Fair value
|Mutual funds      |  | 445,233,742 |  | 3,408,555      |  | 448,642,297 |  | 13,736,601 |  | 244,200        |   |  | 13,980,801
|Mortgage bonds    |  | 1,659,846   |  | 2,123          |  | 1,661,969   |  | 2,181,322  |  | (11,064        | ) |  | 2,170,258 
|Government bonds  |  | 6,311,077   |  | 284,876        |  | 6,595,953   |  | 1,221,091  |  | 33,394         |   |  | 1,254,485 
|Garantizar S.G.R. |  | 1,247,081   |  | 133,339        |  | 1,380,420   |  |           |  |               |   |  |          

Proceeds from sales of investment securities available-for-sale during the years ended
June 30, 2007 and 2006 were Ps. 428.4 million and Ps. 245.6 million, respectively. Gross gains of Ps. 5.8 million and Ps. 1.9 million for the years ended June 30, 2007 and 2006, respectively, were realized on those sales.



F-75



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##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | o) | Comprehensive income (loss)
| | -- | ---------------------------

On July 1, 1998,
the Company adopted SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes guidelines for the reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set
of general purpose financial statements. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the
same prominence as other financial statements. Accumulated other comprehensive income is presented below, net of income tax benefit/expense:



|                                                                                                                                                                                                                                                                                                                    |  |                     |            |      |     |            |  |     |           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ---------- | ---- | --- | ---------- |  | --- | ----------
|                                                                                                                                                                                                                                                                                                                    |  | Year ended June 30,
|                                                                                                                                                                                                                                                                                                                    |  | 2007                |            | 2006 |     | 2005      
|Net income under US GAAP                                                                                                                                                                                                                                                                                            |  | Ps.                 | 75,742,058 |      | Ps. | 47,007,816 |  | Ps. | 36,168,969
|Other comprehensive income:                                                                                                                                                                                                                                                                                         |  |                     |            |      |     |            |  |     |           
|Net change in unrealized holding gain on available-for-sale securities (net of minority interest and income taxes of Ps. 130,260 and Ps.
1,281,505, respectively, for 2007, Ps. 29,449 and Ps. 16,812, respectively, for 2006; and Ps. (5,055) and Ps. 29,771, respectively, for 2005)                              |  |                     | 2,249,677  |      |     | 1,773      |  |     | 60,344    
|Net change in unrealized holding gain on retained interests in transferred credit card receivables (net of income taxes and minority interest
of Ps. 699,900 and Ps. 259,963 respectively, for 2007, Ps. 1,903,361 and Ps. 706,483 respectively, for 2006; and Ps. 765,471 and Ps. 284,317, respectively, for 2005) |  |                     | 1,039,851  |      |     | 2,828,331  |  |     | 1,137,269 
|                                                                                                                                                                                                                                                                                                                    |  |                     |            |      |     |            |  |     |           
|Comprehensive income                                                                                                                                                                                                                                                                                                |  | Ps.                 | 79,031,586 |      | Ps. | 49,837,920 |  | Ps. | 37,366,582
|                                                                                                                                                                                                                                                                                                                    |  |                     |            |      |     |            |  |     |           
|                                                                                                                                                                                                                                                                                                                    | 
|                                                                                                                                                                                                                                                                                                                    |  | As of June 30,     
|                                                                                                                                                                                                                                                                                                                    |  | 2007                |            | 2006 |     | 2005      
|Unrealized holding gains on available-for-sale securities                                                                                                                                                                                                                                                           |  |                     | 2,388,510  |      |     | 138,833    |  |     | 137,060   
|Unrealized holding gains on retained interests in transferred credit card receivables                                                                                                                                                                                                                               |  |                     | 6,045,440  |      |     | 5,005,589  |  |     | 2,177,258 
|                                                                                                                                                                                                                                                                                                                    |  |                     |            |      |     |            |  |     |           
|Accumulated other comprehensive income                                                                                                                                                                                                                                                                              |  | Ps.                 | 8,433,950  |      | Ps. | 5,144,422  |  | Ps. | 2,314,318 
|                                                                                                                                                                                                                                                                                                                    |  |                     |            |      |     |            |  |     |           



| | p) | Pro-rata consolidation of Metroshop S.A.
| | -- | ----------------------------------------

As
discussed in Note 2.c. under Argentine GAAP the Company consolidates the accounts of Metroshop S.A. on a pro-rata basis. Under US GAAP consolidation is not appropriate since the Company does not exercise control over the subsidiary.

Presented below is the consolidated condensed information of the Company at June 30, 2007 and 2006 considering Metroshop S.A. as an equity investee:



F-76



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | p) | Pro-rata consolidation of Metroshop S.A. (continued)
| | -- | ----------------------------------------------------



|                        |  |                                            |  |                                      |   |  |                                                |  |              
|----------------------- |  | ------------------------------------------ |  | ------------------------------------ | - |  | ---------------------------------------------- |  | -------------
|                        |  | As of and for the year ended June 30, 2007
|                        |  | As reported                                |  | Elimination ofMetroshopS.A. accounts |   |  | Inclusion ofMetroshop S.A.as an equityinvestee |  | As adjusted  
|Current assets          |  | 727,845,115                                |  | 2,001,416                            |   |  |                                               |  | 729,846,531  
|Non-current assets      |  | 1,365,865,435                              |  | (6,413,116                           | ) |  | 3,100,889                                      |  | 1,362,553,208
|                        |  |                                            |  |                                      |   |  |                                                |  |              
|Total assets            |  | 2,093,710,550                              |  | (4,411,700                           | ) |  | 3,100,889                                      |  | 2,092,399,739
|                        |  |                                            |  |                                     
|Current liabilities     |  | 403,341,680                                |  | (1,310,811                           | ) |  |                                               |  | 402,030,869  
|Non-current liabilities |  | 795,033,781                                |  |                                     |   |  |                                               |  | 795,033,781  
|                        |  |                                            |  |                                      |   |  |                                                |  |              
|Total liabilities       |  | 1,198,375,461                              |  | (1,310,811                           | ) |  |                                               |  | 1,197,064,650
|                        |  |                                            |  |                                     
|Minority interest       |  | 71,427,862                                 |  |                                     |   |  |                                               |  | 71,427,862   
|Shareholders equity    |  | 823,907,227                                |  |                                     |   |  |                                               |  | 823,907,227  
|                        |  |                                            |  |                                     
|Revenues                |  | 483,231,154                                |  | (5,520,783                           | ) |  |                                               |  | 477,710,371  
|Gross profit            |  | 314,924,586                                |  | (3,507,403                           | ) |  |                                               |  | 311,417,183  
|Net income              |  | 64,056,564                                 |  |                                     |   |  |                                               |  | 64,056,564   



|                        |  |                                            |  |                                      |   |  |                                                |  |              
|----------------------- |  | ------------------------------------------ |  | ------------------------------------ | - |  | ---------------------------------------------- |  | -------------
|                        |  | As of and for the year ended June 30, 2006
|                        |  | As reported                                |  | Elimination ofMetroshopS.A. accounts |   |  | Inclusion ofMetroshop S.A.as an equityinvestee |  | As adjusted  
|Current assets          |  | 213,703,570                                |  | 1,223,554                            |   |  |                                               |  | 214,927,124  
|Non-current assets      |  | 1,141,341,918                              |  | (1,357,625                           | ) |  |                                               |  | 1,139,984,293
|                        |  |                                            |  |                                      |   |  |                                                |  |              
|Total assets            |  | 1,355,045,488                              |  | (134,071                             | ) |  |                                               |  | 1,354,911,417
|                        |  |                                            |  |                                     
|Current liabilities     |  | 293,556,844                                |  | (211,947                             | ) |  |                                               |  | 293,344,897  
|Non-current liabilities |  | 224,658,434                                |  |                                     |   |  | 77,876                                         |  | 224,736,310  
|                        |  |                                            |  |                                      |   |  |                                                |  |              
|Total liabilities       |  | 518,215,278                                |  | (211,947                             | ) |  | 77,876                                         |  | 518,081,207  
|                        |  |                                            |  |                                     
|Minority interest       |  | 29,989,705                                 |  |                                     |   |  |                                               |  | 29,989,705   
|Shareholders equity    |  | 806,840,505                                |  |                                     |   |  |                                               |  | 806,840,505  
|                        |  |                                            |  |                                     
|Revenues                |  | 361,355,913                                |  | (1,684,494                           | ) |  |                                               |  | 359,671,419  
|Gross profit            |  | 222,290,537                                |  | (926,859                             | ) |  |                                               |  | 221,363,678  
|Net income              |  | 44,679,032                                 |  |                                     |   |  |                                               |  | 44,679,032   



F-77



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | q) | Investments in real estate and accumulated depreciation
| | -- | -------------------------------------------------------



The following is a summary of the Companys investments in real estate as of June 30, 2007
prepared in accordance with SEC S-X 12-28.



|                         |  |              |  |      |             |                          |     |               |  |     |                         |   |                                |     |             |  |                         |                  |  |                      |               |               |     |                                                                    |   |  |                                   |  |                                              |  |   
|------------------------ |  | ------------ |  | ---- | ----------- | ------------------------ | --- | ------------- |  | --- | ----------------------- | - | ------------------------------ | --- | ----------- |  | ----------------------- | ---------------- |  | -------------------- | ------------- | ------------- | --- | ------------------------------------------------------------------ | - |  | --------------------------------- |  | -------------------------------------------- |  | --
|Description              |  | Encumbrances |  | Land |             | Buildings andimprovement |     | Transfers     |  |     | Improvements /Additions |   | Totalbuildings andimprovements |     | Total       |  | Accumulateddepreciation |                  |  | Date of construction |               | Date acquired |     | Life on whichdepreciation in lateststatements of incomeis computed
|Shopping centers:        |  |              |  |      |             |                          |     |               |  |     |                         |   |                                |     |             |  |                         |                  |  |                      |               |               |     |                                                                    |   |  |                                   |  |                                              |  |   
|-Abasto                  |  |              |  | Ps.  | 9,752,107   |                          | Ps. | 242,398,568   |  | Ps. | 41,173                  |   |                                | Ps. | 730,995     |  | Ps.                     | 243,170,736      |  | Ps.                  | 252,922,843   |               | Ps. | (71,663,613                                                        | ) |  | November, 1998                    |  |                                             |  | 31
|- Alto Palermo           |  |              |  |      | 8,693,768   |                          |     | 398,126,817   |  |     | 76,688                  |   |                                |     | 379,750     |  |                         | 398,583,255      |  |                      | 407,277,023   |               |     | (231,759,828                                                       | ) |  | October, 1990                     |  | November, 1997 andMarch, 1998                |  | 26
|- Alto Avellaneda        |  |              |  |      | 18,089,159  |                          |     | 147,847,607   |  |     | 400,923                 |   |                                |     | 11,652,172  |  |                         | 159,900,702      |  |                      | 177,989,861   |               |     | (88,325,783                                                        | ) |  | October, 1995                     |  | November andDecember, 1997                   |  | 19
|- Paseo Alcorta          |  |              |  |      | 8,066,295   |                          |     | 97,904,672    |  |     | 7,714                   |   |                                |     | 6,169,139   |  |                         | 104,081,525      |  |                      | 112,147,820   |               |     | (47,716,189                                                        | ) |  | June, 1992                        |  | June, 1997                                   |  | 22
|- Alto Noa               |  |              |  |      | 356,752     |                          |     | 42,857,786    |  |     |                        |   |                                |     | 93,420      |  |                         | 42,951,206       |  |                      | 43,307,958    |               |     | (16,267,694                                                        | ) |  | September, 1994                   |  | March, 1995,September, 1996and January, 2000 |  | 22
|- Patio Bullrich         |  |              |  |      | 8,418,811   |                          |     | 151,834,699   |  |     | (11,038                 | ) |                                |     | 508,577     |  |                         | 152,332,238      |  |                      | 160,751,049   |               |     | (57,614,534                                                        | ) |  | September, 1988                   |  | October, 1998                                |  | 23
|- Buenos Aires Design    |  |              |  |      |            |                          |     | 48,984,751    |  |     | (38,413                 | ) |                                |     | 73,711      |  |                         | 49,020,049       |  |                      | 49,020,049    |               |     | (32,938,536                                                        | ) |  | BetweenNovember andDecember, 1993 |  | November, 1997                               |  | 20
|- Alto Rosario           |  |              |  |      | 25,686,165  |                          |     | 63,560,471    |  |     | 1,222,672               |   |                                |     | 1,065,566   |  |                         | 65,848,709       |  |                      | 91,534,874    |               |     | (5,808,959                                                         | ) |  | November 2004                     |  |                                             |  | 29
|- Mendoza Plaza Shopping |  |              |  |      | 10,820,546  |                          |     | 101,697,509   |  |     | (543,516                | ) |                                |     | 4,410,188   |  |                         | 105,564,181      |  |                      | 116,384,727   |               |     | (27,380,450                                                        | ) |  | June, 1994                        |  | December, 2004                               |  | 22
|- PAMSA                  |  |              |  |      | 123,567,640 |                          |     |              |  |     |                        |   |                                |     | 44,038,768  |  |                         | 44,038,768       |  |                      | 167,606,408   |               |     |                                                                   |   |  | Under construction                |  | November, 2006                               |  |  
|-Empalme.                |  | Antichresis  |  |      | 5,009,058   |                          |     |              |  |     |                        |   |                                |     | 88,388,364  |  |                         | 88,388,364       |  |                      | 93,397,422    |               |     | (17,889,212                                                        | ) |  | March, 1990                       |  | December, 2006                               |  | 34
|Neuquén                  |  | Mortgage     |  |      | 3,313,623   |                          |     | 8,852,279     |  |     | 15,268                  |   |                                |     | 120,630     |  |                         | 8,988,177        |  |                      | 12,301,800    |               |     |                                                                   |   |  | Under construction                |  | September, 1999                              |  |  
|Other                    |  |              |  |      | 965,445     |                          |     | 8,804,643     |  |     |                        |   |                                |     |            |  |                         | 8,804,643        |  |                      | 9,770,088     |               |     | (910,208                                                           | ) |  |                                  |  |                                             |  |  
|                         |  |              |  |      |             |                          |     |               |  |     |                         |   |                                |     |             |  |                         |                  |  |                      |               |               |     |                                                                    |   |  |                                   |  |                                              |  |   
|Total                    |  |              |  | Ps.  | 222,739,369 |                          |     | 1,312,869,802 |  |     | 1,171,471               |   |                                |     | 157,631,280 |  |                         | Ps.1,471,672,553 |  | Ps.                  | 1,694,411,922 |               | Ps. | (598,275,006                                                       | ) |  |                                   |  |                                              |  |   
|                         |  |              |  |      |             |                          |     |               |  |     |                         |   |                                |     |             |  |                         |                  |  |                      |               |               |     |                                                                    |   |  |                                   |  |                                              |  |   



F-78



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | q) | Investments in real estate and accumulated depreciation (continued)
| | -- | -------------------------------------------------------------------



|                                                     |  |                     |               |   |      |     |               |  
|---------------------------------------------------- |  | ------------------- | ------------- | - | ---- | --- | ------------- | -
|                                                     |  | Year ended June 30, |              
|                                                     |  | 2007                |               |   | 2006 |    
|Balance, beginning of the year                       |  | Ps.                 | 1,407,406,658 |   |      | Ps. | 1,399,133,239 |  
|Additions during the year:                           |  |                     |               |   |      |     |               |  
|Improvements                                         |  |                     | 283,975,975   |   |      |     | 19,569,420    |  
|Transfers from other fixed assets                    |  |                     | 1,171,471     |   |      |     |              |  
|Amortization of impairment                           |  |                     |              |   |      |     | 120,999       |  
|Recovery of impairment (1) (2)                       |  |                     | 2,153,984     |   |      |     | 3,311,966     |  
|                                                     |  |                     |               |   |      |     |               |  
|                                                     |  | Ps.                 | 1,694,708,088 |   |      | Ps. | 1,422,135,624 |  
|                                                     |  |                     |               |   |      |     |               |  
|Deductions during the year:                          |  |                     |               |   |      |     |               |  
|Deductions                                           |  |                     | (296,166      | ) |      |     |              |  
|Damage in Alto Avellaneda Shopping                   |  |                     |              |   |      |     | (13,438,300   | )
|Sale of real estate                                  |  |                     |              |   |      |     | (1,076,013    | )
|Transfers from other receivables                     |  |                     |              |   |      |     | (64,790       | )
|Transfers to work-in-progress leasehold improvements |  |                     |              |   |      |     | (6,722        | )
|Transfers to facilities                              |  |                     |              |   |      |     | (143,141      | )
|                                                     |  |                     |               |   |      |     |               |  
|                                                     |  | Ps.                 | (296,166      | ) |      | Ps. | (14,728,966   | )
|                                                     |  |                     |               |   |      |     |               |  
|Balance, end of the year                             |  | Ps.                 | 1,694,411,922 |   |      | Ps. | 1,407,406,658 |  
|                                                     |  |                     |               |   |      |     |               |  

---

|(1) | As of June 30, 2006 includes Ps. 24,832 related to Neuquén and Ps. 3,287,134 related to Alto Rosario.
|--- | -----------------------------------------------------------------------------------------------------

|(2) | As of June 30, 2007 related to Neuquén.
|--- | ---------------------------------------



F-79



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | r) | Mortgage receivable on real estate
| | -- | ----------------------------------

The following
is a summary of the Companys mortgage receivable on real estate as of June 30, 2007 prepared in accordance with SEC S-X 12-29.



|                                            |  |               |   |  |                                             |  |                      |  |             |  |                         |           |                             |     |                                                                           |  |     
|------------------------------------------- |  | ------------- | - |  | ------------------------------------------- |  | -------------------- |  | ----------- |  | ----------------------- | --------- | --------------------------- | --- | ------------------------------------------------------------------------- |  | ----
|                                            |  | Col. B.       |   |  | Col. C.                                     |  | Col. D.              |  | Col. E.     |  | Col. F.                 |           | Col. G.                     |     | Col. H.                                                                  
|Description                                 |  | Interest Rate |   |  | Final maturity date                         |  | Periodic paymentterm |  | Prior liens |  | Face amount ofmortgages |           | Carrying amount ofmortgages |     | Principal amount ofreceivables subject todelinquent principal or
interest
|Customer A                                  |  | 14            | % |  | June 2014                                   |  | Monthly              |  | None        |  |                         | 127,676   |                             |     | 73,445                                                                    |  | None
|Customer B                                  |  | 14            | % |  | May 2014                                    |  | Monthly              |  | None        |  |                         | 77,163    |                             |     | 128,542                                                                   |  | None
|Customer C                                  |  | 12            | % |  | September 2009                              |  | Monthly              |  | None        |  |                         | 76,000    |                             |     | 27,884                                                                    |  | None
|Customer D                                  |  | 12            | % |  | April 2015                                  |  | Monthly              |  | None        |  |                         | 72,801    |                             |     | 57,107                                                                    |  | None
|Customer E                                  |  | 14            | % |  | June 2014                                   |  | Monthly              |  | None        |  |                         | 70,165    |                             |     | 148,550                                                                   |  | None
|Customer F                                  |  | 14            | % |  | July 2009                                   |  | Monthly              |  | None        |  |                         | 60,368    |                             |     | 140,838                                                                   |  | None
|Customer G                                  |  | 14            | % |  | April 2014                                  |  | Monthly              |  | None        |  |                         | 57,802    |                             |     | 41,731                                                                    |  | None
|Customer H                                  |  | 16            | % |  | February 2010                               |  | Monthly              |  | None        |  |                         | 57,539    |                             |     | 29,580                                                                    |  | None
|Customer I                                  |  | 12            | % |  | April 2015                                  |  | Monthly              |  | None        |  |                         | 53,173    |                             |     | 41,829                                                                    |  | None
|Customer J                                  |  | 14            | % |  | February 2014                               |  | Monthly              |  | None        |  |                         | 49,908    |                             |     | 76,109                                                                    |  | None
|Customer K                                  |  | 16            | % |  | September 2009                              |  | Monthly              |  | None        |  |                         | 20,000    |                             |     | 43,608                                                                    |  | None
|Mortgages Receivables Ps.30,000-Ps.49,999   |  | 14-17         | % |  | September 2007-September 2009 -January 2011 |  | Monthly              |  | None        |  |                         | 76,130    |                             |     | 30,546                                                                    |  | None
|Mortgages Receivables Ps. 50,000-Ps. 69,999 |  | 14-15         | % |  | May 2009 - July 2014                        |  | Monthly              |  | None        |  |                         | 111,200   |                             |     | 39,004                                                                    |  | None
|Mortgages receivables Ps.70,000-Ps.89,999   |  | 14-16         | % |  | June 2009 - December 2014                   |  | Monthly              |  | None        |  |                         | 234,710   |                             |     | 1,992                                                                     |  | None
|                                            |  |               |   |  |                                             |  |                      |  |             |  |                         |           |                             |     |                                                                           |  |     
|                                            |  |               |   |  |                                             |  |                      |  |             |  | Ps.                     | 1,144,635 |                             | Ps. | 880,765                                                                   |  |     
|                                            |  |               |   |  |                                             |  |                      |  |             |  |                         |           |                             |     |                                                                           |  |     



F-80



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|19. | Differences between Argentine GAAP and US GAAP (continued)
|--- | ----------------------------------------------------------



| | II. | Additional disclosure requirements
| | --- | ----------------------------------



| | r) | Mortgage receivable on real estate (continued)
| | -- | ----------------------------------------------



The summary of activity in mortgage receivable is as follows:



|                               |  |                      |         |   |      |     |           |  
|------------------------------ |  | -------------------- | ------- | - | ---- | --- | --------- | -
|                               |  | Years ended June 30, |        
|                               |  | 2007                 |         |   | 2006 |    
|Balance, beginning of the year |  | Ps.                  | 958,645 |   |      | Ps. | 1,122,500 |  
|Deductions during the year:    |  |                      |         |   |      |     |           |  
|Collections of principal       |  |                      | (77,880 | ) |      |     | (163,855  | )
|                               |  |                      |         |   |      |     |           |  
|Balance, end of year           |  | Ps.                  | 880,765 |   |      | Ps. | 958,645   |  
|                               |  |                      |         |   |      |     |           |  



| | s) | Acquisition of Empalme
| | -- | ----------------------

The following
schedule presents supplemental unaudited pro forma information as if the acquisition of Empalme had occurred on July 1, 2005. The unaudited pro forma statement of income information is presented based on information available, is intended for
informational purposes only and is not necessarily indicative of and does not purport to represent what the Companys future financial condition or operating results will be after giving effect to the Empalme transaction and does not reflect
actions that may be undertaken by management in integrating this business.



|                                                             |  |                               |   |  |              |  
|------------------------------------------------------------ |  | ----------------------------- | - |  | ------------ | -
|                                                             |  | Pro Forma Year ended June 30, |  
|                                                             |  | 2007 Ps.                      |   |  | 2006 Ps.     |  
|Revenues                                                     |  | 487,130,852                   |   |  | 368,096,444  |  
|Costs                                                        |  | (169,773,933                  | ) |  | (141,960,511 | )
|                                                             |  |                               |   |  |              |  
|Gross profit                                                 |  | 317,356,919                   |   |  | 226,135,933  |  
|Selling expenses                                             |  | (84,512,497                   | ) |  | (47,680,834  | )
|Administrative expenses                                      |  | (80,232,145                   | ) |  | (54,239,713  | )
|Net income from retained interest in securitized receivables |  | 3,253,789                     |   |  | 2,625,001    |  
|Gain from recognition of inventories at net realizable value |  | 545,400                       |   |  | 3,497,632    |  
|                                                             |  |                               |   |  |              |  
|Operating income                                             |  | 156,411,466                   |   |  | 130,338,019  |  
|Loss in equity investee                                      |  | (678,569                      | ) |  | (678,881     | )
|Amortization of goodwill                                     |  | (4,366,356                    | ) |  | (4,739,675   | )
|Financial results, net                                       |  | (20,753,533                   | ) |  | (13,206,601  | )
|Other expenses, net                                          |  | (3,341,648                    | ) |  | (9,745,891   | )
|                                                             |  |                               |   |  |              |  
|Income before taxes                                          |  | 127,271,360                   |   |  | 101,966,971  |  
|Income tax expense                                           |  | (56,777,797                   | ) |  | (48,715,790  | )
|Minority interest                                            |  | (6,370,610                    | ) |  | (4,784,413   | )
|                                                             |  |                               |   |  |              |  
|Net income                                                   |  | 64,122,953                    |   |  | 48,466,768   |  
|                                                             |  |                               |   |  |              |  



F-81



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos,
except as otherwise indicated)



|20. | Other financial statement information
|--- | -------------------------------------

The
following tables present additional consolidated financial statement disclosures required under Argentine GAAP:



| | a. | Fixed assets, net
| | -- | -----------------



| | b. | Intangible assets, net
| | -- | ----------------------



| | c. | Goodwill, net
| | -- | -------------



| | d. | Allowances and provisions
| | -- | -------------------------



| | e. | Cost of leases and services, credit card operations and others
| | -- | --------------------------------------------------------------



| | f. | Foreign currency assets and liabilities
| | -- | ---------------------------------------



| | g. | Other expenses
| | -- | --------------



F-82



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)



|20. | Other financial statement information (continued)
|--- | -------------------------------------------------



| | a. | Fixed assets, net
| | -- | -----------------



|                             |  |                               |               |           |     |                 |  |     |             |   |  |                         |                |   |  |     |              
|---------------------------- |  | ----------------------------- | ------------- | --------- | --- | --------------- |  | --- | ----------- | - |  | ----------------------- | -------------- | - |  | --- | -------------
|                             |  | Original value               
|                             |  |                               |               |           |     |                 |  |     |             |   |  |                        
|Principal account            |  | Value as of beginning of year |               | Additions |     | Deductions      |  |     | Transfers   |   |  | Value as of end of year
|Properties:                  |  |                               |               |           |     |                 |  |     |             |   |  |                         |                |   |  |     |              
|Shopping Centers:            |  |                               |               |           |     |                 |  |     |             |   |  |                         |                |   |  |     |              
|-Abasto                      |  | Ps.                           | 252,177,964   |           | Ps. | 370,202         |  | Ps. |            |   |  | Ps.                     | 41,173         |   |  | Ps. | 252,589,339  
|-Alto Palermo                |  |                               | 406,821,358   |           |     | 379,750         |  |     | (773        | ) |  |                         | 76,688         |   |  |     | 407,277,023  
|-Alto Avellaneda             |  |                               | 165,936,766   |           |     | 7,172,934       |  |     |            |   |  |                         | 400,923        |   |  |     | 173,510,623  
|-Paseo Alcorta               |  |                               | 105,970,967   |           |     | 592,550         |  |     |            |   |  |                         | 7,714          |   |  |     | 106,571,231  
|-Alto Noa                    |  |                               | 43,218,304    |           |     | 93,420          |  |     | (3,766      | ) |  |                         |               |   |  |     | 43,307,958   
|-Buenos Aires Design         |  |                               | 48,986,135    |           |     | 30,210          |  |     | (1,385      | ) |  |                         | (43,178        | ) |  |     | 48,971,782   
|-Patio Bullrich              |  |                               | 160,058,090   |           |     | 59,099          |  |     | (13,018     | ) |  |                         | (11,038        | ) |  |     | 160,093,133  
|-Alto Rosario                |  |                               | 86,479,033    |           |     | 960,379         |  |     |            |   |  |                         | 4,054,930      |   |  |     | 91,494,342   
|-Mendoza Plaza Shopping      |  |                               | 112,524,945   |           |     | 4,410,188       |  |     | (6,890      | ) |  |                         | (543,516       | ) |  |     | 116,384,727  
|-Neuquén                     |  |                               | 10,321,414    |           |     |                |  |     | 67          |   |  |                         |               |   |  |     | 10,321,481   
|-Rosario plots of land       |  |                               |              |           |     |                |  |     |            |   |  |                         |               |   |  |     |             
|-Caballito plots of land     |  |                               |              |           |     |                |  |     |            |   |  |                         |               |   |  |     |             
|-PAMSA                       |  |                               |              |           |     | 89,154,469      |  |     |            |   |  |                         | 59,912,260     |   |  |     | 149,066,729  
|-Empalme                     |  |                               |              |           |     | 93,385,972      |  |     |            |   |  |                         |               |   |  |     | 93,385,972   
|Other                        |  |                               | 10,013,202    |           |     |                |  |     | (243,114    | ) |  |                         |               |   |  |     | 9,770,088    
|Leasehold improvements       |  |                               | 8,450,898     |           |     | 737,654         |  |     | (19,463     | ) |  |                         |               |   |  |     | 9,169,089    
|Facilities                   |  |                               | 37,107,083    |           |     | 4,167,566       |  |     |            |   |  |                         | 1,092,076      |   |  |     | 42,366,725   
|Furniture and fixtures       |  |                               | 18,271,076    |           |     | 3,481,433       |  |     | (30,757     | ) |  |                         | 275,707        |   |  |     | 21,997,459   
|Vehicles                     |  |                               | 205,933       |           |     | 52,760          |  |     |            |   |  |                         |               |   |  |     | 258,693      
|Computer equipment           |  |                               | 22,633,186    |           |     | 5,626,418       |  |     | (51,451     | ) |  |                         | (1,893         | ) |  |     | 28,206,260   
|Software                     |  |                               | 7,906,893     |           |     | 6,314,515       |  |     | (5,663      | ) |  |                         | 2,057          |   |  |     | 14,217,802   
|-Suppliers advances-Rosario  |  |                               | 1,222,672     |           |     | 37,133,870      |  |     | (42,121     | ) |  |                         | (1,432,439     | ) |  |     | 36,881,982   
|Work-in-progress:            |  |                               |               |           |     |                 |  |     |             |   |  |                         |                |   |  |     |              
|-Rosario                     |  |                               | 2,767,603     |           |     | 105,187         |  |     |            |   |  |                         | (2,832,258     | ) |  |     | 40,532       
|-Abasto                      |  |                               |              |           |     | 360,793         |  |     | (27,289     | ) |  |                         |               |   |  |     | 333,504      
|-Avellaneda                  |  |                               |              |           |     | 4,479,238       |  |     |            |   |  |                         |               |   |  |     | 4,479,238    
|-SAPSA                       |  |                               |              |           |     | 133             |  |     |            |   |  |                         | (133           | ) |  |     |             
|-Caballito                   |  |                               |              |           |     |                |  |     |            |   |  |                         |               |   |  |     |             
|-Neuquén                     |  |                               | 1,844,421     |           |     | 120,630         |  |     |            |   |  |                         | 15,268         |   |  |     | 1,980,319    
|-Buenos Aires Design         |  |                               |              |           |     | 43,501          |  |     |            |   |  |                         | 4,766          |   |  |     | 48,267       
|-Leasehold improvements      |  |                               | 1,009,330     |           |     | 695,991         |  |     |            |   |  |                         | (1,106,847     | ) |  |     | 598,474      
|-Patio Bullrich              |  |                               | 208,438       |           |     | 449,478         |  |     |            |   |  |                         |               |   |  |     | 657,916      
|-Paseo Alcorta               |  |                               |              |           |     | 5,576,589       |  |     |            |   |  |                         |               |   |  |     | 5,576,589    
|-Tarshop                     |  |                               |              |           |     | 41,938          |  |     |            |   |  |                         |               |   |  |     | 41,938       
|-Mendoza Plaza Shopping S.A. |  |                               |              |           |     |                |  |     |            |   |  |                         |               |   |  |     |             
|-Empalme                     |  |                               |              |           |     | 11,450          |  |     |            |   |  |                         |               |   |  |     | 11,450       
|-PAMSA                       |  |                               |              |           |     | 18,539,679      |  |     |            |   |  |                         |               |   |  |     | 18,539,679   
|Other                        |  |                               | 1,572         |           |     |                |  |     | (1,572      | ) |  |                         |               |   |  |     |             
|                             |  |                               |               |           |     |                 |  |     |             |   |  |                         |                |   |  |     |              
|Total as of June 30, 2007    |  | Ps.                           | 1,504,137,283 |           | Ps. | (7) 284,547,996 |  | Ps. | (447,195    | ) |  | Ps.                     | (6) 59,912,260 |   |  | Ps. | 1,848,150,344
|                             |  |                               |               |           |     |                 |  |     |             |   |  |                         |                |   |  |     |              
|Total as of June 30, 2006    |  | Ps.                           | 1,488,632,610 |           | Ps. | 30,261,398      |  | Ps. | (14,693,730 | ) |  | Ps.                     | (1) (62,995    | ) |  | Ps. | 1,504,137,283
|                             |  |                               |               |           |     |                 |  |     |             |   |  |                         |                |   |  |     |              



|                             |  |                                     |             |                                  |     |            |           |  |        |            |                              |     |                |  |      |             |      |     |               |  |     |               |  |     |            
|---------------------------- |  | ----------------------------------- | ----------- | -------------------------------- | --- | ---------- | --------- |  | ------ | ---------- | ---------------------------- | --- | -------------- |  | ---- | ----------- | ---- | --- | ------------- |  | --- | ------------- |  | --- | -----------
|                             |  | Depreciation                        |             | Net carrying value as of June 30
|                             |  |                                     |             | Current year                     |     |            |           |  |        |            |                              |    
|Principal account            |  | Accumulated as of beginning of
year |             | Deductions                       |     |            | Additions |  | Amount |            | Accumulated asof end of year |     | Impairment     |  | 2007 |             | 2006
|Properties:                  |  |                                     |             |                                  |     |            |           |  |        |            |                              |     |                |  |      |             |      |     |               |  |     |               |  |     |            
|Shopping Centers:            |  |                                     |             |                                  |     |            |           |  |        |            |                              |     |                |  |      |             |      |     |               |  |     |               |  |     |            
|-Abasto                      |  | Ps.                                 | 63,818,261  |                                  | Ps. |           |           |  | Ps.    |           |                              | Ps. | 7,845,352      |  | Ps.  | 71,663,613  |      | Ps. |              |  | Ps. | 180,925,726   |  | Ps. | 188,359,703
|-Alto Palermo                |  |                                     | 213,308,549 |                                  |     | (537       | )         |  |        | 100        |                              |     | 18,451,716     |  |      | 231,759,828 |      |     |              |  |     | 175,517,195   |  |     | 193,512,809
|-Alto Avellaneda             |  |                                     | 79,648,106  |                                  |     |           |           |  |        |           |                              |     | 8,677,677      |  |      | 88,325,783  |      |     |              |  |     | 85,184,840    |  |     | 86,288,660 
|-Paseo Alcorta               |  |                                     | 43,711,088  |                                  |     |           |           |  |        |           |                              |     | 4,005,101      |  |      | 47,716,189  |      |     |              |  |     | 58,855,042    |  |     | 62,259,879 
|-Alto Noa                    |  |                                     | 14,201,824  |                                  |     | (3,766     | )         |  |        |           |                              |     | 2,069,636      |  |      | 16,267,694  |      |     |              |  |     | 27,040,264    |  |     | 29,016,480 
|-Buenos Aires Design         |  |                                     | 30,469,490  |                                  |     |           |           |  |        |           |                              |     | 2,469,046      |  |      | 32,938,536  |      |     |              |  |     | 16,033,246    |  |     | 18,516,645 
|-Patio Bullrich              |  |                                     | 50,857,430  |                                  |     |           |           |  |        |           |                              |     | 6,757,104      |  |      | 57,614,534  |      |     |              |  |     | 102,478,599   |  |     | 109,200,660
|-Alto Rosario                |  |                                     | 3,307,709   |                                  |     |           |           |  |        |           |                              |     | 2,501,250      |  |      | 5,808,959   |      |     |              |  |     | 85,685,383    |  |     | 83,171,324 
|-Mendoza Plaza Shopping      |  |                                     | 23,924,146  |                                  |     |           |           |  |        |           |                              |     | 3,456,304      |  |      | 27,380,450  |      |     |              |  |     | 89,004,277    |  |     | 88,600,799 
|-Neuquén                     |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 10,321,481    |  |     | 8,167,430  
|-Rosario plots of land       |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     |              |  |     |           
|-Caballito plots of land     |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     |              |  |     |           
|-PAMSA                       |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 149,066,729   |  |     |           
|-Empalme                     |  |                                     |            |                                  |     |           |           |  |        | 15,708,071 |                              |     | 2,181,141      |  |      | 17,889,212  |      |     |              |  |     | 75,496,760    |  |     |           
|Other                        |  |                                     | 711,611     |                                  |     | (243,114   | )         |  |        |           |                              |     | 441,714        |  |      | 910,211     |      |     |              |  |     | 8,859,877     |  |     | 9,301,591  
|Leasehold improvements       |  |                                     | 5,442,370   |                                  |     | (19,393    | )         |  |        | 65         |                              |     | 1,043,693      |  |      | 6,466,735   |      |     |              |  |     | 2,702,354     |  |     | 3,008,528  
|Facilities                   |  |                                     | 22,937,699  |                                  |     |           |           |  |        | 1,261,493  |                              |     | 2,427,473      |  |      | 26,626,665  |      |     |              |  |     | 15,740,060    |  |     | 14,169,384 
|Furniture and fixtures       |  |                                     | 13,128,409  |                                  |     | (28,560    | )         |  |        | 690,536    |                              |     | 1,624,480      |  |      | 15,414,865  |      |     |              |  |     | 6,582,594     |  |     | 5,142,667  
|Vehicles                     |  |                                     | 130,211     |                                  |     |           |           |  |        | 52,760     |                              |     | 25,241         |  |      | 208,212     |      |     |              |  |     | 50,481        |  |     | 75,722     
|Computer equipment           |  |                                     | 18,370,273  |                                  |     | (41,078    | )         |  |        | 1,329,768  |                              |     | 2,896,120      |  |      | 22,555,083  |      |     |              |  |     | 5,651,177     |  |     | 4,262,913  
|Software                     |  |                                     | 5,219,411   |                                  |     | (3,146     | )         |  |        | 3,537,830  |                              |     | 1,224,599      |  |      | 9,978,694   |      |     |              |  |     | 4,239,108     |  |     | 2,687,482  
|-Suppliers advances-Rosario  |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 36,881,982    |  |     | 1,222,672  
|Work-in-progress:            |  |                                     |             |                                  |     |            |           |  |        |            |                              |     |                |  |      |             |      |     |               |  |     |               |  |     |            
|-Rosario                     |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 40,532        |  |     | 2,767,603  
|-Abasto                      |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 333,504       |  |     |           
|-Avellaneda                  |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 4,479,238     |  |     |           
|-SAPSA                       |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     |              |  |     |           
|-Caballito                   |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     |              |  |     |           
|-Neuquén                     |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 1,980,319     |  |     | 1,844,421  
|-Buenos Aires Design         |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 48,267        |  |     |           
|-Leasehold improvements      |  |                                     |            |                                  |     |           |           |  |        | 597,562    |                              |     | 322            |  |      | 597,884     |      |     |              |  |     | 590           |  |     | 1,009,330  
|-Patio Bullrich              |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 657,916       |  |     | 208,438    
|-Paseo Alcorta               |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 5,576,589     |  |     |           
|-Tarshop                     |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 41,938        |  |     |           
|-Mendoza Plaza Shopping S.A. |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     |              |  |     |           
|-Empalme                     |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 11,450        |  |     |           
|-PAMSA                       |  |                                     |            |                                  |     |           |           |  |        |           |                              |     |               |  |      |            |      |     |              |  |     | 18,539,679    |  |     |           
|Other                        |  |                                     | 1,572       |                                  |     | (1,572     | )         |  |        |           |                              |     |               |  |      |            |      |     |              |  |     |              |  |     |           
|                             |  |                                     |             |                                  |     |            |           |  |        |            |                              |     |                |  |      |             |      |     |               |  |     |               |  |     |            
|Total as of June 30, 2007    |  | Ps.                                 | 589,188,159 |                                  | Ps. | (341,166   | )         |  | Ps.    | 23,178,185 |                              | Ps. | (3) 68,097,969 |  | Ps.  | 680,123,147 |      | Ps. | (5)          |  | Ps. | 1,168,027,197 |  | Ps. |           
|                             |  |                                     |             |                                  |     |            |           |  |        |            |                              |     |                |  |      |             |      |     |               |  |     |               |  |     |            
|Total as of June 30, 2006    |  | Ps.                                 | 533,908,551 |                                  | Ps. | (7,276,753 | )         |  | Ps.    |           |                              | Ps. | (2) 62,556,361 |  | Ps.  | 589,188,159 |      | Ps. | (4) 2,153,984 |  | Ps. |              |  | Ps. | 912,795,140
|                             |  |                                     |             |                                  |     |            |           |  |        |            |                              |     |                |  |      |             |      |     |               |  |     |               |  |     |            

---

|(1) | Includes Ps. (71,092) reclassified to Other receivables and Ps. 8,097 reclassified from Other investments.
|--- | ----------------------------------------------------------------------------------------------------------

|(2) | The allocation of annual depreciation charges in the statements of income is included in Other expenses, except for Ps. 301,312 passed-through to tenants (See Note
20.g.).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The allocation of annual depreciation charges in the statements of income is included in Other expenses, except for Ps. 316,296 passed-through to tenants (See Note
20.g.).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net of the depreciation of the year of Ps. 120,999.
|--- | ---------------------------------------------------

|(5) | During fiscal year 2007, the Company recovered impairment of Ps. 2,153,984. See Note 7Financial results, net.
|--- | --------------------------------------------------------------------------------------------------------------

|(6) | Corresponds to the transfer of General Paz plot of land from Other investments, net. See Note 4.b.
|--- | --------------------------------------------------------------------------------------------------

|(7) | Includes additions related to the commencement of the consolidation of Empalme, E-Commerce Latina S.A. and PAMSA of Ps. 188,791,480.
|--- | ------------------------------------------------------------------------------------------------------------------------------------



F-83



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)



|20. | Other financial statement information (continued)
|--- | -------------------------------------------------



| | b. | Intangible assets, net
| | -- | ----------------------



|                          |  |                             |            |              |     |                                   |  |     |            |   |  |                         |            |                                  |  |                    |            |  |            |            |                              |     |            |   |      |     |           |  |     |            |  |     |         |  |     |           |  |     |          
|------------------------- |  | --------------------------- | ---------- | ------------ | --- | --------------------------------- |  | --- | ---------- | - |  | ----------------------- | ---------- | -------------------------------- |  | ------------------ | ---------- |  | ---------- | ---------- | ---------------------------- | --- | ---------- | - | ---- | --- | --------- |  | --- | ---------- |  | --- | ------- |  | --- | --------- |  | --- | ---------
|                          |  | Original value              |            | Amortization |     | Net carrying value as of June 30,
|                          |  |                             |            |              |     |                                   |  |     |            |   |  |                         |            |                                  |  | Current year       |            |  |            |            |                              |    
|Principalaccount          |  | Value as ofbeginning ofyear |            | Additions    |     | Deductions                        |  |     | Transfers  |   |  | Value as of end of year |            | Accumulatedas ofbeginning ofyear |  | Increase(Decrease) |            |  | Amount (1) |            | Accumulated as of endof year |     | Impairment |   | 2007 |     | 2006     
|Trademarks                |  | Ps.                         | 586,002    |              | Ps. |                                  |  | Ps. |           |   |  | Ps                      |           |                                  |  | Ps.                | 586,002    |  | Ps.        | 409,149    |                              | Ps. |           |   |      | Ps. | 53,853    |  | Ps. | 463,002    |  | Ps. | 280     |  | Ps. | 122,720   |  | Ps. | 176,491  
|Preoperating expenses.    |  |                             | 14,653,711 |              |     |                                  |  |     | (6,069,772 | ) |  |                         |           |                                  |  |                    | 8,583,939  |  |            | 11,607,926 |                              |     | (6,069,772 | ) |      |     | 1,454,578 |  |     | 6,992,732  |  |     |        |  |     | 1,591,207 |  |     | 3,045,785
|                          |  |                             |            |              |     |                                   |  |     |            |   |  |                         |            |                                  |  |                    |            |  |            |            |                              |     |            |   |      |     |           |  |     |            |  |     |         |  |     |           |  |     |          
|Total as of June 30, 2007 |  | Ps.                         | 15,239,713 |              | Ps. |                                  |  | Ps. | (6,069,772 | ) |  | Ps.                     |           |                                  |  | Ps.                | 9,169,941  |  | Ps.        | 12,017,075 |                              | Ps. | (6,069,772 | ) |      | Ps. | 1,508,431 |  | Ps. | 7,455,734  |  | Ps. | (4) 280 |  | Ps. | 1,713,927 |  | Ps. |         
|                          |  |                             |            |              |     |                                   |  |     |            |   |  |                         |            |                                  |  |                    |            |  |            |            |                              |     |            |   |      |     |           |  |     |            |  |     |         |  |     |           |  |     |          
|Total as of June 30, 2006 |  | Ps.                         | 15,206,346 |              | Ps. | 50,000                            |  | Ps. | (4,833     | ) |  | Ps.                     | (2)(11,800 | )                                |  | Ps.                | 15,239,713 |  | Ps.        | 10,466,070 |                              | Ps. |           |   |      | Ps. | 1,551,005 |  | Ps. | 12,017,075 |  | Ps. | (3) 362 |  | Ps. |          |  | Ps. | 3,222,276
|                          |  |                             |            |              |     |                                   |  |     |            |   |  |                         |            |                                  |  |                    |            |  |            |            |                              |     |            |   |      |     |           |  |     |            |  |     |         |  |     |           |  |     |          

---

|(1) | The allocation of annual amortization charges in the statements of income is included in Other expenses (Note 20.g).
|--- | ----------------------------------------------------------------------------------------------------------------------

|(2) | Reclassified to Other receivables.
|--- | ----------------------------------

|(3) | Net of the amortization of the year of Ps. 152,163.
|--- | ---------------------------------------------------

|(4) | Net of the amortization of the year of Ps. 82. See Note 20.d.
|--- | -------------------------------------------------------------



F-84



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)



|20. | Other financial statement information (continued)
|--- | -------------------------------------------------



| | c. | Goodwill, net
| | -- | -------------



|                          |  |                              |            |   |              |     |             |                                   |  |     |                                    |   |  |        |            |   |                              |     |               |      |  |     |            |   |  |     |             |   |  |     |            |  
|------------------------- |  | ---------------------------- | ---------- | - | ------------ | --- | ----------- | --------------------------------- |  | --- | ---------------------------------- | - |  | ------ | ---------- | - | ---------------------------- | --- | ------------- | ---- |  | --- | ---------- | - |  | --- | ----------- | - |  | --- | ---------- | -
|                          |  | Original value               |            |   | Amortization |     |             | Net carrying value as of June 30, | 
|Principal account         |  | Value as ofbeginning of year |            |   | Additions    |     |             | Value as of end of year           |  |     | Accumulated as of beginningof year |   |  | Amount |            |   | Accumulated asof end of year |     |               | 2007 |  |     | 2006       |  
|- Old Alto Palermo        |  | Ps.                          | 24,628,438 |   |              | Ps. |            |                                   |  | Ps. | 24,628,438                         |   |  | Ps.    | 21,549,884 |   |                              | Ps. | 2,462,834     |      |  | Ps. | 24,012,718 |   |  | Ps. | 615,720     |   |  | Ps. | 3,078,554  |  
|- Tarshop                 |  |                              | 2,422,536  |   |              |     |            |                                   |  |     | 2,422,536                          |   |  |        | 1,938,029  |   |                              |     | 242,264       |      |  |     | 2,180,293  |   |  |     | 242,243     |   |  |     | 484,507    |  
|- Fibesa                  |  |                              | 21,217,024 |   |              |     |            |                                   |  |     | 21,217,024                         |   |  |        | 12,661,770 |   |                              |     | 2,053,238     |      |  |     | 14,715,008 |   |  |     | 6,502,016   |   |  |     | 8,555,254  |  
|- Ersa                    |  |                              | (579,074   | ) |              |     |            |                                   |  |     | (579,074                           | ) |  |        | (18,680    | ) |                              |     | (74,719       | )    |  |     | (93,399    | ) |  |     | (485,675    | ) |  |     | (560,394   | )
|- E-Commerce Latina S.A.  |  |                              |           |   |              |     | 634,971     |                                   |  |     | 634,971                            |   |  |        |           |   |                              |     | 634,971       |      |  |     | 634,971    |   |  |     |            |   |  |     |           |  
|- Empalme                 |  |                              |           |   |              |     | (10,670,507 | )                                 |  |     | (10,670,507                        | ) |  |        |           |   |                              |     | (317,261      | )    |  |     | (317,261   | ) |  |     | (10,353,246 | ) |  |     |           |  
|                          |  |                              |            |   |              |     |             |                                   |  |     |                                    |   |  |        |            |   |                              |     |               |      |  |     |            |   |  |     |             |   |  |     |            |  
|Total as of June 30, 2007 |  | Ps.                          | 47,688,924 |   |              | Ps. | (10,035,536 | )                                 |  | Ps. | 37,653,388                         |   |  | Ps.    | 36,131,003 |   |                              | Ps. | (1) 5,001,327 |      |  | Ps. | 41,132,330 |   |  | Ps. | (3,478,942  | ) |  | Ps. |           |  
|                          |  |                              |            |   |              |     |             |                                   |  |     |                                    |   |  |        |            |   |                              |     |               |      |  |     |            |   |  |     |             |   |  |     |            |  
|Total as of June 30, 2006 |  | Ps.                          | 48,267,998 |   |              | Ps. | (579,074    | )                                 |  | Ps. | 47,688,924                         |   |  | Ps.    | 31,391,328 |   |                              | Ps. | 4,739,675     |      |  | Ps. | 36,131,003 |   |  | Ps. |            |   |  | Ps. | 11,557,921 |  
|                          |  |                              |            |   |              |     |             |                                   |  |     |                                    |   |  |        |            |   |                              |     |               |      |  |     |            |   |  |     |             |   |  |     |            |  

---

|(1) | The allocation of annual amortization charges in the statements of income is included in Amortization of goodwill, except for Ps. 634,971 shown in Note 8 (Other
expenses, net - Others).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-85



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)



|20. | Other financial statement information (continued)
|--- | -------------------------------------------------



| | d. | Allowances and provisions
| | -- | -------------------------



|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|------------------------------------------ |  | ------------------------------- | ---------- | --------- | --- | ----------- |  | ---------- | -------------- | ----------------------------- | --- | ---------------- |  | ---- | ---------- |  | --- | ---------- |  | --- | ----------
|                                           |  |                                 |            |           |     |             |  |            |                | Carrying value as of June 30,
|Item                                       |  | Balances as ofbeginning of year |            | Transfers |     | Additions   |  | Deductions |                | 2007                          |     | 2006             |  | 2005
|Deducted from current assets:              |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Allowance for doubtful accounts            |  | Ps.                             | 43,435,193 |           | Ps. |            |  | Ps.        | (1) 33,887,501 |                               | Ps. | (6) (23,908,011) |  | Ps.  | 53,414,683 |  | Ps. | 43,435,193 |  | Ps. | 37,367,227
|Impairment of inventory                    |  |                                 | 205,599    |           |     |            |  |            |               |                               |     | (4) (101,197)    |  |      | 104,402    |  |     | 205,599    |  |     |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2007                  |  | Ps.                             | 43,640,792 |           | Ps. |            |  | Ps.        | 33,887,501     |                               | Ps. | (24,009,208)     |  | Ps.  | 53,519,085 |  | Ps. |           |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2006                  |  | Ps.                             | 37,367,227 |           | Ps. |            |  | Ps.        | 13,378,925     |                               | Ps. | (7,105,360)      |  | Ps.  |           |  | Ps. | 43,640,792 |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2005                  |  | Ps.                             | 34,061,561 |           | Ps. | 4,478,645   |  | Ps.        | 6,590,250      |                               | Ps. | (7,763,229)      |  | Ps.  |           |  | Ps. |           |  | Ps. | 37,367,227
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Deducted from non-current assets:          |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Allowance for doubtful accounts            |  | Ps.                             | 1,332,818  |           | Ps. |            |  | Ps.        | (1) 621,727    |                               | Ps. |                 |  | Ps.  | 1,954,545  |  | Ps. | 1,332,818  |  | Ps. | 969,219   
|Allowance for doubtful mortgage receivable |  |                                 | 2,208,275  |           |     |            |  |            |               |                               |     |                 |  |      | 2,208,275  |  |     | 2,208,275  |  |     | 2,208,275 
|Impairment of fixed assets                 |  |                                 | 2,153,984  |           |     |            |  |            |               |                               |     | (4) (2,153,984)  |  |      |           |  |     | 2,153,984  |  |     | 5,586,949 
|Impairment of intangible assets            |  |                                 | 362        |           |     |            |  |            |               |                               |     | (5) (82)         |  |      | 280        |  |     | 362        |  |     | 355,047   
|Impairment of non-current investments      |  |                                 | 190,000    |           |     |            |  |            |               |                               |     | (4) (18,000)     |  |      | 172,000    |  |     | 190,000    |  |     | 7,983,469 
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2007                  |  | Ps.                             | 5,885,439  |           | Ps. |            |  | Ps.        | 621,727        |                               | Ps. | (2,172,066)      |  | Ps.  | 4,335,100  |  | Ps. |           |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2006                  |  | Ps.                             | 17,102,959 |           | Ps. |            |  | Ps.        | 553,961        |                               | Ps. | (11,771,481)     |  | Ps.  |           |  | Ps. | 5,885,439  |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2005                  |  | Ps.                             | 29,975,755 |           | Ps. |            |  | Ps.        | 924,256        |                               | Ps. | (13,797,052)     |  | Ps.  |           |  | Ps. |           |  | Ps. | 17,102,959
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Included in current liabilities:           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Provision for contingencies                |  | Ps.                             | 506,714    |           | Ps. |            |  | Ps.        | (2) 226,686    |                               | Ps. |                 |  | Ps.  | 733,400    |  | Ps. | 506,714    |  | Ps. | 2,032,500 
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2007                  |  | Ps.                             | 506,714    |           | Ps. |            |  | Ps.        | 226,686        |                               | Ps. |                 |  | Ps.  | 733,400    |  | Ps. |           |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2006                  |  | Ps.                             | 2,032,500  |           | Ps. |            |  | Ps.        | 506,714        |                               | Ps. | (2,032,500)      |  | Ps.  |           |  | Ps. | 506,714    |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2005                  |  | Ps.                             |           |           | Ps. | 2,032,500   |  | Ps.        |               |                               | Ps. |                 |  | Ps.  |           |  | Ps. |           |  | Ps. | 2,032,500 
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Included in non-current liabilities:       |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Provision for contingencies                |  | Ps.                             | 10,667,309 |           | Ps. |            |  | Ps.        | (2) 5,148,304  |                               | Ps. | (3) (3,374,327)  |  | Ps.  | 12,441,286 |  | Ps. | 10,667,309 |  | Ps. | 10,606,121
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2007                  |  | Ps.                             | 10,667,309 |           | Ps. |            |  | Ps.        | 5,148,304      |                               | Ps. | (3,374,327)      |  | Ps.  | 12,441,286 |  | Ps. |           |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2006                  |  | Ps.                             | 10,606,121 |           | Ps. |            |  | Ps.        | 791,469        |                               | Ps. | (730,281)        |  | Ps.  |           |  | Ps. | 10,667,309 |  | Ps. |          
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           
|Total as of June 30, 2005                  |  | Ps.                             | 5,995,698  |           | Ps. | (2,032,500) |  | Ps.        | 6,879,052      |                               | Ps. | (236,129)        |  | Ps.  |           |  | Ps. |           |  | Ps. | 10,606,121
|                                           |  |                                 |            |           |     |             |  |            |                |                               |     |                  |  |      |            |  |     |            |  |     |           

---

|(1) | Includes Ps. 28,331,790 allocated in Selling expenses, Ps. 1,041,066 related to the consolidation of E-commerce Latina S.A. and Empalme, and Ps. 5,136,372 related to the
allowance of the cancelled trusts in the period.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes Ps. 3,369,430 shown in Note 8 - Other expenses, net, Ps. 324,300 shown in Note 20.g. (Other expenses - Cost of leases and services - Contingencies), Ps. 226,686 shown in
Note 20.g. (Other expenses - Cost of credit card operations - Salaries, bonuses and social security contributions) and Ps. 1,454,574 related to the consolidation of E-Commerce Latina S.A. and Empalme.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes utilization of the year of Ps. 3,020,030, recovery of provision of Ps. 352,886 shown in Note 8 - Other expenses, net and Ps. 1,411 shown in Note 20.g. (Other expenses -
Cost of others - Contingencies).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Related to recovery of impairment. See Note 7 - Financial results, net.
|--- | -----------------------------------------------------------------------

|(5) | Corresponds to the amortization of the year.
|--- | --------------------------------------------

|(6) | Includes Ps. 4,325,247 related to recovery of allowance and Ps. 19,582,764 related to off set of the year.
|--- | ----------------------------------------------------------------------------------------------------------



F-86



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)



|20. | Other financial statement information (continued)
|--- | -------------------------------------------------



| | e. | Cost of leases and services, credit card operations and others
| | -- | --------------------------------------------------------------



|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  
|------------------------------------------------------------ |  | ------------------- | ----------- | - | ---- | --- | ----------- | ---- |  | --- | ----------- | -
|                                                             |  | Year ended June 30, |            
|                                                             |  | 2007                |             |   | 2006 |     |             | 2005 | 
|I. Cost of leases and services                               |  |                     |             |   |      |     |             |      |  |     |             |  
|Expenses (Note 20.g)                                         |  |                     | 90,718,723  |   |      |     | 76,634,274  |      |  |     | 69,203,912  |  
|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  
|Cost of leases and services                                  |  | Ps.                 | 90,718,723  |   |      | Ps. | 76,634,274  |      |  | Ps. | 69,203,912  |  
|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  
|II. Cost of credit card operations                           |  |                     |             |   |      |     |             |      |  |     |             |  
|Expenses (Note 20.g)                                         |  |                     | 76,250,947  |   |      |     | 43,933,220  |      |  |     | 23,101,868  |  
|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  
|Cost of credit card operations                               |  | Ps.                 | 76,250,947  |   |      | Ps. | 43,933,220  |      |  | Ps. | 23,101,868  |  
|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  
|III. Cost of others                                          |  |                     |             |   |      |     |             |      |  |     |             |  
|Inventory as of the beginning of the years                   |  | Ps.                 | 7,989,246   |   |      | Ps. | 18,936,565  |      |  | Ps. | 18,325,323  |  
|Plus:                                                        |  |                     |             |   |      |     |             |      |  |     |             |  
|Purchases of the years                                       |  |                     | 2,138,623   |   |      |     | 1,497,876   |      |  |     | 1,536,418   |  
|Expenses (Note 20.g)                                         |  |                     | 1,331,794   |   |      |     | 449,350     |      |  |     | 127,510     |  
|Recovery / (Increase) of impairment of inventory (Note 20.d) |  |                     | 101,197     |   |      |     | (205,599    | )    |  |     | 500,134     |  
|Write offs due to obsolescence                               |  |                     | (1,598,755  | ) |      |     |            |      |  |     |            |  
|Transfers (1)                                                |  |                     | (1,878,420  | ) |      |     | 2,311,304   |      |  |     | (1,348,234  | )
|Gain from valuation of inventories at net realizable value   |  |                     | 545,400     |   |      |     | 3,497,632   |      |  |     |            |  
|Less:                                                        |  |                     |             |   |      |     |             |      |  |     |             |  
|Inventory as of the end of the years                         |  |                     | (7,292,187  | ) |      |     | (7,989,246  | )    |  |     | (18,936,565 | )
|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  
|Cost of others                                               |  | Ps.                 | 1,336,898   |   |      | Ps. | 18,497,882  |      |  | Ps. | 204,586     |  
|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  
|Total cost                                                   |  | Ps.                 | 168,306,568 |   |      | Ps. | 139,065,376 |      |  | Ps. | 92,510,366  |  
|                                                             |  |                     |             |   |      |     |             |      |  |     |             |  

---

|(1) | For the year ended June 30, 2007, corresponds to transfers of the cost of marketing merchandise shown in Note 4.d. For the year ended June 30, 2006, includes Ps.
(1,516,129) related to transfers of the cost of marketing merchandise shown in Note 4.d. and Ps. 3,827,433 reclassified to other investments. For the year ended June 30, 2005, corresponds to transfers of the cost of marketing merchandise.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-87



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)



|20. | Other financial statement information (continued)
|--- | -------------------------------------------------



| | f. | Foreign currency assets and liabilities
| | -- | ---------------------------------------



|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|------------------------------------------- |  | -------- |  | ------------------------- | -------------- | -------------------- | ------ | -------------------- | --- | ----------- |  | --- | -----------
|                                            |  |          |  |                           |                |                      |        | Total as of June 30,
|Captions                                    |  | Currency |  | Amount offoreign currency |                | Currentexchange rate |        | 2007                 |     | 2006       
|Assets                                      |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Current assets                              |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Cash and banks                              |  | US$      |  |                           | 3,704,170      |                      | 3.0530 |                      | Ps. | 11,308,831  |  | Ps. | 27,294,672 
|Cash and banks                              |  | EURO     |  |                           | 307,560        |                      | 4.1298 |                      |     | 1,270,161   |  |     | 1,181,616  
|Other investments, net                      |  | US$      |  |                           | (1) 95,929,753 |                      | 3.0530 |                      |     | 292,769,901 |  |     | 41,850     
|Accounts receivable, net                    |  | US$      |  |                           | 2,124,706      |                      | 3.0530 |                      |     | 6,486,727   |  |     | 6,387,462  
|Other receivables and prepaid expenses, net |  | US$      |  |                           |               |                      | 3.0530 |                      |     |            |  |     | 9,183,690  
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total current assets                        |  |          |  |                           | 102,066,189    |                      |        |                      | Ps. | 311,835,620 |  | Ps. | 44,089,290 
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Non current assets                          |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Accounts receivable, net                    |  | US$      |  |                           | 93,917         |                      | 3.0530 |                      | Ps. | 286,729     |  | Ps. | 12,161,380 
|Other receivables and prepaid expenses, net |  | US$      |  |                           | 44,949         |                      | 3.0530 |                      |     | 137,229     |  |     |           
|Other investments                           |  | US$      |  |                           | 363,000        |                      | 3.0530 |                      |     | 1,108,239   |  |     |           
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total non-current assets.                   |  |          |  |                           | 501,866        |                      |        |                      |     | 1,532,197   |  |     | 12,161,380 
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total assets as of June 30, 2007            |  |          |  |                           | 102,568,055    |                      |        |                      | Ps. | 313,367,817 |  | Ps. |           
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total assets as of June 30, 2006            |  |          |  |                           | 18,414,028     |                      |        |                      | Ps. |            |  | Ps. | 56,250,670 
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Liabilities                                 |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Current liabilities                         |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Trade accounts payable                      |  | US$      |  |                           | 326,536        |                      | 3.0930 |                      | Ps. | 1,009,976   |  | Ps. | 1,023,961  
|Customer advances                           |  | EURO     |  |                           | 600,000        |                      | 4.1842 |                      |     | 2,510,520   |  |     | 2,365,800  
|Short-term debt                             |  | US$      |  |                           | 7,411,644      |                      | 3.0930 |                      |     | 22,924,215  |  |     | 21,632,224 
|Related parties                             |  | US$      |  |                           | 310,118        |                      | 3.0930 |                      |     | 959,195     |  |     | 988,660    
|Other Liabilities                           |  | US$      |  |                           | 199,950        |                      | 3.0930 |                      |     | 618,445     |  |     |           
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total current liabilities                   |  |          |  |                           | 8,848,248      |                      |        |                      | Ps. | 28,022,351  |  | Ps. | 26,010,645 
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Non current liabilities                     |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Trade accounts payable                      |  | US$      |  |                           | 6,726          |                      | 3.0930 |                      | Ps. | 20,804      |  | Ps. | 1,010,150  
|Long-term debt                              |  | US$      |  |                           | 169,227,934    |                      | 3.0930 |                      |     | 523,422,000 |  |     | 145,852,155
|Related parties                             |  | US$      |  |                           |               |                      | 3.0930 |                      |     |            |  |     | 925,800    
|Other Liabilities                           |  | US$      |  |                           | 173,302        |                      | 3.0930 |                      |     | 536,023     |  |     |           
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total non-current liabilities               |  |          |  |                           | 169,407,962    |                      |        |                      | Ps. | 523,978,827 |  | Ps. | 147,788,105
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total liabilities as of June 30, 2007       |  |          |  |                           | 178,256,210    |                      |        |                      | Ps. | 552,001,178 |  | Ps. |           
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            
|Total liabilities as of June 30, 2006       |  |          |  |                           | 56,151,830     |                      |        |                      | Ps. |            |  | Ps. | 173,798,750
|                                            |  |          |  |                           |                |                      |        |                      |     |             |  |     |            

---

|(1) | Includes US$ 45,000 valuated al fair market value (Ps. 35,750).
|--- | ---------------------------------------------------------------



F-88



---

##### Table of Contents

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)



|20. | Other financial statement information (continued)
|--- | -------------------------------------------------



| | g. | Other expenses
| | -- | --------------



|                                                    |  |                |           |   |                               |     |                           |  |                              |               |  |                                 |             |   |                          |     |             |               |  |                |             |         |  |                          |                |                          |     |                          |  |     |               |  |     |             |  |     |             |  |     |            
|--------------------------------------------------- |  | -------------- | --------- | - | ----------------------------- | --- | ------------------------- |  | ---------------------------- | ------------- |  | ------------------------------- | ----------- | - | ------------------------ | --- | ----------- | ------------- |  | -------------- | ----------- | ------- |  | ------------------------ | -------------- | ------------------------ | --- | ------------------------ |  | --- | ------------- |  | --- | ----------- |  | --- | ----------- |  | --- | -----------
|                                                    |  | Expenses       |           |   |                               |     |                           | 
|Items                                               |  | Cost of others |           |   | Cost of credit cardoperations |     | Cost ofleases andservices |  | Cost of pass-throughexpenses |               |  | Cost ofcollectivepromotion fund |             |   | Cost of expensesrecovery |     |             | Subtotal cost |  | Administrative |             | Selling |  | Total as ofJune 30, 2007 |                | Total as ofJune 30, 2006 |     | Total as ofJune 30, 2005
|Depreciation and amortization                       |  | Ps.            |          |   |                               | Ps. | 1,302,361                 |  | Ps.                          | 66,677,064    |  | Ps.                             | 299,448     |   |                          | Ps. | 16,848      |               |  | Ps.            | (316,296    | )       |  | Ps.                      | 67,979,425     |                          | Ps. | 1,310,597                |  | Ps. |              |  | Ps. | 69,290,022  |  | Ps. | 63,532,892  |  | Ps. | 58,367,673 
|Salaries, bonuses and social security contributions |  |                | 9,631     |   |                               |     | 24,869,891                |  |                              |              |  |                                 | 38,865,059  |   |                          |     | 5,103,741   |               |  |                | (43,968,800 | )       |  |                          | 24,879,522     |                          |     | 28,816,861               |  |     | 5,208,641     |  |     | 58,905,024  |  |     | 34,749,462  |  |     | 19,936,107 
|Taxes, rates, contributions and services            |  |                | 44,840    |   |                               |     | 14,191,681                |  |                              | 39,096        |  |                                 | 14,420,910  |   |                          |     | 1,583,064   |               |  |                | (16,003,974 | )       |  |                          | 14,275,617     |                          |     | 10,130,141               |  |     | 24,784,172    |  |     | 49,189,930  |  |     | 31,359,068  |  |     | 18,839,950 
|Advertising                                         |  |                |          |   |                               |     |                          |  |                              |              |  |                                 | 72,937      |   |                          |     | 29,157,469  |               |  |                | (29,230,406 | )       |  |                          |               |                          |     |                         |  |     | 27,833,164    |  |     | 27,833,164  |  |     | 16,507,341  |  |     | 9,193,235  
|Fees for directors                                  |  |                |          |   |                               |     |                          |  |                              |              |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          |               |                          |     | 11,751,793               |  |     |              |  |     | 11,751,793  |  |     | 8,883,474   |  |     | 8,950,771  
|Common area maintenance expenses                    |  |                |          |   |                               |     |                          |  |                              | 12,135,362    |  |                                 | 415,529     |   |                          |     |            |               |  |                | (415,529    | )       |  |                          | 12,135,362     |                          |     |                         |  |     |              |  |     | 12,135,362  |  |     | 9,786,049   |  |     | 7,156,728  
|Fees and payments for services                      |  |                | 1,249,715 |   |                               |     | 8,335,243                 |  |                              |              |  |                                 | 5,024,982   |   |                          |     | 63,009      |               |  |                | (5,087,991  | )       |  |                          | 9,584,958      |                          |     | 17,931,281               |  |     | 205,901       |  |     | 27,722,140  |  |     | 17,364,094  |  |     | 5,786,237  
|Commissions                                         |  |                |          |   |                               |     | 21,915,572                |  |                              |              |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          | 21,915,572     |                          |     |                         |  |     | 157,500       |  |     | 22,073,072  |  |     | 10,743,807  |  |     | 5,191,555  
|Parking                                             |  |                |          |   |                               |     |                          |  |                              | 4,218,640     |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          | 4,218,640      |                          |     |                         |  |     |              |  |     | 4,218,640   |  |     | 3,738,333   |  |     | 3,260,781  
|Allowance for doubtful accounts                     |  |                |          |   |                               |     |                          |  |                              |              |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          |               |                          |     |                         |  |     | 24,006,543    |  |     | 24,006,543  |  |     | 10,897,356  |  |     | 2,883,259  
|Rental                                              |  |                |          |   |                               |     | 1,362,491                 |  |                              |              |  |                                 | 894,229     |   |                          |     | 46,002      |               |  |                | (940,231    | )       |  |                          | 1,362,491      |                          |     | 2,975,961                |  |     |              |  |     | 4,338,452   |  |     | 3,596,502   |  |     | 2,293,814  
|Maintenance, repairs, cleaning and security         |  |                | 28,765    |   |                               |     | 468,898                   |  |                              | 7,082,243     |  |                                 | 24,542,794  |   |                          |     | 86,462      |               |  |                | (24,629,256 | )       |  |                          | 7,579,906      |                          |     | 586,647                  |  |     |              |  |     | 8,166,553   |  |     | 1,544,708   |  |     | 1,131,586  
|Insurance                                           |  |                |          |   |                               |     | 1,252,157                 |  |                              |              |  |                                 | 568,986     |   |                          |     | 16,544      |               |  |                | (585,530    | )       |  |                          | 1,252,157      |                          |     | 1,673,708                |  |     |              |  |     | 2,925,865   |  |     | 1,597,308   |  |     | 962,008    
|Stationery                                          |  |                |          |   |                               |     | 1,136,238                 |  |                              |              |  |                                 | 1,100,190   |   |                          |     | 33,186      |               |  |                | (1,133,376  | )       |  |                          | 1,136,238      |                          |     | 1,419,191                |  |     |              |  |     | 2,555,429   |  |     | 1,654,961   |  |     | 908,597    
|Personnel                                           |  |                |          |   |                               |     | 1,385,283                 |  |                              |              |  |                                 | 2,495,709   |   |                          |     | 432,597     |               |  |                | (2,928,306  | )       |  |                          | 1,385,283      |                          |     | 2,006,795                |  |     |              |  |     | 3,392,078   |  |     | 1,094,036   |  |     | 753,069    
|Freight and transportation                          |  |                |          |   |                               |     |                          |  |                              |              |  |                                 | 435,865     |   |                          |     | 61,935      |               |  |                | (497,800    | )       |  |                          |               |                          |     | 86,648                   |  |     |              |  |     | 86,648      |  |     | 90,743      |  |     | 297,579    
|Regulatory Authority expenses                       |  |                |          |   |                               |     |                          |  |                              |              |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          |               |                          |     | 211,076                  |  |     |              |  |     | 211,076     |  |     | 137,145     |  |     | 152,031    
|Bank charges                                        |  |                |          |   |                               |     |                          |  |                              |              |  |                                 | 2,140       |   |                          |     | 373         |               |  |                | (2,513      | )       |  |                          |               |                          |     | 499,592                  |  |     |              |  |     | 499,592     |  |     | 366,426     |  |     | 133,470    
|Courses to tenants                                  |  |                |          |   |                               |     |                          |  |                              |              |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          |               |                          |     |                         |  |     |              |  |     |            |  |     |            |  |     | 127,510    
|Contingencies                                       |  |                | (1,411    | ) |                               |     |                          |  |                              | 324,300       |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          | 322,889        |                          |     |                         |  |     |              |  |     | 322,889     |  |     | 964,514     |  |     | 665,764    
|Training expenses                                   |  |                |          |   |                               |     |                          |  |                              |              |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          |               |                          |     |                         |  |     |              |  |     |            |  |     | 304,401     |  |     | 131,397    
|Other services                                      |  |                |          |   |                               |     |                          |  |                              | 242,018       |  |                                 | 362,122     |   |                          |     | 75          |               |  |                | (362,197    | )       |  |                          | 242,018        |                          |     |                         |  |     | 404,190       |  |     | 646,208     |  |     | 242,361     |  |     | 242,019    
|Indemnity                                           |  |                |          |   |                               |     |                          |  |                              |              |  |                                 |            |   |                          |     |            |               |  |                |            |         |  |                          |               |                          |     |                         |  |     | 370,995       |  |     | 370,995     |  |     | 212,406     |  |     |           
|Other                                               |  |                | 254       |   |                               |     | 31,132                    |  |                              |              |  |                                 | 288,802     |   |                          |     | 49,253      |               |  |                | (338,055    | )       |  |                          | 31,386         |                          |     | 472,581                  |  |     | 1,340,889     |  |     | 1,844,856   |  |     | 1,327,855   |  |     | 1,717,806  
|Expenses recovery                                   |  |                |          |   |                               |     |                          |  |                              |              |  |                                 | (89,789,702 | ) |                          |     | (36,650,558 | )             |  |                | 126,440,260 |         |  |                          |               |                          |     |                         |  |     |              |  |     |            |  |     |            |  |     |           
|                                                    |  |                |           |   |                               |     |                           |  |                              |               |  |                                 |             |   |                          |     |             |               |  |                |             |         |  |                          |                |                          |     |                          |  |     |               |  |     |             |  |     |             |  |     |            
|Total as of June 30, 2007                           |  | Ps.            | 1,331,794 |   |                               | Ps. | 76,250,947                |  |                              | Ps.90,718,723 |  | Ps.                             |            |   |                          | Ps. |            |               |  | Ps.            |            |         |  |                          | Ps.168,301,464 |                          | Ps. | 79,872,872               |  |     | Ps.84,311,995 |  | Ps. | 332,486,331 |  | Ps. |            |  | Ps. |           
|                                                    |  |                |           |   |                               |     |                           |  |                              |               |  |                                 |             |   |                          |     |             |               |  |                |             |         |  |                          |                |                          |     |                          |  |     |               |  |     |             |  |     |             |  |     |            
|Total as of June 30, 2006                           |  | Ps.            | 449,350   |   |                               | Ps. | 43,933,220                |  | Ps.                          | 76,634,274    |  | Ps.                             |            |   |                          | Ps. |            |               |  | Ps.            |            |         |  | Ps.                      | 121,016,844    |                          | Ps. | 52,773,070               |  | Ps. | 46,905,328    |  | Ps. |            |  | Ps. | 220,695,242 |  | Ps. |           
|                                                    |  |                |           |   |                               |     |                           |  |                              |               |  |                                 |             |   |                          |     |             |               |  |                |             |         |  |                          |                |                          |     |                          |  |     |               |  |     |             |  |     |             |  |     |            
|Total as of June 30, 2005                           |  | Ps.            | 127,510   |   |                               |     | Ps23,101,868              |  | Ps.                          | 69,203,912    |  | Ps.                             |            |   |                          | Ps. |            |               |  | Ps.            |            |         |  | Ps.                      | 92,433,290     |                          | Ps. | 31,875,300               |  | Ps. | 24,774,356    |  | Ps. |            |  | Ps. |            |  | Ps. | 149,082,946
|                                                    |  |                |           |   |                               |     |                           |  |                              |               |  |                                 |             |   |                          |     |             |               |  |                |             |         |  |                          |                |                          |     |                          |  |     |               |  |     |             |  |     |             |  |     |            



F-89