I love the write up, it looks like the bear case might be too pessimistic especially since it looks like Milei's reforms hold (as current trends suggest), IRSA looks poised for asymmetric upside.
What are IRSA competitors and how are they stacking up against them?
I hope you're right about the bear case, but Argentina has had false dawns before. Competitively, I think real estate is primarily about location and management/capital allocation. I think IRSA score well on both. Certainly Ramblas del Plata is a unique asset - just look at the map and you'll see it's irreplaceable. On the malls front, they have 2/3rds share in the capital city, and some of those malls are also irreplicable - it's not easy to find big plots in dense cities. Other malls are tucked into multiuse developments, which kind of create their own demand. And because IRSA are the only scale operator of premium malls, they're in a great position to buy underperforming malls and turn them around, which they have been doing recently. If Argentina booms long term I would absolutely expect to see more competition, but also plenty more demand. Also, mall competition will only come if cap rates fall, because there's no point building an asset only to have it valued at an 11% cap rate. Falling mall cap rates would be good for the stock. Hope that helps.
I love the write up, it looks like the bear case might be too pessimistic especially since it looks like Milei's reforms hold (as current trends suggest), IRSA looks poised for asymmetric upside.
What are IRSA competitors and how are they stacking up against them?
I hope you're right about the bear case, but Argentina has had false dawns before. Competitively, I think real estate is primarily about location and management/capital allocation. I think IRSA score well on both. Certainly Ramblas del Plata is a unique asset - just look at the map and you'll see it's irreplaceable. On the malls front, they have 2/3rds share in the capital city, and some of those malls are also irreplicable - it's not easy to find big plots in dense cities. Other malls are tucked into multiuse developments, which kind of create their own demand. And because IRSA are the only scale operator of premium malls, they're in a great position to buy underperforming malls and turn them around, which they have been doing recently. If Argentina booms long term I would absolutely expect to see more competition, but also plenty more demand. Also, mall competition will only come if cap rates fall, because there's no point building an asset only to have it valued at an 11% cap rate. Falling mall cap rates would be good for the stock. Hope that helps.