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IRSA Seeking Opportunities in Europe as Property Prices Plunge, CEO Says

IRSA Inversiones y Representaciones SA (IRSA), Argentina’s biggest real estate developer, will look for opportunities in crisis-stricken Europe and keep expanding its business in the U.S. and Argentina, Chief Executive Officer and founder Eduardo Elsztain said.

“The best transactions are done when everybody stops and is paralyzed,” Elsztain said in an interview at the New York Stock Exchange. “These days, the whole world is in some way frozen and the best way to preserve value is to have real assets.”

He would not elaborate on the kind of investments he is looking for in Europe, or the specific countries.

The sovereign debt crisis in Europe is depressing real- estate prices across the continent, with the cost of U.K. commercial real estate failing to rise for the first time in more than two years in October, according to Investment Property Databank Ltd. Property prices in Greece dropped 15 percent since the end of 2010, newspaper Kathimerini reported last month, citing a report by real-estate firm RE/MAX Hellas.

“When you see a crash, people are reluctant to sell an apartment at half the price, but you can see shares of very good assets selling at 60 percent discount,” he said. Elsztain and other IRSA executives rang the NYSE opening bell today. “That strategy we learnt by suffering,” he said, recalling the 2001 financial crisis that led Argentina’s government to default on $95 billion of debt.

Lipstick Building

IRSA intensified its investments in real estate and the hospitality sector in the U.S. over the last two years. It increased its stake in New York’s Lipstick Building, located in Manhattan’s Midtown area, to 49 percent in a debt restructuring of the property in January. It also bought a building on Madison Avenue and 34th Street, Elsztain said.

The Buenos Aires-based company invested in Hersha Hospitality Trust (HT), a real estate investment trust which owns and operates hotels in several states throughout the Northeastern U.S., in 2009 and now has about 10 percent of the company, Elsztain said.

The Argentine company also said it would buy up to $30 million in Supertel Hospitality Inc. (SPPR) shares on Nov. 16. The agreement is currently in the process of being approved by Supertel shareholders, Elsztain said. Supertel is a real estate investment trust that provides limited-service lodging. The company owns hotels in Midwestern and Eastern states.

“The values of the properties are attractive, the cash flows of the companies are attractive, the locations,” Elsztain said of IRSA’s U.S. investments.

IRSA shares were unchanged at 4.5 pesos on Nov. 25. The company’s American depositary receipts fell 0.1 percent to $9.54 in New York.

To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net

To contact the editors responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net; Helder Marinho at hmarinho@bloomberg.net

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