Application of Push Down Accounting

Alto Palermo S.A. ("APSA") is a Buenos Aires-headquartered operator of ten shopping centers in Argentina with a limited trading market of American Depositary Shares listed on the NASDAQ Global Market.  In connection with the registration of common shares for concurrent Argentine and international offerings, APSA has applied push down accounting for US GAAP purposes in the Form F-1 filed on May 2 (SEC file no. 333-173838).  For Argentine GAAP purposes, push down accounting is not applied.

IRSA Inversiones y Representaciones Sociedad Anónima increased its equity interest in APSA to over 94% of the voting capital on October 15, 2010.  Pursuant to FASB ASC No. 805 and Codification of SEC Staff Accounting Bulletins Topic 5.J “New Basis of Accounting Required in Certain Circumstances”, when a purchase transaction results in an entity becoming substantially wholly-owned, push down accounting is applied in the acquired entity´s separate financial statements.  Push down accounting requires that the fair value adjustments and goodwill or negative goodwill identified by the acquiring entity be pushed down and reflected in the financial statements of the acquired entity.

Accordingly, the selected consolidated US GAAP income data statement data for the six-month period ended 12/31/10 prior to 10/15/10 reflect the historical accounting basis in APSA assets and liabilities and are labeled “Predecessor Company”.  The selected consolidated US GAAP income data statement data for the six-month period ended 12/31/10 subsequent to 10/15/10 are labeled “Successor Company” and reflect the push down basis of accounting for the new fair values in APSA's consolidated financial statements.  Consequently, the amounts shown for the periods prior to and subsequent to 10/15/10 are not comparable. Note 14 to the unaudited six-month consolidated financial statements provide a description of the adjustment related to push down accounting.