Despite having a portfolio of large works and being in charge of important ventures, The former TGLT accumulates losses of $37,719 million between 2018 and 2022, when it closed its annual balance with a red of $4,577 million against $5,862 million in 2021.
Renamed as Construction, Design and Engineering Group (GCDI)its complicated financial situation, which has been going on for several years, did not change even with the change of company name made last June thinking, precisely, of facing a new stage as the result of a transformation process that can offer history, confidence and solidity to its clients and also to its own shareholders.
Real estate business: TLGT has been losing for five years in a row
The company is controlled by the Point Argentun Master Fund, with 41.73% of the capital and by IRSA, which owns another 27.82% of the capital, while almost 30% floats in the capital market.
In the latest report sent to the National Securities Commission (CNV), the real estate developer understands that Its negative operating result is due to the fact that the impact of the new works won during 2022 has not yet been generated.
It also explains that significant losses were recognized for $738 million in legal provisions and other provisions for onerous contracts for $500 million.
It also details that investments in companies produced a net loss of $1,659 million, mainly due to the devaluation of the main asset of Marina Río Luján SA, which it maintains as investment property.
Astor San Telmo, one of the luxury developments managed by GCDI in the Federal Capital.
Regarding the result from the sale of companies, the report states that it corresponds to the result from the delivery in payment of the Catalinas I Private Financial Administration Trust to Banco Itaú Argentina, canceling one of its main financial debts, and providing financial relief with respect to the obligations that GCDI had at the end of the year as of December 31, 2021 with said entity, which shows a significant drop in financial costs compared to the same year.
“The company is making great efforts to continue to correct its financial situation”details the document of the company that during the past year, for example, completed the refinancing of the Class XVI Negotiable Obligations (ON), achieving an extension of capital amortization maturities for the years 2026 and 2027.
On the other hand, it transferred the interest in the Catalinas I Banco Itaú Administration Financial Trust and Itaú Asset Management; canceling all of the capital and interest owed by the Company to the financial entity under the Credit Line Agreement entered into between the GCDI, as debtor, FDB SA, as interested party, and Banco Itaú, on December 19, 2019.
As balance of the operation, the company received $1,076,035 from Itaú Asset Management with which it paid Argentum Investments V LLC (Argentum) US$4,462,654 of capital and US$1,328,867 of interests of the private ONs owned by Argentum for US$6 million, leaving a balance of US$544,087 of capital, which was canceled on February 3.
TGLT: new image, new brand
Thus, the developer’s board managed to significantly reduce maturities in the short term, generating financial relief that allows you to focus on your operational growth objectives.
In this regard, and after the change of brand, it will continue to focus its greatest efforts on the construction business in order to increase the amount of its backlog (contracts in the portfolio) of more than $9,979 million that it has as of December 31, 2022.
GCDI is controlled by the Point Argentun Master Fund, with 41.73% of the capital, and by IRSA, which owns another 27.82%.
Likewise, it will continue to focus on completing the real estate projects that it is currently carrying out with the aim of maximizing their value.
In fact, and as a consequence of their strategic plans for the coming years, on February 2, the shareholders held an Extraordinary Meeting in which a capital increase of up to $2,000 million was unanimously approved which, according to its executives, will allow it to settle its short-term obligations and strengthen its working capital.
“The company, in turn, will continue working on strengthening its processes, management systems and human resources structure in such a way that they allow it to make its current operation and the administration of new projects more efficient,” adds the GCDI document.
diversified portfolio
Founded in 2005 as a residential real estate developer for the upper-middle and upper segments, GCDI has participated in and controlled all aspects of project development, from land acquisition to construction management, from product design and conception to its sale and marketing.
Along its history, GCDI has developed or has 12 large projects in its portfolio that consist of around 400,000 square meters, and has brands recognized in the market such as Forum, aimed at large-scale luxury projects of more than 30,000 square meters, such as Forum Puerto Madero and Forum Alcorta in the City of Buenos Aires, Forum Puerto Norte in the City of Rosario and Forum Puerto del Buceo, in Montevideo, Uruguay.
Also, Astor, focused on top quality projects in the upper-middle income segment, ranging from 10,000 to 30,000 square meters, such as Astor Palermo, Astor Núñez and Astor San Telmo, the latter. To these two is added Metra, such as Metra Puerto Norte, also under construction and located in the City of Rosario currently under construction,
The Metra brand is another of the main assets managed by the real estate developer.
At the beginning of 2018, it acquired the construction company Caputo, one of the main ones in Argentina, with more than 500 public and private worksincluding AAA corporate office buildings, large residential towers, shopping malls, art centers and industrial warehouses, among others.
Some projects that Caputo has built throughout its history are the Torre Consultatio, the Usina del Arte cultural center, the Astor Palermo building (developed by GCDI), the Tortugas Open Mall, the Abasto Shopping Mall and the Mendoza Thermal Power Plant.
Through this purchase and subsequent merger, GCDI incorporated a business line with a recurring stream of income that allows it to improve its execution capabilities and at the same time capture construction margins in all its developments.
The public labor
For GCDI executives, industry and construction ended 2022 with a second annual growth after the impact of the pandemic, although December numbers left sharp falls interannual of 2.7% and 10.6% respectively.
These latest data confirmed the slowdown in activity in the last four-month period of last year within the framework of import restrictions due to the shortage of foreign currency, inflation and higher credit prices.
In fact, the activity began in 2023 with a cooling trend, with more than 200,000 works underway throughout the country thanks to public and private support, works that will be completed between this year and 2024. Only in different Buenos Aires Buenos Aires government agencies, including the Urban Development Secretariat, reported that sMore than 1,600,000 square meters of building permits have been authorized, 80% of which are homes and 10% offices.
Construction firms hope to reactivate the sector with public works influenced by the electoral landscape.
The figure represents some 20,000 units, while Some 15,000 homes are currently underway in 1,200 corners of different neighborhoods of Buenos Aires that belong to various real estate ventures that total private investments for the equivalent of US$2.250 million.
According to data from INDEC, a qualitative survey of construction, carried out among large companies in the sector, shows favorable expectations regarding the level of activity expected for the first quarter of 2023, as long as they are mainly engaged in carrying out private or public works.
For GCDI executives, the activity will depend on public investment and the reactivation of government works. The companies that carry out private works, and that anticipate that the activity of the sector will increase in the next three months, indicate as main factors of stimulus to new public works plans (21.3%) and the growth of economic activity (20.3%).
Those that are mainly dedicated to public works, and that estimate an increase in the activity of the sector in the next three months, indicate as the main stimulus factors new official plans (32.8%) and the restart of halted works (25.9%).
The perspectives at the macro level are coincident between the companies that work in public works and in private works. Between 65% and 70% are expecting activity to stabilize in the coming months and recover gradually, starting at the end of this year and extending into 2024, due to the stabilization of inflation and the emergence of new aid instruments for the sale of properties.
“In conclusion, during 2023 the activity will depend heavily on public investment and the reactivation of government works. It is expected that, in an electoral period, public investment will grow,” argues the work of GCDI.
