05 37 SOTOGRANDE THE ESTATE 38 I. LA RESERVA 38 II. OTHER DEVELOPMENTS 38 NEW NH SOTOGRANDE HOTEL 39 NH ALMENARA DECLARED EUROPE'S BEST SPA HOTEL 39 REORGANIZATION OF SOTOGRANDE 39 EARNINGS 40 BOARD OF DIRECTORS AND   MANAGEMENT COMMITTEE 41 05 SOTOGRANDE

38 SOTOGRANDE "A WAY OF LIFE" La Reserva Golf Club | Sotogrande - Cádiz (Spain) THE ESTATE Sotogrande   is   considered   to   be   the   most   prestigious residential development on the Costa del Sol and one of the most  exclusive  in  Southern  Europe.  NH  Hoteles  currently controls 78.7% of Sotogrande S.A. and completes the real estate offering with projects related to exclusive leisure and hospitality. I. LA RESERVA "La Reserva" is an area dedicated to golf, with views over the finest  courses,  equipped  with  the  best  infrastructure  and services to offer year-round luxury. In August 2003, NH Hoteles opened La Reserva's first golf course.   The   18-hole   golf   course,   designed   by   Cabell Robinson on a 72-hectare site, has been well received in the few months following its recent inauguration, and it reflects the major efforts made by La Reserva de Sotogrande. The complex's first 6,950-meter golf course has four lakes and impressive greens designed by Tom Lamb. Sotogrande plans to build a second signature 18-hole golf course at La Reserva. The spectacular La Reserva Club House is expected to open in the summer of 2004 and will serve the complex's two golf courses. At 2003 year-end, 270 of a total of 450 plots, most of which have views of the golf course, went on sale. These plots are among  the  best  that  Sotogrande  has  launched  since  its creation 40 years ago. "Los Cortijos de La Reserva", a development consisting of homes overlooking the golf course, is also for sale. The 76 luxury  villas  and  homes  along  the  avenue  leading  to  La Reserva Club House will be delivered in the second half of 2006; 18 of them were sold before construction commenced. II. OTHER DEVELOPMENTS La Marina de Sotogrande offers a wide range of properties. La Ribera del Obispo is a 29-apartment complex with direct views of the marina. The location is ideal, at the very entrance of La Marina golf course and a mere stone's throw from the shops, bars and restaurants and from the beach and the main entrance to the marina. La   Ribera   del   Guramí   is   a   development   of   33   luxury apartments under construction between Ribera del Obispo and  Ribera  del  Arlequín,  with  panoramic  sea  views.  The apartments will be delivered in 2004, and only one apartment remains unsold. Ribera  del  Marlín,  a  combined  33,000  m²  residential  and commercial  complex,  is  expected  to  be  launched  in  late 2004. Phase two of Las Cimas, a 21-home complex using cutting- edge architecture overlooking the NH Almenara hotel golf course, will be launched in summer 2004 through RESCO- Sotogrande (50%-owned by Sotogrande).

39 Map of Sotogrande NEW NH SOTOGRANDE HOTEL Every year, more visitors come in search of the Sotogrande lifestyle.  Therefore,  in  order  to  establish  a  symbol  for  the development, NH Hoteles decided to renovate the historical Sotogrande hotel. It is currently being refurbished and will open in the third quarter of 2004. The new four-star hotel will boast  112  spacious  rooms,  a  swimming  pool,  an  open-air restaurant  and  multi-purpose  rooms,  and  will  be  located opposite La Cabaña restaurant. NH ALMENARA DECLARED EUROPE'S BEST SPA HOTEL In November 2003, NH Almenara Golf Hotel & Spa won the Most Excellent European Spa Hotel award in the 2003 Condé Nast  Johansens  award  ceremony.  This  is  one  of  the  most prestigious    distinctions    worldwide.    The    Condé    Nast Johansens Awards for Excellence are presented annually to those establishments that represent the finest standards and best value for money in luxury and independent travel. The award certifies the good work by the NH Almenara Golf & Spa hotel team. The hotel is very representative of the NH chain  and  has  gradually  established  itself  as  a  European benchmark in golf and health and beauty services. The 27-hole golf course designed by Dave Thomas surrounds the NH Almenara hotel, and its top-level golf academy has been  recognized  officially  as  a  high-performance  sports training center. Sotogrande   participated   actively   in   the   Volvo   Masters Andalucia 2003 (part of the EPGA tour), which was held in the Valderrama Golf Club. The Volvo Masters Amateur took place in the NH Almenara golf complex. REORGANIZATION OF SOTOGRANDE Sotogrande performed a rights issue in 2003—which entailed the issuance of 7,232,265 new shares and the entry of Caja Madrid into Sotogrande's ownership structure with a 17.3% stake—thus concluding the series of transactions approved by the Boards of Directors of NH Hoteles and Sotogrande in December 2002. The objective was to streamline the Group's structure by grouping together all the business hotels under the  NH  Hoteles  parent  company  and  the  golf  and  tourist hospitality  activities  under  Sotogrande.  As  a  result  of  the capital increase, NH Hoteles now owns 78.7% of Sotogrande, S.A. The transaction involved the following measures: 1. In December 2002, NH Hoteles purchased 49% of AHORA, a company which owns Casino de Madrid, Los Retamares Golf  Club,  Aymerich  Golf  Management  and  seven  NH hotels, from Caja Madrid. AHORA is now wholly owned by NH Hoteles. 2. The Sotogrande Special Shareholders' Meeting in January 2003 approved the issuance of 7,232,265 new shares for a total of 70.24 million euros including an issue premium. NH Hoteles did not subscribe to the rights issue, and the Caja Madrid Group subscribed and paid for the 7,227,642 shares that were not taken up by the market. The Caja Madrid

40 La Reserva | Sotogrande - Cádiz (Spain) La Marina | Sotogrande - Cádiz (Spain) Group also purchased 4,623 old shares of Sotogrande from NH   Hoteles   in   order   to   achieve   the   agreed   stake   in Sotogrande. 3. All of AHORA's assets relating to tourist hotels, golf, leisure and hospitality (i.e. Casino de Madrid, Los Retamares Golf Club,   Aymerich   Golf   Management   and   the   hotels   in Marbella) were transferred to Sotogrande. 4. The   rest   of   AHORA's   assets   (i.e.   seven   urban   hotels) remained   in   AHORA's   portfolio   (100%-owned   by   NH Hoteles), namely: NH Ciudad de Santander, NH Avenida de Jerez, NH Palacio de Castellanos, NH Ciutat de Reus, NH Luz Huelva , NH El Toro and NH La Perdiz. In  October  2003,  NH  Hoteles'  Management  Committee approved the appointment of Gustavo Gabarda Durán as the new Chief Executive Officer of Sotogrande, S.A. Gustavo   Gabarda,   who   worked   for   over   ten   years   with JPMorgan before restructuring Portugal's largest steel group, has been a member of Sotogrande's Board of Directors since 1996.  Gustavo  Garbarda  Durán  is  now  in  charge  of  the Sotogrande   Business   Unit,   enabling   Ignacio   Aranguren, Sotogrande's   former   CEO,   to   dedicate   more   time   to designing the strategy and supervising the management of the NH Hoteles Group. EARNINGS Sotogrande performed well in 2003: booked property sales amounted to 56.88 million euros and committed sales yet to be  booked  reached  a  record  70.2  million  euros,  with  42.2 million euros in profit. This compares very favorably with the situation   on   31   December   2002,   when   committed   sales pending booking amounted to 34.8 million euros, with 15.9 million in profit (i.e. less than half the present figure). Sotogrande's contribution to Group EBITDA totalled 31.56 million euros. Between January 2003 and March 2004, Sotogrande's share appreciated by 14%. Geopolitical uncertainties triggered a slump in the stock markets in 2003, causing Sotogrande's share price to fall 38%; however, the stock has gained 57% since then. Sotogrande's market capitalization totals 335.1 million euros and free float amounts to 4% of capital. 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 Apr    May   Jun   Jul   Aug Sep   Oct  Nov  Dec    03    Feb  Mar   Apr May   Jun    Jul   Aug  Sep   Oct Nov    Dec  04    Feb  Mar SOTOGRANDE MARKET PERFORMANCE