11. Permanent investments 11.1 LOANS AND ACCOUNTS RECEIVABLE NOT AVAILABLE FOR TRADING Set out below is an analysis of other long-term debtors as at 31 December 2005 and 2004 (in thousand euros): The line “Subordinate loans for refinancing rents in Germany and Austria” record a series of loans granted by NH Hoteles Group to different companies owning hotel buildings in Germany and Austria which are operated by the Group under lease agreements. These loans are part of a rent refinancing operation that has had the following effects on the Group: -   A lease cost saving of 3.6 million euros in 2005. -   The rents of these hotels shall not be pegged to inflation or to any other index. -   These subordinate loans shall earn interest at a fixed annual rate of 3% (1.5 million euros for 2005). -   The new rent agreements provide for some purchase options for the buildings leased under the contracts, which may be taken up, as a general rule, in the tenth and fifteenth periods as from when they come into force. -   These rent agreements have been considered as operating leases, based on the assesment of two independent third parties experts, with recognized prestige in Germany and Austria. The difference between the purchase value of these buildings and the price at which these options could be exercised today amounts to approximately 1.02 million euros. The caption “Loans to staff” includes the loans made to top managers of the Group in order to buy shares in the Controlling Company. These loans, totaling 14.32 million euros, are appropriately secured. They expired in January 2006 and the borrower may renew the term every year up to 9 January 2008. As at the date these consolidated annual accounts were drawn up, all the borrowers had exercised their right to extend the loans. The  line  “Residencial  Marlin,  S.L.”  records  the  proportional  part  of  the  subordinate  participating  loan  granted  to  said  company  by Sotogrande, S.A. to acquire the plot “Ribera del Marlin” (see Note 20). The line “Advance lease payments” records advances paid to the owners of certain hotels that are operated under leases so that said owners could buy decoration items and furniture. They are discounted from future lease payments. The caption “Harrington Hall Hotel Loan” records the subordinate loan granted by the NH Hoteles Group to the company Harrington Hall Hotel, Ltd. for the purpose of refinancing the acquired company’s prior financial debt. Set out below is the analysis of the different loans granted, giving dates of expiry and interest: 33 consolidated annual accounts 05 2005 2004 Subordinate loans for refinancing rents in Germany and Austria 51,657 - Loans to staff 14,320 14,320 Residencial Marlin, S.L. 9,000 9,000 Advance lease payments 5,964 8,072 Harrington Hall Hotel Loan 2,250 - Project advances 375 5,334 Long-term deposits and guarantee deposits 7,567 7,342 Other 3,348 6,696 Total 94,481 50,764 Expiry Balance as at 31.12.2005 2006 2007 2008 2009 2010   Remainder Average interest rate Residencial Marlin, S.L. 9,000 - 9,000 - - - - 2.33% Advance project fees 375 - 375 - - - - N/A Harrington Hall Hotel Loan 2,250 - - - - 112 2,138 5.43% Subordinate loans for refinancing rents Germany and Austria 51,657 - - - - - 51,657 3% Total 63,282 - 9,375 - - 112 53,795

11.2 OTHER PERMANENT INVESTMENTS Set out below is an analysis of this caption as at 31 December 2005 and 2004: 11.2.1 HOLDINGS STATED AT COST Set out below is an analysis of the holdings in companies stated at cost, (applying  IFRS 39.9 b): 11.2.2 TRADED FINANCIAL ASSETS As at 31 December 2005 and 2004, the NH Hoteles Group has a number of interest-rate collar and swap contracts that originally hedged a syndicated loan that was cancelled in 2004. The fair value of these derivatives as at 31 December 2005 amounted to 4,089 thousand euros (7,746 thousand euros in 2004), 680 thousand euros of which are classified as short-term (see Note 14.2). The Controlling Company also has an equity swap to hedge against the obligations arising under the share option plans designed for certain specific employees of the NH Hoteles Group (see Note 5.14). The fair value, as at 31 December 2005, amounted to 12,788 thousand euros (see Note 21). 12. Inventories Set out below is an analysis of inventories as at 31 December 2005 and 2004 (thousand euros): The Group now owns approximately four million square metres of land in Sotogrande (Cadiz). The planning status of this land is governed by the General Urban Zoning Plan of San Roque, approved by the Provincial Town Planning Committee of Cadiz on 2 November 1987, which 34 consolidated annual accounts 05 Company Address 31.12.05 31.12.04 Parque Temático de Madrid, S.A. Madrid 8,789 8,789 Hanuman Investment, S.L. Tenerife 2,162 2,162 Donnafugata Resort, S.R.L. Italy 2,700 - Fast Good Chile, S.L. Santiago de Chile 249 - Sociedad Deportiva de Tenis, S.A. Cádiz 113 102 S.A.D. Sotogrande, S.A. Cádiz 73 115 Iberinterbrokers, S.L. Barcelona 3 3 Cofir, S.L. Madrid - 60 G.V.G.T. Asociados, S.L. Barcelona - 270 NH Hoteles Alcorcón, S.A. Madrid - 2,632 Desarrollo Inmobiliario Santa Fé México, S.A. De C.V. México D.F. - 2,664 Other capital expenditures 1,221 721 Parque Temático de Madrid provision (8,789) (8,789) Other provisions (282) (282) 6,239 8,447 2005 2004 Developed land 32,318 32,510 Undeveloped land 17,096 15,061 Construction work in progress 31,806 20,891 Finished construction work 7,203 6,540 Auxiliary material and other 8,479 8,517 Total 96,902 83,519 Total

classifies the land owned by the Group mostly as programmed land that qualifies for development. The average cost of the developed land, as at 31 December 2005, is 22 euros per square metre and 11 euros per square metre for the undeveloped land. Moreover, assessments have been carried out by independent third parties according to which the market value of this land is higher than its book value. 13. Trade debtors “Trade debtors” record the different debtor accounts relating to the Group’s current activities as well as the Controlling Company’s earlier industrial activities. Set out below is an analysis of “Trade debtors” as at 31 December (thousand euros): Movements of the provision for bad debts during the years ended on 31 December 2005 and 2004 are as follows (thousand euros): 14. Current-asset investments 14.1 FINANCIAL ASSETS AT MATURITY The caption “Current-asset investments held to maturity” on the accompanying consolidated balance sheet as at 31 December 2005 and 2004, is made up of the following accounts: As at 31 December 2005 and 2004, financial assets such as the fixed-term deposits all mature in less than one year and earn an average market interest rate. 14.2 TRADED FINANCIAL ASSETS The caption “Current-asset investments at fair value” on the accompanying consolidated balance sheet as at 31 December 2005 and 2004, is made up of the following accounts: 35 consolidated annual accounts 05 2005 2004 Trade accounts receivable for services provided 96,042 87,496 Trade debtors for sales of property products 45,542 4,971 141,584 92,467 Less, provision for bad debts (11,228) (11,042) Total 130,356 81,425 2005 2004 Balance as at 1 January 11,042 10,168 Translation differences 96 (56) Charges 90 2,832 Applications - (1,902) Balance as at 31 December 11,228 11,042 2005 2004 Fixed-income securities 26,621 41,114 Short-term fixed-term deposits - 23,028 Total 26,621 64,142 2005 2004 Equity securities 638 637 Interest rate swap (see Note 11.2.2) 680 - Provision for decline in value of equity securities (95) (137) Total 1,223 500

15. Cash and banks and other cash equivalents This caption includes mainly the Group’s cash and bank accounts, as well as bank loans and deposits that initially expire within no more than three months.  The average interest rate earned by the Group on the balances of its cash and bank and other cash equivalents during 2004 and 2005 was a floating rate benchmarked to Euribor. These assets are recorded at their fair value. 16. Net equity 16.1 SHARE CAPITAL As at December 31st 2005 and 2004, the Controlling Company’s share capital was represented by 119,532,898 fully subscribed and paid-in bearer shares, each with a par value of 2 euros. All the shares have equal voting and financial rights and are listed on the Continuous Market in the Madrid Stock Exchange. On August 15th 2005 the shares in the Controlling Company were delisted permanently from Euronext Amsterdam, after the approval by the governing body of the Amsterdam Stock Exchange. According to the latest notifications the Controlling Company has received, and to the notifications made to the Spanish Securities Exchange Commission before the year end, the most significant shareholdings were as follows as at December 31st: At  the  end  of  2005  and  2004,  the  different  members  of  the  Board  of  Directors  held  or  were  the  stable  representatives  of  shareholdings representing approximately 33.02% and 33.04% of the share capital, respectively. 16.2 RESERVES OF THE CONTROLLING COMPANY i)  Legal reserve The current Spanish Companies Act stipulates that 10% of the net profits of the year must be appropriated to the Legal reserve until it attains at least 20% of share capital. The Legal reserve may be used to increase capital to the extent that its balance exceeds 10% of the capital already increased. Except for this purpose, and whenever its balance does not exceed 20% of share capital, this reserve may only be used to offset losses whenever there are no other reserves available. ii)Other reserves not available for distribution Until such time as start-up expenses and goodwill (not including goodwill on consolidation) recorded in the individual annual accounts of the companies that are included in the scope of consolidation of the NH Hoteles Group have been written off, no dividends may be distributed, unless the amount of reserves available for distribution is at least equal to the pending balances. 36 consolidated annual accounts 05 2005 2004 Finaf 92, S.A. 5.24% 5.24% Corporación Financiera Caja de Madrid, S.A. 5.00% 5.00% Caja de Ahorros de Valencia, Castellón y Alicante 6.12% 6.12% Shares used for Option Plans plus Management Team holding 4.14% 5.86% Holding companies of Amancio Ortega Gaona 10.27% 10.27% Hoteles Participados, S.L. 5.25% 5.13% Grupo Inversor Hesperia 5.02% 5.02% Caja de Ahorros y Monte de Piedad de Zaragoza, Aragón y Rioja 5.00% -

16.3 RESERVES OF SUBSIDIARY COMPANIES Set out below is an analysis for each company of the balances of this account in the consolidated balance sheets - after taking into account the effect of the consolidation adjustments - and the differences on exchange accounted in net equity as a result of the consolidation process: (*) Company merged with NH Participaties, N.V. and subsidiaries. 16.4 EQUITY VALUATION ADJUSTMENTS Cash-flow hedging This caption on the consolidated balance sheet records the net amount of the changes in value of the financial derivatives designated as cash-flow hedging instruments (see note 5.6.1). Set out below is the movement in the balance of this caption during 2005: 16.5 OWN SHARES During 2005, the Group has carried out several operations to purchase 2,203,349 shares (2,203,530 shares in 2004) and sell, 2,228,349 shares (2,358,042 shares in 2004) its own shares, within the limits stipulated by law and has made the required notifications to the National Securities Market Commission and the Governing Bodies of the Stock Exchanges. At the year end, the Group held 25,000 shares in NH Hoteles, S.A. (50,000 at the end of 2004), representing 0.02% of its share capital, at a cost of 301 thousand euros. 37 consolidated annual accounts 05 Thousand euros 2005 2004 Reserves Differences on exchange Reserves Differences on exchange FULLY CONSOLIDATED AND CONSOLIDATED USING THE PROPORTIONAL METHOD NH Participaties, N.V. and subsidiaries 167,185 152 72,580 - Shuaa Hotels, B.V.* - - 81,602 - Sotogrande, S.A. and subsidiaries 54,136 - 23,630 - Latinoamericana de Gestión Hotelera, S.A. and subsidiaries 3,460 17,553 (3,167) (2,686) NH Private Equity and subsidiaries 72 - 40 - NH Central Europe GmbH & Co.KG, Berlin and subsidiaries (101,164) (46) (101,327) - NH Italia, S.r.l. and subsidiaries (1,216) - - - Other Spanish hotel companies 28,362 161 44,515 (102) Subtotal 150,785 17,820 117,873 (2,788) CONSOLIDATED USING THE EQUITY METHOD Jolly Hotels, S.p.A. 9,073 - 3,133 - Palacio de la Merced, S.A. (418) - (466) - Fonfir, S.L. (4) - (4) - Subtotal 8,651 - 2,663 - Total 159,436 17,820 120,536 (2,788) Thousand Euros Effect of the first application of IAS 32 and 39 3,492 Additions 7,118 Retirements (5,838) Closing balance 4,772

16.6 MINORITY INTERESTS Set  out  below  is  a  detail  by  company,  of  the  balance  of  the  caption  “Minority  Interests”  on  the  consolidated  balance  sheets  as  at  31 December 2005 and 2004 and the share of outside shareholders in the profit and loss account for 2005 and 2004: Set out below is a summary of the movement in this caption during 2004 and 2005: The line “Change in the scope of consolidation” records, in 2005 and 2004, the balances of certain companies which were included for the first time in the scope of consolidation of the Group in those years or which were taken out as a result of being sold (see Note 2.6.6). The line “Purchase of minority interests” basically records, in 2005, the purchase of 38% of the share capital of Nacional Hispana de Hoteles, S.R.L. de C.V. (see Note 2.6.6). 38 consolidated annual accounts 05 Thousand euros 2005 2004 Company Minority interest Profit/(loss) attributed to minority interests Minority interest Profit/(loss) attributed to minority interests Latinoamericana de Gestión Hotelera, S.A. and subsidiaries 63,729 2,128 85,053 (1,184) Sotogrande, S.A. and subsidiaries 37,970 6,818 32,926 10,463 NH Participaties N.V. and subsidiaries 4,030 362 3,672 213 NH Italia, S.p.A. and subsidiaries 130 (1,332) 1,003 (247) Other Spanish hotel companies 13,823 194 14,612 1,355 Total 119,682 8,170 137,266 10,600 Thousand euros 2005 2004 Opening balance 137,266 133,068 External shareholders' share in profit/(loss) for the year 8,170 10,600 Changes in the scope of consolidation 2,643 1,250 Purchase of minority interests (31,704) (557) Dividends paid to minority shareholders (2,637) (3,407) Differences on exchange 6,193 (3,452) Other movements (249) (236) Closing balance 119,682 137,266