The breakdown of this item at 31 December 2018 and 2017 is as follows:


The “Subordinated loans to companies owning hotels operated by the Group through leases” item includes a series of loans granted by the Group to companies which own hotels in countries such as Germany, Austria, the Netherlands, Italy and Spain, and which are operated by the Group under a leasing agreement.

The main features of these agreements are as follows:

  • Hotel rentals are not subject to evolution of the inflation rate or to that of any other index.
  • The above-mentioned subordinated loans accrue interest at a fixed rate of 3% per year (2.13 million euros in 2018 and 2.93 million euros in the preceding year).
  • Lease agreements establish a purchase right on properties subject to agreements that, as a general rule, may be executed in the fifth, tenth and fifteenth year from the entry into force of the agreement.
  • The model used for these lease agreements has been analysed and independent experts consider them to be operating leases.

At 2017 year-end, the “Other collection rights” line item reflected the claim filed against the insurance company that underwrote the ten-year construction insurance. The amount claimed corresponds to the repairs made and pending in the Los Cortijos de Sotogrande housing development. At the end of 2018, the amount of this claim was collected without any economic losses by the Group.

The “Lease advance payments” item consists of advance payments made to the owners of certain hotels operated under a lease arrangement for the purchase of decoration and furniture; these are discounted from future rental payments.