What changed in INTERGROUP CORP's 2023 10-K compared to 2022?

Across the narrative sections we track, INTERGROUP CORP (INTG) added 252 paragraphs, removed 288, and edited 190 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+83/−82), Item 2. Properties (+80/−88), Item 1. Business (+57/−77).

Did INTERGROUP CORP add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 24 new/edited paragraphs and 34 removed paragraphs versus the 2022 10-K.

What changed in INTERGROUP CORP's MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 83 new/edited paragraphs and 82 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this INTG 10-K diff come from?

The source filings are INTERGROUP CORP's official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in INTERGROUP CORP's 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of INTERGROUP CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+252 added−288 removedSource: 10-K (2023-10-16) vs 10-K (2022-09-28)

Top changes in INTERGROUP CORP's 2023 10-K

252 paragraphs added · 288 removed · 190 edited across 5 sections

Item 7. Management's Discussion & Analysis+83 / −82 · 39 edited
Item 2. Properties+80 / −88 · 71 edited
Item 1. Business+57 / −77 · 53 edited
Item 1A. Risk Factors+24 / −34 · 21 edited
Item 5. Market for Registrant's Common Equity+8 / −7 · 6 edited

Item 1. Business

Business — how the company describes what it does

53 edited+4 added−24 removed24 unchanged

2022 filing

2023 filing

Biggest changeHotel improvements are ongoing to remain competitive. As of the date of this report, the competition for business is stronger than ever as there still hasn’t been a rebound close to 2019 for the overall market.

Biggest changeAs of the date of this report, the competition for business is very strong as there still hasn’t been a rebound close to 2019 for the overall San Francisco market. The fiscal year ending June 30, 2023, the Hotel’s Competitive Set (“CompSet”) was running 64% occupancy and average daily rate of $236 for a RevPAR of $152.

Interest rate on the three new mortgages is fixed at 3.50% for five years and the mortgages mature in July 2051. In July 2021, the Company obtained a mortgage note payable on one of its California properties for $830,000.

The interest rate on the three new mortgages is fixed at 3.50% for five years and the mortgages mature in July 2051. In July 2021, the Company obtained a mortgage note payable on one of its California properties for $830,000.

The Company received net proceeds of $836,000 which exceeded the new loan amount by $6,000 due to advanced deposits made by the Company prior to closing. Interest rate on the mortgage is fixed at 3.50% for five years and the mortgage note payable matures in August 2051.

The Company received net proceeds of $836,000 which exceeded the new loan amount by $6,000 due to advanced deposits made by the Company prior to closing. The interest rate on the mortgage is fixed at 3.50% for five years and the mortgage note payable matures in August 2051.

The Company has not received written notice from any governmental authority of any material noncompliance, liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of its present properties. 9 Competition – Rental Properties The ownership, operation, and leasing of multifamily rental properties are highly competitive.

On June 26, 2015, Operating and Hilton entered into an amended franchise agreement that, among other things, extended the License Agreement through 2030, and also provided the Partnership with certain key money cash incentives to be earned through 2030.

On June 26, 2015, Operating and Hilton entered into an amended franchise agreement that, among other things, extended the License Agreement through 2030, and provided the Partnership with certain key money cash incentives to be earned through 2030.

The public may read and copy any materials that we file with the Commission at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The Company may also invest, with the approval of the Committee, in unlisted securities, such as convertible notes, through private placements including private equity investment funds. Those investments in non-marketable securities are carried at cost on the Company’s consolidated balance sheets as part of Other Assets, net and reviewed for impairment on a periodic basis.

Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. Environmental consultants retained by the Partnership or its lenders conducted updated Phase I environmental site assessments in fiscal year ended June 30, 2014 on the Hotel property.

Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. Environmental consultants retained by Justice and its lenders conducted updated Phase I environmental site assessments in fiscal year ended June 30, 2014 on the Hotel property.

The Company changed its form from a REIT to a corporation so that it could pursue a variety of investments beyond real estate and broaden its social impact to engage in any opportunity which would offer the potential to increase shareholder value within the Company’s underlying commitment to social responsibility.

In addition, other forms of residential properties, including single family housing and town homes, provide housing alternatives to potential residents of quality apartment communities or potential purchasers of for-sale condominium units. The Company competes for residents in its apartment communities based on resident service and amenity offerings and the desirability of the Company’s locations.

The Hotel is a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (“Hilton”) through January 31, 2030. In addition to the operations of the Hotel, the Company also generates income from the ownership, management and, when appropriate, sale of real estate.

The acquisition of any new real estate investments will depend on the Company’s ability to find suitable investment opportunities and the availability of sufficient financing to acquire such investments. To help fund any such acquisition, the Company may borrow funds to leverage its investment capital.

The Company has been a publicly held company since M-REIT’s first public offering of shares in 1966. The Company was organized to buy, develop, operate, rehabilitate and dispose of real property of various types and descriptions, and to engage in such other business and investment activities as would benefit the Company and its shareholders.

The Company has been a publicly held company since M-REIT’s first public offering of shares in 1966. The Company was organized to buy, develop, operate, rehabilitate, and dispose of real property of various types and descriptions, and to engage in such other business and investment activities as would benefit the Company and its shareholders.

Further information with respect to investment in marketable securities and other investments of the Company is set forth in Management Discussion and Analysis of Financial Condition and Results of Operations section and Notes 5 and 6 of the Notes to Consolidated Financial Statements. SEASONALITY Historically, the Hotel’s operation has been seasonal under normal circumstances.

Prior to its dissolution effective December 23, 2021, Justice owned and operated a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”).

Properties include sixteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States but are concentrated in Texas and the County of Los Angeles, California. The Company also has an investment in unimproved real property. As of June 30, 2022, all of the Company’s operating real estate properties are managed in-house.

Properties include sixteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States but are concentrated in Texas and the County of Los Angeles, California. The Company also has an investment in unimproved real property. As of June 30, 2023, all the Company’s operating real estate properties are managed in-house.

If the Hotel needs the event space during one of the dates previously reserved by the Foundation, the Hotel shall pay the Foundation $4,000 per day for using the event space. During the fiscal years ended June 30, 2022 and 2021, the Hotel paid the Foundation $12,000 and $0 for such fees, respectively.

If the Hotel needs the event space during one of the dates previously reserved by the Foundation, the Hotel shall pay the Foundation $4,000 per day for using the event space. During the fiscal years ended June 30, 2023 and 2022, the Hotel paid the Foundation $20,000 and $12,000 for such fees, respectively.

Effective July 15, 2021, Portsmouth completed the purchase of 100% of the limited partnership interest of Justice through the acquisition of the remaining 0.7% non-controlling interest. 4 Effective December 23, 2021, the partnership was dissolved. The financial statements of Justice were consolidated with those of the Company.

Those fees were eliminated in consolidation. Effective July 15, 2021, Portsmouth completed the purchase of 100% of the limited partnership interest of Justice through the acquisition of the remaining 0.7% non-controlling interest. 4 Effective December 23, 2021, The partnership was dissolved. The financial statements of Justice were consolidated with those of the Company.

As part of the Hotel management agreement, Aimbridge, through Portsmouth’s wholly owned subsidiary, Kearny Street Parking LLC, manages the parking garage in-house. 5 CHINESE CULTURE FOUNDATION LEASE On March 15, 2005, the Hotel entered into an amended lease with the Chinese Culture Foundation of San Francisco (the “Foundation”) for the third-floor space of the Hotel commonly known as the Chinese Culture Center, which the Foundation had right to occupy pursuant to a 50-year nominal rent lease that began in 1967.

As part of the Hotel management agreement, Aimbridge, through the Company’s wholly owned subsidiary, Kearny Street Parking LLC, manages the parking garage in-house. 5 CHINESE CULTURE FOUNDATION LEASE On March 15, 2005, the Hotel entered into an amended lease with the Chinese Culture Foundation of San Francisco (the “Foundation”) for the third-floor space of the Hotel commonly known as the Chinese Culture Center, which the Foundation had right to occupy pursuant to a 50-year nominal rent lease that began in 1967.

Under the terms on the HMA, base management fee payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue.

Under the terms on the HMA, base management fee (“Basic Fee”) payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total Hotel revenue.

The Hotel’s location in the San Francisco Financial District historically had provided greater opportunities over its competitors when it comes to developing relationships with the Financial District entities and the customers who regularly do business in the downtown area.

MARKETABLE SECURITIES INVESTMENT POLICIES In addition to its Hotel and real estate operations, the Company also invests from time to time in income producing instruments, corporate debt and equity securities, publicly traded investment funds, mortgage-backed securities, securities issued by REITs and other companies which invest primarily in real estate.

The mortgage loan matures in May 2025. 6 MARKETABLE SECURITIES INVESTMENT POLICIES In addition to its Hotel and real estate operations, the Company also invests from time to time in income producing instruments, corporate debt and equity securities, publicly traded investment funds, mortgage-backed securities, securities issued by REITs and other companies which invest primarily in real estate.

The Company has invested in income-producing instruments, equity and debt securities and will consider other investments if such investments offer growth or profit potential. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the Company’s marketable securities and other investments.

The Company also competes with other quality apartment owned by public and private companies. The number of competitive multifamily properties in a particular market could adversely affect the Company’s ability to lease its multifamily properties, as well as the rents it is able to charge.

The Company also competes with other quality apartments owned by public and private companies. The number of competitive multifamily properties in a particular market could adversely affect the Company’s ability to lease its multifamily properties, as well as the rents it is able to charge.

The Committee has delegated authority to manage the portfolio to the Company’s Chairman and President together with such assistants and management committees he may engage. The Committee generally follows certain established investment guidelines for the Company’s investments.

Effective August 2014, the Company entered into a client service agreement with Automatic Data Processing (“ADP”), a professional employer organization serving as an off-site, full-service human resource department for its employees. ADP personnel management services are delivered by entering into a co-employment relationship with the Company’s employees.

As of June 30, 2022 and 2021, the Company had obligations for securities sold (equities short) of $449,000 and $6,419,000, respectively. The Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. The margin used by the Company may fluctuate depending on market conditions.

As of June 30, 2023 and 2022, the Company had obligations for securities sold (equities short) of $1,416,000 and $449,000, respectively. The Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. The margin used by the Company may fluctuate depending on market conditions.

The amended lease, among other things, requires the Hotel to pay to the Foundation a monthly event space fee in the amount of $5,000, adjusted annually based on the local Consumer Price Index. As of June 30, 2022, monthly event space fee is $6,800.

HOTEL MANAGEMENT COMPANY AGREEMENT Operating entered into a hotel management agreement (“HMA”) with Aimbridge Hospitality (“Aimbridge”) to manage the Hotel, along with its five-level parking garage, with an effective date of February 3, 2017.

The amount of any such debt will depend on a number of factors including, but not limited to, the availability of financing and the sufficiency of the acquisition property’s projected cash flows to support the operations and debt service. The Company also may derive income from the investment of its cash and investment securities assets.

The amount of any such debt will depend on several factors including, but not limited to, the availability of financing and the sufficiency of the acquisition property’s projected cash flows to support the operations and debt service. The Company also may derive income from the investment of its cash and investment securities assets.

Like most hotels in the San Francisco area, the Hotel generally maintained high occupancy and room rates during the entire year except for the weeks starting from Thanksgiving to the end of the calendar year due to the holiday season. These seasonal patterns can be expected to cause fluctuations in the quarterly revenues of the Hotel.

Like most hotels in the San Francisco area, the Hotel generally maintained high occupancy and room rates during the entire year except for the weeks starting from Thanksgiving to first week of January due to the holiday season. These seasonal patterns can be expected to cause fluctuations in the quarterly revenues of the Hotel. See Item 7.

ADDITIONAL INFORMATION The Company files required annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the Securities and Exchange Commission (“SEC” or the “Commission”).

The use of leverage could be viewed as risky and the market values of the portfolio may be subject to large fluctuations. Margin balances due as of June 30, 2022 and 2021 were $490,000 and $7,917,000, respectively. 7 As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V.

The use of leverage could be viewed as risky, and the market values of the portfolio may be subject to large fluctuations. Margin balances due as of June 30, 2023 and 2022 were $1,601,000 and $490,000, respectively. 7 As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V.

These Phase I assessments relied, in part, on Phase I environmental assessments prepared in connection with the Partnership’s first mortgage loan obtained in December 2013.

The Company’s securities investments are made under the supervision of an Executive Strategic Real Estate and Securities Investment Committee of the Board of Directors (the “Committee”). The Committee currently has three members and is chaired by the Company’s Chairman of the Board and President, John V. Winfield.

HILTON HOTELS FRANCHISE LICENSE AGREEMENT The Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding LLC (“Hilton”) on December 10, 2004.

For the fiscal years ended June 30, 2022 and 2021, hotel management fees were $1,055,000 and $242,000, respectively, offset by key money amortization of $250,000 for both years and are included in Hotel operating expenses in the consolidated statements of operations.

For the fiscal years ended June 30, 2023 and 2022, hotel management fees were $711,000 and $530,000, and incentive fees of $505,000 and $525,000, respectively, offset by key money amortization of $250,000 for both years and are included in Hotel operating expenses in the consolidated statements of operations.

As of June 30, 2022, approximately 86% of those employees were represented by one of three labor unions, and their terms of employment were determined under various collective bargaining agreements (“CBAs”) to which Aimbridge was a party. CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2022 and is currently under review.

As of June 30, 2023, approximately 90% of those employees were represented by one of three labor unions, and their terms of employment were determined under various collective bargaining agreements (“CBAs”) to which Aimbridge was a party. CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2022 and a new MOU was signed June 26, 2023.

As of June 30, 2022 and 2021, the Company had other investments of zero and $41,000, respectively. As part of its investment strategies, the Company may assume short positions in marketable securities. Short sales are used by the Company to potentially offset normal market risks undertaken in the course of its investing activities or to provide additional return opportunities.

As part of its investment strategies, the Company may assume short positions in marketable securities. Short sales are used by the Company to potentially offset normal market risks undertaken in the course of its investing activities or to provide additional return opportunities.

We took advantage of the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the hotel bath tubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and started the carpet corridor install that was completed in July 2021.

During 2021 and first part of calendar 2022, we took advantage of the slow periods to make certain capital improvements including complete refinishing of all guest room furniture, resurfacing half of the hotel bathtubs that needed repair, refreshed meeting space and lobby paint and vinyl, replaced all bed frames and socks, and completed the carpet and wall covering corridor installation.

Item 1. Business. GENERAL The InterGroup Corporation (“InterGroup” or the “Company” and may also be referred to as “we” “us” or “our” in this report) is a Delaware corporation formed in 1985, as the successor to Mutual Real Estate Investment Trust (“M-REIT”), a New York real estate investment trust created in 1965.

The maturity date of the new mortgage is August 1, 2051. 6 In July 2021, the Company refinanced three of its California properties’ existing mortgages totaling $1,065,000 with three new mortgages totaling $3,450,000. The Company generated net proceeds totaling $2,325,000 as a result of the refinancing.

SALES AND REFINANCING OF REAL ESTATE PROPERTIES In July 2021, the Company refinanced three of its California properties’ existing mortgages totaling $1,065,000 with three new mortgages totaling $3,450,000. The Company generated net proceeds totaling $2,325,000 as a result of the refinancing.

Resident leases at the Company’s apartment communities are priced competitively based on market conditions, supply and demand characteristics, and the quality and resident service offerings of its communities. EMPLOYEES As of June 30, 2022, the Company had a total of 28 full-time employees.

Resident leases at the Company’s apartment communities are priced competitively based on market conditions, supply and demand characteristics, and the quality and resident service offerings of its communities. EMPLOYEES As of June 30, 2023, the Company’s corporate office and multifamily operations had 32 employees.

CBA for Local 856 (International Brotherhood of Teamsters) will expire on December 31, 2022. CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024. Negotiation of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Partnership and Aimbridge.

Negotiation of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Partnership and Aimbridge.

The term of the amended lease expires on October 17, 2023, with an automatic extension for another 10-year term if the property continues to be operated as a hotel.

The term of the amended lease expires on October 17, 2023, with an automatic extension for another 10-year term if the property continues to be operated as a hotel. Subject to certain conditions as set forth in the amended lease, the Foundation is entitled to reserve a maximum of 75 days per calendar year for use of the event space.

The employees and the Company are not party to any collective bargaining agreement, and the Company believes that its employee relations are satisfactory. On February 3, 2017, Aimbridge assumed all labor union agreements and retained employees of their choice to continue providing services to the Hotel.

The employees and the Company are not party to any collective bargaining agreement, and the Company believes that its employee relations are satisfactory. The hotel operations had 187 employees as of June 30, 2023. On February 3, 2017, Aimbridge assumed all labor union agreements and Justice provides all funding for all payroll and related costs.

Portsmouth’s primary business was conducted through its general and limited partnership interest in Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”). Portsmouth received management fees as a general partner of Justice for its services in overseeing and managing the Partnership’s assets. Those fees were eliminated in consolidation.

The Company’s Chief Operating Officer, David Gonzalez was elected President of Portsmouth in May 2021. Portsmouth’s primary business was conducted through its general and limited partnership interest in Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”). Portsmouth received management fees as a general partner of Justice for its services in overseeing and managing the Partnership’s assets.

As of June 30, 2022, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth. The Company’s Vice President Real Estate, David Gonzalez was elected President of Portsmouth in May 2021.

As of June 30, 2023, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth. As of June 30, 2023, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, owns approximately 2.5% of the outstanding common shares of Portsmouth. Mr. Winfield also serves as the Chairman of the Board and Chief Executive Officer of Portsmouth.

For the six months ending June 30, 2022, the Hotel’s CompSet was still only running 51% occupancy and average daily rate of $244 for a RevPAR of $125. The Hotel has fared drastically better than its CompSet by aggressively pursuing all segments and opening all channels on off peak days and limiting access over peak demand dates.

The Hotel has fared drastically better than its CompSet by aggressively pursuing all segments and opening all channels on off peak days and limiting access over peak demand dates.

With business travel to San Francisco almost non-existent for the time, we are competing with hotels in more tourist attracting locations and amenities for the leisure traveler.

With limited business travel to San Francisco for the time, we are competing with hotels in more tourist attracting locations and amenities for the leisure traveler. The ability to capitalize on the strong midweek demand of the individual business traveler to the Financial District has been the focus during the timeframe of strong growth in the market.

The annual interest rate on the mortgage is fixed at 4.4% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052.

The annual interest rate on the mortgage is fixed at 4.4% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052. On May 31, 2023, the Company refinanced its $4,823,000 mortgage note payable on its 264-unit apartment complex in St Louis, Missouri and obtained a new two year mortgage for $5,360,000.

Our Hotel has navigated this very competitive market nimbly and has consistently been ranked the number one hotel in its Competitive Set (“CompSet”) based on our ability to drive occupancy. At the end of fiscal year 2021 the Hotel had roughly a 233% RevPAR index.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information regarding the effects on our results of operations. COMPETITION The Hotel has navigated this very competitive market nimbly and has consistently been ranked the number one hotel in its Competitive Set (“CompSet”) based on our ability to drive occupancy.

Conversely, for the six months ending June 30, 2022, the Hotel is running occupancy of 82% at $195 average daily rate for a RevPAR of $160, giving the Hotel a RevPAR index of 128%.

At the end of fiscal year ending June 30, 2023, the Hotel was running occupancy of 83% including the vacancy of the “Out Of Order” rooms of about 13% at $195 average daily rate for a RevPAR of $161, giving the Hotel a RevPAR index of 106%.

Removed

Effective February 19, 2021, the Company’s 83.7% owned subsidiary, Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF), was liquidated and all of its assets including its 68.8% interest in Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI) was distributed to its shareholders in exchange for their Santa Fe common stock.

Added

In addition to the Basic Fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s Gross Operating Profit.

Removed

InterGroup received cash of $5,013,000 and 422,998 shares of Portsmouth common stock in March 2021 as a result of the liquidation of Santa Fe.

Added

The Company deposited the existing cash in escrow for Capital Expenditure Reserve of $616,000 and $244,000 in Additional Reserve for taxes and insurance. The mortgage has a floating monthly rate of 30-day SOFR (capped at 5.5%) plus SOFR margin of 3.10% interest-only payments are due for the 12 months and $5,500 principal paydowns commencing in June 2024.

Removed

As a former 3.7% shareholder of Santa Fe, the Company’s President, Chairman of the Board and Chief Executive Officer, John Winfield, received cash of $221,000 and 18,641 shares of Portsmouth common stock in March 2021 as a result of the liquidation of Santa Fe.

Added

In November 2022, we began our guestroom renovation and had completed approximately 200 guestrooms as of June 30, 2023. Hotel improvements are ongoing to remain competitive and we anticipate completing the guestroom renovations by the end March 2024.

Removed

On April 12, 2021, Santa Fe received a filed stamped copy of its Articles of Dissolution from the State of Nevada, and Santa Fe is effectively fully dissolved and no longer in legal existence.

Added

CBA for Local 856 (International Brotherhood of Teamsters) expired on December 31, 2022 and a new agreement was signed on April 26, 2023. CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024.

Removed

The liquidation and distribution of Santa Fe did not have an impact on the consolidated statement of operations but rather on the consolidated balance sheets as a reclass between non-controlling interests and accumulated deficit. As of June 30, 2022, InterGroup owns approximately 75.0% of the outstanding common shares of Portsmouth.

Removed

Subject to certain conditions as set forth in the amended lease, the Foundation is entitled to reserve for a maximum of 75 days per calendar year for use of the event space.

Removed

SALES AND REFINANCING OF REAL ESTATE PROPERTIES On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. Santa Fe was able to utilize its entire available federal net operating losses (“NOL”) and capital loss carryforwards.

Removed

However, California A.B. 85, signed by Governor Newsom on June 29, 2020, suspended the use of NOLs for tax years beginning in 2020, 2021, and 2022; therefore, Santa Fe was unable to utilize its NOLs for State income tax purposes.

Removed

Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of the RLOC of $2,985,000 as the Company had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property.

Removed

In October 2020, the Company refinanced its $4,800,000 mortgage note payable on its 31-unit apartment complex in Santa Monica, California and obtained a new mortgage note payable for $8,400,000. The Company received net proceeds of $3,529,000 as a result of the refinance.

Removed

Interest rate on the mortgage is fixed at 2.52% for ten years and the mortgage matures in November 2030. In November 2020, the Company refinanced its $1,088,000 mortgage note payable on its 9-unit apartment complex in West Los Angeles, California and obtained a new mortgage note payable for $1,995,000.

Removed

The Company received net proceeds of $798,000 as a result of the refinance. Interest rate on the mortgage is fixed at 3.05% for ten years and the mortgage matures in December 2030.

Removed

In January 2021, the Company refinanced its $1,597,000 mortgage note payable on its 14-unit apartment complex in West Los Angeles, California and obtained a new mortgage note payable for $2,780,000. The Company received net proceeds of $1,057,000 as a result of the refinance.

Removed

Interest rate on the mortgage is fixed at 3.05% for ten years and the mortgage matures in February 2031. In June 2021, the Company refinanced its $563,000 mortgage note payable on its 4-unit apartment complex in West Los Angeles, California and obtained a new mortgage note payable for $1,155,000.

Removed

The Company received net proceeds of $619,000 as a result of the refinance. Interest rate on the mortgage has a five-year fixed interest rate of 3.5% per annum and adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

Removed

Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051.

Removed

In June 2021, the Company refinanced two of its single-family houses in West Los Angeles, California with two existing mortgages totaling $751,000 and obtained two new mortgage notes payable for a combined $1,475,000. The Company received combined net proceeds of $759,000 as a result of the refinancing of these two mortgages.

Removed

Interest rate on the mortgages is at five-year fixed interest rate of 3.5% per annum and adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments. Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%.

Removed

The COVID-19 pandemic altered the typical seasonality by significantly reducing operations and revenues through the first calendar quarter of 2022. The hotel has since returned to normal seasonality of being mostly impacted from Thanksgiving through the first week of January. See Item 7.

Removed

Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information regarding the effects of the COVID-19 pandemic on our results of operations. COMPETITION The hotel industry has been devastated by the COVID-19 pandemic that hurt business worse than 9/11 and the Great Recession combined.

Removed

By the start of the fiscal year 2021 most of the hotels in the San Francisco market were closed due to lack of business, only one hotel in our primary competitive set remained open at that time. Most of those hotels stayed closed through end of Q1 fiscal year 2021.

Removed

By the end of Q2 fiscal year 2021, all but one had reopened. The market has seen slight improvements over the last two quarters of fiscal year 2021 but RevPAR in San Francisco was hit the hardest of any major market in the US.

Removed

As group demands rebound some of the larger hotels in our CompSet, we could see significant gains in their occupancy as they sell large blocks to fill their empty meeting spaces which will gradually chip away at the Hotel’s phenomenal RevPAR index for the last six months.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

21 edited+3 added−13 removed48 unchanged

2022 filing

2023 filing

Biggest changeLeisure travel and other leisure activities represent discretionary expenditures, and participation in such activities tends to decline during economic downturns, during which consumers generally have less disposable income. As a result, in those times customer demand for the luxury amenities and leisure activities that we offer may decline.

Biggest changeThe macro-economic situation of a looming US/Global recession has seen business reducing or eliminating typical travel and group meetings in efforts to be conservative in uncertain financial times. Leisure travel and other leisure activities represent discretionary expenditures, and participation in such activities tends to decline during economic downturns, during which consumers generally have less disposable income.

We face intense local and increasingly national competition which could impact our operations and adversely affect our business and results of operations . We operate in the highly competitive San Francisco hotel industry. The Hotel competes with other high-quality Northern California hotels and resorts.

We face intense local and increasingly national competition which could impact our operations and adversely affect our business and the results of operations . We operate in the highly competitive San Francisco hotel industry. The Hotel competes with other high-quality Northern California hotels and resorts.

We could incur liabilities resulting from loss or injury to the Hotel or to persons at the Hotel. Claims, whether they have merit, could harm the reputation of the Hotel or cause us to incur expenses to the extent of insurance deductibles or losses in excess of policy limitations, which could harm our results of operations.

We could incur liabilities resulting from loss or injury to the Hotel or to persons at the Hotel. Claims, whether or not they have merit, could harm the reputation of the Hotel or cause us to incur expenses to the extent of insurance deductibles or losses in excess of policy limitations, which could harm our results of operations.

If this were to occur, or if we were unable to obtain adequate insurance and the Hotel experienced damage which would otherwise have been covered by insurance, it could materially adversely affect our financial condition and the operations of the Hotel. 15 In addition, insurance coverage for the Hotel and for casualty losses does not customarily cover damages that are characterized as punitive or similar damages.

If this were to occur, or if we were unable to obtain adequate insurance and the Hotel experienced damage which would otherwise have been covered by insurance, it could materially adversely affect our financial condition and the operations of the Hotel. 14 In addition, insurance coverage for the Hotel and for casualty losses does not customarily cover damages that are characterized as punitive or similar damages.

If our revenues decline and we are unable to reduce our expenses in a timely manner, our business and results of operations could be adversely affected. 13 Risk of declining market values in marketable securities. The Company invests from time to time in marketable securities. As a result, the Company is exposed to market volatility in connection with these investments.

If our revenues decline and we are unable to reduce our expenses in a timely manner, our business and results of operations could be adversely affected. 12 Risk of declining market values in marketable securities. The Company invests from time to time in marketable securities. As a result, the Company is exposed to market volatility in connection with these investments.

As a result, we may have to enter into short-term borrowings in certain quarters in order to offset these quarterly fluctuations in our revenues. 14 The hotel industry is heavily regulated and failure to comply with extensive regulatory requirements may result in an adverse effect on our business.

As a result, we may have to enter into short-term borrowings in certain quarters in order to offset these quarterly fluctuations in our revenues. 13 The hotel industry is heavily regulated and failure to comply with extensive regulatory requirements may result in an adverse effect on our business.

If we are unable to compete effectively, we could lose market share, which could adversely affect our business and results of operations. 12 The San Francisco hotel and resort industry is capital intensive; financing our renovations and future capital improvements could reduce our cash flow and adversely affect our financial performance.

If we are unable to compete effectively, we could lose market share, which could adversely affect our business and results of operations. 11 The San Francisco hotel and resort industry is capital intensive; financing our renovations and future capital improvements could reduce our cash flow and adversely affect our financial performance.

Material legal proceedings are described more fully in Note 18, Commitments and Contingencies, to our consolidated financial statements, included in Item 8 of this Annual Report on Form 10-K.

Material legal proceedings are described more fully in Note 17, Commitments and Contingencies, to our consolidated financial statements, included in Item 8 of this Annual Report on Form 10-K.

Seasonality and other related factors such as weather can be expected to cause quarterly fluctuations in revenue at the Hotel. The hotel and resort industry is seasonal in nature. This seasonality can tend to cause quarterly fluctuations in revenues at the Hotel.

Seasonality and other related factors such as weather can be expected to cause quarterly fluctuations in revenue at the Hotel. The hotel and resort industry are seasonal in nature. This seasonality can tend to cause quarterly fluctuations in revenues at the Hotel.

Winfield will be able to significantly influence the election of the Company’s board of directors and all other decisions on all matters requiring shareholder approval. As a result, the ability of other shareholders to determine the management and policies of the Company is significantly limited.

The market price of the Company’s common stock may fluctuate significantly from time to time as a result of many factors, including: investors’ perceptions of the Company and its prospects; investors’ perceptions of the Company’s and/or the industry’s risk and return characteristics relative to other investment alternatives; difficulties between actual financial and operating results and those expected by investors and analysts; changes in our capital structure; trading volume fluctuations; actual or anticipated fluctuations in quarterly financial and operational results; volatility in the equity securities market; and sales, or anticipated sales, of large blocks of the Company’s common stock.

The Company’s financial position and financial performance could be adversely affected by worsening market conditions or sluggish performance of such investments. Illiquidity risk in nonmarketable securities. Nonmarketable securities are, by definition, instruments that are not readily salable in the capital markets, and when sold are usually at a substantial discount.

In addition, renovations and capital improvements of hotels usually generate little or no cash flow until the project’s completion. We may not be able to fund such projects solely from cash provided from our operating activities.

Litigation is inherently unpredictable and defending these proceedings can result in significant ongoing expenditures and the diversion of our management’s time and attention from the operation of our business, which could have a negative effect on our business operations.

These conditions affect discretionary and leisure spending and could adversely affect our customers’ ability or willingness to travel to destinations for leisure and cutback on discretionary business travel, which could adversely affect our operating results.

The interests of the Company’s largest shareholder may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions.

Changes adversely impacting this market could have a material effect on our business, financial condition, results of operations, and fair market value of the Hotel . Our business has a limited base of operations and substantially all of our revenues are currently generated by the Hotel.

Changes adversely impacting this market could have a material effect on our business, financial condition, results of operations, and fair market value of the Hotel . Our business in San Francisco and the hospitality industry has a limited base of operations and substantially all of our revenues are currently generated by the Hotel in San Francisco, California.

The concentrated beneficial ownership of our common stock and the ability it affords to control our business may limit or eliminate other shareholders’ ability to influence corporate affairs . The Company’s President, Chief Executive Officer, and Chairman of the Board of Directors, John V. Winfield is a 67.8% beneficial shareholder of the Company. Because of this concentrated stock ownership, Mr.

The concentrated beneficial ownership of our common stock and the ability it affords to control our business may limit or eliminate other shareholders’ ability to influence corporate affairs . The Company’s President, Chief Executive Officer, and Chairman of the Board of Directors, John V. Winfield is a 68.6% beneficial shareholder of the Company. Because of this concentrated stock ownership, Mr.

There is no assurance that the Company’s initiatives to improve its profitability or liquidity and financial position will be successful. Accordingly, there is substantial risk that an investment in the Company will decline in value. The price of the Company’s common stock may fluctuate significantly, which could negatively affect the Company and holders of its common stock.

There is no assurance that the Company’s initiatives to improve its profitability or liquidity and financial position will be successful. The price of the Company’s common stock may fluctuate significantly, which could negatively affect the Company and holders of its common stock.

Due to several factors affecting consumers, the outlook for the lodging industry remains uncertain. These factors have resulted at times in the past and could continue to result in the future in fewer customers visiting, or customers spending less, in San Francisco, as compared to prior periods.

These factors have resulted at times in the past and could continue to result in the future in fewer customers visiting, or customers spending less, in San Francisco, as compared to prior periods.

Furthermore, during periods of economic contraction, revenues may decrease while some of our costs remain fixed or even increase, resulting in decreased earnings. Weakened global economic conditions may adversely affect our industry, business, and results of operations. Our overall performance depends in part on worldwide economic conditions which could adversely affect the tourism industry.

As a result, in those times customer demand for the luxury amenities and leisure activities that we offer may decline. Furthermore, during periods of economic contraction, revenues may decrease while some of our costs remain fixed or even increase, resulting in decreased earnings. Weakened global economic conditions may adversely affect our industry, business, and results of operations.

Removed

Item 1A. Risk Factors. The responses by federal, state, and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our business, financial results and liquidity, and such impact could worsen and last for an unknown period of time.

Added

Item 1A. Risk Factors. Adverse changes in the U.S. and global economies could negatively impact our financial performance. Due to a number of factors affecting consumers, the outlook for the lodging industry remains uncertain.

Removed

The global spread of the COVID-19 pandemic is complex and rapidly-evolving, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses, cancellation of events, including sporting events, conferences and meetings, and quarantines and lock-downs.

Added

Our overall performance depends in part on worldwide economic conditions, which could adversely affect the tourism industry.

Removed

The shelter-in-place, physical distancing, quarantine measures, city closures and their consequences have dramatically reduced travel, conventions and demand for hotel rooms, which has and will continue to impact our business, operations, and financial results. The pandemic is having a significant impact on the U.S. economy and on the local markets in which our properties are located.

Added

The debt agreement that governs our outstanding indebtedness due January 2024 could result in our being required to repay these borrowings on their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, the Hotel financial condition and results of operations could be adversely affected.

Removed

While we did not incur significant disruptions in our real estate operations during the fiscal year ended June 30, 2022 from the COVID-19 pandemic, we are unable to predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to many uncertainties.

Removed

The extent to which the closures impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the closures; the negative impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; our ability to successfully navigate the impacts of the closures; governments actions, businesses and individuals take in response to the closures, including limiting or banning travel; and how quickly economies, travel activity, and demand for lodging recovers after the closures subsides.

Removed

The COVID-19 closures have subjected our business, operations and financial condition to a number of risks, including, but not limited to, those discussed below: ● Risks Related to Revenue: The COVID-19 closures and other imposed restrictions have negatively impacted and will in the future negatively impact to an extent we are unable to predict, our revenue from the Hotel.

Removed

Currently, the Hotel is not generating revenue sufficient to meet its operating expenses, which is adversely affecting our net income. ● Risks Related to Operations: Because of the significant decline in the demand for hotel rooms, the Hotel has taken steps to reduce operating costs and improve efficiency, including furloughing a substantial number of its personnel and implementing reduced work weeks for other personnel.

Removed

Such steps, and further changes we may make in the future to reduce costs, may negatively impact guest loyalty, or our ability to attract and retain associates, and our reputation and market share may suffer as a result.

Removed

For example, if our furloughed personnel do not return to work with us when the COVID-19 closures and imposed restrictions are lifted, including because they find new jobs during the furlough, we may experience operational challenges that impact guest loyalty and our market share, which could limit our ability to grow revenue and could reduce our profits.

Removed

Further, reputational damage from, and the financial impact of, reduced work weeks could lead associates to depart the company and could make it harder for us to recruit new associates in the future.

Removed

We may also face demands or requests from labor unions that represent our associates, whether during our periodic renegotiation of our collective bargaining agreements or otherwise, for additional compensation, healthcare benefits or other terms as a result of COVID-19 that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our COVID-19 mitigation plans.

Removed

COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, could also precipitate or aggravate the other risk factors that we identify in this annual report, which in turn could materially adversely affect our business, financial condition, liquidity, and results of operations (including revenues and profitability).

Removed

Further, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider presenting significant risks to our operations. 11 Adverse changes in the U.S. and global economies could negatively impact our financial performance.

Item 2. Properties

Properties — owned and leased real estate

71 edited+9 added−17 removed17 unchanged

2022 filing

2023 filing

Biggest changeThe outstanding mortgage balance was approximately $4,958,000 at June 30, 2022 with a fixed interest rate of 4.05% per annum and the maturity date of the mortgage is May 31, 2023. Florence, Kentucky. The Florence property is a three-story apartment complex with 157 units on approximately 6.0 acres.

Biggest changeThe maturity date of the mortgage is May 31, 2025. Florence, Kentucky. The Florence property is a three-story apartment complex with 157 units on approximately 6.0 acres. The Company acquired the property on December 20, 1972 at an initial cost of approximately $1,995,000. For the year ended June 30, 2023, real estate property taxes were approximately $64,000.

The company acquired the property in July of 2015 as a strategic asset for $1,975,000. For the year ended June 30, 2022, real estate property taxes were approximately $26,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The company acquired the property in July of 2015 as a strategic asset for $1,975,000. For the year ended June 30, 2023, real estate property taxes were approximately $26,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on August 9, 2000 at an initial cost of approximately $1,308,000. For the year ended June 30, 2022, real estate property taxes were approximately $23,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on August 9, 2000 at an initial cost of approximately $1,308,000. For the year ended June 30, 2023, real estate property taxes were approximately $23,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051. 21 The third Los Angeles single-family house is a 2,387 square foot home.

Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051. 20 The third Los Angeles single-family house is a 2,387 square foot home.

The Company acquired the property on November 10, 1999 at an initial cost of approximately $1,675,000. For the year ended June 30, 2022, real estate property taxes were approximately $30,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on November 10, 1999 at an initial cost of approximately $1,675,000. For the year ended June 30, 2023, real estate property taxes were approximately $30,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on May 1, 2001 at an initial cost of approximately $1,206,000. For the year ended June 30, 2022, real estate property taxes were approximately $21,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on May 1, 2001 at an initial cost of approximately $1,206,000. For the year ended June 30, 2023, real estate property taxes were approximately $21,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on November 9, 2000 at an initial cost of approximately $660,000. For the year ended June 30, 2022, real estate property taxes were approximately $11,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on November 9, 2000 at an initial cost of approximately $660,000. For the year ended June 30, 2023, real estate property taxes were approximately $11,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on August 22, 2003 at an initial cost of approximately $700,000. For the year ended June 30, 2022, real estate property taxes were approximately $13,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on August 22, 2003 at an initial cost of approximately $700,000. For the year ended June 30, 2023, real estate property taxes were approximately $13,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051. The ninth Los Angeles apartment complex is a 7,500 square foot apartment with 7 units.

Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The maturity date of the new mortgage is August 1, 2051. The eighth Los Angeles apartment complex is a 7,500 square foot apartment with 7 units.

The Company’s Los Angeles commercial property is a 5,503 square foot, two story building that served as the Company’s corporate offices until it was leased out, effective October 1, 2009 and the Company leased a new space for its corporate office. The Company acquired the building on March 4, 1999 for $1,876,000.

Property taxes for the year ended June 30, 2022 were approximately $32,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. As of June 30, 2022, this property was not encumbered by a mortgage. The first Los Angeles apartment complex is a 10,600 square foot two-story apartment with 12 units.

Property taxes for the year ended June 30, 2023 were approximately $33,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. As of June 30, 2023, this property was not encumbered by a mortgage. The first Los Angeles apartment complex is a 10,600 square foot two-story apartment with 12 units.

In July 2021, the Company obtained a mortgage on the property for $830,000, generating net proceeds of $836,000. Interest rate on the mortgage is fixed at 3.50% for five years and the mortgage matures in August 2051. Outstanding mortgage balance was approximately $817,000 as of June 30, 2022. The first Los Angeles single-family house is a 2,771 square foot home.

In July 2021, the Company obtained a mortgage on the property for $830,000, generating net proceeds of $836,000. Interest rate on the mortgage is fixed at 3.50% for five years and the mortgage matures in August 2051. Outstanding mortgage balance was approximately $800,000 as of June 30, 2023. The first Los Angeles single-family house is a 2,771 square foot home.

In June 2021, the Company refinanced its 3.75% existing $363,000 mortgage and generated net proceeds of $576,000. The outstanding new mortgage balance was approximately $904,000 as of June 30, 2022 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

In June 2021, the Company refinanced its 3.75% existing $363,000 mortgage and generated net proceeds of $576,000. The outstanding new mortgage balance was approximately $886,000 as of June 30, 2023 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

In June 2021, the Company refinanced its 3.75% existing $388,000 mortgage and generated net proceeds of $183,000. The outstanding new mortgage balance was approximately $545,000 as of June 30, 2022 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

In June 2021, the Company refinanced its 3.75% existing $388,000 mortgage and generated net proceeds of $183,000. The outstanding new mortgage balance was approximately $534,000 as of June 30, 2023 with a five-year fixed interest rate of 3.5% per annum adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2022 and 2021, InterGroup is in compliance with both requirements.

Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2023 and 2022, InterGroup is in compliance with both requirements.

The Morris County property is a two-story garden apartment complex that was completed in June 1964 with 151 units on approximately 8 acres of land. The Company acquired the complex on September 15, 1967 at an initial cost of approximately $1,600,000. Real estate property taxes for the year ended June 30, 2022 were approximately $276,000.

In an all-cash transaction, the Company acquired the property on May 14, 2021 at an initial cost of approximately $2,600,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. For the year ended June 30, 2022, real estate property taxes were approximately $34,000.

In an all-cash transaction, the Company acquired the property on May 14, 2021 at an initial cost of approximately $2,600,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. For the year ended June 30, 2023, real estate property taxes were approximately $32,000.

In November 2020, the Company refinanced its 5.89% existing $1,088,000 mortgage and generated net proceeds of $798,000. The outstanding new mortgage balance was approximately $1,934,000 as of June 30, 2022 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is December 1, 2030.

In November 2020, the Company refinanced its 5.89% existing $1,088,000 mortgage and generated net proceeds of $798,000. The outstanding new mortgage balance was approximately $1,891,000 as of June 30, 2023 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is December 1, 2030.

Justice Operating Company, LLC is not meeting certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lockbox and cash sweep by the Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to replace its hotel management company.

The Company acquired the complex on November 1, 1968 at an initial cost of $2,328,000. For the year ended June 30, 2022, real estate property taxes were approximately $124,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the complex on November 1, 1968 at an initial cost of $2,328,000. For the year ended June 30, 2023, real estate property taxes were approximately $134,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on July 30, 1999 at an initial cost of approximately $1,305,000. For the year ended June 30, 2022, real estate property taxes were approximately $24,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on July 30, 1999 at an initial cost of approximately $1,305,000. For the year ended June 30, 2023, real estate property taxes were approximately $25,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The outstanding mortgage balance was approximately $956,000 as of June 30, 2022 and the maturity date of the mortgage is October 1, 2048. Maui, Hawaii.

Semi-annual rate cap is 1.25% after the initial interest rate change with a floor equal to the start rate and ceiling of 9.95%. The outstanding mortgage balance was approximately $934,000 as of June 30, 2023 and the maturity date of the mortgage is October 1, 2048. Maui, Hawaii .

The fairness of the sale terms of the transaction were reviewed and approved by the independent directors of Santa Fe and InterGroup, and unanimously approved by the entire Board of Directors of both companies. In July 2021, the Company refinanced the property’s existing 3.75%, $327,000 mortgage with a new mortgage for $700,000.

The Company generated net proceeds of $381,000 because of the refinancing. Interest rate on the new mortgage is fixed at 3.50% for five years and the mortgage matures in July 2051. Outstanding mortgage balance was approximately $688,000 as of June 30, 2022.

In September 2021, the Company refinanced the property’s existing 4.75% per annum mortgage and reduced the rate to five-year fixed at 3.5% per annum, adjustable thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

Real estate property taxes for the year ended June 30, 2022 were approximately $977,000. In October 2021, the Company refinanced its 3.73% existing $15,900,000 mortgage note payable on the property and generated net proceeds of $12,938,000. The outstanding new mortgage balance was $28,800,000 as of June 30, 2022.

Real estate property taxes for the year ended June 30, 2023 were approximately $1,054,000. In October 2021, the Company refinanced its 3.73% existing $15,900,000 mortgage note payable on the property and generated net proceeds of $12,938,000. The outstanding new mortgage balance was $28,800,000 as of June 30, 2023.

The outstanding new mortgage balance was approximately $17,598,000 at June 30, 2022 with a fixed interest rate of 3.17% per annum and the maturity date of the new mortgage is May 1, 2030. 18 St. Louis, Missouri. The St. Louis property is a two-story project with 264 units on approximately 17.5 acres.

The outstanding new mortgage balance was approximately $17,208,000 at June 30, 2023 with a fixed interest rate of 3.17% per annum and the maturity date of the new mortgage is May 1, 2030. St. Louis, Missouri. The St. Louis property is a two-story project with 264 units on approximately 17.5 acres.

InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup as needed up to $10,000,000.

InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000.

The twelfth apartment which is located in Marina del Rey, California, is a 6,316 square foot two-story apartment with 9 units. The Company acquired the property on April 29, 2011 at an initial cost of approximately $4,000,000. For the year ended June 30, 2022, real estate property taxes were approximately $57,000.

The eleventh apartment which is located in Marina del Rey, California, is a 6,316 square foot two-story apartment with 9 units. The Company acquired the property on April 29, 2011 at an initial cost of approximately $4,000,000. For the year ended June 30, 2023, real estate property taxes were approximately $58,000.

RENTAL PROPERTIES As June 30, 2022, the Company’s investment in real estate consisted of twenty properties located throughout the United States, with a concentration in Texas and Los Angeles County, California. These properties include sixteen apartment complexes, three single-family houses as strategic investments and one commercial real estate property. All properties are operating properties.

RENTAL PROPERTIES As June 30, 2023, the Company’s investment in real estate consisted of twenty properties located throughout the United States, with a concentration in Texas and Los Angeles County, California. These properties include sixteen apartment complexes, three single-family houses as strategic investments and one commercial real estate property. All properties are operating properties.

As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender. The Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan.

The Guaranties are full recourse guaranties under identified circumstances, including failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy of another person, transfer, or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding.

The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2020 to third quarter of fiscal year 2022 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters.

The DSCR for Operating had been below 1.00 from third quarter of fiscal year 2023 to fourth quarter of fiscal year 2023 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters.

Los Angeles, CA (15) 69 % 94 % The Company’s Los Angeles, California properties are subject to various rent control laws, ordinances and regulations which impact the Company’s ability to adjust and achieve higher rental rates.

The fifth Los Angeles apartment complex is a 26,100 square foot two-story apartment with 31 units. The Company acquired the property on May 26, 2000 at an initial cost of approximately $7,500,000. For the year ended June 30, 2022, real estate property taxes were approximately $124,000.

The fourth Los Angeles apartment complex is a 26,100 square foot two-story apartment with 31 units. The Company acquired the property on May 26, 2000 at an initial cost of approximately $7,500,000. For the year ended June 30, 2023, real estate property taxes were approximately $127,000.

The sixth Los Angeles apartment complex is a 27,600 square foot two-story apartment with 30 units. The Company acquired the property on July 7, 2000 at an initial cost of approximately $4,411,000. For the year ended June 30, 2022, real estate property taxes were approximately $77,000.

The fifth Los Angeles apartment complex is a 27,600 square foot two-story apartment with 30 units. The Company acquired the property on July 7, 2000 at an initial cost of approximately $4,411,000. For the year ended June 30, 2023, real estate property taxes were approximately $78,000.

The outstanding new mortgage balance was approximately $8,400,000 at June 30, 2022 with a fixed interest rate of 2.52% per annum and the maturity date of the new mortgage is November 1, 2030. The new mortgage requires interest-only payments for the first two years and will amortized over 30 years thereafter.

The outstanding new mortgage balance was approximately $8,291,000 at June 30, 2023 with a fixed interest rate of 2.52% per annum and the maturity date of the new mortgage is November 1, 2030. The new mortgage requires interest-only payments for the first two years and will amortize over 30 years thereafter.

The outstanding new mortgage balance was approximately $2,498,000 as of June 30, 2022 with a fixed interest rate of 3.09% per annum and the maturity date of the new mortgage is July 1, 2030. The thirteenth Los Angeles apartment complex is a 4,093 square foot apartment with 4 units.

The outstanding new mortgage balance was approximately $2,443,000 as of June 30, 2023 with a fixed interest rate of 3.09% per annum and the maturity date of the new mortgage is July 1, 2030. The twelfth Los Angeles apartment complex is a 4,093 square foot apartment with 4 units.

The Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations; (ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance, or condemnation proceeds; and (iv) failure to pay taxes or insurance.

The Mortgage Loan is secured by Portsmouth’s principal asset, the Hotel. The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024.

As required by its senior lender, Operating will continue to make minimum payments into its furniture, fixtures, and equipment (“FF&E”) escrow account held by its senior lender of the greatest of 4% of annual revenues or a minimum of $1,952,000 per annum.

Upon the dissolution of Justice in December 2021, Portsmouth assumed Justice’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000.

Upon the dissolution of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000.

The outstanding new mortgage balance was approximately $2,704,000 at June 30, 2022 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is February 1, 2031. The fourth Los Angeles apartment complex is a 10,500 square foot apartment with 9 units.

The outstanding new mortgage balance was approximately $2,645,000 at June 30, 2023 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is February 1, 2031. 18 The third Los Angeles apartment complex is a 10,500 square foot apartment with 9 units.

The economic occupancy (gross potential less rent below market, vacancy loss, bad debt, discounts and concessions divided by gross potential rent) and the physical occupancy (gross potential rent less vacancy loss divided by gross potential rent) for each of the Company’s operating properties for fiscal year ended June 30, 2022 are provided below. Property Economic Occupancy Physical Occupancy 1.

The economic occupancy (gross potential less rent below market, vacancy loss, bad debt, discounts and concessions divided by gross potential rent) and the physical occupancy (gross potential rent less vacancy loss divided by gross potential rent) for each of the Company’s operating properties for fiscal year ended June 30, 2023 are provided below. Property Economic Occupancy Physical Occupancy 1.

The outstanding mortgage balance was approximately $774,000 as of June 30, 2022 with an interest rate of 4.125% and the maturity date of the mortgage is September 1, 2042. 20 The tenth Los Angeles apartment complex is a 13,000 square foot two-story apartment with 8 units.

The outstanding mortgage balance was approximately $751,000 as of June 30, 2023 with an interest rate of 4.125% and the maturity date of the mortgage is September 1, 2042. The ninth Los Angeles apartment complex is a 13,000 square foot two-story apartment with 8 units.

Santa Fe realized a gain on the sale of approximately $901,000, which was eliminated in consolidation at InterGroup. The sales price of the property represents the current value as of the sale date as appraised by a licensed independent third-party appraiser.

The outstanding mortgage on the property for $334,000 was simultaneously transferred to InterGroup. Santa Fe realized a gain on the sale of approximately $901,000, which was eliminated in consolidation at InterGroup. The sales price of the property represents the current value as of the sale date as appraised by a licensed independent third-party appraiser.

In addition to the properties, the Company owns approximately 2 acres of unimproved land in Maui, Hawaii. As of June 30, 2022, all the Company’s operating real estate properties are managed in-house. Description of Properties Las Colinas, Texas.

In addition to the properties, the Company owns approximately 2 acres of unimproved land in Maui, Hawaii. As of June 30, 2023, all the Company’s operating real estate properties are managed in-house. 17 Description of Properties Las Colinas, Texas.

The Company acquired the property on July 28, 2000 at an initial cost of approximately $1,005,000. For the year ended June 30, 2022, real estate property taxes were approximately $17,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on July 19, 2000 at an initial cost of approximately $1,070,000. For the year ended June 30, 2023, real estate property taxes were approximately $18,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

As additional security for the new mezzanine loan, there is a limited guaranty executed by the Company in favor of Cred Reit Holdco LLC (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”).

However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations for at least the next twelve months and beyond.

In July 2021, the Company refinanced the property’s existing 3.75%, $416,000 mortgage with a new mortgage for $1,595,000. The Company generated net proceeds of $1,098,000 because of the refinancing. Interest rate on the new mortgage is fixed at 3.50% for five years and the mortgages mature in July 2051. Outstanding mortgage balance was approximately $1,567,000 as of June 30, 2022.

The Company acquired the property on December 20, 1972 at an initial cost of approximately $1,995,000. For the year ended June 30, 2022, real estate property taxes were approximately $67,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

The Company acquired the property on October 20, 1999 at an initial cost of approximately $2,150,000. For the year ended June 30, 2023, real estate property taxes were approximately $38,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.

In the opinion of management, the Hotel is adequately covered by insurance. 16 HOTEL FINANCING On December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”).

In the opinion of management, the Hotel is adequately covered by insurance. 15 HOTEL FINANCING On December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”).

The outstanding mortgage balance was approximately $2,026,000 as of June 30, 2022 with a fixed interest rate of 3.59% per annum and the maturity date of the mortgage is June 23, 2026. The second Los Angeles apartment complex was a 29,000 square foot three-story apartment with 27 units.

The outstanding mortgage balance was approximately $1,974,000 as of June 30, 2023 with a fixed interest rate of 3.59% per annum and the maturity date of the mortgage is June 23, 2026. The second Los Angeles apartment complex is a 12,700 square foot apartment with 14 units.

Other features of the Hotel include a 5-level underground parking garage and pedestrian bridge across Kearny Street connecting the Hotel and the CCC with Portsmouth Square Park in Chinatown.

The Hotel has approximately 22,000 square feet of meeting room space, including the grand ballroom. Other features of the Hotel include a 5-level underground parking garage and pedestrian bridge across Kearny Street connecting the Hotel and the CCC with Portsmouth Square Park in Chinatown.

In June 2021, the Company refinanced its 3.75% existing $563,000 mortgage and generated net proceeds of $619,000. The outstanding new mortgage balance was approximately $1,135,000 at June 30, 2022 with a five-year fixed interest rate of 3.5% per annum and adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

The outstanding new mortgage balance was approximately $1,112,000 at June 30, 2023 with a five-year fixed interest rate of 3.5% per annum and adjustable rate thereafter at 2.5% over the 6-month LIBOR Index with semi-annual rate and payment adjustments.

Depreciation is recorded on the straight-line method based upon an estimated useful life of 40 years. On November 23, 2020, Santa Fe sold this property to InterGroup for $1,530,000 in exchange for a reduction of $1,196,000 of its obligation to InterGroup. The outstanding mortgage on the property for $334,000 was simultaneously transferred to InterGroup.

For the year ended June 30, 2023, real estate property taxes were approximately $13,000. Depreciation is recorded on the straight-line method based upon an estimated useful life of 40 years. On November 23, 2020, Santa Fe sold this property to InterGroup for $1,530,000 in exchange for a reduction of $1,196,000 of its obligation to InterGroup.

The Second SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act.

As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs. The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act.

The Mezzanine Loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. Interest only payments were due monthly. On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000.

On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly.

For the year ended June 30, 2022, real estate property taxes were approximately $18,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In July 2021, the Company refinanced its 3.75% existing $323,000 mortgage and generated net proceeds of $846,000.

Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In June 2021, the Company refinanced its 3.75% existing $563,000 mortgage and generated net proceeds of $619,000.

The annual interest rate on the new mortgage is fixed at 4.40% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052. The seventh Los Angeles apartment complex is a 3,000 square foot apartment with 4 units. The Company acquired the property on July 19, 2000 at an initial cost of approximately $1,070,000.

The outstanding new mortgage balance was approximately $5,762,000 at June 30, 2023 with a fixed annual interest rate on the new mortgage at 4.40% for the first five years and 5.44% thereafter. The mortgage loan matures in July 2052. The sixth Los Angeles apartment complex is a 3,000 square foot apartment with 4 units.

The eleventh Los Angeles apartment complex, which was owned 100% by the Company’s subsidiary Santa Fe, is a 4,200 square foot two-story apartment with 2 units. Santa Fe acquired the property on February 1, 2002 at an initial cost of approximately $785,000. For the year ended June 30, 2022, real estate property taxes were approximately $13,000.

Outstanding mortgage balance was approximately $1,535,000 as of June 30, 2023. 19 The tenth Los Angeles apartment complex, which was owned 100% by the Company’s subsidiary Santa Fe, is a 4,200 square foot two-story apartment with 2 units. Santa Fe acquired the property on February 1, 2002 at an initial cost of approximately $785,000.

In February 2022, the Los Angeles County Board of Supervisors extended the majority of the eviction moratorium to 2022 and parts of it until 2023. The County’s non-payment eviction protection is scheduled to last from July 1, 2022 until the end of 2022. 22

In February 2022, the Los Angeles County Board of Supervisors extended the majority of the eviction moratorium to 2022 and parts of it until 2023. The County’s non-payment COVID-19 tenant eviction protection resolution expired on March 31, 2023.

The outstanding new mortgage balance was approximately $1,135,000 as of June 30, 2022 with a fixed interest rate of 3.50% per annum and the maturity date of the new mortgage is July 1, 2051. The eighth Los Angeles apartment complex is a 4,500 square foot two-story apartment with 4 units.

In July 2021, the Company refinanced its 3.75% existing $323,000 mortgage and generated net proceeds of $846,000. The outstanding new mortgage balance was approximately $1,112,000 as of June 30, 2023 with a fixed interest rate of 3.50% per annum and the maturity date of the new mortgage is July 1, 2051.

Each of the Loan Agreements also provides for mandatory prepayments under certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions set forth in the Loan Agreements. 17 On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month.

On February 3, 2021, Justice entered into a second loan agreement (“Second SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the Second SBA Loan. As of June 30, 2021, Justice used all proceeds from the Second SBA Loan primarily for payroll costs.

The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan.

The outstanding mortgage balance was approximately $2,998,000 as of June 30, 2022 with a fixed interest rate of 3.875% per annum and the maturity date of the mortgage is April 1, 2025. Los Angeles, California. The Company owns one commercial property, twelve apartment complexes, and three single-family houses in the general area of County of Los Angeles, California (“Los Angeles”).

Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. The outstanding mortgage balance was approximately $2,917,000 as of June 30, 2023 with a fixed interest rate of 3.875% per annum and the maturity date of the mortgage is April 1, 2025. Los Angeles, California.

For the year ended June 30, 2022, real estate property taxes were approximately $38,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. In January 2021, the Company refinanced its 5.89% existing $1,597,000 mortgage and generated net proceeds of $1,057,000.

In January 2021, the Company refinanced its 5.89% existing $1,597,000 mortgage and generated net proceeds of $1,057,000.

The third floor houses the Chinese Culture Center (the “CCC”), its administrative office, and a grand ballroom. The Hotel has approximately 22,000 square feet of meeting room space, including the grand ballroom.

The Hotel has a restaurant, a lounge, and a private dining room on 3,700 square feet; additionally, there are two kitchens to service the restaurant and banquets and a fully equipped gym. The third floor houses the Chinese Culture Center (the “CCC”), its administrative office, and a grand ballroom.

As of June 30, 2022 and 2021, the balance of the loan was $14,200,000 and $6,650,000, net of loan amortization costs of zero, respectively, and are eliminated in the consolidated balance sheets of InterGroup.

As of June 30, 2023 and 2022, the balance of the loan was $15,700,000 and $14,200,000, net of loan amortization costs of zero, respectively. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. The Company agreed to a 0.5% loan extension and modification fee payable to InterGroup.

Removed

The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly.

Added

The Company is working with various potential lenders to refinance its current senior mortgage and mezzanine debt which will mature on January 1, 2024. 16 On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month.

Removed

Additionally, Operating’s DSCR for the fourth quarter of fiscal year 2022 has reached 1.69 for the Mortgage Loan and 1.34 for the Mezzanine Loan.

Added

As a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration (“SBA”).

Removed

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). Justice received proceeds of $4,719,000 from the SBA Loan.

Added

The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property.

Removed

In accordance with the requirements of the CARES Act, Justice used the proceeds from the SBA Loan for payroll costs and other qualified expenses. The SBA Loan was scheduled to mature on April 9, 2022 with a 1.00% interest rate and was subject to the terms and conditions applicable to loans administered by the U.S.

Added

On May 31, 2023, the Company refinanced its $4,823,000 mortgage with a new two-year $5,360,000 mortgage. Interest-only payments are due monthly and commencing on June 10, 2024, the Company will be required to make equal monthly principal installments of $5,500 up to the loan maturity of May 31, 2025.

Removed

Small Business Administration under the CARES Act. On June 10, 2021, the SBA Loan was forgiven in full and $4,719,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2021.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−1 removed1 unchanged

2022 filing

2023 filing

Biggest changeOn September 23, 2019, the Board of Directors authorized the Company to purchase up to an additional 120,000 shares of Company’s common stock. The purchases will be made, in the discretion of management, from time to time, in the open market or through privately negotiated third party transactions depending on market conditions and other factors.

Biggest changeThe purchases will be made, in the discretion of management, from time to time, in the open market or through privately negotiated third party transactions depending on market conditions and other factors. The Company’s repurchase program has no expiration date and can be amended and increased, from time to time, in the discretion of the Board of Directors.

Such number of owners was determined from the Company’s shareholders records and does not include beneficial owners of the Company’s Common Stock whose shares are held in names of various brokers, clearing agencies or other nominees. DIVIDENDS The Company has not declared any cash dividends on its common stock and does not foresee issuing cash dividends in the near future.

On June 3, 2009, the Board of Directors authorized the Company to purchase up to an additional 125,000 shares of Company’s common stock. On November 15, 2012, the Board of Directors authorized the Company to purchase up to an additional 100,000 shares of Company’s common stock.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. This information appears in Part III, Item 12 of this report. 23 ISSUER PURCHASES OF EQUITY SECURITIES The following table reflects purchases of InterGroup’s common stock made by The InterGroup Corporation, for its own account, during the fourth quarter of its fiscal year ending June 30, 2022.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. This information appears in Part III, Item 12 of this report. 22 ISSUER PURCHASES OF EQUITY SECURITIES The following table reflects purchases of InterGroup’s common stock made by The InterGroup Corporation, for its own account, during the fourth quarter of its fiscal year ending June 30, 2023.

Item 5. Market for Common Equity and Related Stockholder Matters. MARKET INFORMATION The Company’s Common Stock is listed and trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market, LLC under the symbol: “INTG”. As of June 30, 2022, the approximate number of holders of record of the Company’s Common Stock was 182.

Item 5. Market for Common Equity and Related Stockholder Matters. MARKET INFORMATION The Company’s Common Stock is listed and trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market, LLC under the symbol: “INTG”. As of June 30, 2023, the approximate number of holders of record of the Company’s Common Stock was 165.

SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES Fiscal 2022 Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number of shares that May Yet be Purchased Under the Plans or Programs Month #1 (April 1- April 30) 868 $ 48.64 868 127,119 Month #2 (May 1- May 31) 4,773 $ 46.68 4,773 122,346 Month #3 (June 1- June 30) 1,362 $ 47.20 1,362 120,984 TOTAL: 7,003 $ 47.02 7,003 120,984 The Company has only one stock repurchase program.

SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES Fiscal 2023 Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number of shares that May Yet be Purchased Under the Plans or Programs Month #1 (April 1- April 30) 190 $ 41.94 190 91,218 Month #2 (May 1- May 31) 530 $ 36.60 530 91,028 Month #3 (June 1- June 30) 297 $ 36.20 297 90,731 TOTAL: 1,017 $ 37.94 1,017 90,731 The Company has only one stock repurchase program.

Removed

The Company’s repurchase program has no expiration date and can be amended and increased, from time to time, in the discretion of the Board of Directors. No plan or program expired during the period covered by the table. Item 6. Selected Financial Data. Not required for smaller reporting companies.

Added

On September 23, 2019, the Board of Directors authorized the Company to purchase up to an additional 120,000 shares of Company’s common stock. On December 20, 2021, the Board of Directors authorized the Company to purchase up to an additional 125,000 shares of Company’s common stock.

Added

No plan or program expired during the period covered by the table.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

39 edited+44 added−43 removed9 unchanged

2022 filing

2023 filing

Biggest changeThe following table shows the composition of the Company’s marketable securities portfolio by selected industry groups: As of June 30, 2022 Industry Group Fair Value % of Total Investment Securities REITs and real estate companies $ 3,289,000 29.8 % Communications Services 2,787,000 25.2 % Financial services 1,755,000 15.9 % Technology 815,000 7.4 % Basic materials 769,000 7.0 % Consumer cyclical 693,000 6.3 % Industrial 385,000 3.5 % Energy 279,000 2.5 % Other 277,000 2.4 % $ 11,049,000 100.0 % As of June 30, 2021 Industry Group Fair Value % of Total Investment Securities REITs and real estate companies $ 11,624,000 32.5 % Energy 6,374,000 17.8 % Communications Services 4,872,000 13.6 % Financial services 3,873,000 10.8 % Industrials 3,746,000 10.5 % Basic materials 1,797,000 5.0 % Consumer goods 1,702,000 4.8 % Healthcare 981,000 2.7 % Technology 442,000 1.2 % Other 381,000 1.1 % $ 35,792,000 100.0 % As of June 30, 2022, the Company’s investment portfolio is diversified with 38 different equity positions.

Biggest changeThe following table shows the composition of the Company’s marketable securities portfolio by selected industry groups: As of June 30, 2023 Industry Group Fair Value % of Total Investment Securities REITs and real estate companies $ 6,985,000 38.1 % Technology 2,779,000 15.1 % T-Notes 2,093,000 11.4 % Financial services 1,865,000 10.2 % Consumer cyclical 1,689,000 9.2 % Basic materials 1,047,000 5.7 % Healthcare 739,000 4.0 % Communications Services 566,000 3.1 % Industrial 485,000 2.7 % Utilities 97,000 0.5 % $ 18,345,000 100.0 % As of June 30, 2022 Industry Group Fair Value % of Total Investment Securities REITs and real estate companies $ 3,289,000 29.8 % Communication Services 2,787,000 25.2 % Financial Services 1,755,000 15.9 % Technology 815,000 7.4 % Basic materials 769,000 7.0 % Consumer cyclical 693,000 6.3 % Industrial 385,000 3.5 % Energy 279,000 2.5 % Other 277,000 2.4 % $ 11,049,000 100.0 % As of June 30, 2023, the Company’s investment portfolio is diversified with 59 different equity positions.

The SBA Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and was subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act.

On November 19, 2021, the Second SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2022. 30 Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance of the Hotel.

On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ending June 30, 2022. 28 Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance of the Hotel.

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel and our real estate properties. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations.

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations.

On November 19, 2021, the Second SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ended June 30, 2022. RESULTS OF OPERATIONS As of June 30, 2022, the Company owned approximately 75.0% of the common shares of Portsmouth Square, Inc.

On November 19, 2021, the SBA Loan was forgiven in full and $2,000,000 was recorded as gain on debt extinguishment on the consolidated statement of operations for the fiscal year ended June 30, 2022. RESULTS OF OPERATIONS As of June 30, 2023, the Company owned approximately 75.7% of the common shares of Portsmouth Square, Inc.

During the years ended June 30, 2022 and 2021, the Company performed an impairment analysis of its other investments and determined that its investments had other than temporary impairment and recorded impairment losses of $41,000 and $119,000, respectively. The Company and its subsidiary Portsmouth, compute and file income tax returns and prepare discrete income tax provisions for financial reporting.

During the years ended June 30, 2023 and 2022, the Company performed an impairment analysis of its other investments and determined that its investments had other than temporary impairment and recorded impairment losses of zero and $41,000, respectively. The Company and its subsidiary Portsmouth compute and file income tax returns and prepare discrete income tax provisions for financial reporting.

(NASDAQ: MUC), which are included the Communications, REITs and real estate companies, and Financial Services industry groups, respectively. The following table shows the net (loss) gain on the Company’s marketable securities and the associated margin interest and trading expenses for the respective years.

(NASDAQ: MUC), which are included the Communications, REITs and real estate companies, and Financial Services industry groups, respectively. The following table shows the net gain (loss) on the Company’s marketable securities and the associated margin interest and trading expenses for the respective years.

However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

The Company’s principal sources of revenue are revenues from the hotel owned by Portsmouth, rental income from its investments in multi-family and commercial real estate properties, and income received from investment of its cash and securities assets.

Small Business Administration (the “SBA”). On February 3, 2021, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA administered by the SBA. Justice received proceeds of $2,000,000 from the SBA Loan. As of June 30, 2021, Justice used all proceeds from the SBA Loan primarily for payroll costs.

On December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup as needed up to $10,000,000 and extended the maturity date of the loan to July 31, 2021. On July 7, 2021, the maturity date was extended to July 31, 2022.

On December 16, 2020, Justice and InterGroup entered into a loan modification agreement which increased Justice’s borrowing from InterGroup as needed up to $10,000,000 and extended the maturity date of the loan to July 31, 2021. As of the date of this report, the maturity date was extended to July 31, 2025.

Income from operations was $3,671,000 for the year ended June 30, 2022 and loss from operations was $4,870,000 for fiscal year ended June 30, 2021. The Company recorded losses of $8,101,000 from marketable securities transactions during fiscal year ended June 30, 2022 as compared to gains of $10,705,000 during fiscal year ended June 30, 2021.

Income from operations was $4,336,000 for the year ended June 30, 2023 and income from operations was $3,671,000 for fiscal year ended June 30, 2022. The Company recorded gains of $58,000 from marketable securities transactions during fiscal year ended June 30, 2023 as compared to losses of $8,101,000 during fiscal year ended June 30, 2022.

Portsmouth’s primary asset is a 544-room hotel property located at 750 Kearny Street, San Francisco, California 94108, known as the “Hilton San Francisco Financial District” (the “Hotel” or the “Property”) and related facilities, including a five-level underground parking garage. The financial statements of Portsmouth have been consolidated with those of the Company.

Investment Transactions The Company had a net loss on marketable securities of $7,614,000 for the year ended June 30, 2022 compared to a net gain on marketable securities of $11,638,000 for the year ended June 30, 2021.

Investment Transactions The Company had a net income on marketable securities of $1,126,000 for the year ended June 30, 2023 compared to a net loss on marketable securities of $7,614,000 for the year ended June 30, 2022.

Fiscal Year Ended June 30, 2022 Compared to Fiscal Year Ended June 30, 2021 The Company had a net loss of $10,616,000 or the year ended June 30, 2022 compared to a net income of $10,545,000 for the year ended June 30, 2021.

Fiscal Year Ended June 30, 2023 Compared to Fiscal Year Ended June 30, 2022 The Company had a net loss of $9,932,000 for the year ended June 30, 2023 compared to a net loss of $10,616,000 for the year ended June 30, 2022.

The Company had restricted cash of $8,982,000 and $8,584,000 as of June 30, 2022 and 2021, respectively. The Company had marketable securities, net of margin due to securities brokers, of $10,110,000 and $21,456,000 as of June 30, 2022 and 2021, respectively. These marketable securities are short-term investments and liquid in nature.

The Company had restricted cash of $6,914,000 and $8,982,000 as of June 30, 2023 and 2022, respectively. The Company had marketable securities, net of margin due to securities brokers and obligations for securities sold of $15,328,000 and $10,110,000 as of June 30, 2023 and 2022, respectively. These marketable securities are short-term investments and liquid in nature.

For the year ended June 30, 2022, the Company had a net realized loss of $2,581,000 related to the Company’s investment in the common stock of Comstock Mining Inc. (“Comstock” - NYSE MKT: LODE). For the year ended June 30, 2021, the Company had a net gain (realized and unrealized) of $3,390,000 related to the Company’s investment in Comstock.

For the year ended June 30, 2022, the Company had a net realized loss of $2,581,000 related to the Company’s investment in the common stock of Comstock Mining Inc. (“Comstock” - NYSE MKT: LODE). For the year ended June 30, 2023, the Company had a net realized loss of $1,712,000 and a net unrealized gain of $2,838,000.

For the year ended June 30, 2021, the Company had a net realized gain of $876,000 and a net unrealized gain of $10,762,000. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations.

For the year ended June 30, 2022, the Company had a net realized loss of $2,206,000 and a net unrealized loss of $5,408,000. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations.

The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the CARES Act. Justice received proceeds of $4,719,000 from the SBA Loan - Justice.

For the year ended June 30, 2022 2021 Hotel revenues: Hotel rooms $ 26,599,000 $ 12,138,000 Food and beverage 1,471,000 293,000 Garage 3,112,000 2,117,000 Other operating departments 352,000 120,000 Total hotel revenues 31,534,000 14,668,000 Operating expenses excluding depreciation and amortization (27,451,000 ) (17,911,000 ) Operating income (loss) before interest, depreciation and amortization 4,083,000 (3,243,000 ) Gain on disposal of assets - 12,000 Gain on forgiveness of debt 2,000,000 4,719,000 Interest expense - mortgage (6,549,000 ) (6,710,000 ) Depreciation and amortization expense (2,310,000 ) (2,228,000 ) Net loss from Hotel operations $ (2,776,000 ) $ (7,450,000 ) For the year ended June 30, 2022, the Hotel had operating income of $4,083,000 before non-recurring charges, interest, depreciation, and amortization on total operating revenues of $31,534,000 compared to operating loss of $3,243,000 before non-recurring charges, interest, depreciation, and amortization on total operating revenues of $14,668,000 for the year ended June 30, 2021.

For the year ended June 30, 2023 2022 Hotel revenues: Hotel rooms $ 35,684,000 $ 26,599,000 Food and beverage 2,625,000 1,471,000 Garage 2,790,000 3,112,000 Other operating departments 928,000 352,000 Total hotel revenues 42,027,000 31,534,000 Operating expenses excluding depreciation and amortization (34,457,000 ) (27,451,000 ) Operating income interest, depreciation and amortization 7,570,000 4,083,000 And gain on forgiveness of debt - 2,000,000 Interest expense - mortgage (6,467,000 ) (6,549,000 ) Depreciation and amortization expense (2,815,000 ) (2,310,000 ) Net loss from Hotel operations $ (1,712,000 ) $ (2,776,000 ) For the year ended June 30, 2023, the Hotel had operating income of $7,570,000 before non-recurring charges, interest, depreciation, and amortization on total operating revenues of $42,027,000.

The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs.

The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. However, there can be no guarantee that management will be successful with its plan.

The year over year increase in all areas are result of recovery from the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak since March 2020. The following table sets forth the monthly average occupancy percentage of the Hotel for the fiscal years ended June 30, 2022 and 2021.

The year over year increase in all areas, except garage revenues, are result of recovery from the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak since March 2020.

We believe that our cash on hand, along with other potential sources of liquidity that management may be able to obtain, will be sufficient to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond.

After considering our approach to liquidity and accessing our available sources of cash, We believe that our cash on hand, along with other potential sources of liquidity that management may be able to obtain, will be sufficient to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond even if current levels of occupancy and revenue per occupied room (“RevPAR”, calculated by multiplying the hotel’s average daily room rate by its occupancy percentage) were to persist.

Since Aimbridge has the power and ability under the terms of its management agreement to adjust hotel room rates on an ongoing basis, there should be minimal impact on partnership revenues due to inflation. Partnership revenues are also subject to interest rate risks, which may be influenced by inflation.

Since Aimbridge has the power and ability under the terms of its management agreement to adjust Hotel room rates on an ongoing basis, there should be minimal impact on partnership revenues due to inflation. For the two most recent fiscal years, the impact of inflation on the Company’s income is not viewed by management as material.

The change was primarily attributable to the $16,866,000 increase in Hotel revenue, offset by the $9,540,000 increase in operating expenses. 26 The following table sets forth a more detailed presentation of Hotel operations for the years ended June 30, 2022 and 2021.

The change was primarily attributable to the $10,493,000 increase in Hotel revenue, offset by $7,006,000 increase in operating expenses and the $2,000,000 gain on forgiveness of debt during period ended June 30, 2022. 24 The following tables set forth a more detailed presentation of Hotel operations for the years ended June 30, 2023 and 2022.

For the two most recent fiscal years, the impact of inflation on the Company’s income is not viewed by management as material. The Company’s residential rental properties provide income from short-term operating leases and no lease extends beyond one year. Rental increases are expected to offset anticipated increased property operating expenses.

The Company’s residential rental properties provide income from short-term operating leases and no lease extends beyond one year. Rental increases are expected to offset anticipated increased property operating expenses.

The following table sets forth the average daily room rate, average occupancy percentage and room revenue per available room (“RevPAR”) of the Hotel for the year ended June 30, 2022 and 2021.

The following table sets forth the monthly average occupancy percentage of the Hotel for the fiscal years ended June 30, 2023 and 2022.

For the Year Ended June 30, Average Daily Rate Average Occupancy % RevPAR 2022 $ 168 80 % $ 134 2021 $ 111 55 % $ 61 27 The Hotel’s revenues increased by 115% year over year.

For the Year Ended June 30, Average Daily Rate Average Occupancy % RevPAR 2023 $ 217 83 % $ 180 2022 $ 168 80 % $ 134 25 The Hotel’s revenues increased by 33% year over year.

Hotel Operations The Company had net loss of $2,776,000 from Hotel operations for the year ended June 30, 2022 compared to net loss of $7,450,000 for the year ended June 30, 2021.

Gain on insurance recovery of $2,692,000 was recorded during fiscal year ended June 30, 2023. Gain on debt forgiveness was $2,000,000 during fiscal year ended June 30, 2022. Hotel Operations The Company had net loss of $1,612,000 from Hotel operations for the year ended June 30, 2023 compared to net loss of $2,776,000 for the year ended June 30, 2022.

For the years ended June 30, 2022 2021 Net (loss) gain on marketable securities $ (7,614,000 ) $ 11,638,000 Impairment loss on other investments (41,000 ) (119,000 ) Dividend and interest income 980,000 519,000 Margin interest expense (851,000 ) (810,000 ) Trading expenses (575,000 ) (523,000 ) Total $ (8,101,000 ) $ 10,705,000 29 FINANCIAL CONDITION, LIQUIDITY AND CAPITAL SOURCES Historically, our cash flows have been primarily generated from our Hotel and real estate operations.

For the years ended June 30, 2023 2022 Net gain (loss) on marketable securities $ 1,126,000 $ (7,614,000 Impairment loss on other investments - (41,000 ) Dividend and interest income 485,000 980,000 Margin interest expense (848,000 ) (851,000 ) Trading expenses (705,000 ) (575,000 ) Total $ 58,000 $ (8,101,000 ) 27 FINANCIAL CONDITION, LIQUIDITY AND CAPITAL SOURCES The Company had cash and cash equivalents of $5,960,000 and $14,367,000 as of June 30, 2023 and 2022, respectively.

Average daily rate increased by $57, average occupancy increased 25%, and RevPAR increased by $73 for the twelve months ended June 30, 2022 compared to the twelve months ended June 30, 2021. The Hotel has taken advantage of the softer demand to take on many improvement projects.

Average daily rate increased by $49, average occupancy increased 3%, and RevPAR increased by $46 for the twelve months ended June 30, 2023 compared to the twelve months ended June 30, 2022.

During the fiscal year ending June 30, 2022, we refinanced six of our properties’ existing mortgages and obtained a mortgage note payable on one of our California properties, generating net proceeds totaling $16,683,000. We are currently evaluating other refinancing opportunities and we could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable.

Louis, Missouri property $4.9 million loan and obtain a $5,360,000 new two-year loan at a floating interest rate of 3.1% over the cap 5.5% SOFR. During the fiscal year ending June 30, 2022, we refinanced six of our properties’ existing mortgages and obtained a mortgage note payable on one of our California properties, generating net proceeds totaling $16,683,000.

Real estate operating expenses increased to $8,694,000 from $7,869,000 primarily due to increased administrative expenses, salary expense, insurance expense, and painting – contract labor. Management continues to review and analyze the Company’s real estate operations to improve occupancy and rental rates and to reduce expenses and improve efficiencies.

Management continues to review and analyze the Company’s real estate operations to improve occupancy and rental rates and to reduce expenses and improve efficiencies.

We are currently evaluating other refinancing opportunities and we could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable. On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S.

Project to repurpose the old Justice offices, accounting offices, Spa, and Executive Lounge has begun which would add 15 additional income producing guest rooms to our inventory. Part of the renovation will be funded by the Hotel’s furniture, fixture, and equipment reserve account with our senior lender.

After this project is completed early calendar year 2024, the Hotel will add 14 additional guest rooms bringing back the old Justice offices, spa, and accounting offices to their original purpose. This will all be funded from the Hotel’s cash from operations through the Hotel’s furniture, fixture, and equipment reserve account with our senior lender.

During the fiscal year ending June 30, 2022, InterGroup advanced $7,550,000 to the Hotel, bringing the total amount due to InterGroup to $14,200,000 on June 30, 2022. During the fiscal year ending June 30, 2021, we completed refinancing on six of our California properties and generated net proceeds of $6,762,000.

During the fiscal year ending June 30, 2023 and 2022, InterGroup advanced to the Hotel $1,500,000 and $7,550,000, respectively, bringing the total amount due to InterGroup to $15,700,000 and $14,200,000 as of June 30, 2023 and 2022, respectively. In July 2023, Portsmouth and InterGroup entered into a new loan modification agreement which increased Portsmouth’s borrowing from InterGroup up to $20,000,000.

July and August 2022 performed strong as well as we closed out the expected demand from summer travel along with an increase in much needed Business Travel and small groups to the hotel. 25 As a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration (“SBA”).

Even factors like the recent culture wars that are dividing much of the country are impacting San Francisco harder than other areas as the city have long been known as the LGBTQ capital of the US, and made recent headlines after Mayor London Breed’s office named the first ever Drag Laureate to an 18 month term as ambassador. 23 As a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration (“SBA”).

Removed

Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations. NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS On February 25, 2020, the City of San Francisco issued the proclamation by the Mayor declaring the existence of a local emergency.

Added

Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements, related notes included thereto and Item 1A., “Risk Factors,” appearing elsewhere in this Annual Report on Form 10-K.

Removed

The negative effects of the civil authority actions related to the novel strain of coronavirus (“COVID-19”) on our business have been significant. In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies, and financial markets globally.

Added

For the discussion and analysis of our 2022 financial condition and results of operations compared to 2023, refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended June 30, 2023.

Removed

It has also disrupted the normal operations of many businesses, including ours.

Added

NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS There are several factors at play that are having a negative impact on our business and the entire hospitality community in San Francisco.

Removed

To mitigate the harm from the pandemic, on March 16, 2020, the City and County of San Francisco, along with a group of five other Bay Area counties and the City of Berkeley, issued parallel health officer orders imposing shelter in place limitations across the Bay Area, requiring everyone to stay safe at home except for certain essential needs.

Added

The constant “doom loop” of negative headlines picked up in main stream media, particularly outlets like Fox News that have made San Francisco their punching back and find ways to amplify any negative story line in the city.

Removed

Since February 2020, several unfavorable events and civil authority actions have unfolded causing demand for our hotel rooms to suffer including cancellations of all citywide conventions, reduction of flights in and out of the Bay Area and decline in both leisure and business travel. 24 In December 2020, due to the surge in COVID-19 cases and hospitalizations, the Health Officer of the City and County of San Francisco suspended or restricted certain activities.

Added

The macro economic situation of a looming US/Global recession have seen business reducing or eliminating typical travel and group meetings in efforts to be conservative in uncertain financial times.

Removed

Health Order C19-07q (the “Order”) incorporates suspensions, reductions in capacity limits, and other restrictions contained in the Regional Stay At Home Order issued by the California Department of Public Health on December 3, 2020. Effective December 17, 2020, the Bay Area Region, including San Francisco, was required to comply with the State’s December 3, 2020 Regional Stay-at-Home Order.

Added

The micro economic situation specific to San Francisco and Bay Area is many of the world’s largest tech companies have taken even more drastic cost cutting measures laying off hundreds of thousands of workers in the area and have reduced business travel, group meetings and even major citywides to cancel like Meta, Red Hat and VMWare.

Removed

The Order strongly discouraged anyone in the County from travelling for leisure, recreation, business, or other purposes that could be postponed until after the surge. With limited exceptions, this Order imposed a mandatory quarantine on anyone traveling, moving, or returning to the County from anywhere outside the Bay Area.

Added

The ongoing conditions of the streets in regards to cleanliness, safety and homelessness problems have driven many other citywide customers to rethink hosting meetings in San Francisco and have relocated to other major markets like Las Vegas, Orlando and San Diego.

Removed

Effective January 20, 2021, Health Order C19- 07r revised and replaced the previous Order; it continued to temporarily prohibit certain businesses and activities from resuming but allowed certain other businesses, activities, travel, and governmental functions to occur subject to specified health and safety restrictions, limitations, and conditions to limit the transmission of COVID-19.

Added

Month Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Fiscal Year Year 2022 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 2023 2022 - 2023 Average Occupancy % 93 % 94 % 95 % 89 % 82 % 77 % 76 % 77 % 81 % 65 % 80 % 83 % 83 % Year 2021 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2022 2021 - 2022 Average Occupancy % 82 % 77 % 76 % 79 % 72 % 74 % 68 % 74 % 81 % 87 % 90 % 95 % 80 % Beginning in November 2022, the occupancy of our hotel has been reduced by approximately 13% every month to reflect the “out-of-order” rooms that are being renovated at any given time.

Removed

On March 24, 2021, the City and County of San Francisco announced it moved into the orange tier which removed the suggested Shelter in Place for guests travelling to San Francisco. This was a very positive step for the hotel community. This tier opened activities in the city including expanded restaurant capacities, museums, and attractions.

Added

The guestroom renovation is scheduled to be completed by the end of March 31, 2024. Additionally, 14 guest rooms will be added to inventory as a result of renovating such rooms which had been repurposed for administrative offices in past years.

Removed

For the hotel it allowed for guests to gather in public spaces and for outlets and amenities to open at limited capacities including fitness centers. It did not change the very stringent cleaning and sanitation requirements set forth by the Health Officer of the City and County of San Francisco which proved to be a costly measure to maintain.

Added

Total operating expenses increased by $7,006,000 due to increase in rooms, food and beverage, salaries and wages, utilities, credit card commissions, and franchise fees. The following table sets forth the average daily room rate, average occupancy percentage and room revenue per available room (“RevPAR”) of the Hotel for the year ended June 30, 2023 and 2022.

Removed

Effective May 6, 2021, the City and County of San Francisco moved into the yellow tier guidelines. We continue to closely monitor the very fluid changes that the Center for Disease Control, San Francisco Department of Health and other authorities implement with regards to the COVID-19 pandemic. On August 20, 2021, San Francisco announced vaccination requirements for indoor activities.

Added

As previously mentioned, our occupancy is lowered by approximately 13% beginning November 2022 when we began to take three levels out of service in order to complete our guestroom renovations. Had the Hotel been able to sell the additional 13% of rooms that were out of order, the RevPar would have been approximately $192.

Removed

This order requires restaurants, theaters, and entertainment venues where food or drink is served inside, as well as gyms, recreation facilities, yoga studios, dance studios and other fitness establishments, clubs involving elevated breathing to show proof of vaccination. On January 11, 2022, a new Health Order has been issued.

Added

After taking advantage of softer demand to refresh all public spaces and meeting rooms, the Hotel is now deep into a renovation of the guest rooms and suites. The Hotel started it’s full renovation of all guest rooms and suites mid-November 2022 and is over half way complete as of fiscal year end 2023.

Removed

The primary change to the Order is to comply with changes the State made lowering the threshold for mega events to 500 attendees indoor and 5,000 attendees outdoor beginning January 15, 2022.

Added

This includes new carpet, vinyl wall covering, headboards, end tables, wall sconces, art, soft seating and refinish of existing desks and doors. The Hotel removed the existing armoire and has built a closet to replace it.

Removed

On March 17, 2022, the State of California announced that beginning on April 1, 2022, it will no longer require that people attending Indoor Mega-Event (i.e., events with 1,000 or more attendees) provide proof of vaccination or negative testing to gain entry. Instead, the State strongly recommend that venues hosting Indoor Mega-Events continue to impose that requirement.

Added

Real Estate Operations Revenues from real estate operations were consistent year over year for June 30, 2023 and 2022 at $15,580,000 and $15,685,000 respectively. Real estate operating expenses increased to $10,017,000 from $8,694,000 primarily due to increased insurance expense of over $1,000,000 year over year.

Removed

The San Francisco hospitality market has seen the two largest citywide events go virtual with DreamForce in September 2021 and JP Morgan Healthcare Conference in January 2022. RSA Conference originally scheduled for February 2022 was moved to June 2022 and Google Cloud Next was cancelled for 2022.

Added

An income tax benefit was recorded for the year ended June 30, 2022, for the pre-tax loss.

Removed

As of the date of this report, the market is seeing slow and steady improvement month over month. Rates in the market grew roughly 20% from February 2022 to March 2022 as demand is steadily increasing, particularly midweek where it has been the softest.

Added

However, for the year ended June 30, 2023, an expense was booked on the pre-tax loss due to the set up of a valuation allowance on all of Portsmouth (standalone) deferred tax assets. 26 MARKETABLE SECURITIES AND OTHER INVESTMENTS As of June 30, 2023 and 2022, the Company had investments in marketable equity securities of $18,345,000 and $11,049,000, respectively.

Removed

Demand generators are returning to the market with the largest being Game Developers Conference in March 2022. Although it was approximately half of the pre-COVID attendance, it lifted the market to the best RevPAR we have seen since March 2020. . April 2022 continued the trend with midweek rates rising and another strong performance from the RIMS citywide.

Added

The Company holds one equity security that comprised more than 10% of the equity value of the portfolio. The three largest security position represent 19%, 4%, and 4% of the portfolio and consists of the common stock of American Realty Investors, Inc.

Removed

May was another strong month with increasing leisure demand and another successful citywide in American Thoracic Society, RevPAR grew 10% month over month. June was the strongest month since the pandemic with rates growing $35 almost 15% just from the previous month driven by strong summer travel and the most successful citywide since the pandemic began in RSA.

Added

(NASDAQ: ARL), Ouster Inc – Common Stock (NASDAQ: OUST), and Bank Hawaii Corp (NASDAQ: BOH), which are included in the REITs and real estate companies, Financial Services, and Financial Services industry groups, respectively. As of June 30, 2022, the Company’s investment portfolio is diversified with 38 different equity positions.

Removed

The hotel achieved a significant benchmark breaking the $4MM mark in total revenues for the first time since January of 2020.

Added

The Company could amend its by-laws and increase the number of authorized shares to issue additional shares to raise capital in the public markets if needed. During the fiscal year ending June 30, 2023, we completed the refinancing on our St.

Removed

In accordance with the requirements of the CARES Act, Justice has used all proceeds from the SBA Loan for payroll costs and other qualified expenses. The SBA Loan - Justice was scheduled to mature on April 9, 2022 and had a 1.00% interest rate and was subject to the terms and conditions applicable to loans administered by the U.S.

Added

Going Concern The Hotel financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As discussed in Note 10 – Mortgage Notes Payable, as of June 30, 2023, the outstanding balance consists of a senior mortgage loan and mezzanine loan totaling $107,117,000.

Removed

Small Business Administration under the CARES Act. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. InterGroup used all the $453,000 loan proceeds in qualified payroll expenses.

… 46 more changes not shown on this page.

Top changes in INTERGROUP CORP's 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other INTG 10-K year-over-year comparisons