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What changed in INTERGROUP CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of INTERGROUP CORP's 2023 and 2024 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 2024 report.

+233 added−232 removedSource: 10-K (2024-10-01) vs 10-K (2023-10-16)

Top changes in INTERGROUP CORP's 2024 10-K

233 paragraphs added · 232 removed · 183 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe 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.
Biggest changeSALES AND REFINANCING OF REAL ESTATE PROPERTIES 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. 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 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.
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 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 January 2030, and provided the Partnership with certain key money cash incentives to be earned through January 2030.
The Partnership expects and anticipates that the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of each CBA and incorporates these principles into its operating and budgetary practices.
The Hotel expects and anticipates that the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of each CBA and incorporates these principles into its operating and budgetary practices.
The Commission also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. Other information about the Company can be found on its website www.intgla.com .
The Commission also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. Other information about the Company can be found on its website www.intergroupcorporation.com .
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 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.
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.
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.
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.
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.
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.
With business travel slowly returning 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 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 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 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 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 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, 2023, the monthly event space fee is $7,131.
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, 2024, the monthly event space fee is $7,000.
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 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.
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.
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.
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.
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 mortgage loan matures in November 2031. 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.
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.
As of June 30, 2024 and 2023, the Company had obligations for securities sold (equities short) of $188,000 and $1,416,000, 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.
Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the investment activity of Portsmouth. Effective June 2016, Mr.
Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Board of Portsmouth and oversees the investment activity of Portsmouth.
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.
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.
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”).
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”).
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 Hotel and Aimbridge.
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.
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, 2024, 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, 2023 and 2022, the Hotel paid the Foundation $20,000 and $12,000 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, 2024 and 2023, the Hotel paid the Foundation $8,000 and $20,000 for such fees, respectively.
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 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 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.
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.
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.
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.
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 Note 6 of the Notes to Consolidated Financial Statements. SEASONALITY Historically, the Hotel’s operation has been seasonal under normal circumstances.
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.
For the fiscal years ended June 30, 2024 and 2023, hotel management fees were $706,000 and $711,000, and incentive fees of $0 and $505,000, 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.
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.
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, 2024 and 2023 were $0 and $1,601,000, 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.
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.
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.
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.
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.
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”).
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”).
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.
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.
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.
As of June 30, 2024, InterGroup owns approximately 75.7% of the outstanding common shares of Portsmouth. As of June 30, 2024, 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 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.
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.
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.
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, 2024, the Company’s corporate office and multifamily operations had 28 employees.
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.
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.
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.
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 four members and is chaired by the Company’s Chairman of the Board and President, John V. Winfield.
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.
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 In November 1967, Justice entered into a 50-year nominal rent lease (the “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 the right to occupy pursuant to the Lease.
The shift to attracting leisure travel has pushed the hotel to price aggressively to lure competition from the more tourist locations in San Francisco. 8 The Hotel is also subject to certain operating risks common to all of the hotel industry, which could adversely impact performance.
The shift to attracting leisure travel has pushed the Hotel to price aggressively to lure competition from the more tourist locations in the city. We are optimistic to see business travel and self-contained groups trending positively. 8 The Hotel is also subject to certain operating risks common to all of the hotel industry, which could adversely impact performance.
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.
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 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.
While the CompSet has lost over 15% RevPAR; in these two months, the Hotel has grown over 15% in this metric. 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.
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.
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. The mortgage loan matures in May 2025.
Winfield became the Managing Director of Justice and served in that position until the dissolution of Justice in December 2021. Depending on certain market conditions and various risk factors, the Chief Executive Officer, and Portsmouth, at times, invest in the same companies in which the Company invests.
Depending on certain market conditions and various risk factors, the Chief Executive Officer, and Portsmouth, at times, invest in the same companies in which the Company invests.
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, 2024, 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 to as agent for Hotel and Justice.
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.
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.
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.
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, 2024.
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.
CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2024, and is currently under negotiations. CBA for Local 856 (International Brotherhood of Teamsters) will expire on December 31, 2024. CBA for Local 39 (Stationary Engineers) will expire in July 2030.
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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.
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However, the Company is currently in discussions with Aimbridge regarding a dispute in connection with the validity of the incentive fees as they relate directly to the Covid pandemic.
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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.
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Among other requirements, the Lease was a condition imposed by the City of San Francisco upon Justice, in order to convey the real estate where the Hotel would be built. On March 15, 2005, the Hotel and the Foundation entered an amended lease.
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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.
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The term of the amended lease expired on October 17, 2023, with an automatic extension for another 10-year term if the property continues to be operated as a hotel.
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On October 14, 2021, the Company refinanced its $15,900,000 mortgage note payable on its 358-unit apartment complex in Irving, Texas and obtained a new mortgage note payable for $28,800,000. The Company received net proceeds of $12,938,000 as a result of the refinance.
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On December 15, 2023, the Company obtained a second mortgage note payable in the amount of $4,573,000 on its 358-unit apartment complex in Las Colinas, Texas. The term of the loan is approximately 7 years with an interest rate of 7.60%.
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The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year amortization thereafter. The mortgage loan matures in November 2031.
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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 successfully completed its full guest-rooms renovation over the last 2 years along with public space, fitness center, corridors, and meeting space.
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On June 30, 2022, the Company refinanced its $5,283,000 mortgage note payable on its 30-unit apartment complex in West Los Angeles, California and obtained a new mortgage note payable for $5,850,000. The Company received net proceeds of $584,000 as a result of the refinance.
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With newly renovated rooms in its Competitive Set of hotels (“CompSet”) and will allow the hotel to continue to drive rate and grow RevPAR over the market and its CompSet.
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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.
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The hotel recently received its annual Quality Assurance inspection from Hilton and received the highest score at least in the hotel’s last decade at 94.45% which is an “Outstanding” ranking by Hilton. Even during the renovation that took out between 2-4 floors or 50-100 guest rooms of inventory at a time, the Hotel maintained an index of over 100%.
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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.
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At the end of the renovation in June 2024, the Hotel’s trailing 12-month index was 109.6%. During the fiscal year ending June 30, 2024, the Hotel’s CompSet achieved a RevPAR of $161.47 while the Hotel had a RevPAR of $176.99. An excellent achievement for our property while it had roughly 13%-18% of its inventory unavailable over this time period.
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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.
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Since the completion of the renovation, the Hotel has increased its lead in RevPAR on the CompSet dramatically. In the two months since completing the renovation, the Hotel has achieved an average RevPAR index of over 150% for both months.
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As 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.
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On February 3, 2017, Aimbridge assumed all labor union agreements as agent for Hotel and Justice, and Justice provides all funding for all payroll and related costs.
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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.
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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%.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe 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.
Biggest changeThe 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.
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.
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.
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.
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 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.
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.
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.
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.
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 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.
The debt agreements that govern our outstanding indebtedness due January 2025 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.
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.
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.
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.
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 69.4% beneficial shareholder of the Company. Because of this concentrated stock ownership, Mr.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor 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.
Biggest changeLouis property is a two-story project with 264 units on approximately 17.5 acres. The Company acquired the complex on November 1, 1968 at an initial cost of $2,328,000. For the year ended June 30, 2024, real estate property taxes were approximately $150,000. 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 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 $32,000. 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. 20 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. The third Los Angeles single-family house is a 2,387 square foot home.
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.
The Company acquired the property on July 19, 2000 at an initial cost of approximately $1,070,000. For the year ended June 30, 2024, 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.
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.
The Company acquired the property on July 30, 1999 at an initial cost of approximately $1,305,000. For the year ended June 30, 2024, 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.
In August 2004, the Company purchased an approximately two-acre parcel of unimproved land in Kihei, Maui, Hawaii for $1,467,000. Upon the recent wildfires in the area the land was not impacted. As of June 30, 2023, this property is not encumbered by a mortgage.
In August 2004, the Company purchased an approximately two-acre parcel of unimproved land in Kihei, Maui, Hawaii for $1,467,000. Upon the recent wildfires in the area the land was not impacted. As of June 30, 2024, this property is not encumbered by a mortgage.
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.
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.
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.
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 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.
The Company acquired the property on October 20, 1999 at an initial cost of approximately $2,150,000. For the year ended June 30, 2024, real estate property taxes were approximately $40,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.
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.
Property taxes for the year ended June 30, 2024 were approximately $34,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. As of June 30, 2024, 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 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.
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 $523,000 as of June 30, 2024 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, 2023 and 2022, 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, 2024 and 2023, InterGroup is in compliance with both requirements.
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.
Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years. The outstanding mortgage balance was approximately $2,834,000 as of June 30, 2024 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 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 outstanding new mortgage balance was approximately $5,662,000 at June 30, 2024 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.
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.
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 $1,848,000 as of June 30, 2024 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is December 1, 2030.
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.
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.
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.
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 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 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, 2024, real estate property taxes were approximately $129,000.
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 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, 2024, real estate property taxes were approximately $82,000.
The seventh Los Angeles apartment complex is a 4,500 square foot two-story apartment with 4 units. The Company acquired the property on July 28, 2000 at an initial cost of approximately $1,005,000. For the year ended June 30, 2023, real estate property taxes were approximately $17,000.
The seventh Los Angeles apartment complex is a 4,500 square foot two-story apartment with 4 units. The Company acquired the property on July 28, 2000 at an initial cost of approximately $1,005,000. For the year ended June 30, 2024, real estate property taxes were approximately $19,000.
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 $8,102,000 at June 30, 2024 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.
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.
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 $1,088,000 as of June 30, 2024 with a fixed interest rate of 3.50% per annum and the maturity date of the new mortgage is July 1, 2051.
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 in July of 2015 as a strategic asset for $1,975,000. For the year ended June 30, 2024, real estate property taxes were approximately $28,000. 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.
The Company acquired the property on August 9, 2000 at an initial cost of approximately $1,308,000. For the year ended June 30, 2024, 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 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.
The outstanding mortgage balance was approximately $1,919,000 as of June 30, 2024 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.
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 May 1, 2001 at an initial cost of approximately $1,206,000. For the year ended June 30, 2024, real estate property taxes were approximately $22,000. 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.
The Company acquired the property on August 22, 2003 at an initial cost of approximately $700,000. For the year ended June 30, 2024, real estate property taxes were approximately $14,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 40 years.
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.
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.
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.
The outstanding new mortgage balance was approximately $1,088,000 at June 30, 2024 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 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.
The outstanding mortgage balance was approximately $733,000 as of June 30, 2024 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.
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.
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.
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.
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, 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.
Real estate property taxes for the year ended June 30, 2024 were approximately $1,083,000. 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 mortgage balance was $28,800,000 as of June 30, 2024.
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 .
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 $910,000 as of June 30, 2024 and the maturity date of the mortgage is October 1, 2048. 21 Maui, Hawaii .
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.
RENTAL PROPERTIES As June 30, 2024, 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.
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 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 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 outstanding new mortgage balance was approximately $2,585,000 at June 30, 2024 with a fixed interest rate of 3.05% per annum and the maturity date of the new mortgage is February 1, 2031. 19 The third Los Angeles apartment complex is a 10,500 square foot apartment with 9 units.
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.
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 from the refinancing. Interest rate on the new mortgage is fixed at 3.50% for five years and the mortgages mature in July 2051.
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.
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.
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.
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”).
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”).
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 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, 2024 are provided below. Property Economic Occupancy Physical Occupancy 1.
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.
In addition to the properties, the Company owns approximately 2 acres of unimproved land in Maui, Hawaii. As of June 30, 2024, all the Company’s operating real estate properties are managed in-house. Description of Properties Las Colinas, Texas.
The 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 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, 2024, real estate property taxes were approximately $64,000.
Los Angeles, CA (10) 75 % 75 % 15. Los Angeles, CA (11) 97 % 100 % 16. Los Angeles, CA (12) 62 % 62 % 17. Los Angeles, CA (13) 100 % 100 % 18. Los Angeles, CA (14) 100 % 100 % 19.
Los Angeles, CA (10) 100 % 100 % 15. Los Angeles, CA (11) 98 % 100 % 16. Los Angeles, CA (12) 74 % 97 % 17. Los Angeles, CA (13) 100 % 100 % 18. Los Angeles, CA (14) 100 % 100 % 19.
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.
Los Angeles, CA (15) 67 % 50 % 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 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 complex on September 15, 1967 at an initial cost of approximately $1,600,000. Real estate property taxes for the year ended June 30, 2024 were approximately $290,000. 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. 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”).
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 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.
The outstanding new mortgage balance was approximately $867,000 as of June 30, 2024 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.
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 Company will endeavor to refinance the aforementioned loans prior to their new maturity. 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 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 April 29, 2011 at an initial cost of approximately $4,000,000. For the year ended June 30, 2024, real estate property taxes were approximately $61,000. Depreciation is recorded on the straight-line method, based upon an estimated useful life of 27.5 years.
Depreciation is recorded on the straight-line method, based upon an estimated useful life of 27.5 years. In June 2020, the Company refinanced its 5.6% existing $1,303,000 mortgage and generated net proceeds of $1,144,000.
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 $363,000 mortgage and generated net proceeds of $576,000.
Los Angeles, CA (4) 81 % 93 % 9. Los Angeles, CA (5) 100 % 97 % 10. Los Angeles, CA (6) 98 % 100 % 11. Los Angeles, CA (7) 100 % 100 % 12. Los Angeles, CA (8) 100 % 94 % 13. Los Angeles, CA (9) 100 % 100 % 14.
Los Angeles, CA (4) 81 % 95 % 9. Los Angeles, CA (5) 99 % 99 % 10. Los Angeles, CA (6) 98 % 97 % 11. Los Angeles, CA (7) 97 % 92 % 12. Los Angeles, CA (8) 98 % 96 % 13. Los Angeles, CA (9) 89 % 87 % 14.
The floating interest rate is based on the one month term SOFR plus 310 bps floating with a SOFR cap of 5.5%. The interest rate of the greater of (a) the Prime Rate for such day and (b) the Federal Funds Rate for plus 0.50%. 5.5% per annum for two years with interest-only payments for the first year.
The interest rate of the greater of (a) the Prime Rate for such day and (b) the Federal Funds Rate for plus 0.50%. 5.5% per annum for two years with interest-only payments for the first year. The maturity date of the mortgage is May 31, 2025. Florence, Kentucky.
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.
The twelfth Los Angeles apartment complex is a 4,093 square foot apartment with 4 units. 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.
Las Colinas, TX 100 % 99 % 2. Morris County, NJ 92 % 97 % 3. St. Louis, MO 68 % 66 % 4. Florence, KY 80 % 92 % 5. Los Angeles, CA (1) 92 % 95 % 6. Los Angeles, CA (2) 96 % 89 % 7. Los Angeles, CA (3) 96 % 79 % 8.
Las Colinas, TX 83 % 91 % 2. Morris County, NJ 84 % 96 % 3. St. Louis, MO 31 % 37 % 4. Florence, KY 85 % 96 % 5. Los Angeles, CA (1) 88 % 96 % 6. Los Angeles, CA (2) 100 % 94 % 7. Los Angeles, CA (3) 96 % 94 % 8.
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.
For the year ended June 30, 2024, real estate property taxes were approximately $33,000. In July 2021, the Company obtained a mortgage on the property for $830,000, generating net proceeds of $836,000. The interest rate on the mortgage is fixed at 3.50% for five years and the mortgage matures in August 2051.
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”).
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. 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”).
Landlords in California are not allowed to evict tenants for unpaid rent prior to March 2023 and are not allowed to file a civil complaint for such rent until 2025. The Company will file civil complaints as soon as it is allowed by statue in an effort to collect any unpaid rent prior to March 2023. 21
Landlords in California are not allowed to evict tenants for unpaid rent prior to March 2023 and are allowed to file a civil complaint for such rent immediately. The Company has filed civil complaints for unpaid rent and will continue to pursue all unpaid rent.
The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year amortization thereafter. The mortgage loan matures in November 2031. Morris County, New Jersey.
The annual interest rate on the mortgage is fixed at 2.95% for ten years with interest-only payments for the first five years and 30-year amortization thereafter. The mortgage loan matures in November 2031. In December 2023, the Company obtained a second mortgage on its 358-unit apartment located in Las Colinas, Texas in the amount of $4,573,000.
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.
In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. In March 2024, Portsmouth and InterGroup entered in a loan modification agreement which increased Portsmouth’s borrowing amount to $30,000,000. Portsmouth agreed to a 0.5% loan modification fee for the increased borrowing of $10,000,000 payable to InterGroup.
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.
The Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. 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 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.
In June 2020, the Company refinanced its 5.6% existing $1,303,000 mortgage and generated net proceeds of $1,144,000. The outstanding new mortgage balance was approximately $2,386,000 as of June 30, 2024 with a fixed interest rate of 3.09% per annum and the maturity date of the new mortgage is July 1, 2030.
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.
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.
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 $673,000 as of June 30, 2023.
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 $659,000 as of June 30, 2024. The eleventh apartment which is located in Marina del Rey, California, is a 6,316 square foot two-story apartment with 9 units.
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.
In April 2020, the Company refinanced its 3.51% and 4.51% existing $8,737,000 and $2,512,000 mortgages and generated net proceeds of $6,814,000. The outstanding mortgage balance was approximately $16,807,000 at June 30, 2024 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.
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, 2023 were approximately $285,000.
The term of the loan is approximately 7 years with interest rate at 7.60%. The loan matures in November 2031. Morris County, New Jersey. 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.
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.
Outstanding mortgage balance was approximately $1,503,000 as of June 30, 2024. 20 The tenth Los Angeles apartment complex, is a 4,200 square foot two-story apartment with 2 units. For the year ended June 30, 2024, real estate property taxes were approximately $14,000. Depreciation is recorded on the straight-line method based upon an estimated useful life of 40 years.
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.
Outstanding mortgage balance was approximately $783,000 as of June 30, 2024. The first Los Angeles single-family house is a 2,771 square foot home. The Company acquired the property on November 9, 2000 at an initial cost of approximately $660,000. For the year ended June 30, 2024, real estate property taxes were approximately $12,000.
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.
As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender. On April 29, 2024, U.S. Bank National Association and other lenders (“Lender”) entered into a Forbearance Agreement (the “Mortgage Loan Forbearance Agreement”), all capitalized terms are used in this paragraph as defined in this agreement with Operating.
Removed
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.
Added
Assuming no Termination Event occurs, Lender agrees to not take any action with respect to the loan facility set forth therein prior to January 1, 2025. During the Forbearance Period, Operating shall make all regularly scheduled payments to the Lender.
Removed
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.
Added
The Mortgage Loan Forbearance Agreement also contains amended terms as to financial covenants and a 10% principal paydown in the amount of $8,589,706.44 to be applied by the Lender upon execution of the Mortgage Loan Forbearance Agreement.
Removed
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”).
Added
Retroactive to January 1, 2024, Operating is required to accrue an additional 4% default interest, due and payable to Lender at the new maturity or loan prepayment. In addition, Operating paid 1% forbearance fee or $858,971 to Lender upon execution of the Forbearance Agreement.
Removed
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.
Added
On April 29, 2024, CRED REIT HOLDCO LLC (“Mezz Lender”) entered into a Forbearance Agreement (the “Mezz Forbearance Agreement”), all capitalized terms in this paragraph are used as defined in the Mezz Forbearance Agreement) with Mezzanine, an indirect subsidiary of the Company.
Removed
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.
Added
Assuming no Termination Event occurs, Mezz Lender agrees to not take any action with respect to the loan facility set forth therein prior to January 1, 2025. The Mezz Lender also has advanced $4.5 million for payment of the 10% principal paydown with respect to the Mortgage Loan Forbearance Agreement (defined below).

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Added
Mine Safety Disclosures. Not applicable. 22 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSMALL 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.
Biggest changeSMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES Fiscal 2024 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) 3,454 $ 20.56 3,454 68,564 Month #2 (May 1- May 31) 2,788 $ 20.32 2,788 65,776 Month #3 (June 1- June 30) 2,017 $ 20.88 2,017 63,759 TOTAL: 8,259 $ 20.56 8,259 63,759 The Company has only one stock repurchase program.
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.
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.
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. 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.
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. 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.
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.
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.
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.
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.
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.
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, 2024.
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.
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, 2024, the approximate number of holders of record of the Company’s Common Stock was 150.
No plan or program expired during the period covered by the table.
No plan or program expired during the period covered by the table. Item 6. Reserved. Not applicable.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeThe following table shows the composition of the Company’s marketable securities portfolio by selected industry groups: As of June 30, 2024 Industry Group Fair Value % of Total Investment Securities REITs and real estate companies $ 3,358,000 45.1 % Communication services 1,994,000 26.7 % T-Notes 933,000 12.5 % Energy 303,000 4.1 % Financial services 269,000 3.6 % Healthcare 179,000 2.4 % Utilities 163,000 2.2 % Industrial 159,000 2.1 % Basic materials 75,000 1.0 % Technology 21,000 0.3 % $ 7,454,000 100.0 % 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 % Communication services 566,000 3.1 % Industrial 485,000 2.7 % Utilities 97,000 0.5 % $ 18,345,000 100.0 % As of June 30, 2024, the Company’s investment portfolio is diversified with 24 different equity positions.
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 objectives of our cash management policy are to increase 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.
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.
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.
There were no indicators of impairment on its hotel investments or intangible assets and accordingly no impairment losses recorded for the years ended June 30, 2023 and 2022.
There were no indicators of impairment on its hotel investments or intangible assets and accordingly no impairment losses recorded for the years ended June 30, 2024 and 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 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.
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.
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.
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 following table sets forth the monthly average occupancy percentage of the Hotel for the fiscal years ended June 30, 2023 and 2022.
The following table sets forth the monthly average occupancy percentage of the Hotel for the fiscal years ended June 30, 2024 and 2023.
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 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.
Due to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement issuance date.
Due to these factors and the Hotel’s ability to successfully refinance the debt on favorable terms in the current lending environment gives rise to substantial doubt about the Hotel’s ability to continue as a going concern for one year after the financial statement issuance date.
If a position does not meet the more likely than not standard, the benefit cannot be recognized. Assumptions, judgment, and the use of estimates are required in determining if the “more likely than not” standard has been met when developing the provision for income taxes.
If a position does not meet the more likely than not standard, the benefit cannot be recognized. Assumptions, judgment, and the use of estimates are required in determining if the “more likely than not” standard has been met when developing the provision for income taxes.
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.
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.
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.
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.
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.
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.
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 financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be necessary if the Hotel were unable to continue as a going concern. 29 MATERIAL CONTRACTUAL OBLIGATIONS The following table provides a summary as of June 30, 2023, the Company’s material financial obligations which also includes interest payments.
The financial statements do not include any adjustments to the carrying amounts of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. 30 MATERIAL CONTRACTUAL OBLIGATIONS The following table provides a summary as of June 30, 2024, the Company’s material financial obligations which also includes interest payments.
A change in the assessment of the “more likely than not” standard with respect to a position could materially impact our consolidated financial statements. 30 DEFERRED INCOME TAXES – VALUATION ALLOWANCE We assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that some or all of our deferred tax assets are not realizable.
A change in the assessment of the “more likely than not” standard with respect to a position could materially impact our consolidated financial statements. 31 DEFERRED INCOME TAXES – VALUATION ALLOWANCE We assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that some or all of our deferred tax assets are not realizable.
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.
During the years ended June 30, 2024 and 2023, 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 $5,000 and $0, respectively. The Company and its subsidiary Portsmouth compute and file income tax returns and prepare separate income tax provisions for financial reporting.
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.
Total operating expenses increased by $1,682,000 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, 2024 and 2023.
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.
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.
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.
The Company had restricted cash of $4,361,000 and $6,914,000 as of June 30, 2024 and 2023, respectively. The Company had marketable securities, net of margin due to securities brokers and obligations for securities sold of $7,266,000 and $15,328,000 as of June 30, 2024 and 2023, respectively. These marketable securities are short-term investments and liquid in nature.
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.
Month Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Fiscal Year Year 2023 2023 2023 2023 2023 2023 2024 2024 2024 2024 2024 2024 2023 – 2024 Average Occupancy % 81 % 89 % 93 % 83 % 79 % 80 % 80 % 78 % 76 % 73 % 78 % 87 % 82 % 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 % Beginning in November 2022, the occupancy of our hotel has been reduced by approximately 13% - 18% every month to reflect the “out-of-order” rooms that were being renovated at any given time.
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.
Income from operations was $1,454,000 for the year ended June 30, 2024 and income from operations was $4,336,000 for fiscal year ended June 30, 2023. The Company recorded losses of $1,633,000 from marketable securities transactions during fiscal year ended June 30, 2024 as compared to gains of $58,000 during fiscal year ended June 30, 2023.
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.
Fiscal Year Ended June 30, 2024, Compared to Fiscal Year Ended June 30, 2023 The Company had a net loss of $12,556,000 for the year ended June 30, 2024 compared to a net loss of $9,932,000 for the year ended June 30, 2023.
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.
For the discussion and analysis of our 2023 financial condition and results of operations compared to 2024, 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, 2024.
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.
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. 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.
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 efficiency.
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.
As of June 30, 2024, the guestroom renovation was completed. Additionally, 14 guest rooms will be added during fiscal year 2025 to inventory as a result of renovating such rooms which had been repurposed for administrative offices in past years.
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.
Investment Transactions The Company had a net loss on marketable securities of $485,000 for the year ended June 30, 2024 compared to a net income on marketable securities of $1,126,000 for the year ended June 30, 2023. For the year ended June 30, 2024, the Company had a net realized gain of $1,251,000 and a net unrealized loss of $1,736,000.
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.
The repayment of the SBA loan has been recorded as a loss on extinguishment of debt in the condensed consolidated statements of operations for the year ended June 30, 2024. 29 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.
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.
For the years ended June 30, 2024 2023 Net (loss) gain on marketable securities $ (485,000 ) $ 1,126,000 Impairment loss on other investments (5,000 ) - Dividend and interest income 405,000 485,000 Margin interest expense (1,013,000 ) (848,000 ) Trading expenses (535,000 ) (705,000 ) Net (loss) gain from marketable securities operations $ (1,633,000 ) $ 58,000 28 FINANCIAL CONDITION, LIQUIDITY AND CAPITAL SOURCES The Company had cash and cash equivalents of $4,333,000 and $5,960,000 as of June 30, 2024 and 2023, respectively.
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.
The Company holds two equity securities that comprised more than 10% of the equity value of the portfolio. The two largest security positions represent 28% and 22% of the portfolio and consists of the common stock of American Realty Investors, Inc. (NASDAQ: ARL) and Alphabet Inc.
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.
However, for the year ended June 30, 2023, an expense of $7,912,000 income tax expense was recorded due to the setup of a valuation allowance on deferred tax assets. 27 MARKETABLE SECURITIES AND OTHER INVESTMENTS As of June 30, 2024 and 2023, the Company had investments in marketable equity securities of $7,454,000 and $18,345,000, respectively.
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.
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 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.
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.
For the year ended June 30, 2024 2023 Hotel revenues: Hotel rooms $ 35,239,000 $ 35,684,000 Food and beverage 3,213,000 2,625,000 Garage 2,988,000 2,790,000 Other operating departments 446,000 928,000 Total hotel revenues 41,886,000 42,027,000 Operating expenses excluding depreciation and amortization (36,139,000 ) (34,457,000 ) Operating income interest, depreciation and amortization 5,747,000 7,570,000 Interest expense - mortgage (9,407,000 ) (6,467,000 ) Depreciation and amortization expense (3,494,000 ) (2,815,000 ) Net loss from Hotel operations $ (7,154,000 ) $ (1,712,000 ) For the year ended June 30, 2024, the Hotel had operating income of $5,747,000 before interest, depreciation, and amortization on total operating revenues of $41,886,000.
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.
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, 2024, the Company obtained a second mortgage on its 358-unit apartment located in Las Colinas, Texas in the amount of $4,573,000.
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.
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 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.
As of March 31, 2021, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup was scheduled to mature on April 27, 2022 and had a 1.00% interest rate. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S.
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.
The term of the loan is approximately 7 years with interest rate at 7.60%. During the fiscal year ending June 30, 2023, the Company completed the refinancing on our St. 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.
(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.
The three largest security position represent 19%, 4%, and 4% of the portfolio and consists of the common stock of American Realty Investors, Inc. (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.
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.
Average daily rate remained the same, average occupancy decreased 1%, and RevPAR increased by $3 for the twelve months ended June 30, 2024 compared to the twelve months ended June 30, 2023. The Hotel started its’ full renovation of all guest rooms and suites mid-November 2022 and completed the renovation by June 30, 2024.
(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.
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.
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.
For the Year Ended June 30, Average Daily Rate Average Occupancy % RevPAR 2024 $ 217 82 % $ 177 2023 $ 217 83 % $ 180 26 The Hotel’s revenues decreased by less than 1% year over year.
As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all.
While the Company successfully entered into the aforementioned forbearance agreements, we continue our efforts to place a longer term refinancing solution to its current senior mortgage and mezzanine debt with potential lenders. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all.
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.
Real Estate Operations Revenues from real estate operations increased for June 30, 2024 and 2023 at $16,254,000 and $15,580,000 primarily as the result of higher occupancy and increased rental rates. Real estate operating expenses decreased to $9,836,000 from $10,017,000 primarily due to decrease in salaries and related costs.
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.
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. In March 2024, Portsmouth and InterGroup entered in a loan modification agreement which increased Portsmouth’s borrowing amount to $30,000,000. Portsmouth agreed to a 0.5% loan modification fee for the increased borrowing of $10,000,000 payable to InterGroup.
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.
Hotel Operations The Company had net loss of $7,154,000 from Hotel operations for the year ended June 30, 2024 compared to net loss of $1,712,000 for the year ended June 30, 2023. The change was primarily attributable to the increase of $1,682,000 in operating expenses and the $2,940,000 increase in interest expense.
Removed
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.
Added
NEGATIVE EFFECTS OF THE PUBLIC PERCEPTION OF SAN FRANCISCO The San Francisco hospitality community continues to struggle with the perception that the city is plagued with homelessness, open air drug use, dirty streets, rampant crime, and an exodus of business and retail establishments.
Removed
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.
Added
While these issues do exist, they are not anywhere near the levels at which people outside of the city believe them to be including those responsible for travel for organizations and individual leisure travelers.
Removed
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.
Added
We know this to be true as our sales team along with the sales team of SF Travel report these concerns as the biggest impact on companies choosing not to bring their events to San Francisco.
Removed
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.
Added
The city has done a great job of cleaning up the streets and is just getting started on clearing out homeless encampments, that will take time but should help the perception of city to those looking at us as a potential destination.
Removed
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.
Added
Compounding the issue is a tight Mayoral race in which all the candidates, with the exception of one, the incumbent, are looking to play up these issues in an effort to get them elected by highlighting the shortcomings of the city.
Removed
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”).
Added
Many of the positive stories coming out about the city and its recovery, including the explosion of AI and the companies at the forefront of it based out of San Francisco are helping to change the narrative back to one of innovation and the future of technology. 24 RESULTS OF OPERATIONS As of June 30, 2024, the Company owned approximately 75.7% of the common shares of Portsmouth Square, Inc.
Removed
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.
Added
Gain on insurance recovery of $2,692,000 was recorded during fiscal year ended June 30, 2023. The Company incurred interest expense of $12,007,000 and $8,585,000 during fiscal years ended June 30, 2024 and 2023, respectively, or an increase of $3,422,000 primarily as a result of additional interest being incurred in its hotel operation.
Removed
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.
Added
The Hotel had an income tax provision expense adjustment of $7,912,000 at June 30, 2023 mainly due to a valuation allowance on our deferred tax assets.
Removed
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.
Added
The increase in pre-tax loss during June 30, 2024 over 2023, was as a result of increased operating expenses, increased mortgage interest expense from the 4% default additional interest rate on the senior and mezzanine loans as provided in the Forbearance Agreement entered into with its senior and mezzanine lenders retroactive to January 1, 2024 and an increase in related party accrued interest expense due to a higher balance due Intergroup. 25 The following tables set forth a more detailed presentation of Hotel operations for the years ended June 30, 2024 and 2023.
Removed
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.
Added
The Company does not record an income tax benefit from its pre-tax losses due to its continued operating losses during the past three consecutive taxable years.
Removed
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.
Added
(NASDAQ: GOOG), which are included in the REITs and real estate companies and Communication Services, respectively. As of June 30, 2023, the Company’s investment portfolio is diversified with 59 different equity positions. The Company holds one equity security that comprised more than 10% of the equity value of the portfolio.
Removed
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.
Added
During the fiscal year ending June 30, 2024 and 2023, InterGroup advanced to the Hotel $10,793,000 and $1,500,000, respectively, bringing the total amounts due to InterGroup were $26,493,000 and $15,700,000 as of June 30, 2024 and 2023. Portsmouth has not made any paid-downs to its note payable to InterGroup.
Removed
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.
Added
Small Business Administration under the CARES Act. If the SBA approves the forgiveness amount, all payments of principal and interest are deferred until the date the forgiveness amount is remitted by the SBA to CIBC. If the SBA does not forgive any amount of the loan, payments would start within 30 days.
Removed
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.
Added
All unforgiven portion of the principal and accrued interest will be due at maturity. In March of 2021 the SBA had forgiven the full $453,000 of the SBA Loan. In February 2024 InterGroup repaid the loan after an eligibility investigation took place concluding the type of business was ineligible for the loan.
Removed
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.
Added
As discussed in Note 10 – Mortgage Notes Payable, as of June 30, 2024, the outstanding balance consists of a senior mortgage loan and mezzanine loan totaling $100,783,000 net of debt issuance costs amounting to $679,000. Both loans matured on January 1, 2024 and were extended to January 1, 2025 on April 29, 2024 through Forbearance Agreements.
Removed
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.
Added
In addition, the Hotel has recurring losses and has an accumulated deficit of $117,102,000 which includes a $64,100,000 increase adjustment made in December 2013 as a result of the partnership redemption.
Removed
An income tax benefit was recorded for the year ended June 30, 2022, for the pre-tax loss.
Added
On January 4, 2024, the Hotel was made aware of a notice of default (the “Notice”) issued by its senior loan special servicer LNR Partners, LLC to Justice Operating Company, LLC which is the wholly owned subsidiary of Portsmouth.

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