LIQUIDITY

3 Months Ended

Sep. 30, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NOTE 2 - LIQUIDITY

Historically, the Company has relied primarily on cash flows generated from operations at its hotel property, the Hilton San Francisco Financial District (the “Hotel”), as its primary source of liquidity. However, the pace of recovery in the San Francisco hospitality market remains slower than anticipated due to several factors, including a sustained decline in business travel driven by remote work trends, as well as broader municipal challenges such as safety concerns, homelessness, and increased crime. These conditions have limited demand in key customer segments and shifted the Hotel’s revenue base toward lower-yielding leisure travel.

As a result, the Company experienced net cash used in operating activities of $296,000 for the three months ended September 30, 2025. In response to ongoing market pressures, Portsmouth has adopted several capital preservation initiatives, including deferral of non-essential capital projects, temporary suspension of certain Hotel services, renegotiation of vendor agreements, and reduction of controllable operating expenses. During the three months ended September 30, 2025, Portsmouth continued to invest in property enhancements, incurring capital expenditure of $974,000. These expenditures included the renovation of 14 guest rooms, which had previously been utilized as administrative offices and were returned to the Company’s available room inventory upon completion. During the same period, the Company made capital improvements in the amount of $244,000 to its multi-family and commercial real estate.

As of September 30, 2025, the Company had:

●	Cash and cash equivalents of $5,054,000 (including $11,000 classified as held for sale).
		○	(compared to $5,092,000 (including $8,000 classified as held for sale as of June 30, 2025).
●	Restricted cash of $8,337,000 (including $36,000 classified as held for sale).
		○	(compared to $10,103,000 (including $45,000 classified as held for sale as of June 30, 2025).
●	Marketable securities, net of margin balances, of $966,000 (compared to $969,000 as of June 30, 2025).
			These securities are considered liquid and available for short-term needs.

Related Party Financing

To supplement its liquidity position, the Company maintains access to an unsecured loan facility with its subsidiary company, Portsmouth Square, Inc (“Portsmouth”), a related party. The initial facility, dated July 2, 2014, has undergone several amendments. In March 2025, the facility was amended to:

	●	Increase the available borrowing capacity to $40,000,000, and
	●	Extend the maturity date to July 31, 2027.

As of September 30, 2025, the outstanding loan balance was $38,108,000, with no principal repayments made to date. All material intercompany accounts and transactions have been eliminated in consolidation.

Real Estate

During the three months ended September 30, 2025, the Company did not enter into any new financing arrangements, modifications, or refinancings related to its real estate properties.

All existing loans and mortgage obligations remained in good standing, and there were no material changes to the terms, maturities, or covenants of any existing debt instruments.

Management continues to monitor market conditions and the Company’s real estate portfolio for potential refinancing opportunities that could improve liquidity or reduce interest costs; however, no such transactions were undertaken during the reporting period.

Liquidity Outlook and Going Concern Considerations

The Company’s liquidity position remains stable following the completion of Portsmouth’s senior mortgage refinancing and mezzanine debt on March 28, 2025. These transactions enhanced the Company’s maturity profile, improved covenant compliance, and strengthened its overall capital structure.

During the quarter ended September 30, 2025, the Company did not enter into any additional financing arrangements or refinancings. All debt obligations remain current and in compliance with applicable covenants.

Forward-looking risks remain primarily tied to the performance of the San Francisco hospitality market, including:

	●	The pace of recovery in business travel,
	●	Competitive dynamics among local hotels,
	●	Broader municipal issues affecting the city’s perception among travelers, and
	●	Potential impacts from macroeconomic trends on leisure travel demand.

Management will continue to monitor these market-specific conditions and adjust operations, capital allocation, and marketing strategies to maintain the Hotel’s competitive position.

The Hotel debt and cash-management/lockbox reside at Portsmouth’s subsidiaries; while these provisions may limit distributions upstream to InterGroup while in effect, they do not encumber InterGroup’s non-Hotel properties or parent-level liquidity. InterGroup’s exposure to the Hotel financing is limited to its guaranties of specified non-recourse carve-outs and defined springing recourse events.

The following table provides a summary as of September 30, 2025, the Company’s material financial obligations which also includes interest payments.

			9 Months		Year		Year		Year		Year
	Total		2026		2027		2028		2029		2030		Thereafter
Mortgage and subordinated notes payable	$	197,458,000	$	930,000	$	106,663,000	$	6,588,000	$	1,845,000	$	16,032,000	$	65,400,000
Other notes payable		1,838,000		425,000		463,000		317,000		317,000		316,000		-
Interest		38,526,000		8,711,000		14,091,000		2,645,000		2,580,000		2,436,000		8,063,000
Total	$	237,822,000	$	10,066,000	$	121,217,000	$	9,550,000	$	4,742,000	$	18,784,000	$	73,463,000

INTERGROUP CORP 10-Q