10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2016

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to_________

Commission File Number 1-10324

THE INTERGROUP CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	13-3293645
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

1100 Glendon Avenue, PH-1, Los Angeles, California 90024

(Address of principal executive offices) (Zip Code)

(310) 889-2500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes  ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes  ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):

¨ Yes x No

The number of shares outstanding of registrant’s Common Stock, as of February 7, 2017 was 2,367,126.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets as of December 31, 2016 (Unaudited) and June 30, 2016	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months ended December 31, 2016 and 2015	4
	Condensed Consolidated Statements of Operations (Unaudited) for the Six Months ended December 31, 2016 and 2015	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six months ended December 31, 2016 and 2015	6
Item 1.	Legal Proceedings	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 4.	Controls and Procedures.	22
	PART II – OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 6.	Exhibits.	23
Signatures		23

- 2 -

PART I

FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

As of	December 31, 2016			June 30, 2016
ASSETS
Investment in Hotel, net	$	43,559,000		$	44,821,000
Investment in real estate, net		55,856,000			56,356,000
Investment in marketable securities		17,044,000			14,282,000
Other investments, net		985,000			1,029,000
Cash and cash equivalents		3,771,000			5,404,000
Restricted cash - mortgage impounds		4,183,000			3,221,000
Other assets, net		3,636,000			6,172,000
Deferred income taxes		3,758,000			3,985,000
Total assets	$	132,792,000		$	135,270,000
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities:
Accounts payable and other liabilities	$	4,419,000		$	3,717,000
Accounts payable and other liabilities - Hotel		10,675,000			14,783,000
Due to securities broker		4,023,000			1,493,000
Obligations for securities sold		1,030,000			163,000
Other notes payable		4,670,000			6,996,000
Mortgage notes payable - Hotel		116,216,000			116,160,000
Mortgage notes payable - real estate		65,662,000			65,205,000
Total liabilities		206,695,000			208,517,000
Commitments and contingencies and subsequent event
Shareholders' deficit:
Preferred stock, $.01 par value, 100,000 shares authorized; none issued		-			-
Common stock, $.01 par value, 4,000,000 shares authorized; 3,395,616 issued; 2,367,126 and 2,381,726 outstanding		33,000			33,000
Additional paid-in capital		10,429,000			10,363,000
Accumulated deficit		(44,170,000	)		(43,645,000	)
Treasury stock, at cost, 1,028,490 and 1,013,890 shares		(12,434,000	)		(12,082,000	)
Total InterGroup shareholders' deficit		(46,142,000	)		(45,331,000	)
Noncontrolling interest		(27,761,000	)		(27,916,000	)
Total shareholders' deficit		(73,903,000	)		(73,247,000	)
Total liabilities and shareholders' equity	$	132,792,000		$	135,270,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 3 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

For the three months ended December 31,	2016			2015
Revenues:
Hotel	$	12,837,000		$	13,713,000
Real estate		3,605,000			3,546,000
Total revenues		16,442,000			17,259,000
Costs and operating expenses:
Hotel operating expenses		(9,611,000	)		(11,969,000	)
Real estate operating expenses		(1,754,000	)		(1,715,000	)
Depreciation and amortization expenses		(1,370,000	)		(1,285,000	)
General and administrative expenses		(602,000	)		(585,000	)
Total costs and operating expenses		(13,337,000	)		(15,554,000	)
Income from operations		3,105,000			1,705,000
Other income (expense):
Interest expense - mortgages		(2,402,000	)		(2,461,000	)
Net loss on marketable securities		(3,290,000	)		(6,356,000	)
Net unrealized loss on other investments		-			(53,000	)
Impairment loss on other investments		(24,000	)		(287,000	)
Dividend and interest income		68,000			6,000
Trading and margin interest expense		(291,000	)		(222,000	)
Total other expense, net		(5,939,000	)		(9,373,000	)
Loss before income taxes		(2,834,000	)		(7,668,000	)
Income tax benefit		825,000			2,538,000
Net loss		(2,009,000	)		(5,130,000	)
Less:  Net loss attributable to the noncontrolling interest		293,000			835,000
Net loss attributable to InterGroup	$	(1,716,000	)	$	(4,295,000	)
Net loss per share
Basic and diluted	$	(0.85	)	$	(2.15	)
Net loss per share attributable to InterGroup
Basic and diluted	$	(0.72	)	$	(1.80	)
Weighted average number of basic and diluted common shares outstanding		2,375,654			2,384,272

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 4 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

For the six months ended December 31,	2016			2015
Revenues:
Hotel	$	27,442,000		$	28,851,000
Real estate		7,254,000			7,128,000
Total revenues		34,696,000			35,979,000
Costs and operating expenses:
Hotel operating expenses		(19,867,000	)		(23,162,000	)
Real estate operating expenses		(3,561,000	)		(3,451,000	)
Depreciation and amortization expenses		(2,638,000	)		(2,521,000	)
General and administrative expenses		(1,330,000	)		(1,394,000	)
Total costs and operating expenses		(27,396,000	)		(30,528,000	)
Income from operations		7,300,000			5,451,000
Other income (expense):
Interest expense - mortgages		(4,864,000	)		(4,925,000	)
Net loss on disposal of assets		-			(30,000	)
Net loss on marketable securities		(2,136,000	)		(5,976,000	)
Net unrealized loss on other investments		-			(127,000	)
Impairment loss on other investments		(44,000	)		(287,000	)
Dividend and interest income		110,000			19,000
Trading and margin interest expense		(553,000	)		(462,000	)
Total other expense, net		(7,487,000	)		(11,788,000	)
Loss before income taxes		(187,000	)		(6,337,000	)
Income tax (expense) benefit		(227,000	)		1,920,000
Net loss		(414,000	)		(4,417,000	)
Less:  Net (income) loss attributable to the noncontrolling interest		(111,000	)		591,000
Net loss attributable to InterGroup	$	(525,000	)	$	(3,826,000	)
Net loss per share
Basic and diluted	$	(0.17	)	$	(1.85	)
Net loss per share attributable to InterGroup
Basic and diluted	$	(0.22	)	$	(1.60	)
Weighted average number of basic and diluted common shares outstanding		2,378,690			2,385,784

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 5 -

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the six months ended December 31,	2016			2015
Cash flows from operating activities:
Net loss	$	(414,000	)	$	(4,417,000	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,638,000			2,521,000
Net loss on disposal of assets		-			30,000
Net unrealized loss on marketable securities		2,448,000			5,519,000
Unrealized loss on other investments		-			127,000
Impairment loss on other investments		44,000			287,000
Stock compensation expense		140,000			330,000
Deferred taxes		227,000			(1,920,000	)
Changes in assets and liabilities:
Investment in marketable securities		(5,210,000	)		(2,444,000	)
Other assets		2,648,000			5,063,000
Accounts payable and other liabilities		(3,406,000	)		(3,106,000	)
Due to securities broker		2,530,000			1,207,000
Obligations for securities sold		867,000			(22,000	)
Net cash provided by operating activities		2,512,000			3,175,000
Cash flows from investing activities:
Investment in hotel, net		(317,000	)		(2,902,000	)
Investment in real estate, net		(615,000	)		(2,425,000	)
Investment in Santa Fe		(30,000	)		(120,000	)
Net cash used in investing activities		(962,000	)		(5,447,000	)
Cash flows from financing activities:
Restricted cash - payment of mortgage impounds		(962,000	)		(69,000	)
Net payments of mortgage and other notes payable		(1,869,000	)		(954,000	)
Purchase of treasury stock		(352,000	)		(155,000	)
Net cash used in financing activities		(3,183,000	)		(1,178,000	)
Net decrease in cash and cash equivalents		(1,633,000	)		(3,450,000	)
Cash and cash equivalents at the beginning of the period		5,404,000			8,529,000
Cash and cash equivalents at the end of the period	$	3,771,000		$	5,079,000
Supplemental information:
Interest paid	$	5,167,000		$	5,132,000
Non-cash transaction:
Conversion of other investments to marketable securities	$	-		$	13,231,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 6 -

THE INTERGROUP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements included herein have been prepared by The InterGroup Corporation (“InterGroup” or the “Company”), without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which included only normal recurring adjustments) necessary for a fair statement of the financial position, cash flows and results of operations as of and for the periods indicated. It is suggested that these financial statements be read in conjunction with the audited financial statements of InterGroup and the notes therein included in the Company's Annual Report on Form 10-K for the year ended June 30, 2016. The June 30, 2016 Condensed Consolidated Balance Sheet was derived from the Company’s Form 10-K for the year ended June 30, 2016.

The results of operations for the three and six months ended December 31, 2016 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2017.

Basic and diluted loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. The computation of diluted income per share is similar to the computation of basic earnings per share except that the weighted-average number of common shares is increased to include the number of additional common shares that would have been outstanding if potential dilutive common shares had been issued. The Company's only potentially dilutive common shares are stock options.

As of December 31, 2016, the Company had the power to vote 85.7% of the voting shares of Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF). This percentage includes the power to vote an approximately 4% interest in the common stock in Santa Fe owned by the Company’s Chairman and President pursuant to a voting trust agreement entered into on June 30, 1998.

Santa Fe’s primary business is conducted through the management of its 68.8% owned subsidiary, Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI). Portsmouth has a 93% limited partnership interest in Justice and is the sole general partner. InterGroup also directly owns approximately 13.3% of the common stock of Portsmouth.

Justice, through its subsidiaries Justice Holdings Company, LLC (“Holdings”), a Delaware Limited Liability Company, Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), owns a 543-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. Holdings and Mezzanine are both wholly-owned subsidiaries of the Partnership; Operating is a wholly-owned subsidiary of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (Hilton). Justice has a management agreement with Prism Hospitality L.P. (“Prism”) to perform certain management functions for the Hotel. The management agreement with Prism had an original term of ten years, subject to the Partnership’s right to terminate at any time with or without cause. Effective January 2014, the management agreement with Prism was amended by the Partnership to change the nature of the services provided by Prism and the compensation payable to Prism, among other things. Effective December 1, 2013, GMP Management, Inc. (“GMP”), a company owned by a Justice limited partner and a related party, also provided management services for the Partnership pursuant to a management services agreement, with a three year term, subject to the Partnership’s right to terminate earlier for cause. In June 2016, GMP resigned. After a lengthy review process of several national third party hotel management companies, on February 1, 2017, Justice entered into a management agreement with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017.   The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions.

- 7 -

The parking garage that is part of the Hotel property was managed by Ace Parking pursuant to a contract with the Partnership. The contract was terminated with an effective termination date of October 4, 2016. Justice began managing the parking garage in-house after the termination of Ace Parking.

Management believes that the revenues expected to be generated from the operations of the hotel, garage and leases will be sufficient to meet all of the Partnership’s current and future obligations and financial requirements.

In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate. Properties include apartment complexes, commercial real estate, and three single-family houses as strategic investments. The properties are located throughout the United States, but are concentrated in Texas and Southern California. The Company also has investments in unimproved real property. All of the Company’s residential rental properties are managed in-house.

Recently Issued Accounting Pronouncements

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern that requires management to evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statements are issued on both an interim and annual basis. Management is required to provide certain footnote disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern. ASU No. 2014-15 becomes effective for annual periods beginning after December 15, 2016 and for interim reporting periods thereafter. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

On June 16, 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2020. The Company is currently reviewing the effect of ASU No. 2016-13.

On August 26, 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic230).” This ASU is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. The Company adopted ASU No. 2016-15 in the first quarter of 2017 with no material impact to our financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods within these annual periods beginning after December 15, 2015 and early application is permitted. The Company adopted this standard during the quarter and reclassified the debt issuance costs of $840,000 from Other Assets to Mortgage notes payable – Hotel, net on the June 30, 2016 consolidated balance sheet.

- 8 -

NOTE 2 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

			Accumulated			Net Book
December 31, 2016	Cost		Depreciation			Value
Land	$	2,738,000	$	-		$	2,738,000
Furniture and equipment		27,674,000		(23,839,000	)		3,835,000
Building and improvements		64,308,000		(27,322,000	)		36,986,000
	$	94,720,000	$	(51,161,000	)	$	43,559,000

			Accumulated			Net Book
June 30, 2016	Cost		Depreciation			Value
Land	$	2,738,000	$	-		$	2,738,000
Furniture and equipment		28,857,000		(23,096,000	)		5,761,000
Building and improvements		62,908,000		(26,586,000	)		36,322,000
	$	94,503,000	$	(49,682,000	)	$	44,821,000

NOTE 3 – INVESTMENT IN REAL ESTATE

Investment in real estate consisted of the following:

As of	December 31, 2016			June 30, 2016
Land	$	25,033,000		$	25,033,000
Buildings, improvements and equipment		66,544,000			65,929,000
Accumulated depreciation		(35,721,000	)		(34,606,000	)
Investment in real estate, net	$	55,856,000		$	56,356,000

In July 2015, the Company purchased residential house in Los Angeles, California as a strategic asset for $1,975,000 in cash. In August 2016, the Company obtained a mortgage note payable on the house in the amount of $1,000,000. The note has an adjustable interest rate of 4.5% as of December 31, 2016 and requires interest only payments for the first twenty three months with a balloon payment at maturity in August 2018.

NOTE 4 – INVESTMENT IN MARKETABLE SECURITIES

The Company’s investment in marketable securities consists primarily of corporate equities. The Company has also periodically invested in corporate bonds and income producing securities, which may include interests in real estate based companies and REITs, where financial benefit could transfer to its shareholders through income and/or capital gain.

At December 31, 2016 and June 30, 2016, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

- 9 -

			Gross		Gross			Net			Fair
Investment	Cost		Unrealized Gain		Unrealized Loss			Unrealized Loss			Value
As of December 31, 2016
Corporate
Equities	$	27,617,000	$	1,049,000	$	(11,622,000	)	$	(10,573,000	)	$	17,044,000
As of June 30, 2016
Corporate
Equities	$	22,500,000	$	1,161,000	$	(9,379,000	)	$	(8,218,000	)	$	14,282,000

As of December 31, 2016 and June 30, 2016, approximately 41% and 65%, respectively, of the investment marketable securities balance above is comprised of the common stock of Comstock Mining, Inc.

As of December 31, 2016 and June 30, 2016, the Company had unrealized losses of $3,949,000 and $3,620,000, respectively, related to securities held for over one year.

Net loss on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the respective periods:

For the three months ended December 31,	2016			2015
Realized loss on marketable securities	$	(107,000	)	$	(397,000	)
Unrealized loss on marketable securities		(3,183,000	)		(5,959,000	)
Net loss on marketable securities	$	(3,290,000	)	$	(6,356,000	)

For the six months ended December 31,	2016			2015
Realized gain (loss) on marketable securities	$	312,000		$	(457,000	)
Unrealized loss on marketable securities		(2,448,000	)		(5,519,000	)
Net gain on marketable securities	$	(2,136,000	)	$	(5,976,000	)

NOTE 5 – OTHER INVESTMENTS, NET

The Company may also invest, with the approval of the securities investment committee and other Company guidelines, in private investment equity funds and other unlisted securities, such as convertible notes through private placements. Those investments in non-marketable securities are carried at cost on the Company’s balance sheet as part of other investments, net of other than temporary impairment losses. Other investments also include non-marketable warrants carried at fair value.

Other investments, net consist of the following:

Type	December 31, 2016		June 30, 2016
Private equity hedge fund, at cost	$	916,000	$	916,000
Other preferred stock, at cost		69,000		113,000
	$	985,000	$	1,029,000

NOTE 6 - FAIR VALUE MEASUREMENTS

The carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).

- 10 -

The assets measured at fair value on a recurring basis are as follows:

	12/31/2016		6/30/2016
As of	Total - Level 1		Total - Level 1
Assets:
Investment in marketable securities:
Basic materials	$	7,165,000	$	9,273,000
Energy		3,318,000		1,907,000
Corporate bonds		1,584,000		-
REITs and real estate companies		1,416,000		-
Financial services		590,000		1,021,000
Other		2,971,000		2,081,000
	$	17,044,000	$	14,282,000

The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date.

Financial assets that are measured at fair value on a non-recurring basis and are not included in the tables above include “Other investments in non-marketable securities,” that were initially measured at cost and have been written down to fair value as a result of impairment or adjusted to record the fair value of new instruments received (i.e., preferred shares) in exchange for old instruments (i.e., debt instruments). The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:

					Net loss for the six months
Assets	Level 3		December 31, 2016		ended December 31, 2016
Other non-marketable investments	$	985,000	$	985,000	$	(44,000	)

					Net loss for the six months
Assets	Level 3		June 30, 2016		ended December 31, 2015
Other non-marketable investments	$	1,029,000	$	1,029,000	$	(287,000	)

Other investments in non-marketable securities are carried at cost net of any impairment loss. The Company has no significant influence or control over the entities that issue these investments and holds less than 20% ownership in each of the investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

NOTE 7 – STOCK BASED COMPENSATION PLANS

The Company follows Accounting Standard Codification (ASC) Topic 718 “Compensation – Stock Compensation”, which addresses accounting for equity-based compensation arrangements, including employee stock options and restricted stock units. 

Please refer to Note 16 – Stock Based Compensation Plans in the Company's Form 10-K for the year ended June 30, 2016 for more detail information on the Company’s stock-based compensation plans.

For the three months ended December 31, 2016 and 2015, the Company recorded stock option compensation cost of $66,000 and $123,000, respectively, related to stock options that were previously issued. For the six months ended December 31, 2016 and 2015, the Company recorded stock option compensation cost of $141,000 and $242,000, respectively, related to stock options that were previously issued.

- 11 -

As of December 31, 2016, there was a total of $218,000 of unamortized compensation related to stock options which is expected to be recognized over the weighted-average period of 2 years.

Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history. The Company has selected to use the simplified method for estimating the expected term. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.

The following table summarizes the stock options activity from July 1, 2016 through December 31, 2016:

		Number of		Weighted Average		Weighted Average	Aggregate
		Shares		Exercise Price		Remaining Life	Intrinsic Value
Oustanding at	July 1, 2015		350,000	$	16.70	6.95 years	$	939,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Oustanding at	June 30, 2016		350,000	$	16.70	5.95 years	$	3,082,000
Exercisable at	June 30, 2016		236,000	$	15.54	5.33 years	$	2,351,000
Vested and Expected to vest at	June 30, 2016		350,000	$	16.70	5.95 years	$	3,082,000
Oustanding at	July 1, 2016		350,000	$	16.70	5.95 years	$	3,082,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Oustanding at	December 31, 2016		350,000	$	16.70	5.44 years	$	3,572,000
Exercisable at	December 31, 2016		268,000	$	15.95	5.09 years	$	2,935,000
Vested and Expected to vest at	December 31, 2016		350,000	$	16.70	5.44 years	$	3,572,000

NOTE 8 – SEGMENT INFORMATION

The Company operates in three reportable segments, the operation of the hotel (“Hotel Operations”), the operation of its multi-family residential properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments (“Investment Transactions”). These three operating segments, as presented in the financial statements, reflect how management internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this information.

Information below represents reported segments for the three and six months ended December 31, 2016 and 2015. Segment income from hotel operations consist of the operation of the hotel and operation of the garage. Operating income for rental properties consist of rental income. Operating income (loss) for investment transactions consist of net investment gain (loss), impairment loss on other investments, net unrealized gain (loss) on other investments, dividend and interest income and trading and margin interest expense. The other segment consists of corporate general and administrative expenses and the income tax expense for the entire Company.

- 12 -

As of and for the three months	Hotel			Real Estate			Investment
ended December 31, 2016	Operations			Operations			Transactions			Corporate			Total
Revenues	$	12,837,000		$	3,605,000		$	-		$	-		$	16,442,000
Segment operating expenses		(9,611,000	)		(1,754,000	)		-			(602,000	)		(11,967,000	)
Segment income (loss) from operations		3,226,000			1,851,000			-			(602,000	)		4,475,000
Interest expense - mortgage		(1,750,000	)		(652,000	)		-			-			(2,402,000	)
Depreciation and amortization expense		(810,000	)		(560,000	)		-			-			(1,370,000	)
Loss from investments		-			-			(3,537,000	)		-			(3,537,000	)
Income tax benefit		-			-			-			825,000			825,000
Net income (loss)	$	666,000		$	639,000		$	(3,537,000	)	$	223,000		$	(2,009,000	)
Total assets	$	50,206,000		$	55,856,000		$	18,029,000		$	8,701,000		$	132,792,000

As of and for the three months	Hotel			Real Estate			Investment
ended December 31, 2015	Operations			Operations			Transactions			Corporate			Total
Revenues	$	13,713,000		$	3,546,000		$	-		$	-		$	17,259,000
Segment operating expenses		(11,969,000	)		(1,715,000	)		-			(585,000	)		(14,269,000	)
Segment income (loss) from operations		1,744,000			1,831,000			-			(585,000	)		2,990,000
Interest expense - mortgage		(1,813,000	)		(648,000	)		-			-			(2,461,000	)
Loss on disposal of assets					-			-			-			-
Depreciation and amortization expense		(759,000	)		(526,000	)		-			-			(1,285,000	)
Loss from investments		-			-			(6,912,000	)		-			(6,912,000	)
Income tax benefit		-			-			-			2,538,000			2,538,000
Net income (loss)	$	(828,000	)	$	657,000		$	(6,912,000	)	$	1,953,000		$	(5,130,000	)

As of and for the six months	Hotel			Real Estate			Investment
ended December 31, 2016	Operations			Operations			Transactions			Corporate			Total
Revenues	$	27,442,000		$	7,254,000		$	-		$	-		$	34,696,000
Segment operating expenses		(19,867,000	)		(3,561,000	)		-			(1,330,000	)		(24,758,000	)
Segment income (loss) from operations		7,575,000			3,693,000			-			(1,330,000	)		9,938,000
Interest expense - mortgage		(3,579,000	)		(1,285,000	)		-			-			(4,864,000	)
Depreciation and amortization expense		(1,523,000	)		(1,115,000	)		-			-			(2,638,000	)
Loss from investments		-			-			(2,623,000	)		-			(2,623,000	)
Income tax expense		-			-			-			(227,000	)		(227,000	)
Net income (loss)	$	2,473,000		$	1,293,000		$	(2,623,000	)	$	(1,557,000	)	$	(414,000	)
Total assets	$	50,206,000		$	55,856,000		$	18,029,000		$	8,701,000		$	132,792,000

As of and for the six months	Hotel			Real Estate			Investment
ended December 31, 2015	Operations			Operations			Transactions			Corporate			Total
Revenues	$	28,851,000		$	7,128,000		$	-		$	-		$	35,979,000
Segment operating expenses		(23,162,000	)		(3,451,000	)		-			(1,394,000	)		(28,007,000	)
Segment income (loss) from operations		5,689,000			3,677,000			-			(1,394,000	)		7,972,000
Interest expense - mortgage		(3,627,000	)		(1,298,000	)		-			-			(4,925,000	)
Loss on disposal of assets		(30,000	)		-			-			-			(30,000	)
Depreciation and amortization expense		(1,521,000	)		(1,000,000	)		-			-			(2,521,000	)
Loss from investments		-			-			(6,833,000	)		-			(6,833,000	)
Income tax benefit		-			-			-			1,920,000			1,920,000
Net income (loss)	$	511,000		$	1,379,000		$	(6,833,000	)	$	526,000		$	(4,417,000	)

NOTE 9 – RELATED PARTY TRANSACTIONS

Four of the Portsmouth directors serve as directors of InterGroup. Three of those directors also serve as directors of Santa Fe. The three Santa Fe directors also serve as directors of InterGroup.

John V. Winfield serves as Chief Executive Officer and Chairman of the Company, Portsmouth and Santa Fe. Depending on certain market conditions and various risk factors, the Chief Executive Officer, Portsmouth and Santa Fe may, at times, invest in the same companies in which the Company invests. The Company encourages such investments because it places personal resources of the Chief Executive Officer and the resources of Portsmouth and Santa Fe, at risk in connection with investment decisions made on behalf of the Company.

NOTE 10 – SUBSEQUENT EVENT

After a lengthy review process of several national third party hotel management companies, on February 1, 2017, Justice entered into a management agreement with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017.   The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. 

- 13 -

Item 1 – LEGAL PROCEEDINGS

The Company is involved from time to time in legal proceedings of types regarded as common in our business, including administrative or judicial proceedings, such as employment or labor disputes, breach of contract liability and premises liability litigation. Where appropriate, we may establish financial reserves for such proceedings. We also maintain insurance to mitigate certain of such risks.

On May 5, 2016, Justice Investors and Portsmouth (parent Company) entered into a settlement agreement with Evon and Holdings. Under this settlement agreement, the Partnership agreed to pay Evon Corporation $5,575,000 no later than January 10, 2017. As of January 17, 2017, all conditions of the settlement agreement have been satisfied by the Company.

Item 2 -  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Company may from time to time make forward-looking statements and projections concerning future expectations. When used in this discussion, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “could,” “might” and similar expressions, are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties, such as national and worldwide economic conditions, including the impact of recessionary conditions on tourism, travel and the lodging industry, the impact of terrorism and war on the national and international economies, including tourism and securities markets, energy and fuel costs, natural disasters, general economic conditions and competition in the hotel industry in the San Francisco area, seasonality, labor relations and labor disruptions, actual and threatened pandemics such as swine flu, partnership distributions, the ability to obtain financing at favorable interest rates and terms, securities markets, regulatory factors, litigation and other factors discussed below in this Report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016, that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

RESULTS OF OPERATIONS

As of December 31, 2016, the Company owned approximately 81.7% of the common shares of its subsidiary, Santa Fe and Santa Fe owned approximately 68.8% of the common shares of Portsmouth Square, Inc. InterGroup also directly owns approximately 13.3% of the common shares of Portsmouth. The Company's principal sources of revenue continue to be derived from the general and limited partnership interests of its subsidiary, Portsmouth, in the Justice Investors limited partnership (“Justice” or the “Partnership”), rental income from its investments in multi-family real estate properties and income received from investment of its cash and securities assets. Justice owns a 543 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 Justice have been consolidated with those of the Company.

The Hotel is operated by the Partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement (the “License Agreement”) with HLT Franchise Holding LLC (Hilton). The Partnership entered into the License Agreement on December 10, 2004. The term of the License Agreement was for an initial period of 15 years commencing on the opening date, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, the Partnership and Hilton entered into an amended franchise agreement which extended the License Agreement through 2030, modified the monthly royalty rate, extended geographic protection to the Partnership and also provided the Partnership certain key money cash incentives to be earned through 2030. The key money cash incentives were received on July 1, 2015.

- 14 -

Justice also has a management agreement with Prism Hospitality L.P. (“Prism”) to perform management functions for the Hotel. The management agreement with Prism had an original term of ten years and can be terminated at any time with or without cause by the Partnership. Effective January 2014, the management agreement with Prism was amended by the Partnership to change the nature of the services provided by Prism and the compensation payable to Prism, among other things. Effective December 1, 2013, GMP Management, Inc. (“GMP”), a company owned by a Justice limited partner and a related party, began to provide management services for the Partnership pursuant to a management services agreement with a term of three years, subject to the Partnership’s right to terminate earlier, for cause. In June 2016, GMP resigned.  After a lengthy review process of several national third party hotel management companies, on February 1, 2017, Justice entered into a management agreement with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017.   The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. 

The parking garage that is part of the Hotel property was managed by Ace Parking pursuant to a contract with the Partnership. The contract was terminated with an effective termination date of October 4, 2016. The Company began managing the parking garage in-house after the termination of Ace Parking.

In addition to the operations of the Hotel, the Company also generates income from the ownership and management of real estate. Properties include fifteen apartment complexes, one commercial real estate property, and three single-family houses as strategic investments. The properties are located throughout the United States, but are concentrated in Texas and Southern California. The Company also has an investment in unimproved real property. All of the Company’s operating real estate properties are managed in-house.

The Company acquires its investments in real estate and other investments utilizing cash, securities or debt, subject to approval or guidelines of the Board of Directors. The Company also invests in income-producing instruments, equity and debt securities and will consider other investments if such investments offer growth or profit potential.

Three Months Ended December 31, 2016 Compared to the Three Months Ended December 31, 2015

The Company had a net loss of $2,009,000 for the three months ended December 31, 2016 compared to net loss of $5,130,000 for the three months ended December 31, 2015. The decrease in the net loss is primarily attributable to the higher income from the Hotel operations and the decrease in investment related losses.

Hotel Operations

Net income from Hotel operations was $666,000 for the three months ended December 31, 2016 compared to a net loss of $828,000 for the three months ended December 31, 2015. The change is primarily due to the reduction of expenses as the result of the resignation of GMP management in June 2016 and the decrease in legal expenses as the result of the legal settlement that was reached in May 2016. Please see Note 17 of the Company’s June 30, 2016 10-K report for further information. The decrease in operating expenses was partially offset by the decrease in total Hotel revenues.

The following table sets forth a more detailed presentation of Hotel operations for the three months ended December 31, 2016 and 2015.

- 15 -

For the three months ended December 31,	2016			2015
Hotel revenues:
Hotel rooms	$	10,497,000		$	10,796,000
Food and beverage		1,506,000			1,858,000
Garage		643,000			674,000
Other operating departments		191,000			385,000
Total hotel revenues		12,837,000			13,713,000
Operating expenses excluding depreciation and amortization		(9,611,000	)		(11,969,000	)
Operating income before interest, depreciation and amortization		3,226,000			1,744,000
Interest expense - mortgage		(1,750,000	)		(1,813,000	)
Depreciation and amortization expense		(810,000	)		(759,000	)
Net income (loss) from Hotel operations	$	666,000		$	(828,000	)

For the three months ended December 31, 2016, the Hotel had operating income of $3,226,000 before interest, depreciation and amortization on total operating revenues of $12,837,000 compared to operating income of $1,744,000 before interest, depreciation and amortization on total operating revenues of $13,713,000 for the three months ended December 31, 2015.  Room revenues decreased by $299,000 for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 primarily as the result of the decrease in group business and the decrease in the average daily rate. Food and beverage revenue decreased by $352,000 as the result of the reduction in the catering and banquet services from the decrease in the group business.

Total operating expenses decreased by $2,358,000 this quarter as compared to the previous comparable quarter primarily due to the decrease in operating expenses related to the resignation of GMP management, the reduction in legal expenses and management efforts to reduce operating expenses in all areas.  

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 three months ended December 31, 2016 and 2015.

Three Months Ended December 31,	Average Daily Rate		Average Occupancy %			RevPAR
2016	$	236		89	%	$	210
2015	$	243		89	%	$	216

The Hotel’s total revenues decreased by 6.4% this quarter as compared to the previous comparable quarter. Average daily rate decreased by $7 and RevPAR decreased by $6 for the three months ended December 31, 2016 compared to the three months ended December 31, 2015. Average occupancy remained consistent with the prior comparable quarter.

Our highest priority is guest satisfaction. We believe that enhancing the guest experience differentiates the Hotel from our competition and is critical to the Hotel’s objective of building sustainable guest loyalty. In order to make a large impact on guest experience, the Hotel will continue training team members on Hilton brand standards and guest satisfaction, hiring and retaining talents in key operations and enhancing the arrival experience. In addition, the Hotel replaced the carpet flooring in the lobby and the fourth floor with oak wood, creating an open and welcoming environment; modernized the furniture in the lobby, the porte cochere, and the second floor; and replaced the third floor carpets and doors. The Wellness Center on the fifth floor features a new spa with two treatment rooms and a room for manicures and pedicures. During the fiscal year ended June 30, 2016, the Hotel partially remodeled 14 floors of guest rooms by updating the tables and the night stands with granite tops for a sleek and modern look. As the Hotel continues to further develop its ties with the financial district community and the City of San Francisco, the Hotel is also committed to promoting innovative business ideas and good corporate citizenship.

With the high demand in guest rooms, the Hotel can focus more attention on length and patterns of stay that benefit the Hotel. The Hotel is also focusing on high end clients with more banquet and meeting room requirements. Moving forward, the Hotel will continue to focus on cultivating international business and capturing a greater percentage of the higher rated business, leisure and group travel. The Hotel will continue to explore new and innovative ways to differentiate the Hotel from its competition, as well as focusing on returning our food and beverage operations to profitability. However, like all hotels, it will remain subject to the uncertain domestic and global economic environment and other risk factors beyond our control, such as the effect of natural disasters and adverse business conditions.

- 16 -

Real Estate Operations

Real estate revenues for the three months ended December 31, 2016 and 2015 remained relatively consistent at $3,605,000 and $3,546,000, respectively. Real estate operating expenses also remained relatively consistent for the three months ended December 31, 2016 and 2015. All of Company’s properties are managed in-house. 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.

Investment Transactions

The Company had a net loss on marketable securities of $3,290,000 for the three months ended December 31, 2016 compared to a net loss on marketable securities of $6,356,000 for the three months ended December 31, 2015. For the three months ended December 31, 2016, approximately $2,923,000 of the $3,290,000 net loss is related to the Company’s investment in the common stock of Comstock Mining, Inc. (Comstock). For the comparative three months ended December 31, 2015, approximately $5,562,000 of the $6,356,000 net loss is related to the Company’s investment in the Comstock. For the three months ended December 31, 2016, the Company had a net realized loss of $107,000 and a net unrealized loss of $3,183,000. For the three months ended December 31, 2015, the Company had a net realized loss of $397,000 and a net unrealized loss of $5,959,000. 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. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

The Company and its subsidiaries, Portsmouth and Santa Fe, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. The income tax benefit during the three months ended December 31, 2016 and 2015 represents primarily the income tax effect of the pre-tax loss at InterGroup and the pretax loss of Portsmouth which includes its share in net income(loss) of the Hotel.

Six Months Ended December 31, 2016 Compared to the Six Months Ended December 31, 2015

The Company had a net loss of $414,000 for the six months ended December 31, 2016 compared to net loss of $4,417,000 for the six months ended December 31, 2015. The decrease in the net loss is primarily attributable to the higher income from the Hotel operations and the decrease in investment related losses.

Hotel Operations

Net income from Hotel operations was $2,473,000 for the six months ended December 31, 2016 compared to net income of $511,000 for the six months ended December 31, 2015. The change is primarily due to the reduction of expenses as the result of the resignation of GMP management in June 2016, the decrease in legal expenses as the result of the legal settlement that was reached in May 2016 and management’s efforts to reduce operating expenses. The decrease in operating expenses was partially offset by the decrease in total Hotel revenues.

The following table sets forth a more detailed presentation of Hotel operations for the six months ended December 31, 2016 and 2015.

- 17 -

For the six months ended December 31,	2016			2015
Hotel revenues:
Hotel rooms	$	22,795,000		$	23,403,000
Food and beverage		2,955,000			3,508,000
Garage		1,324,000			1,359,000
Other operating departments		368,000			581,000
Total hotel revenues		27,442,000			28,851,000
Operating expenses excluding depreciation and amortization		(19,867,000	)		(23,162,000	)
Operating income before loss on disposal of assets, interest, depreciation and amortization		7,575,000			5,689,000
Loss on disposal of assets		-			(30,000	)
Interest expense - mortgage		(3,579,000	)		(3,627,000	)
Depreciation and amortization expense		(1,523,000	)		(1,521,000	)
Net income from Hotel operations	$	2,473,000		$	511,000

For the six months ended December 31, 2016, the Hotel had operating income of $7,575,000 before loss on disposal of assets, interest, depreciation and amortization on total operating revenues of $27,442,000 compared to operating income of $5,689,000 before loss on disposal of assets, interest, depreciation and amortization on total operating revenues of $28,851,000 for the six months ended December 31, 2015.  Room revenues decreased by $608,000 for the six months ended December 31, 2016 compared to the six months ended December 31, 2015 primarily as the result of the decrease in group business and the decrease in the average daily rate. Food and beverage revenue decreased by $553,000 as the result of the reduction in the catering and banquet services from the decrease in the group business.

Total operating expenses decreased by $3,295,000 for the six months ended December 31, 2016 as compared to the comparable six months ended December 31, 2015 primarily due to the decrease in operating expenses related to the resignation of GMP management, the reduction in legal expenses and management efforts to reduce operating expenses in all areas.  

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 six months ended December 31, 2016 and 2015.

Six months Ended December 31,	Average Daily Rate		Average Occupancy %			RevPAR
2016	$	245		93	%	$	228
2015	$	254		92	%	$	234

The Hotel’s total revenues decreased by 4.9% for the six months ended December 31, 2016 as compared to the six months ended December 31, 2015. Average daily rate decreased by $9 and RevPAR decreased by $6 for the six months ended December 31, 2016 compared to the six months ended December 31, 2015. Average occupancy increased by 1% during the six months ended December 31, 2016 versus the comparable period.

Our highest priority is guest satisfaction. We believe that enhancing the guest experience differentiates the Hotel from our competition and is critical to the Hotel’s objective of building sustainable guest loyalty. In order to make a large impact on guest experience, the Hotel will continue training team members on Hilton brand standards and guest satisfaction, hiring and retaining talents in key operations and enhancing the arrival experience. In addition, the Hotel replaced the carpet flooring in the lobby and the fourth floor with oak wood, creating an open and welcoming environment; modernized the furniture in the lobby, the porte cochere, and the second floor; and replaced the third floor carpets and doors. The Wellness Center on the fifth floor features a new spa with two treatment rooms and a room for manicures and pedicures. During the fiscal year ended June 30, 2016, the Hotel partially remodeled 14 floors of guest rooms by updating the tables and the night stands with granite tops for a sleek and modern look. As the Hotel continues to further develop its ties with the financial district community and the City of San Francisco, the Hotel is also committed to promoting innovative business ideas and good corporate citizenship.

With the high demand in guest rooms, the Hotel can focus more attention on length and patterns of stay that benefit the Hotel. The Hotel is also focusing on high end clients with more banquet and meeting room requirements. Moving forward, the Hotel will continue to focus on cultivating international business and capturing a greater percentage of the higher rated business, leisure and group travel. The Hotel will continue to explore new and innovative ways to differentiate the Hotel from its competition, as well as focusing on returning our food and beverage operations to profitability. However, like all hotels, it will remain subject to the uncertain domestic and global economic environment and other risk factors beyond our control, such as the effect of natural disasters and adverse business conditions.

- 18 -

Real Estate Operations

Real estate revenues for the six months ended December 31, 2016 and 2015 remained relatively consistent at $7,254,000 and $7,128,000, respectively. Real estate operating expenses also remained relatively consistent for the six months ended December 31, 2016 and 2015 at $3,561,000 and $3,451,000, respectively. All of Company’s properties are managed in-house. 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.

Investment Transactions

The Company had a net loss on marketable securities of $2,136,000 for the six months ended December 31, 2016 compared to a net loss on marketable securities of $5,976,000 for the six months ended December 31, 2015. For the six months ended December 31, 2016 and 2015, the Company had a net loss of approximately $2,391,000 and $5,146,000 related to the Company’s investment in the common stock of Comstock. For the six months ended December 31, 2016, the Company had a net realized gain of $312,000 and a net unrealized loss of $2,448,000. For the six months ended December 31, 2015, the Company had a net realized loss of 457,000 and a net unrealized loss of $5,519,000. 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. 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.

During the six months ended December 31, 2016 and 2015, the Company performed an impairment analysis of its other investments and determined that its investments had an other than temporary impairment and recorded impairment losses of $44,000 and $287,000 in the respective periods.

The Company and its subsidiaries, Portsmouth and Santa Fe, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. The income tax (expense) benefit during the six months ended December 31, 2016 and 2015 represents primarily the income tax effect of the pre-tax loss at InterGroup and Portsmouth’s pretax income (loss) which includes its share in net income of the Hotel.

FINANCIAL CONDITION AND LIQUIDITY

The Company’s cash flows are primarily generated from its Hotel operations, its real estate operations and from the investment of its cash in marketable securities and other investments.

On December 18, 2013, the Partnership completed an Offer to Redeem any and all limited partnership interests not held by Portsmouth. As a result, Portsmouth, which prior to the Offer to Redeem owned 50% of the then outstanding limited partnership interests now controls approximately 93% of the voting interest in Justice and is now its sole General Partner.

To fund the redemption of limited partnership interests and to repay the prior mortgage of $42,940,000. Justice obtained a $97,000,000 mortgage loan and a $20,000,000 mezzanine loan. The mortgage loan is secured by the Partnership’s principal asset, the Hotel. The mortgage loan bears an interest rate of 5.275% per annum with interest only payments due thru January 2017. Beginning in February 2017, the loan will begin to amortize over a thirty year period thru its maturity date of January 2024. As additional security for the mortgage loan, there is a limited guaranty executed by the Company in favor of mortgage lender. The mezzanine loan is a secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine interest only loan bears interest at 9.75% per annum and matures in January 2024. As additional security for the mezzanine loan, there is a limited guaranty executed by the Company in favor of mezzanine lender.

- 19 -

Despite an uncertain economy, the Hotel has continued to generate positive operating income. While the debt service requirements related the loans may create some additional risk for the Company and its ability to generate cash flows in the future, management believes that cash flows from the operations of the Hotel and the garage will continue to be sufficient to meet all of the Partnership’s current and future obligations and financial requirements.

In July 2015, the Company purchased residential house in Los Angeles, California as a strategic asset for $1,975,000 in cash. In August 2016, the Company obtained a mortgage note payable on the house in the amount of $1,000,000. The note has an adjustable interest rate of 4.5% as of December 31, 2016 and requires interest only payments for the first twenty three months with a balloon payment at maturity in August 2018.

Management believes that its cash, securities assets, real estate and the cash flows generated from those assets and from partnership distributions and management fees, will be adequate to meet the Company’s current and future obligations. Additionally, management believes there is significant appreciated value in the Hotel and other real estate properties to support additional borrowings if necessary.

MARKETABLE SECURITIES

The following table shows the composition of the Company’s marketable securities portfolio as of December 31, 2016 and June 30, 2016 by selected industry groups.

As of	12/31/2016					6/30/2016
			% of Total					% of Total
			Investment					Investment
Industry Group	Fair Value		Securities			Fair Value		Securities
Basic materials	$	7,165,000		42.0	%	$	9,273,000		64.9	%
Energy		3,318,000		19.5	%		1,907,000		13.4	%
Corporate bonds		1,584,000		9.3	%		-		0.0	%
REITs and real estate companies		1,416,000		8.3	%		-		0.0	%
Financial services		590,000		3.5	%		1,021,000		7.1	%
Other		2,971,000		17.4	%		2,081,000		14.6	%
	$	17,044,000		100.0	%	$	14,282,000		100.0	%

The Company’s investment in marketable securities portfolio consists primarily of (41%) of the common stock of Comstock Mining, Inc. which is included in the basic materials industry group.

For the three months ended December 31,	2016			2015
Net loss on marketable securities	$	(3,290,000	)	$	(6,356,000	)
Net unrealized loss on other investments		-			(53,000	)
Impairment loss on other investments		(24,000	)		(287,000	)
Dividend and interest income		68,000			6,000
Margin interest expense		(159,000	)		(108,000	)
Trading and management expenses		(132,000	)		(114,000	)
	$	(3,537,000	)	$	(6,912,000	)

- 20 -

For the six months ended December 31,	2016			2015
Net loss on marketable securities	$	(2,136,000	)	$	(5,976,000	)
Net unrealized loss on other investments		-			(127,000	)
Impairment loss on other investments		(44,000	)		(287,000	)
Dividend and interest income		110,000			19,000
Margin interest expense		(303,000	)		(207,000	)
Trading and management expenses		(250,000	)		(255,000	)
	$	(2,623,000	)	$	(6,833,000	)

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off balance sheet arrangements.

MATERIAL CONTRACTUAL OBLIGATIONS

The following table provides a summary as of December 31, 2016, the Company’s material financial obligations which also including interest payments.

			6 Months		Year		Year		Year		Year
	Total		2017		2018		2019		2020		2021		Thereafter
Mortgage and subordinated notes payable	$	182,662,000	$	1,482,000	$	3,013,000	$	3,154,000	$	3,290,000	$	3,226,000	$	168,497,000
Other notes payable		4,670,000		1,029,000		317,000		317,000		317,000		317,000		2,373,000
Interest		65,428,000		6,755,000		9,670,000		9,529,000		9,382,000		8,936,000		21,156,000
Total	$	252,760,000	$	9,266,000	$	13,000,000	$	13,000,000	$	12,989,000	$	12,479,000	$	192,026,000

IMPACT OF INFLATION

Hotel room rates are typically impacted by supply and demand factors, not inflation, since rental of a hotel room is usually for a limited number of nights. Room rates can be, and usually are, adjusted to account for inflationary cost increases. Since the Company has the power and ability to adjust hotel room rates on an ongoing basis, there should be minimal impact on partnership revenues due to inflation. Partnership revenues are also subject to interest rate risks, which may be influenced by inflation. For the two most recent fiscal years, the impact of inflation on the Company's income is not viewed by management as material.

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

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Critical accounting policies are those that are most significant to the presentation of our financial position and results of operations and require judgments by management in order to make estimates about the effect of matters that are inherently uncertain. The preparation of these condensed financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to the consolidation of our subsidiaries, to our revenues, allowances for bad debts, accruals, asset impairments, other investments, income taxes and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions. There have been no material changes to the Company’s critical accounting policies during the six months ended December 31, 2016. Please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, 2016 for a summary of the critical accounting policies.

- 21 -

Item 4. Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the Company’s internal control over financial reporting during the last quarterly period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.

OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not applicable.

(c) Purchases of equity securities by the small business issuer and affiliated purchasers.

The following table reflects purchases of InterGroup’s common stock made by The InterGroup Corporation, for its own account, during the second quarter of its fiscal year ending June 30, 2017.

SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

					(c) Total Number		(d) Maximum Number
	(a) Total		(b)		of Shares Purchased		of shares that May
Fiscal	Number of		Average		as Part of Publicly		Yet be Purchased
2017	Shares		Price Paid		Announced Plans		Under the Plans
Period	Purchased		Per Share		or Programs		or Programs
Month #1
(October 1-October 31)		-		-		-		88,943
Month #2
(November 1-November 30)		11,400	$	23.31		11,400		77,543
Month #3
(December 1-December 31)		3,200	$	26.80		3,200		74,343
TOTAL:		14,600	$	24.08		14,600		74,343

- 22 -

The Company has only one stock repurchase program. The program was initially announced on January 13, 1998 and was amended on February 10, 2003 and October 12, 2004. The total number of shares authorized to be repurchased pursuant to those prior authorizations was 870,000, adjusted for stock splits. 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. 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. No plan or program expired during the period covered by the table.

Item 6. Exhibits.

31.1 Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).

31.2 Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).

32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE INTERGROUP CORPORATION
	(Registrant)
Date: February 14, 2017	by	/s/ John V. Winfield
		John V. Winfield, President,
		Chairman of the Board and
		Chief Executive Officer
Date: February 14, 2017	by	/s/ David Nguyen
		David Nguyen, Treasurer
		and Controller

- 23 -

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, John V. Winfield, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The InterGroup Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2017

/s/ John V. Winfield                                    

John V. Winfield

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David Nguyen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The InterGroup Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2017

/s/ David Nguyen                          

David Nguyen

Treasurer and Controller

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

Certification of Principal Executive Officer Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act Of 2002

In connection with the Quarterly Report of The InterGroup Corporation (the "Company") on Form 10-Q for the quarterly period ended December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John V. Winfield, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

· The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and

· The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John V. Winfield                                  

John V. Winfield

President and Chief Executive Officer

(Principal Executive Officer)

Date: February 14, 2017

A signed original of this written statement required by Section 906 has been provided to The InterGroup Corporation and will be retained by The InterGroup Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification of Principal Financial Officer Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act Of 2002

In connection with the Quarterly Report of The InterGroup Corporation (the "Company") on Form 10-Q for the quarterly period ended December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David Nguyen, Treasurer and Controller of the Company, serving as its Principal Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

· The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and

· The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David Nguyen                       

David Nguyen

Treasurer and Controller

(Principal Financial Officer)

Date: February 14, 2017

A signed original of this written statement required by Section 906 has been provided to The InterGroup Corporation and will be retained by The InterGroup Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Dec. 31, 2016	Feb. 07, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Entity Registrant Name	INTERGROUP CORP
Entity Central Index Key	0000069422
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	INTG
Entity Common Stock, Shares Outstanding		2,367,126

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2016	Jun. 30, 2016
ASSETS
Investment in Hotel, net	$ 43,559,000	$ 44,821,000
Investment in real estate, net	55,856,000	56,356,000
Investment in marketable securities	17,044,000	14,282,000
Other investments, net	985,000	1,029,000
Cash and cash equivalents	3,771,000	5,404,000
Restricted cash - mortgage impounds	4,183,000	3,221,000
Other assets, net	3,636,000	6,172,000
Deferred income taxes	3,758,000	3,985,000
Total assets	132,792,000	135,270,000
Liabilities:
Accounts payable and other liabilities	4,419,000	3,717,000
Accounts payable and other liabilities - Hotel	10,675,000	14,783,000
Due to securities broker	4,023,000	1,493,000
Obligations for securities sold	1,030,000	163,000
Other notes payable	4,670,000	6,996,000
Mortgage notes payable - Hotel	116,216,000	116,160,000
Mortgage notes payable - real estate	65,662,000	65,205,000
Total liabilities	206,695,000	208,517,000
Commitments and contingencies and subsequent event
Shareholders' deficit:
Preferred stock, $.01 par value, 100,000 shares authorized; none issued	0	0
Common stock, $.01 par value, 4,000,000 shares authorized; 3,395,616 issued; 2,367,126 and 2,381,726 outstanding	33,000	33,000
Additional paid-in capital	10,429,000	10,363,000
Accumulated deficit	(44,170,000)	(43,645,000)
Treasury stock, at cost, 1,028,490 and 1,013,890 shares	(12,434,000)	(12,082,000)
Total InterGroup shareholders' deficit	(46,142,000)	(45,331,000)
Noncontrolling interest	(27,761,000)	(27,916,000)
Total shareholders' deficit	(73,903,000)	(73,247,000)
Total liabilities and shareholders' equity	$ 132,792,000	$ 135,270,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Dec. 31, 2016	Jun. 30, 2016
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock , shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	4,000,000	4,000,000
Common stock, shares issued	3,395,616	3,395,616
Common stock, shares outstanding	2,367,126	2,381,726
Treasury stock, shares	1,028,490	1,013,890

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Revenues:
Hotel	$ 12,837,000	$ 13,713,000	$ 27,442,000	$ 28,851,000
Real estate	3,605,000	3,546,000	7,254,000	7,128,000
Total revenues	16,442,000	17,259,000	34,696,000	35,979,000
Costs and operating expenses:
Hotel operating expenses	(9,611,000)	(11,969,000)	(19,867,000)	(23,162,000)
Real estate operating expenses	(1,754,000)	(1,715,000)	(3,561,000)	(3,451,000)
Depreciation and amortization expenses	(1,370,000)	(1,285,000)	(2,638,000)	(2,521,000)
General and administrative expenses	(602,000)	(585,000)	(1,330,000)	(1,394,000)
Total costs and operating expenses	(13,337,000)	(15,554,000)	(27,396,000)	(30,528,000)
Income from operations	3,105,000	1,705,000	7,300,000	5,451,000
Other income (expense):
Interest expense - mortgages	(2,402,000)	(2,461,000)	(4,864,000)	(4,925,000)
Net loss on disposal of assets		0	0	(30,000)
Net loss on marketable securities	(3,290,000)	(6,356,000)	(2,136,000)	(5,976,000)
Net unrealized loss on other investments	0	(53,000)	0	(127,000)
Impairment loss on other investments	(24,000)	(287,000)	(44,000)	(287,000)
Dividend and interest income	68,000	6,000	110,000	19,000
Trading and margin interest expense	(291,000)	(222,000)	(553,000)	(462,000)
Total other expense, net	(5,939,000)	(9,373,000)	(7,487,000)	(11,788,000)
Loss before income taxes	(2,834,000)	(7,668,000)	(187,000)	(6,337,000)
Income tax (expense) benefit	825,000	2,538,000	(227,000)	1,920,000
Net loss	(2,009,000)	(5,130,000)	(414,000)	(4,417,000)
Less: Net (income) loss attributable to the noncontrolling interest	293,000	835,000	(111,000)	591,000
Net loss attributable to InterGroup	$ (1,716,000)	$ (4,295,000)	$ (525,000)	$ (3,826,000)
Net loss per share
Basic and diluted	$ (0.85)	$ (2.15)	$ (0.17)	$ (1.85)
Net loss per share attributable to InterGroup
Basic and diluted	$ (0.72)	$ (1.80)	$ (0.22)	$ (1.60)
Weighted average number of basic and diluted common shares outstanding	2,375,654	2,384,272	2,378,690	2,385,784

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net loss	$ (414,000)	$ (4,417,000)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	2,638,000	2,521,000
Net loss on disposal of assets	0	30,000
Net unrealized loss on marketable securities	2,448,000	5,519,000
Unrealized loss on other investments	0	127,000
Impairment loss on other investments	44,000	287,000
Stock compensation expense	140,000	330,000
Deferred taxes	227,000	(1,920,000)
Changes in assets and liabilities:
Investment in marketable securities	(5,210,000)	(2,444,000)
Other assets	2,648,000	5,063,000
Accounts payable and other liabilities	(3,406,000)	(3,106,000)
Due to securities broker	2,530,000	1,207,000
Obligations for securities sold	867,000	(22,000)
Net cash provided by operating activities	2,512,000	3,175,000
Cash flows from investing activities:
Investment in hotel, net	(317,000)	(2,902,000)
Investment in real estate, net	(615,000)	(2,425,000)
Investment in Santa Fe	(30,000)	(120,000)
Net cash used in investing activities	(962,000)	(5,447,000)
Cash flows from financing activities:
Restricted cash - payment of mortgage impounds	(962,000)	(69,000)
Net payments of mortgage and other notes payable	(1,869,000)	(954,000)
Purchase of treasury stock	(352,000)	(155,000)
Net cash used in financing activities	(3,183,000)	(1,178,000)
Net decrease in cash and cash equivalents	(1,633,000)	(3,450,000)
Cash and cash equivalents at the beginning of the period	5,404,000	8,529,000
Cash and cash equivalents at the end of the period	3,771,000	5,079,000
Supplemental information:
Interest paid	5,167,000	5,132,000
Non-cash transaction:
Conversion of other investments to marketable securities	$ 0	$ 13,231,000

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements included herein have been prepared by The InterGroup Corporation (“InterGroup” or the “Company”), without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which included only normal recurring adjustments) necessary for a fair statement of the financial position, cash flows and results of operations as of and for the periods indicated. It is suggested that these financial statements be read in conjunction with the audited financial statements of InterGroup and the notes therein included in the Company's Annual Report on Form 10-K for the year ended June 30, 2016. The June 30, 2016 Condensed Consolidated Balance Sheet was derived from the Company’s Form 10-K for the year ended June 30, 2016.

The results of operations for the three and six months ended December 31, 2016 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2017.

Basic and diluted loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. The computation of diluted income per share is similar to the computation of basic earnings per share except that the weighted-average number of common shares is increased to include the number of additional common shares that would have been outstanding if potential dilutive common shares had been issued. The Company's only potentially dilutive common shares are stock options.

As of December 31, 2016, the Company had the power to vote 85.7% of the voting shares of Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF). This percentage includes the power to vote an approximately 4% interest in the common stock in Santa Fe owned by the Company’s Chairman and President pursuant to a voting trust agreement entered into on June 30, 1998.

Santa Fe’s primary business is conducted through the management of its 68.8% owned subsidiary, Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI). Portsmouth has a 93% limited partnership interest in Justice and is the sole general partner. InterGroup also directly owns approximately 13.3% of the common stock of Portsmouth.

Justice, through its subsidiaries Justice Holdings Company, LLC (“Holdings”), a Delaware Limited Liability Company, Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), owns a 543-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. Holdings and Mezzanine are both wholly-owned subsidiaries of the Partnership; Operating is a wholly-owned subsidiary of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (Hilton). Justice has a management agreement with Prism Hospitality L.P. (“Prism”) to perform certain management functions for the Hotel. The management agreement with Prism had an original term of ten years, subject to the Partnership’s right to terminate at any time with or without cause. Effective January 2014, the management agreement with Prism was amended by the Partnership to change the nature of the services provided by Prism and the compensation payable to Prism, among other things. Effective December 1, 2013, GMP Management, Inc. (“GMP”), a company owned by a Justice limited partner and a related party, also provided management services for the Partnership pursuant to a management services agreement, with a three year term, subject to the Partnership’s right to terminate earlier for cause. In June 2016, GMP resigned. After a lengthy review process of several national third party hotel management companies, on February 1, 2017, Justice entered into a management agreement with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017.   The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions.

The parking garage that is part of the Hotel property was managed by Ace Parking pursuant to a contract with the Partnership. The contract was terminated with an effective termination date of October 4, 2016. Justice began managing the parking garage in-house after the termination of Ace Parking.

Management believes that the revenues expected to be generated from the operations of the hotel, garage and leases will be sufficient to meet all of the Partnership’s current and future obligations and financial requirements.

In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate. Properties include apartment complexes, commercial real estate, and three single-family houses as strategic investments. The properties are located throughout the United States, but are concentrated in Texas and Southern California. The Company also has investments in unimproved real property. All of the Company’s residential rental properties are managed in-house.

Recently Issued Accounting Pronouncements

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern that requires management to evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statements are issued on both an interim and annual basis. Management is required to provide certain footnote disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern. ASU No. 2014-15 becomes effective for annual periods beginning after December 15, 2016 and for interim reporting periods thereafter. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

On June 16, 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2020. The Company is currently reviewing the effect of ASU No. 2016-13.

On August 26, 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic230).” This ASU is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. The Company adopted ASU No. 2016-15 in the first quarter of 2017 with no material impact to our financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods within these annual periods beginning after December 15, 2015 and early application is permitted. The Company adopted this standard during the quarter and reclassified the debt issuance costs of $840,000 from Other Assets to Mortgage notes payable – Hotel, net on the June 30, 2016 consolidated balance sheet.

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INVESTMENT IN HOTEL, NET

6 Months Ended

Dec. 31, 2016

Hotel [Member]

Real Estate Properties [Line Items]

Investment In Real Estate [Text Block]

NOTE 2 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

			Accumulated		Net Book
December 31, 2016	Cost		Depreciation		Value
Land	$	2,738,000	$	-	$	2,738,000
Furniture and equipment		27,674,000		(23,839,000)		3,835,000
Building and improvements		64,308,000		(27,322,000)		36,986,000
	$	94,720,000	$	(51,161,000)	$	43,559,000

			Accumulated		Net Book
June 30, 2016	Cost		Depreciation		Value
Land	$	2,738,000	$	-	$	2,738,000
Furniture and equipment		28,857,000		(23,096,000)		5,761,000
Building and improvements		62,908,000		(26,586,000)		36,322,000
	$	94,503,000	$	(49,682,000)	$	44,821,000

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INVESTMENT IN REAL ESTATE

6 Months Ended

Dec. 31, 2016

Apartment Building [Member]

Real Estate Properties [Line Items]

Real Estate Disclosure [Text Block]

NOTE 3 – INVESTMENT IN REAL ESTATE

Investment in real estate consisted of the following:

As of	December 31, 2016		June 30, 2016
Land	$	25,033,000	$	25,033,000
Buildings, improvements and equipment		66,544,000		65,929,000
Accumulated depreciation		(35,721,000)		(34,606,000)
Investment in real estate, net	$	55,856,000	$	56,356,000

In July 2015, the Company purchased residential house in Los Angeles, California as a strategic asset for $1,975,000 in cash. In August 2016, the Company obtained a mortgage note payable on the house in the amount of $1,000,000. The note has an adjustable interest rate of 4.5% as of December 31, 2016 and requires interest only payments for the first twenty three months with a balloon payment at maturity in August 2018.

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INVESTMENT IN MARKETABLE SECURITIES

6 Months Ended

Dec. 31, 2016

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 4 – INVESTMENT IN MARKETABLE SECURITIES

The Company’s investment in marketable securities consists primarily of corporate equities. The Company has also periodically invested in corporate bonds and income producing securities, which may include interests in real estate based companies and REITs, where financial benefit could transfer to its shareholders through income and/or capital gain.

At December 31, 2016 and June 30, 2016, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

			Gross		Gross		Net		Fair
Investment	Cost		Unrealized Gain		Unrealized Loss		Unrealized Loss		Value
As of December 31, 2016
Corporate
Equities	$	27,617,000	$	1,049,000	$	(11,622,000)	$	(10,573,000)	$	17,044,000
As of June 30, 2016
Corporate
Equities	$	22,500,000	$	1,161,000	$	(9,379,000)	$	(8,218,000)	$	14,282,000

As of December 31, 2016 and June 30, 2016, approximately 41% and 65%, respectively, of the investment marketable securities balance above is comprised of the common stock of Comstock Mining, Inc.

As of December 31, 2016 and June 30, 2016, the Company had unrealized losses of $3,949,000 and $3,620,000, respectively, related to securities held for over one year.

Net loss on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the respective periods:

For the three months ended December 31,	2016		2015
Realized loss on marketable securities	$	(107,000)	$	(397,000)
Unrealized loss on marketable securities		(3,183,000)		(5,959,000)
Net loss on marketable securities	$	(3,290,000)	$	(6,356,000)
For the six months ended December 31,	2016		2015
Realized gain (loss) on marketable securities	$	312,000	$	(457,000)
Unrealized loss on marketable securities		(2,448,000)		(5,519,000)
Net gain on marketable securities	$	(2,136,000)	$	(5,976,000)

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OTHER INVESTMENTS, NET

6 Months Ended

Dec. 31, 2016

Other Investments [Abstract]

Other Investments Disclosure [Text Block]

NOTE 5 – OTHER INVESTMENTS, NET

The Company may also invest, with the approval of the securities investment committee and other Company guidelines, in private investment equity funds and other unlisted securities, such as convertible notes through private placements. Those investments in non-marketable securities are carried at cost on the Company’s balance sheet as part of other investments, net of other than temporary impairment losses. Other investments also include non-marketable warrants carried at fair value.

Other investments, net consist of the following:

Type	December 31, 2016		June 30, 2016
Private equity hedge fund, at cost	$	916,000	$	916,000
Other preferred stock, at cost		69,000		113,000
	$	985,000	$	1,029,000

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FAIR VALUE MEASUREMENTS

6 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 6 - FAIR VALUE MEASUREMENTS

The carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).

The assets measured at fair value on a recurring basis are as follows:

	12/31/2016		6/30/2016
As of	Total - Level 1		Total - Level 1
Assets:
Investment in marketable securities:
Basic materials	$	7,165,000	$	9,273,000
Energy		3,318,000		1,907,000
Corporate bonds		1,584,000		-
REITs and real estate companies		1,416,000		-
Financial services		590,000		1,021,000
Other		2,971,000		2,081,000
	$	17,044,000	$	14,282,000

 

The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date.

Financial assets that are measured at fair value on a non-recurring basis and are not included in the tables above include “Other investments in non-marketable securities,” that were initially measured at cost and have been written down to fair value as a result of impairment or adjusted to record the fair value of new instruments received (i.e., preferred shares) in exchange for old instruments (i.e., debt instruments). The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:

					Net loss for the six months
Assets	Level 3		December 31, 2016		ended December 31, 2016
Other non-marketable investments	$	985,000	$	985,000	$	(44,000)

					Net loss for the six months
Assets	Level 3		June 30, 2016		ended December 31, 2015
Other non-marketable investments	$	1,029,000	$	1,029,000	$	(287,000)

Other investments in non-marketable securities are carried at cost net of any impairment loss. The Company has no significant influence or control over the entities that issue these investments and holds less than 20% ownership in each of the investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

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STOCK BASED COMPENSATION PLANS

6 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 7 – STOCK BASED COMPENSATION PLANS

The Company follows Accounting Standard Codification (ASC) Topic 718 “Compensation – Stock Compensation”, which addresses accounting for equity-based compensation arrangements, including employee stock options and restricted stock units. 

Please refer to Note 16 – Stock Based Compensation Plans in the Company's Form 10-K for the year ended June 30, 2016 for more detail information on the Company’s stock-based compensation plans.

For the three months ended December 31, 2016 and 2015, the Company recorded stock option compensation cost of $66,000 and $123,000, respectively, related to stock options that were previously issued. For the six months ended December 31, 2016 and 2015, the Company recorded stock option compensation cost of $141,000 and $242,000, respectively, related to stock options that were previously issued.

As of December 31, 2016, there was a total of $218,000 of unamortized compensation related to stock options which is expected to be recognized over the weighted-average period of 2 years.

Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history. The Company has selected to use the simplified method for estimating the expected term. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.

The following table summarizes the stock options activity from July 1, 2016 through December 31, 2016:

		Number of		Weighted Average		Weighted Average		Aggregate
		Shares		Exercise Price		Remaining Life		Intrinsic Value
Oustanding at	July 1, 2015		350,000	$	16.70		6.95 years	$	939,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Oustanding at	June 30, 2016		350,000	$	16.70		5.95 years	$	3,082,000
Exercisable at	June 30, 2016		236,000	$	15.54		5.33 years	$	2,351,000
Vested and Expected to vest at	June 30, 2016		350,000	$	16.70		5.95 years	$	3,082,000
Oustanding at	July 1, 2016		350,000	$	16.70		5.95 years	$	3,082,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Oustanding at	December 31, 2016		350,000	$	16.70		5.44 years	$	3,572,000
Exercisable at	December 31, 2016		268,000	$	15.95		5.09 years	$	2,935,000
Vested and Expected to vest at	December 31, 2016		350,000	$	16.70		5.44 years	$	3,572,000

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SEGMENT INFORMATION

6 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 8 – SEGMENT INFORMATION

The Company operates in three reportable segments, the operation of the hotel (“Hotel Operations”), the operation of its multi-family residential properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments (“Investment Transactions”). These three operating segments, as presented in the financial statements, reflect how management internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this information.

Information below represents reported segments for the three and six months ended December 31, 2016 and 2015. Segment income from hotel operations consist of the operation of the hotel and operation of the garage. Operating income for rental properties consist of rental income. Operating income (loss) for investment transactions consist of net investment gain (loss), impairment loss on other investments, net unrealized gain (loss) on other investments, dividend and interest income and trading and margin interest expense. The other segment consists of corporate general and administrative expenses and the income tax expense for the entire Company.

As of and for the three months	Hotel		Real Estate		Investment
ended December 31, 2016	Operations		Operations		Transactions		Corporate		Total
Revenues	$	12,837,000	$	3,605,000	$	-	$	-	$	16,442,000
Segment operating expenses		(9,611,000)		(1,754,000)		-		(602,000)		(11,967,000)
Segment income (loss) from operations		3,226,000		1,851,000		-		(602,000)		4,475,000
Interest expense - mortgage		(1,750,000)		(652,000)		-		-		(2,402,000)
Depreciation and amortization expense		(810,000)		(560,000)		-		-		(1,370,000)
Loss from investments		-		-		(3,537,000)		-		(3,537,000)
Income tax benefit		-		-		-		825,000		825,000
Net income (loss)	$	666,000	$	639,000	$	(3,537,000)	$	223,000	$	(2,009,000)
Total assets	$	50,206,000	$	55,856,000	$	18,029,000	$	8,701,000	$	132,792,000

As of and for the three months	Hotel		Real Estate		Investment
ended December 31, 2015	Operations		Operations		Transactions		Corporate		Total
Revenues	$	13,713,000	$	3,546,000	$	-	$	-	$	17,259,000
Segment operating expenses		(11,969,000)		(1,715,000)		-		(585,000)		(14,269,000)
Segment income (loss) from operations		1,744,000		1,831,000		-		(585,000)		2,990,000
Interest expense - mortgage		(1,813,000)		(648,000)		-		-		(2,461,000)
Loss on disposal of assets				-		-		-		-
Depreciation and amortization expense		(759,000)		(526,000)		-		-		(1,285,000)
Loss from investments		-		-		(6,912,000)		-		(6,912,000)
Income tax benefit		-		-		-		2,538,000		2,538,000
Net income (loss)	$	(828,000)	$	657,000	$	(6,912,000)	$	1,953,000	$	(5,130,000)

As of and for the six months	Hotel		Real Estate		Investment
ended December 31, 2016	Operations		Operations		Transactions		Corporate		Total
Revenues	$	27,442,000	$	7,254,000	$	-	$	-	$	34,696,000
Segment operating expenses		(19,867,000)		(3,561,000)		-		(1,330,000)		(24,758,000)
Segment income (loss) from operations		7,575,000		3,693,000		-		(1,330,000)		9,938,000
Interest expense - mortgage		(3,579,000)		(1,285,000)		-		-		(4,864,000)
Depreciation and amortization expense		(1,523,000)		(1,115,000)		-		-		(2,638,000)
Loss from investments		-		-		(2,623,000)		-		(2,623,000)
Income tax expense		-		-		-		(227,000)		(227,000)
Net income (loss)	$	2,473,000	$	1,293,000	$	(2,623,000)	$	(1,557,000)	$	(414,000)
Total assets	$	50,206,000	$	55,856,000	$	18,029,000	$	8,701,000	$	132,792,000

As of and for the six months	Hotel		Real Estate		Investment
ended December 31, 2015	Operations		Operations		Transactions		Corporate		Total
Revenues	$	28,851,000	$	7,128,000	$	-	$	-	$	35,979,000
Segment operating expenses		(23,162,000)		(3,451,000)		-		(1,394,000)		(28,007,000)
Segment income (loss) from operations		5,689,000		3,677,000		-		(1,394,000)		7,972,000
Interest expense - mortgage		(3,627,000)		(1,298,000)		-		-		(4,925,000)
Loss on disposal of assets		(30,000)		-		-		-		(30,000)
Depreciation and amortization expense		(1,521,000)		(1,000,000)		-		-		(2,521,000)
Loss from investments		-		-		(6,833,000)		-		(6,833,000)
Income tax benefit		-		-		-		1,920,000		1,920,000
Net income (loss)	$	511,000	$	1,379,000	$	(6,833,000)	$	526,000	$	(4,417,000)

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RELATED PARTY TRANSACTIONS

6 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 9 – RELATED PARTY TRANSACTIONS

Four of the Portsmouth directors serve as directors of InterGroup. Three of those directors also serve as directors of Santa Fe. The three Santa Fe directors also serve as directors of InterGroup.

John V. Winfield serves as Chief Executive Officer and Chairman of the Company, Portsmouth and Santa Fe. Depending on certain market conditions and various risk factors, the Chief Executive Officer, Portsmouth and Santa Fe may, at times, invest in the same companies in which the Company invests. The Company encourages such investments because it places personal resources of the Chief Executive Officer and the resources of Portsmouth and Santa Fe, at risk in connection with investment decisions made on behalf of the Company.

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SUBSEQUENT EVENT

6 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 10 – SUBSEQUENT EVENT

After a lengthy review process of several national third party hotel management companies, on February 1, 2017, Justice entered into a management agreement with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Dec. 31, 2016

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern that requires management to evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statements are issued on both an interim and annual basis. Management is required to provide certain footnote disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern. ASU No. 2014-15 becomes effective for annual periods beginning after December 15, 2016 and for interim reporting periods thereafter. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

On June 16, 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2020. The Company is currently reviewing the effect of ASU No. 2016-13.

On August 26, 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic230).” This ASU is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. The Company adopted ASU No. 2016-15 in the first quarter of 2017 with no material impact to our financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods within these annual periods beginning after December 15, 2015 and early application is permitted. The Company adopted this standard during the quarter and reclassified the debt issuance costs of $840,000 from Other Assets to Mortgage notes payable – Hotel, net on the June 30, 2016 consolidated balance sheet.

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INVESTMENT IN HOTEL, NET (Tables)

6 Months Ended

Dec. 31, 2016

Hotel [Member]

Real Estate Properties [Line Items]

Schedule of Real Estate Properties [Table Text Block]

Investment in hotel consisted of the following as of:

			Accumulated		Net Book
December 31, 2016	Cost		Depreciation		Value
Land	$	2,738,000	$	-	$	2,738,000
Furniture and equipment		27,674,000		(23,839,000)		3,835,000
Building and improvements		64,308,000		(27,322,000)		36,986,000
	$	94,720,000	$	(51,161,000)	$	43,559,000

			Accumulated		Net Book
June 30, 2016	Cost		Depreciation		Value
Land	$	2,738,000	$	-	$	2,738,000
Furniture and equipment		28,857,000		(23,096,000)		5,761,000
Building and improvements		62,908,000		(26,586,000)		36,322,000
	$	94,503,000	$	(49,682,000)	$	44,821,000

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INVESTMENT IN REAL ESTATE (Tables)

6 Months Ended

Dec. 31, 2016

Apartment Building [Member]

Real Estate Properties [Line Items]

Schedule of Real Estate Properties [Table Text Block]

Investment in real estate consisted of the following:

As of	December 31, 2016		June 30, 2016
Land	$	25,033,000	$	25,033,000
Buildings, improvements and equipment		66,544,000		65,929,000
Accumulated depreciation		(35,721,000)		(34,606,000)
Investment in real estate, net	$	55,856,000	$	56,356,000

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INVESTMENT IN MARKETABLE SECURITIES (Tables)

6 Months Ended

Dec. 31, 2016

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Table Text Block]

At December 31, 2016 and June 30, 2016, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

			Gross		Gross		Net		Fair
Investment	Cost		Unrealized Gain		Unrealized Loss		Unrealized Loss		Value
As of December 31, 2016
Corporate
Equities	$	27,617,000	$	1,049,000	$	(11,622,000)	$	(10,573,000)	$	17,044,000
As of June 30, 2016
Corporate
Equities	$	22,500,000	$	1,161,000	$	(9,379,000)	$	(8,218,000)	$	14,282,000

Gain (Loss) on Investments [Table Text Block]

Net loss on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the respective periods:

For the three months ended December 31,	2016		2015
Realized loss on marketable securities	$	(107,000)	$	(397,000)
Unrealized loss on marketable securities		(3,183,000)		(5,959,000)
Net loss on marketable securities	$	(3,290,000)	$	(6,356,000)
For the six months ended December 31,	2016		2015
Realized gain (loss) on marketable securities	$	312,000	$	(457,000)
Unrealized loss on marketable securities		(2,448,000)		(5,519,000)
Net gain on marketable securities	$	(2,136,000)	$	(5,976,000)

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OTHER INVESTMENTS, NET (Tables)

6 Months Ended

Dec. 31, 2016

Other Investments [Abstract]

Other Investments Not Readily Marketable [Table Text Block]

Other investments, net consist of the following:

Type	December 31, 2016		June 30, 2016
Private equity hedge fund, at cost	$	916,000	$	916,000
Other preferred stock, at cost		69,000		113,000
	$	985,000	$	1,029,000

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

The assets measured at fair value on a recurring basis are as follows:

	12/31/2016		6/30/2016
As of	Total - Level 1		Total - Level 1
Assets:
Investment in marketable securities:
Basic materials	$	7,165,000	$	9,273,000
Energy		3,318,000		1,907,000
Corporate bonds		1,584,000		-
REITs and real estate companies		1,416,000		-
Financial services		590,000		1,021,000
Other		2,971,000		2,081,000
	$	17,044,000	$	14,282,000

Fair Value Measurements, Nonrecurring [Table Text Block]

The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:

					Net loss for the six months
Assets	Level 3		December 31, 2016		ended December 31, 2016
Other non-marketable investments	$	985,000	$	985,000	$	(44,000)

					Net loss for the six months
Assets	Level 3		June 30, 2016		ended December 31, 2015
Other non-marketable investments	$	1,029,000	$	1,029,000	$	(287,000)

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STOCK BASED COMPENSATION PLANS (Tables)

6 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The following table summarizes the stock options activity from July 1, 2016 through December 31, 2016:

		Number of		Weighted Average		Weighted Average		Aggregate
		Shares		Exercise Price		Remaining Life		Intrinsic Value
Oustanding at	July 1, 2015		350,000	$	16.70		6.95 years	$	939,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Oustanding at	June 30, 2016		350,000	$	16.70		5.95 years	$	3,082,000
Exercisable at	June 30, 2016		236,000	$	15.54		5.33 years	$	2,351,000
Vested and Expected to vest at	June 30, 2016		350,000	$	16.70		5.95 years	$	3,082,000
Oustanding at	July 1, 2016		350,000	$	16.70		5.95 years	$	3,082,000
Granted			-		-
Exercised			-		-
Forfeited			-		-
Exchanged			-		-
Oustanding at	December 31, 2016		350,000	$	16.70		5.44 years	$	3,572,000
Exercisable at	December 31, 2016		268,000	$	15.95		5.09 years	$	2,935,000
Vested and Expected to vest at	December 31, 2016		350,000	$	16.70		5.44 years	$	3,572,000

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SEGMENT INFORMATION (Tables)

6 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Information below represents reported segments for the three and six months ended December 31, 2016 and 2015. Segment income from hotel operations consist of the operation of the hotel and operation of the garage. Operating income for rental properties consist of rental income. Operating income (loss) for investment transactions consist of net investment gain (loss), impairment loss on other investments, net unrealized gain (loss) on other investments, dividend and interest income and trading and margin interest expense. The other segment consists of corporate general and administrative expenses and the income tax expense for the entire Company.

As of and for the three months	Hotel		Real Estate		Investment
ended December 31, 2016	Operations		Operations		Transactions		Corporate		Total
Revenues	$	12,837,000	$	3,605,000	$	-	$	-	$	16,442,000
Segment operating expenses		(9,611,000)		(1,754,000)		-		(602,000)		(11,967,000)
Segment income (loss) from operations		3,226,000		1,851,000		-		(602,000)		4,475,000
Interest expense - mortgage		(1,750,000)		(652,000)		-		-		(2,402,000)
Depreciation and amortization expense		(810,000)		(560,000)		-		-		(1,370,000)
Loss from investments		-		-		(3,537,000)		-		(3,537,000)
Income tax benefit		-		-		-		825,000		825,000
Net income (loss)	$	666,000	$	639,000	$	(3,537,000)	$	223,000	$	(2,009,000)
Total assets	$	50,206,000	$	55,856,000	$	18,029,000	$	8,701,000	$	132,792,000

As of and for the three months	Hotel		Real Estate		Investment
ended December 31, 2015	Operations		Operations		Transactions		Corporate		Total
Revenues	$	13,713,000	$	3,546,000	$	-	$	-	$	17,259,000
Segment operating expenses		(11,969,000)		(1,715,000)		-		(585,000)		(14,269,000)
Segment income (loss) from operations		1,744,000		1,831,000		-		(585,000)		2,990,000
Interest expense - mortgage		(1,813,000)		(648,000)		-		-		(2,461,000)
Loss on disposal of assets				-		-		-		-
Depreciation and amortization expense		(759,000)		(526,000)		-		-		(1,285,000)
Loss from investments		-		-		(6,912,000)		-		(6,912,000)
Income tax benefit		-		-		-		2,538,000		2,538,000
Net income (loss)	$	(828,000)	$	657,000	$	(6,912,000)	$	1,953,000	$	(5,130,000)

As of and for the six months	Hotel		Real Estate		Investment
ended December 31, 2016	Operations		Operations		Transactions		Corporate		Total
Revenues	$	27,442,000	$	7,254,000	$	-	$	-	$	34,696,000
Segment operating expenses		(19,867,000)		(3,561,000)		-		(1,330,000)		(24,758,000)
Segment income (loss) from operations		7,575,000		3,693,000		-		(1,330,000)		9,938,000
Interest expense - mortgage		(3,579,000)		(1,285,000)		-		-		(4,864,000)
Depreciation and amortization expense		(1,523,000)		(1,115,000)		-		-		(2,638,000)
Loss from investments		-		-		(2,623,000)		-		(2,623,000)
Income tax expense		-		-		-		(227,000)		(227,000)
Net income (loss)	$	2,473,000	$	1,293,000	$	(2,623,000)	$	(1,557,000)	$	(414,000)
Total assets	$	50,206,000	$	55,856,000	$	18,029,000	$	8,701,000	$	132,792,000

As of and for the six months	Hotel		Real Estate		Investment
ended December 31, 2015	Operations		Operations		Transactions		Corporate		Total
Revenues	$	28,851,000	$	7,128,000	$	-	$	-	$	35,979,000
Segment operating expenses		(23,162,000)		(3,451,000)		-		(1,394,000)		(28,007,000)
Segment income (loss) from operations		5,689,000		3,677,000		-		(1,394,000)		7,972,000
Interest expense - mortgage		(3,627,000)		(1,298,000)		-		-		(4,925,000)
Loss on disposal of assets		(30,000)		-		-		-		(30,000)
Depreciation and amortization expense		(1,521,000)		(1,000,000)		-		-		(2,521,000)
Loss from investments		-		-		(6,833,000)		-		(6,833,000)
Income tax benefit		-		-		-		1,920,000		1,920,000
Net income (loss)	$	511,000	$	1,379,000	$	(6,833,000)	$	526,000	$	(4,417,000)

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($)	6 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Basis Of Presentation And Significant Accounting Policies [Line Items]
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest	93.00%
Management Services Agreement Term	10 years
Debt Issuance Costs, Net		$ 840,000
Portsmouth [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Equity Method Investment, Ownership Percentage	68.80%
Noncontrolling Interest, Ownership Percentage by Parent	13.30%
Santa Fe [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired	85.70%
Percentage Of Voting Shares In Common Stock	4.00%

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INVESTMENT IN HOTEL, NET (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Property, Plant and Equipment [Line Items]
Net Book Value	$ 43,559,000	$ 44,821,000
Hotel [Member]
Property, Plant and Equipment [Line Items]
Cost	94,720,000	94,503,000
Accumulated Depreciation	(51,161,000)	(49,682,000)
Net Book Value	43,559,000	44,821,000
Land [Member] | Hotel [Member]
Property, Plant and Equipment [Line Items]
Cost	2,738,000	2,738,000
Accumulated Depreciation	0	0
Net Book Value	2,738,000	2,738,000
Furniture and equipment [Member] | Hotel [Member]
Property, Plant and Equipment [Line Items]
Cost	27,674,000	28,857,000
Accumulated Depreciation	(23,839,000)	(23,096,000)
Net Book Value	3,835,000	5,761,000
Building and improvements [Member] | Hotel [Member]
Property, Plant and Equipment [Line Items]
Cost	64,308,000	62,908,000
Accumulated Depreciation	(27,322,000)	(26,586,000)
Net Book Value	$ 36,986,000	$ 36,322,000

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INVESTMENT IN REAL ESTATE (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Property, Plant and Equipment [Line Items]
Investment in real estate, net	$ 55,856,000	$ 56,356,000
Apartment Building [Member]
Property, Plant and Equipment [Line Items]
Accumulated depreciation	(35,721,000)	(34,606,000)
Apartment Building [Member] | Land [Member]
Property, Plant and Equipment [Line Items]
Cost	25,033,000	25,033,000
Apartment Building [Member] | Building and improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 66,544,000	$ 65,929,000

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INVESTMENT IN REAL ESTATE (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	Jul. 31, 2015	Dec. 31, 2016	Aug. 31, 2016
California Properties [Member] | Real Estate Investment [Member]
Property, Plant and Equipment [Line Items]
Payments to Acquire Real Estate	$ 1,975,000
House [Member]
Property, Plant and Equipment [Line Items]
Mortgage Loans on Real Estate, Face Amount of Mortgages			$ 1,000,000
Mortgage Loans on Real Estate, Interest Rate		4.50%
Debt Instrument, Maturity Date		Aug. 31, 2018

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INVESTMENT IN MARKETABLE SECURITIES (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Schedule of Trading Securities and Other Trading Assets [Line Items]
Net Unrealized Loss	$ (3,183,000)	$ (5,959,000)	$ (2,448,000)	$ (5,519,000)
Fair Value	17,044,000		17,044,000		$ 14,282,000
Equity Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Cost	27,617,000		27,617,000		22,500,000
Gross Unrealized Gain			1,049,000		1,161,000
Gross Unrealized Loss			(11,622,000)		(9,379,000)
Net Unrealized Loss			(10,573,000)		(8,218,000)
Fair Value	$ 17,044,000		$ 17,044,000		$ 14,282,000

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INVESTMENT IN MARKETABLE SECURITIES (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Schedule of Trading Securities and Other Trading Assets [Line Items]
Realized gain (loss) on marketable securities	$ (107,000)	$ (397,000)	$ 312,000	$ (457,000)
Unrealized loss on marketable securities	(3,183,000)	(5,959,000)	(2,448,000)	(5,519,000)
Net gain (loss) on marketable securities	$ (3,290,000)	$ (6,356,000)	$ (2,136,000)	$ (5,976,000)

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INVESTMENT IN MARKETABLE SECURITIES (Details Textual) - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	$ 3,949,000	$ 3,620,000
Percentage Of Investment Marketable Securities	41.00%	65.00%

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OTHER INVESTMENTS, NET (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Other Investment [Line Items]
Other investments, net	$ 985,000	$ 1,029,000
Private equity hedge fund, at cost [Member]
Other Investment [Line Items]
Other investments, net	916,000	916,000
Other preferred stock, at cost [Member]
Other Investment [Line Items]
Other investments, net	$ 69,000	$ 113,000

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FAIR VALUE MEASUREMENTS (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Assets:
Investment in marketable securities	$ 17,044,000	$ 14,282,000
Fair Value, Measurements, Recurring [Member]
Assets:
Investment in marketable securities	17,044,000	14,282,000
Basic Materials [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Investment in marketable securities	7,165,000	9,273,000
Energy [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Investment in marketable securities	3,318,000	1,907,000
Corporate Bonds [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Investment in marketable securities	1,584,000	0
REITs and Real Estate Companies [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Investment in marketable securities	1,416,000	0
Financial Services [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Investment in marketable securities	590,000	1,021,000
Other [Member] | Fair Value, Measurements, Recurring [Member]
Assets:
Investment in marketable securities	$ 2,971,000	$ 2,081,000

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FAIR VALUE MEASUREMENTS (Details 1) - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net loss	$ (44,000)	$ (287,000)
Other Investments [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other non-marketable investments	985,000		$ 1,029,000
Other Investments [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other non-marketable investments	$ 985,000		$ 1,029,000

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FAIR VALUE MEASUREMENTS (Details Textual)	6 Months Ended
	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost Method Investments, Additional Information	Other investments in non-marketable securities are carried at cost net of any impairment loss. The Company has no significant influence or control over the entities that issue these investments and holds less than 20% ownership in each of the investments.

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STOCK BASED COMPENSATION PLANS (Details) - Equity Option [Member] - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2016	Jun. 30, 2015
Stock Based Compensation [Line Items]
Oustanding, Number of Shares	350,000	350,000
Granted, Number of Shares	0	0
Exercised, Number of Shares	0	0
Forfeited, Number of Shares	0	0
Exchanged, Number of Shares	0	0
Oustanding, Number of Shares	350,000	350,000	350,000
Exercisable, Number of Shares	268,000	236,000
Vested and Expected to vest, Number of Shares	350,000	350,000
Oustanding, Weighted Average Exercise Price	$ 16.70	$ 16.70
Granted, Weighted Average Exercise Price	0	0
Exercised, Weighted Average Exercise Price	0	0
Forfeited, Weighted Average Exercise Price	0	0
Exchanged, Weighted Average Exercise Price	0	0
Oustanding, Weighted Average Exercise Price	16.70	16.70	$ 16.70
Exercisable, Weighted Average Exercise Price	15.95	15.54
Vested and Expected to vest, Weighted Average Exercise Price	$ 16.70	$ 16.70
Oustanding at Weighted Average Remaining Life	5 years 5 months 8 days	5 years 11 months 12 days	6 years 11 months 12 days
Exercisable, Weighted Average Remaining Life	5 years 1 month 2 days	5 years 3 months 29 days
Vested and Expected to vest, Weighted Average Remaining Life	5 years 5 months 8 days	5 years 11 months 12 days
Outstanding, Aggregate Intrinsic Value	$ 3,572,000	$ 3,082,000	$ 939,000
Exercisable, Aggregate Intrinsic Value	2,935,000	2,351,000
Vested and Expected to vest, Aggregate Intrinsic Value	$ 3,572,000	$ 3,082,000

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STOCK BASED COMPENSATION PLANS (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Stock Based Compensation [Line Items]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs, Capitalized Amount	$ 66,000	$ 123,000	$ 141,000	$ 242,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total	$ 218,000		$ 218,000
Share-Based Compensation Arrangement By Share-Based Payment Award Award Vesting Period 1			2 years

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SEGMENT INFORMATION (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Segment Reporting Information [Line Items]
Revenues	$ 16,442,000	$ 17,259,000	$ 34,696,000	$ 35,979,000
Segment operating expenses	(11,967,000)	(14,269,000)	(24,758,000)	(28,007,000)
Segment income (loss) from operations	3,105,000	1,705,000	7,300,000	5,451,000
Interest expense - mortgage	(2,402,000)	(2,461,000)	(4,864,000)	(4,925,000)
Loss on disposal of assets		0	0	(30,000)
Depreciation and amortization expense	(1,370,000)	(1,285,000)	(2,638,000)	(2,521,000)
Loss from investments	(3,537,000)	(6,912,000)	(2,623,000)	(6,833,000)
Income tax benefit (expense)	825,000	2,538,000	(227,000)	1,920,000
Net income (loss)	(2,009,000)	(5,130,000)	(414,000)	(4,417,000)
Total assets	132,792,000		132,792,000		$ 135,270,000
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Revenues	0	0	0	0
Segment operating expenses	(602,000)	(585,000)	(1,330,000)	(1,394,000)
Segment income (loss) from operations	(602,000)	(585,000)	(1,330,000)	(1,394,000)
Interest expense - mortgage	0	0	0	0
Loss on disposal of assets		0		0
Depreciation and amortization expense	0	0	0	0
Loss from investments	0	0	0	0
Income tax benefit (expense)	825,000	2,538,000	(227,000)	1,920,000
Net income (loss)	223,000	1,953,000	(1,557,000)	526,000
Total assets	8,701,000		8,701,000
Hotel Operations [Member]
Segment Reporting Information [Line Items]
Revenues	12,837,000	13,713,000	27,442,000	28,851,000
Segment operating expenses	(9,611,000)	(11,969,000)	(19,867,000)	(23,162,000)
Segment income (loss) from operations	3,226,000	1,744,000	7,575,000	5,689,000
Interest expense - mortgage	(1,750,000)	(1,813,000)	(3,579,000)	(3,627,000)
Loss on disposal of assets				(30,000)
Depreciation and amortization expense	(810,000)	(759,000)	(1,523,000)	(1,521,000)
Loss from investments	0	0	0	0
Income tax benefit (expense)	0	0	0	0
Net income (loss)	666,000	(828,000)	2,473,000	511,000
Total assets	50,206,000		50,206,000
Real Estate Operations [Member]
Segment Reporting Information [Line Items]
Revenues	3,605,000	3,546,000	7,254,000	7,128,000
Segment operating expenses	(1,754,000)	(1,715,000)	(3,561,000)	(3,451,000)
Segment income (loss) from operations	1,851,000	1,831,000	3,693,000	3,677,000
Interest expense - mortgage	(652,000)	(648,000)	(1,285,000)	(1,298,000)
Loss on disposal of assets		0		0
Depreciation and amortization expense	(560,000)	(526,000)	(1,115,000)	(1,000,000)
Loss from investments	0	0	0	0
Income tax benefit (expense)	0	0	0	0
Net income (loss)	639,000	657,000	1,293,000	1,379,000
Total assets	55,856,000		55,856,000
Investment Transactions [Member]
Segment Reporting Information [Line Items]
Revenues	0	0	0	0
Segment operating expenses	0	0	0	0
Segment income (loss) from operations	0	0	0	0
Interest expense - mortgage	0	0	0	0
Loss on disposal of assets		0		0
Depreciation and amortization expense	0	0	0	0
Loss from investments	(3,537,000)	(6,912,000)	(2,623,000)	(6,833,000)
Income tax benefit (expense)	0	0	0	0
Net income (loss)	(3,537,000)	$ (6,912,000)	(2,623,000)	$ (6,833,000)
Total assets	$ 18,029,000		$ 18,029,000

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SUBSEQUENT EVENT (Details Textual)	Feb. 03, 2017
Subsequent Event [Member]
Subsequent Event [Line Items]
Management Agreement Term For Managing Hotel	10 years