0001493152-20-020380.txt : 20201103 0001493152-20-020380.hdr.sgml : 20201103 20201103144429 ACCESSION NUMBER: 0001493152-20-020380 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 78 CONFORMED PERIOD OF REPORT: 20200930 FILED AS OF DATE: 20201103 DATE AS OF CHANGE: 20201103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERGROUP CORP CENTRAL INDEX KEY: 0000069422 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 133293645 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10324 FILM NUMBER: 201283120 BUSINESS ADDRESS: STREET 1: 11620 WILSHIRE BOULEVARD STREET 2: SUITE 350 CITY: LOS ANGELES STATE: CA ZIP: 90025 BUSINESS PHONE: (310) 889-2511 MAIL ADDRESS: STREET 1: 11620 WILSHIRE BOULEVARD STREET 2: SUITE 350 CITY: LOS ANGELES STATE: CA ZIP: 90025 FORMER COMPANY: FORMER CONFORMED NAME: MUTUAL REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19860408 10-Q 1 form10-q.htm

 

 

 

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 September 30, 2020

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.)

 

12121 Wilshire Boulevard, Suite 610, Los Angeles, California 90025

(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 every Interactive Data File required to be submitted 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 such files).

[X] Yes [  ] No

 

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

 

Large accelerated filer [  ]   Accelerated filer [  ]
     
Non-accelerated filer [X]   Smaller reporting company [X]
     
    Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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

[  ] Yes [X] No

 

Securities registered pursuant to section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common stock   INTG   NASDAQ CAPITAL MARKET

 

The number of shares outstanding of registrant’s Common Stock, as of November 3, 2020 was 2,283,916.

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
  PART I – FINANCIAL INFORMATION
     
Item 1. Financial Statements.  
     
 

Condensed Consolidated Balance Sheets as of September 30, 2020 and June 30, 2020 (Unaudited)

3
 

Condensed Consolidated Statements of Operations for the Three Months ended September 30, 2020 and 2019 (Unaudited)

4

 

Condensed Consolidated Statements of Shareholders’ Deficit for the Three Months ended September 30, 2020 and 2019 (Unaudited)

5
 

Condensed Consolidated Statements of Cash Flows for the Three Months ended September 30, 2020 and 2019 (Unaudited)

6
  Notes to the Condensed Consolidated Financial Statements 7-20
     

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

20-26

     
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 27
     
Item 4. Controls and Procedures. 27
     
  PART II – OTHER INFORMATION  
     
Item 1. Legal Proceedings. 27
     
Item 1A. Risk Factors. 27
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 27
     
Item 3. Defaults Upon Senior Securities. 27
     
Item 4. Mine Safety Disclosures. 27
     
Item 5. Other Information. 27
     
Item 6. Exhibits. 28
     
Signatures 29

 

2
 

 

PART I

FINANCIAL INFORMATION

 

Item 1 - Condensed Consolidated Financial Statements

 

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

As of  September 30, 2020   June 30, 2020 
ASSETS          
Investment in Hotel, net  $38,325,000   $38,769,000 
Investment in real estate, net   46,885,000    50,338,000 
Investment in marketable securities   8,666,000    6,178,000 
Other investments, net   98,000    278,000 
Cash and cash equivalents   19,444,000    14,163,000 
Restricted cash   11,693,000    14,123,000 
Other assets, net   1,855,000    1,985,000 
Deferred tax asset   2,408,000    4,383,000 
Total assets  $129,374,000   $130,217,000 
           
LIABILITIES AND SHAREHOLDERS’ DEFICIT          
Liabilities:          
Accounts payable and other liabilities - Justice  $6,731,000   $7,414,000 
Accounts payable and other liabilities   4,550,000    4,213,000 
Due to securities broker   294,000    1,576,000 
Obligations for securities sold   307,000    294,000 
Related party and other notes payable   4,525,000    4,654,000 
Finance leases   1,015,000    1,098,000 
Other notes payable - SBA Loans   5,172,000    5,172,000 
Line of credit payable   -    2,985,000 
Mortgage notes payable - Hotel, net   111,137,000    111,446,000 
Mortgage notes payable - real estate, net   65,206,000    65,612,000 
Total liabilities   198,937,000    204,464,000 
           
Shareholders’ deficit:          
Preferred stock, $.01 par value, 100,000 shares authorized; none issued   -    - 
Common stock, $.01 par value, 4,000,000 shares authorized; 3,404,982 and 3,404,982 issued; 2,284,085 and 2,288,809 outstanding, respectively   33,000    33,000 
Additional paid-in capital   6,631,000    6,626,000 
Accumulated deficit   (38,991,000)   (43,541,000)
Treasury stock, at cost, 1,120,897 and 1,116,173 shares, respectively   (15,135,000)   (14,995,000)
Total InterGroup shareholders’ deficit   (47,462,000)   (51,877,000)
Noncontrolling interest   (22,101,000)   (22,370,000)
Total shareholders’ deficit   (69,563,000)   (74,247,000)
           
Total liabilities and shareholders’ deficit  $129,374,000   $130,217,000 

 

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

 

3
 

 

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

For the three months ended September 30,  2020   2019 
Revenues:          
Hotel  $3,425,000   $15,429,000 
Real estate   3,484,000    3,717,000 
Total revenues   6,909,000    19,146,000 
Costs and operating expenses:          
Hotel operating expenses   (5,033,000)   (11,348,000)
Real estate operating expenses   (1,888,000)   (1,950,000)
Depreciation and amortization expenses   (1,191,000)   (1,213,000)
General and administrative expenses   (1,366,000)   (760,000)
           
Total costs and operating expenses   (9,478,000)   (15,271,000)
           
(Loss) income from operations   (2,569,000)   3,875,000 
           
Other income (expense):          
Interest expense - mortgages   (2,315,000)   (2,397,000)
Gain on sale of real estate   12,043,000    - 
Net loss on marketable securities   (253,000)   (145,000)
Net gain (loss) on marketable securities - Comstock   95,000    (304,000)
Impairment loss on other investments   (62,000)   - 
Dividend and interest income   124,000    130,000 
Trading and margin interest expense   (269,000)   (293,000)
Total other income (expense), net   9,363,000    (3,009,000)
           
Income before income taxes   6,794,000    866,000 
Income tax expense   (1,975,000)   (222,000)
Net income   4,819,000    644,000 
Less: Net income attributable to the noncontrolling interest   (269,000)   (308,000)
Net income attributable to InterGroup Corporation  $4,550,000   $336,000 
           
Net income per share          
Basic  $2.11   $0.28 
Diluted  $1.84   $0.24 
           
Net income per share attributable to InterGroup Corporation          
Basic  $1.99   $0.15 
Diluted  $1.74   $0.13 
           
Weighted average number of basic common shares outstanding   2,287,555    2,309,393 
Weighted average number of diluted common shares outstanding   2,621,550    2,639,788 

 

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

 

4
 

 

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(Unaudited)

 

      Additional           InterGroup       Total 
   Common Stock   Paid-in   Accumulated   Treasury   Shareholders’   Noncontrolling   Shareholders’ 
   Shares   Amount   Capital   Deficit   Stock   Deficit   Interest   Deficit 
Balance at
July 1, 2020
   3,404,982   $33,000   $6,626,000   $(43,541,000)  $(14,995,000)  $(51,877,000)  $(22,370,000)  $(74,247,000)
                                         
Net income   -    -    -    4,550,000    -    4,550,000    269,000    4,819,000 
                                         
Stock options expense   -    -    5,000    -    -    5,000    -    5,000 
                                         
Purchase of treasury stock   -    -    -    -    (140,000)   (140,000)   -    (140,000)
Balance at
September 30, 2020
   3,404,982   $33,000   $6,631,000   $(38,991,000)  $(15,135,000)  $(47,462,000)  $(22,101,000)  $(69,563,000)

 

          Additional           InterGroup       Total 
   Common Stock   Paid-in   Accumulated   Treasury   Shareholders’   Noncontrolling   Shareholders’ 
   Shares   Amount   Capital   Deficit   Stock   Deficit   Interest   Deficit 
Balance at July 1, 2019   3,404,982   $33,000   $10,342,000   $(39,760,000)  $(14,347,000)  $(43,732,000)  $(24,697,000)  $(68,429,000)
                                         
Net income   -    -    -    336,000    -    336,000    308,000    644,000 
                                         
Stock options expense   -    -    8,000    -    -    8,000    -    8,000 
                                         
Investment in Santa Fe   -    -    (147,000)   -    -    (147,000)   74,000    (73,000)
                                         
Purchase of treasury stock   -    -    -    -    (156,000)   (156,000)   -    (156,000)
                                        
Balance at September 30, 2019   3,404,982   $33,000   $10,203,000   $(39,424,000)  $(14,503,000)  $(43,691,000)  $(24,315,000)  $(68,006,000)

 

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

 

5
 

 

THE INTERGROUP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the three months ended September 30,  2020   2019 
Cash flows from operating activities:          
Net income  $4,819,000   $644,000 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:          
Depreciation and amortization   1,146,000    1,224,000 
Gain on sale of real estate   (12,043,000)   - 
Deferred taxes   1,975,000    - 
Net unrealized (gain) loss on marketable securities   (104,000)   375,000 
Impairment loss on other investments   62,000    - 
Stock compensation expense   5,000    8,000 
Changes in operating assets and liabilities:          
Investment in marketable securities   (2,384,000)   784,000 
Other assets   130,000    (219,000)
Accounts payable and other liabilities - Justice   (683,000)   (540,000)
Accounts payable and other liabilities   337,000    929,000 
Due to securities broker   (1,282,000)   (229,000)
Obligations for securities sold   13,000    (225,000)
Net cash (used in) provided by operating activities   (8,009,000)   2,751,000 
           
Cash flows from investing activities:          
Payments for hotel investments   (105,000)   (624,000)
Payments for real estate investments   (294,000)   (267,000)
Payments for investment in Santa Fe   -    (73,000)
Proceeds from sale of real estate   15,178,000    - 
Proceeds from other investments   118,000    48,000 
Net cash provided by (used in) investing activities   14,897,000    (916,000)
           
Cash flows from financing activities:          
Net payments of mortgage and other notes payable   (3,863,000)   (1,387,000)
Issuance costs of refinancing mortgage and other notes payable   (34,000)   - 
Purchase of treasury stock   (140,000)   (156,000)
Net cash used in financing activities   (4,037,000)   (1,543,000)
           
Net increase in cash, cash equivalents and restricted cash   2,851,000    292,000 
Cash, cash equivalents and restricted cash at the beginning of the period   28,286,000    25,132,000 
Cash, cash equivalents and restricted cash at the end of the period  $31,137,000   $25,424,000 
           
Supplemental information:          
Interest paid  $2,345,000   $2,445,000 
Taxes paid  $153,000   $- 
Non-cash transaction:          
Additions to Hotel equipment through capital lease  $30,000   $- 

 

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

 

6
 

 

THE INTERGROUP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 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, 2020. The September 30, 2020 Condensed Consolidated Balance Sheet was derived from the Consolidated Balance Sheet as included in the Company’s Form 10-K for the year ended June 30, 2020.

 

The results of operations for the three months ended September 30, 2020 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2021.

 

Basic and diluted income per share is computed by dividing net income 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 September 30, 2020, the Company had the power to vote 87.4% 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 3.7% interest in the common stock in Santa Fe owned by the Company’s Chairman and CEO, John V. Winfield, pursuant to a voting trust agreement entered into on June 30, 1998. Mr. Winfield, Chairman of the Board of both Santa Fe and InterGroup, is a control person of both entities.

 

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’s primary business is conducted through its general and limited partnership interest in Justice Investors Limited Partnership; a California limited partnership (“Justice” or the “Partnership”). InterGroup also directly owns approximately 13.7% of the common stock of Portsmouth.

 

Justice, through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”) owns and operates a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage. Mezzanine is a wholly-owned subsidiary 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) through January 31, 2030.

 

Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel, along with its five-level parking garage, with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee payable to Interstate shall be one and seven-tenths percent (1.70%) of total Hotel revenue. On October 25, 2019, Interstate merged with Aimbridge Hospitality, North America’s largest independent hotel management firm. With the completion of the merger, the newly combined company will be positioned under the Aimbridge Hospitality name in the Americas.

 

7
 

 

In addition to the operations of the Hotel, the Company also generates income from the ownership, management and, when appropriate, sale of real estate. Properties include fifteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States, but are concentrated in Dallas, Texas and Southern California. The Company also has an investment in unimproved real property. As of September 30, 2020, all of the Company’s residential and commercial rental properties are managed in-house.

 

Due to Securities Broker

 

Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability.

 

Obligations for Securities Sold

 

Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the condensed consolidated statements of operations.

 

Income Tax

 

The Company consolidates Justice (“Hotel”) for financial reporting purposes and is not taxed on its non-controlling interest in the Hotel. The income tax expense during the three months ended September 30, 2020 and 2019 represent the income tax effect on the Company’s pretax income which includes its share in the net (loss) income of the Hotel.

 

Recently Issued and Adopted Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Effective July 1, 2019, we adopted ASU 2016-02 using the modified retrospective approach provided by ASU 2018-11. We elected certain practical expedients permitted under the transition guidance, including the election to carryforward historical lease classification. We also elected the short-term lease practical expedient, which allowed us to not recognize leases with a term of less than twelve months on our consolidated balance sheets. In addition, we elected the lease and non-lease components practical expedient, which allowed us to calculate the present value of the fixed payments without performing an allocation of lease and non-lease components. We did not record any operating lease right-of-use (“ROU”) assets and operating lease liabilities upon adoption of the new standard as the aggregate value of the ROU assets and operating lease liabilities are immaterial relative to our total assets and liabilities as of June 30, 2020 and 2019. The standard did not have an impact on our other finance leases, statements of operations or cash flows. See Note 4 and Note 11 for balances of finance lease ROU assets and liabilities, respectively.

 

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 timelier recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2023. The Company is currently reviewing the effect of ASU No. 2016-13.

 

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company has adopted the new standard effective July 1, 2020 and the adoption of this guidance does not have a material impact on its condensed consolidated financial statements.

 

8
 

 

NOTE 2 - LIQUIDITY

 

Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, the responses by federal, state, and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our liquidity. For the three months ended September 30, 2020, our net cash flow used in operations was $8,009,000. For the three months ended September 30, 2019, our net cash flow provided by operations was $2,751,000. We have taken several steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.

 

The Hotel had $9,562,000 and $10,666,000 of restricted cash held by its senior lender Wells Fargo Bank, N.A. (“Lender”) as of September 30, 2020 and June 30, 2020, respectively. Of the $10,666,000 restricted cash held as of June 30, 2020, $2,432,000 was for a possible future property improvement plan (“PIP”) requested by our franchisor, Hilton. On August 19, 2020, Lender released PIP deposits in the amount of $2,379,000 to the Hotel. The funds were utilized to fund operating expenses, including franchise and management fees and other expenses.

 

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of September 30, 2020, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of September 30, 2020, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has a 1.00% interest rate. All payments of principal and interests are deferred until July 2021, and the repayment obligations under both loans may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All unforgiven portion of the principal and accrued interest will be due at maturity.

 

In order to increase its liquidity position and to take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) and the entire $8,000,000 is available to be drawn down as of September 30, 2020 should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. Santa Fe included the gain in the calculation of tax provision for the three months ended September 30, 2020. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale. Santa Fe will not seek a replacement property.

 

As the sole general partner of Justice that controls approximately 93.3% of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup and/or Santa Fe to meet any capital calls and its other obligations during the next twelve months and beyond. On August 28, 2020, the Board of InterGroup and Santa Fe passed resolutions, respectively, to provide funding to Portsmouth if necessary. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain conditions in order to raise additional capital.

 

9
 

 

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance of the Hotel.

 

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel and our real estate properties. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations. After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy and low revenue per available room (“RevPAR”) were to persist. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. We believe that our cash on hand, along with other potential aforementioned sources of liquidity that management may be able to obtain, will be sufficient to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond. However, there can be no guarantee that management will be successful with its plan.

 

The following table provides a summary as of September 30, 2020, the Company’s material financial obligations which also including interest payments.

 

       9 Months   Year   Year   Year   Year     
   Total   2021   2022   2023   2024   2025   Thereafter 
Mortgage and subordinated notes payable  $177,586,000   $10,445,000   $3,100,000   $28,244,000   $108,113,000   $3,494,000   $24,190,000 
Other notes payable   10,698,000    854,000    6,220,000    750,000    567,000    567,000    1,740,000 
Interest   32,580,000    6,886,000    8,419,000    7,625,000    4,412,000    904,000    4,334,000 
Total  $220,864,000   $18,185,000   $17,739,000   $36,619,000   $113,092,000   $4,965,000   $30,264,000 

 

NOTE 3 – REVENUE

 

Our revenue from real estate is primarily rental income from residential and commercial property leases which is recorded when due from residents and is recognized monthly as earned. The following table present our Hotel revenue disaggregated by revenue streams.

 

For the three months ended September 30,  2020   2019 
Hotel revenues:          
Hotel rooms  $2,890,000   $13,314,000 
Food and beverage   37,000    1,222,000 
Garage   470,000    736,000 
Other operating departments   28,000    157,000 
Total hotel revenue  $3,425,000   $15,429,000 

 

Performance obligations

 

We identified the following performance obligations, for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services:

 

  Cancelable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs.
     
  Noncancelable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the room reservation.
     
  Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.
     
  Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above.

 

10
 

 

Hotel revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component.

 

We do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the nature of our business, our revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at our hotel are refunded to hotel guests if the guest cancels within the specified time period, before any services are rendered. Refunds related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are rendered.

 

Contract assets and liabilities

 

We do not have any material contract assets as of September 30, 2020 and June 30, 2020 other than trade and other receivables, net on our condensed consolidated balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

 

We record contract liabilities when cash payments are received or due in advance of guests staying at our hotel, which are presented within accounts payable and other liabilities on our condensed consolidated balance sheets. Contract liabilities decreased to $263,000 as of September 30, 2020, from $375,000 as of June 30, 2020. The decrease for the three months ended September 30, 2020 was primarily driven by $112,000 of revenue recognized and refunds issued to guests as a result of the COVID-19 outbreak.

 

Contract costs

 

We consider sales commissions earned to be incremental costs of obtaining a contract with our customers. As a practical expedient, we expense these costs as incurred as our contracts with customers and lease agreements do not extend beyond one year.

 

NOTE 4 – INVESTMENT IN HOTEL, NET

 

Investment in hotel consisted of the following as of:

 

       Accumulated   Net Book 
September 30, 2020  Cost   Depreciation   Value 
             
Land  $2,738,000   $-   $2,738,000 
Finance lease ROU assets   1,805,000    (368,000)   1,437,000 
Furniture and equipment   30,634,000    (27,631,000)   3,003,000 
Building and improvements   64,005,000    (32,858,000)   31,147,000 
Investment in Hotel, net  $99,182,000   $(60,857,000)  $38,325,000 

 

       Accumulated   Net Book 
June 30, 2020  Cost   Depreciation   Value 
             
Land  $2,738,000   $-   $2,738,000 
Finance lease ROU assets   1,775,000    (291,000)   1,484,000 
Furniture and equipment   30,528,000    (27,498,000)   3,030,000 
Building and improvements   64,005,000    (32,488,000)   31,517,000 
Investment in Hotel, net  $99,046,000   $(60,277,000)  $38,769,000 

 

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NOTE 5 – INVESTMENT IN REAL ESTATE, NET

 

The Company’s investment in real estate includes fifteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States, but are concentrated in Dallas, Texas and Southern California. The Company also has an investment in unimproved real property. Investment in real estate consisted of the following:

 

As of  September 30, 2020   June 30, 2020 
Land  $21,568,000   $23,565,000 
Buildings, improvements and equipment   67,198,000    69,417,000 
Accumulated depreciation   (43,349,000)   (44,112,000)
    45,417,000    48,870,000 
Land held for development   1,468,000    1,468,000 
Investment in real estate, net  $46,885,000   $50,338,000 

 

On August 28, 2020, the Company sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. We will manage our federal and state income tax liability, and anticipates the utilization of our available net operating losses and capital loss carryforwards. We received net proceeds of $12,163,000 after selling costs and repayment of the RLOC of $2,985,000 as we had drawn on our RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. We will not seek a replacement property.

 

NOTE 6 – 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 September 30, 2020 and June 30, 2020, 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    
Investment  Cost   Unrealized Gain   Unrealized Loss   Unrealized Loss   Fair Value 
As of                         
September 30, 2020                         
Corporate                         
Equities  $13,793,000   $1,116,000   $(6,243,000)  $(5,127,000)  $8,666,000 
As of                         
June 30, 2020                         
Corporate                         
Equities  $11,459,000   $902,000   $(6,183,000)  $(5,281,000)  $6,178,000 

 

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As of September 30, 2020 and June 30, 2020, approximately 9% and 11%, respectively, of the investment in marketable securities balance above is comprised of the common stock of Comstock Mining Inc (“Comstock”). As of September 30, 2020 and June 30, 2020, the Company had $5,627,000 and $5,734,000, respectively, of unrealized losses related to securities held for over one year; of which $5,333,000 and $5,427,000 are related to its investment in Comstock, respectively.

 

Net gains (losses) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of net loss on marketable securities for the three months ended September 30, 2020 and 2019, respectively:

 

For the three months ended September 30,  2020   2019 
Realized loss on marketable securities, net  $(262,000)  $(74,000)
Unrealized gain (loss) on marketable securities, net   9,000    (71,000)
Unrealized gain (loss) on marketable securities related to Comstock   95,000    (304,000)
Net loss on marketable securities  $(158,000)  $(449,000)

 

NOTE 7 – OTHER INVESTMENTS, NET

 

The Company may also invest, with the approval of the Executive Strategic Real Estate and 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 consolidated balance sheet as part of other investments, net of other than temporary impairment losses.

 

Other investments, net consist of the following:

 

Type  September 30, 2020   June 30, 2020 
Private equity hedge fund, at cost  $95,000   $157,000 
Other preferred stock, at cost   3,000    121,000 
   $98,000   $278,000 

 

NOTE 8 - 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).

 

13
 

 

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

 

As of  September 30, 2020   June 30, 2020 
Assets:  Total - Level 1   Total - Level 1 
Investment in marketable securities:          
REITs and real estate companies  $4,353,000   $2,365,000 
Energy   999,000    767,000 
Basic material   987,000    1,209,000 
Financial services   624,000    282,000 
Consumer cyclical   592,000    295,000 
Technology   451,000    121,000 
Industrials   390,000    484,000 
Communication services   180,000    157,000 
Healthcare   90,000    43,000 
Corporate bonds   -    417,000 
Other   -    38,000 
   $8,666,000   $6,178,000 

 

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. 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 three months ended 
Assets  Level 3   September 30, 2020   September 30, 2020 
             
Other non-marketable investments  $98,000   $98,000   $(62,000)

 

           Net loss for the three months ended 
Assets  Level 3   June 30, 2020   September 30, 2019 
                
Other non-marketable investments  $278,000   $278,000   $- 

 

For the three months ended September 30, 2020 and 2019, we received distribution from other non-marketable investments of $118,000 and $48,000, respectively.

 

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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NOTE 9 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows.

 

As of  September 30, 2020   June 30, 2020 
         
Cash and cash equivalents  $19,444,000   $14,163,000 
Restricted cash   11,693,000    14,123,000 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows  $31,137,000   $28,286,000 

 

Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves for the Hotel and real estate properties. As of June 30, 2020, restricted cash also includes key money received from Interstate that is restricted for capital improvements for the Hotel. As of September 30, 2020, the key money is included in the balance of cash and cash equivalents in the condensed consolidated balance sheet as the Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021.

 

NOTE 10 – 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, 2020 for more detailed information on the Company’s stock-based compensation plans.

 

During the three months ended September 30, 2020 and 2019, the Company recorded stock option compensation cost of $5,000 and $8,000, respectively, related to stock options that were previously issued.

 

As of September 30, 2020, there was a total of $13,000 of unamortized compensation related to stock options which is expected to be recognized over the weighted-average period of 1.42 years.

 

In December 2018, the Company’s President and Chief Executive Officer, John V. Winfield exercised 26,805 vested Incentive Stock Options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.

 

On February 25, 2020, shareholders of the Company voted in favor of amendments to the Company’s 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”) which would amend Section 1.3 of the 2010 Incentive Plan to extend the term from ten (10) years to sixteen (16) years, and Section 6.4 of the 2010 Incentive Plan to change “tenth (10th) anniversary date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to 20 years (expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The purpose of the amendment to the term is to extend its existence as our only equity incentive plan. The purpose of amendment of the allowable term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s contributions to and leadership of our Company. Upon approval of these amendments by the shareholders, our Board of Directors extended the term of Mr. Winfield’s options as described in this paragraph. As a result of extending Mr. Winfield’s options, the Company recorded stock option compensation cost of $116,000 in March 2020.

 

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.

 

15
 

 

The following table summarizes the stock options activity from July 1, 2019 through September 30, 2020:

 

       Number of   Weighted Average   Weighted Average  Aggregate 
       Shares   Exercise Price   Remaining Life  Intrinsic Value 
                    
Oustanding at   July 1, 2019    341,195   $16.95   3.07 years  $4,680,000 
Granted        -    -         
Exercised        -    -         
Forfeited        -    -         
Exchanged        -    -         
Outstanding at   June 30, 2020    341,195   $16.95   3.83 years  $3,271,000 
Exercisable at   June 30, 2020    323,195   $16.38   3.67 years  $3,271,000 
Vested and Expected to vest at   June 30, 2020    341,195   $16.95   3.83 years  $3,271,000 
                        
Oustanding at   July 1, 2020    341,195   $16.95   3.83 years  $3,271,000 
Granted        -    -         
Exercised        -    -         
Forfeited        -    -         
Exchanged        -    -         
Outstanding at   September 30, 2020    341,195   $16.95   3.58 years  $4,448,000 
Exercisable at   September 30, 2020    333,995   $16.73   3.51 years  $4,428,000 
Vested and Expected to vest at   September 30, 2020    341,195   $16.95   3.58 years  $4,448,000 

 

NOTE 11 – 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 months ended September 30, 2020 and 2019. Operating income (loss) from hotel operations consists of the operation of the hotel and the garage. Operating income from real estate operations consists of the operation of rental properties. Operating loss from investment transactions consists of net investment gains (losses), 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) benefit for the entire Company.

 

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As of and for the three months  Hotel   Real Estate   Investment         
ended September 30, 2020  Operations   Operations   Transactions   Corporate   Total 
Revenues  $3,425,000   $3,484,000   $-   $-   $6,909,000 
Segment operating expenses   (5,033,000)   (1,887,000)   -    (1,366,000)   (8,286,000)
Segment income (loss)   (1,608,000)   1,597,000    -    (1,366,000)   (1,377,000)
Interest expense - mortgage and related party   (1,700,000)   (615,000)   -    -    (2,315,000)
Depreciation and amortization expense   (579,000)   (612,000)   -    -    (1,191,000)
Gain from sale of real estate   -    12,043,000    -    -    12,043,000 
Loss from investments   -    -    (365,000)   -    (365,000)
Income tax expense   -    -    -    (1,975,000)   (1,975,000)
Net income (loss)  $(3,887,000)  $12,413,000   $(365,000)  $(3,341,000)  $4,820,000 
Total assets  $50,854,000   $46,885,000   $8,764,000   $22,871,000   $129,374,000 

 

For the three months  Hotel   Real Estate   Investment         
ended September 30, 2019  Operations   Operations   Transactions   Corporate   Total 
Revenues  $15,429,000   $3,717,000   $-   $-   $19,146,000 
Segment operating expenses   (11,348,000)   (1,950,000)   -    (760,000)   (14,058,000)
Segment income (loss)   4,081,000    1,767,000    -    (760,000)   5,088,000 
Interest expense - mortgage and related party   (1,792,000)   (605,000)   -    -    (2,397,000)
Depreciation and amortization expense   (593,000)   (620,000)   -    -    (1,213,000)
Loss from investments   -    -    (612,000)   -    (612,000)
Income tax expense   -    -    -    (222,000)   (222,000)
Net income (loss)  $1,696,000   $542,000   $(612,000)  $(982,000)  $644,000 

 

NOTE 12 – RELATED PARTY AND OTHER FINANCING TRANSACTIONS

 

The following summarizes the balances of related party and other notes payable as of September 30, 2020 and June 30, 2020, respectively.

 

As of  September 30, 2020   June 30, 2020 
Note payable - Hilton   2,929,000    3,008,000 
Note payable - Interstate   1,583,000    1,646,000 
SBA Loans   5,172,000    5,172,000 
Total related party and other notes payable  $9,684,000   $9,826,000 

 

Note payable to Hilton (Franchisor) is a self-exhausting, interest free development incentive note which is reduced by approximately $316,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton.

 

On February 1, 2017, Justice entered into an HMA with Interstate to manage the Hotel with an effective takeover date of February 3, 2017. The term of the 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 aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second anniversary of the takeover date. As of September 30, 2020, balance of the key money is $809,000 and is included in cash and cash equivalents in the condensed consolidated balance sheet as the Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021. As of June 30, 2020, balance of the key money plus accrued interest is $1,009,000 and is included in restricted cash in the condensed consolidated balance sheet. Unamortized portion of the key money is included in the related party notes payable in the condensed consolidated balance sheets.

 

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On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of September 30, 2020, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of September 30, 2020, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has a 1.00% interest rate. All payments of principal and interests are deferred until July 2021, and the repayment obligations under both loans may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All unforgiven portion of the principal and accrued interest will be due at maturity.

 

As of September 30, 2020, the Company had finance lease obligations outstanding of $1,015,000. These finance leases expire in various years through 2023 at rates ranging from 4.62% to 6.25% per annum. Minimum future lease payments for assets under finance leases as of September 30, 2020 are as follows:

 

For the year ending June 30,     
2021   $389,000 
2022    508,000 
2023    188,000 
Total minimum lease payments    1,085,000 
Less interest on finance lease    (70,000)
Present value of future minimum lease payments   $1,015,000 

 

Future minimum principal payments for all related party and other financing transactions are as follows:

 

For the year ending June 30,     
2021   $854,000 
2022    6,220,000 
2023    750,000 
2024    567,000 
2025    567,000 
There after    1,740,000 
    $10,698,000 

 

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 in December 2013. 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 through January 2017. Beginning in February 2017, the loan began to amortize over a thirty-year period through its maturity date of January 2024. Outstanding principal balance on the loan was $91,923,000 and $92,292,000 as of September 30, 2020 and June 30, 2020, respectively. As additional security for the mortgage loan, there is a limited guaranty executed by Portsmouth in favor of the mortgage lender. The mezzanine loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine interest only loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. As additional security for the mezzanine loan, there is a limited guaranty executed by Portsmouth in favor of the mezzanine lender. On July 31, 2019, Mezzanine refinanced the mezzanine loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan which had a 9.75% per annum interest rate was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly.

 

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Effective May 11, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain certain net worth and liquidity. As of September 30, 2020, InterGroup is in compliance with both requirements. However, due to the Hotel’s current low occupancy and its negative impact on the Hotel’s cash flow, Justice Operating Company, LLC may not meet certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lock-box by the Lender for all cash collected by the Hotel. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR.

 

On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 1, 2021. The balance of this loan was $3,000,000 as of September 30, 2020 and June 30, 2020, and is eliminated in the condensed consolidated balance sheets.

 

In July 2018, InterGroup obtained a revolving $5,000,000 line of credit (“RLOC”) from CIBC Bank USA (“CIBC”). On July 31, 2018, $2,969,000 was drawn from the RLOC to pay off the mortgage note payable at Intergroup Woodland Village, Inc. (“Woodland Village”) and a new mortgage note payable was established at Woodland Village due to InterGroup for the amount drawn. Woodland Village holds a three-story apartment complex in Santa Monica, California and is a subsidiary of Santa Fe and the Company. The RLOC carries a variable interest rate of 30-day LIBOR plus 3%. Interest is paid on a monthly basis. The RLOC and all accrued and unpaid interest were due in July 2019. In July 2019, the Company obtained a modification from CIBC which increased the RLOC by $3,000,000 and extended the maturity date from July 24, 2019 to July 23, 2020. The $2,969,000 mortgage due to InterGroup carries same terms as InterGroup’s RLOC. In July 2020, InterGroup entered into a second modification agreement with CIBC which extended the maturity date of its RLOC to July 21, 2021. The $2,969,000 mortgage due to InterGroup was also extended to July 21, 2021. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale.

 

Four of the Portsmouth directors serve as directors of InterGroup. Two of those directors also serve as directors of Santa Fe. The two Santa Fe directors also serve as directors of InterGroup.

 

As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Portsmouth and Santa Fe and oversees the investment activity of those companies. Effective June 2016, Mr. Winfield became the Managing Director of Justice. 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. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of the Portsmouth and Santa Fe, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

 

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NOTE 13 – ACCOUNTS PAYABLE AND OTHER LIABILITIES - JUSTICE

 

The following summarizes the balances of accounts payable and other liabilities – Justice as of September 30, 2020 and June 30, 2020.

 

As of  September 30, 2020   June 30, 2020 
         
Trade payable  $1,004,000   $3,000,000 
Advance deposits   263,000    375,000 
Property tax payable   1,048,000    523,000 
Payroll and related accruals   2,211,000    1,969,000 
Mortgage interest payable   525,000    527,000 
Withholding and other taxes payable   506,000    370,000 
Security deposit   52,000    52,000 
Other payables   1,122,000    598,000 
Total accounts payable and other liabilities - Justice  $6,731,000   $7,414,000 

 

NOTE 14 – ACCOUNTS PAYABLE AND OTHER LIABILITIES

 

The following summarizes the balances of accounts payable and other liabilities as of September 30, 2020 and June 30, 2020.

 

As of  September 30, 2020   June 30, 2020 
         
Trade payable  $419,000   $709,000 
Advance deposits   296,000    422,000 
Property tax payable   958,000    554,000 
Payroll and related accruals   694,000    42,000 
Interest payable   216,000    218,000 
Withholding and other taxes payable   1,051,000    1,189,000 
Security deposit   733,000    745,000 
Other payables   183,000    334,000 
Total accounts payable and other liabilities  $4,550,000   $4,213,000 

 

NOTE 15 – SUBSEQUENT EVENTS

 

On October 30, 2020, the Company refinanced its Ocean Avenue Santa Monica property’s $4.8 million Fannie Mae mortgage with a new Fannie Mae mortgage in the amount of $8.4 million at a fixed rate of 2.52% for 10-years with interest only payments for two years. The Company received net proceeds of approximately $3.5 million and no prepayment penalty was due.

 

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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.

 

Such statements are subject to certain risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: 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, 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 or the outbreak of COVID-19 or similar outbreaks; 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, 2020. These risks and uncertainties 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.

 

NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS

 

On February 25, 2020, the City of San Francisco issued the proclamation by the Mayor declaring the existence of a local emergency. The negative effects of the civil authority actions related to the novel strain of coronavirus (“COVID-19”) on our business have been significant. In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies and financial markets globally. It has also disrupted the normal operations of many businesses, including ours. To mitigate the harm from the pandemic, on March 16, 2020, the City and County of San Francisco, along with a group of five other Bay Area counties and the City of Berkeley, issued parallel health officer orders imposing shelter in place limitations across the Bay Area, requiring everyone to stay safe at home except for certain essential needs. Since February 2020, several unfavorable events and civil authority actions have unfolded causing demand for our hotel rooms to suffer including cancellations of all citywide conventions, reduction of flights in and out of the Bay Area and decline in both leisure and business travel.

 

In response to the decrease in demand, we have since furloughed all managers at the Hotel except for members of the executive team and continue to limit hourly staff to a minimum. By the end of March 2020, we had temporarily closed all of our food and beverage outlets, valet parking, concierge and bell services, fitness center, as well as the executive lounge facility. We continue to implement social distancing standards and cleaning processes designed by Interstate and Hilton to keep employees and guests safe. The full impact and duration of the COVID-19 outbreak continues to evolve as of the date of this report. The pandemic effectively eliminated our ability to generate any profits, due to the drastic decline in both leisure and business travel. As a result, management believes the ongoing length and severity of the economic downturn caused by the pandemic will have a material adverse impact on our future business, financial condition, liquidity and financial results. We are also assessing the potential impact on the impairment analysis of our long-lived assets and the realization of our deferred tax assets. As of the date of this report, the effects of the pandemic continue to affect our economy, business and leisure travel, and our needs to continue to curtail certain revenue generating activities at the Hotel, and until there are vaccines or other methodologies to effectively combat this pandemic, we expect that the effects will have a material adverse effect on our business. As a result of the CARES Act signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration (“SBA”). The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the CARES Act. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of September 30, 2020, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of September 30, 2020, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has a 1.00% interest rate. All payments of principal and interests are deferred until July 2021, and the repayment obligations under both loans may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All unforgiven portion of the principal and accrued interest will be due at maturity.

 

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RESULTS OF OPERATIONS

 

As of September 30, 2020, the Company has the power to vote for approximately 87.4% 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 13.7% of the common shares of Portsmouth. Historically, the Company’s principal source of revenue is derived from the investment of its subsidiary, Portsmouth, in the Justice Investors Limited Partnership (“Justice” or the “Partnership”) inclusive of hotel room revenue, food and beverage revenue, garage revenue, and revenue from other operating departments. Justice owns the Hotel and related facilities, including a five-level underground parking garage. The financial statements of Justice have been consolidated with those of the Company. However, the impact of the COVID-19 pandemic is highly uncertain and management expects that the ongoing length and severity of the economic downturn will have a material adverse impact on our business, financial condition, liquidity and financial results.

 

The Hotel is operated by the Partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement (the “License Agreement”) with 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.

 

On February 1, 2017, Justice entered into an HMA with Interstate to manage the Hotel and related facilities with an effective takeover date of February 3, 2017. The term of HMA is for an initial period of ten years commencing on the takeover date and automatically renews for an additional year not to exceed five years in aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement.

 

In addition to the operations of the Hotel, the Company also generates income from the ownership, management and, when appropriate, sale 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 residential and commercial rental operating 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 September 30, 2020 Compared to Three Months Ended September 30, 2019

 

The Company had net income of $4,820,000 for the three months ended September 30, 2020 compared to net income of $644,000 for the three months ended September 30, 2019. The increase in net income is primarily attributable to the gain from sale of real estate.

 

Hotel Operations

 

The Company had net loss from Hotel operations of $3,887,000 for the three months ended September 30, 2020 compared to net income of $1,696,000 for the three months ended September 30, 2019. The change is primarily attributable to the decrease in Hotel revenue.

 

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The following table sets forth a more detailed presentation of Hotel operations for the three months ended September 30, 2020 and 2019.

 

For the three months ended September 30,  2020   2019 
Hotel revenues:          
Hotel rooms  $2,890,000   $13,314,000 
Food and beverage   37,000    1,222,000 
Garage   470,000    736,000 
Other operating departments   28,000    157,000 
Total hotel revenues   3,425,000    15,429,000 
Operating expenses excluding depreciation and amortization   (5,033,000)   (11,348,000)
Operating (loss) income before interest, depreciation and amortization   (1,608,000)   4,081,000 
Interest expense - mortgage   (1,700,000)   (1,792,000)
Depreciation and amortization expense   (579,000)   (593,000)
Net (loss) income from Hotel operations  $(3,887,000)  $1,696,000 

 

For the three months ended September 30, 2020, the Hotel had operating loss of $1,608,000 before interest expense, depreciation and amortization on total operating revenues of $3,425,000 compared to operating income of $4,081,000 before interest expense, depreciation and amortization on total operating revenues of $15,429,000 for the three months ended September 30, 2019. For the three months ended September 30, 2020, room revenues decreased by $10,424,000, food and beverage revenue decreased by $1,185,000, and garage revenue decreased by $266,000, compared to the three months ended September 30, 2019. The year over year decline in all areas are result of the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak since March 2020. Total operating expenses decreased by $6,315,000 due to decrease in salaries and wages, rooms commission, credit card fees, management fees, and franchise fees.

 

The following table sets forth the average daily room rate, average occupancy percentage and RevPAR of the Hotel for the three months ended September 30, 2020 and 2019.

 

Three Months

Ended September 30,

 

Average

Daily Rate

   

Average

Occupancy %

   

 

RevPAR

 
                   
2020   $ 108       54 %   $ 58  
2019   $ 271       98 %   $ 266  

 

The Hotel’s revenues decreased by 78% this quarter as compared to the previous comparable quarter. Average daily rate decreased by $163, average occupancy dropped 44%, and RevPAR decreased by $208 for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

 

Real Estate Operations

 

Net income from real estate operations for the three months ended September 30, 2020 increased by $11,870,000 compared to the three months ended September 30, 2019 due to the sale of the Company’s 27-unit apartment complex located in Santa Monica, California for $15,650,000. 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 $158,000 for the three months ended September 30, 2020 compared to a net loss on marketable securities of $449,000 for the three months ended September 30, 2019. For the three months ended September 30, 2020, the Company had a net realized loss of $262,000 and a net unrealized gain of $104,000. For the three months ended September 30, 2019, the Company had a net realized loss of $74,000 and a net unrealized loss of $375,000. 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.

 

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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 during the three months ended September 30, 2020 and 2019 represent primarily the income tax effect of the pretax income (loss) at InterGroup, Santa Fe, and Portsmouth, which includes its share in net income (loss) of the Hotel.

 

MARKETABLE SECURITIES

 

The following table shows the composition of the Company’s marketable securities portfolio as of September 30, 2020 and June 30, 2020 by selected industry groups.

 

As of      % of Total 
September 30, 2020      Investment 
Industry Group  Fair Value   Securities 
         
REITs and real estate companies  $4,353,000    50.3%
Energy   999,000    11.5%
Basic material   987,000    11.4%
Financial services   624,000    7.2%
Consumer cyclical   592,000    6.8%
Technology   451,000    5.2%
Industrials   390,000    4.5%
Communication services   180,000    2.1%
Healthcare   90,000    1.0%
   $8,666,000    100.0%

 

As of      % of Total 
June 30, 2020      Investment 
Industry Group  Fair Value   Securities 
         
REITs and real estate companies  $2,365,000    38.3%
Basic material   1,209,000    19.6%
Energy   767,000    12.4%
Industrials   484,000    7.8%
Corporate bonds   417,000    6.7%
Consumer cyclical   295,000    4.8%
Financial services   282,000    4.6%
Communication services   157,000    2.5%
Technology   121,000    2.0%
Other   81,000    1.3%
   $6,178,000    100.0%

 

As of September 30, 2020, the Company’s investment portfolio is diversified with 82 different equity positions. The Company holds one equity security that comprised more than 10% of the equity value of the portfolio. The largest security position represents 15% of the portfolio and consists of the common stock of American Realty Investors, Inc. (NYSE: ARL) which is included in the REITs and real estate companies’ industry group.

 

As of June 30, 2020, the Company’s investment portfolio is diversified with 59 different equity positions. The Company holds two equity securities that comprised more than 10% of the equity value of the portfolio. The largest security position represents 19% of the portfolio and consists of the common stock of American Realty Investors, Inc. which is included in the REITs and real estate companies’ industry group.

 

The following table shows the net loss on the Company’s marketable securities and the associated margin interest and trading expenses for the respective periods:

 

For the three months ended September 30,  2020   2019 
         
Net loss on marketable securities  $(158,000)  $(449,000)
Impairment loss on other investments   (62,000)   - 
Dividend and interest income   124,000    130,000 
Margin interest expense   (120,000)   (136,000)
Trading and management expenses   (149,000)   (157,000)
Net loss from investment transactions  $(365,000)  $(612,000)

 

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FINANCIAL CONDITION AND LIQUIDITY

 

Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, the responses by federal, state, and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our liquidity. For the three months ended September 30, 2020, our net cash flow used in operations was $8,009,000. For the three months ended September 30, 2019, our net cash flow provided by operations was $2,751,000. We have taken several steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.

 

The Hotel had $9,562,000 and $10,666,000 of restricted cash held by its senior lender Wells Fargo Bank, N.A. (“Lender”) as of September 30, 2020 and June 30, 2020, respectively. Of the $10,666,000 restricted cash held as of June 30, 2020, $2,432,000 was for a possible future property improvement plan (“PIP”) requested by our franchisor, Hilton. On August 19, 2020, Lender released PIP deposits in the amount of $2,379,000 to the Hotel. The funds were utilized to fund operating expenses, including franchise and management fees and other expenses.

 

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of September 30, 2020, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of September 30, 2020, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has a 1.00% interest rate. All payments of principal and interests are deferred until July 2021, and the repayment obligations under both loans may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All unforgiven portion of the principal and accrued interest will be due at maturity.

 

In order to increase its liquidity position and to take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) and the entire $8,000,000 is available to be drawn down as of September 30, 2020 should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. Santa Fe included the gain in the calculation of tax provision for the three months ended September 30, 2020. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale. Santa Fe will not seek a replacement property.

 

As the sole general partner of Justice that controls approximately 93.3% of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup and/or Santa Fe to meet any capital calls and its other obligations during the next twelve months and beyond. On August 28, 2020, the Board of InterGroup and Santa Fe passed resolutions, respectively, to provide funding to Portsmouth if necessary. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain conditions in order to raise additional capital.

 

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance of the Hotel.

 

25
 

 

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel and our real estate properties. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations. After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy and low revenue per available room (“RevPAR”) were to persist. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. We believe that our cash on hand, along with other potential aforementioned sources of liquidity that management may be able to obtain, will be sufficient to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond. However, there can be no guarantee that management will be successful with its plan.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

The Company has no off balance sheet arrangements.

 

MATERIAL CONTRACTUAL OBLIGATIONS

 

The following table provides a summary as of September 30, 2020, the Company’s material financial obligations which also includes interest payments.

 

       9 Months   Year   Year   Year   Year     
   Total   2021   2022   2023   2024   2025   Thereafter 
Mortgage and subordinated notes payable  $177,586,000   $10,445,000   $3,100,000   $28,244,000   $108,113,000   $3,494,000   $24,190,000 
Other notes payable   10,698,000    854,000    6,220,000    750,000    567,000    567,000    1,740,000 
Interest   32,580,000    6,886,000    8,419,000    7,625,000    4,412,000    904,000    4,334,000 
Total  $220,864,000   $18,185,000   $17,739,000   $36,619,000   $113,092,000   $4,965,000   $30,264,000 

 

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 Interstate 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 three months ended September 30, 2020. Please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 for a summary of the critical accounting policies.

 

26
 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

 

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 1. LEGAL PROCEEDINGS

 

During the period ending September 30, 2020, there were no pending or threatened legal actions.

 

Item 1A. RISK FACTORS

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

There have been no events that are required to be reported under this Item.

 

Item 3. DEFAULTS UPON SENIOR SECURITIES

 

There have been no events that are required to be reported under this Item.

 

Item 4. MINE SAFETY DISCLOSURES

 

There have been no events that are required to be reported under this Item.

 

Item 5. OTHER INFORMATION

 

There have been no events that are required to be reported under this Item.

 

27
 

 

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

 

28
 

 

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: November 3, 2020 by /s/ John V. Winfield
    John V. Winfield
    President, Chairman of the Board and
    Chief Executive Officer
    (Principal Executive Officer)
     
     
Date: November 3, 2020 by /s/ Danfeng Xu
    Danfeng Xu
    Treasurer and Controller
    (Principal Financial Officer)

 

29

 

EX-31.1 2 ex31-1.htm

 

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: November 3, 2020

 

/s/ John V. Winfield  
John V. Winfield  
President and Chief Executive Officer  
(Principal Executive Officer)  

 

 

 

 

EX-31 3 ex31-2.htm

 

EXHIBIT 31.2

CERTIFICATION

 

I, Danfeng Xu, 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: November 3, 2020

 

/s/ Danfeng Xu  
Danfeng Xu  
Treasurer and Controller  
(Principal Financial Officer)  

 

 

 

EX-32.1 4 ex32-1.htm

 

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 quarter ended September 30, 2020, 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: November 3, 2020

 

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 5 ex32-2.htm

 

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 quarter ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Danfeng Xu, 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/ Danfeng Xu  
Danfeng Xu  
Treasurer and Controller  
(Principal Financial Officer)  

 

Date: November 3, 2020

 

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.

 

 

 

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Winfield [Member] Derivative Instrument [Axis] Vested Incentive Stock Options [Member] Legal Entity [Axis] Justice [Member] Related Party [Axis] Note payable - Hilton [Member] Note payable - Interstate [Member] Other Notes Payable [Member] Santa Fe [Member] Chairman and CEO [Member] Ownership [Axis] Portsmouth [Member] Consolidated Entities [Axis] InterGroup [Member] Comstock [Member] Fair Value Hierarchy and NAV [Axis] Level 1 [Member] Financial Instrument [Axis] REITs and Real Estate Companies [Member] Energy [Member] Consumer Cyclical [Member] Corporate Bonds [Member] Financial Services [Member] Basic Material [Member] Technology [Member] Healthcare [Member] Industrials [Member] Level 3 [Member] Finance Lease ROU Assets [Member] Furniture and Equipment [Member] Building and Improvements [Member] InterGroup Shareholder' Deficit [Member] Plan Name [Axis] 2010 Incentive Plan [Member] Range [Axis] Minimum [Member] Maximum [Member] Hotel Senior Lender [Member] Property Improvement Plan [Member] Credit Facility [Axis] Cibc Bank Usa [Member] Santa Fe [Member] Collaborative Arrangement and Arrangement Other than Collaborative [Axis] Contribution Agreement [Member] CARES Act [Member] CIBC Bank [Member] Debt Instrument [Axis] Mortgage Note Payable [Member] Other [Member] SBALoans [Member] InterGroup [Member] Sole General Partner [Member] Real Estate [Member] Hotel [Member] Long-term Debt, Type [Axis] Mortgage and Subordinated Notes Payable [Member] Interest [Member] Other Preferred Stock, at Cost [Member] Communication Services [Member] SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Loan Type [Axis] Hotel Operations [Member] Real Estate Operations [Member] Investment Transactions [Member] Corporate [Member] Hilton [Member] Hotel Management Agreement [Member] Partnership [Member] Mortgage Loan [Member] Cred Reit Holdco LLC [Member] Related Party Debt and Other Notes Payable [Member] Legal Entity [Axis] Subsequent Event [Member] New Fannie Mortgage Note Payable [Member] Real Estate Property Ownership [Axis] 633 Ocean Avenue Santa Monica Property [Member] Cover [Abstract] Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Current Reporting Status Entity Interactive Data Current Entity Filer Category Entity Small Business Flag Entity Emerging Growth Company Entity Shell Company Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Investment in Hotel, net Investment in real estate, net Investment in marketable securities Other investments, net Cash and cash equivalents Restricted cash Other assets, net Deferred tax asset Total assets LIABILITIES AND SHAREHOLDERS' DEFICIT Liabilities: Accounts payable and other liabilities - Justice Accounts payable and other liabilities Due to securities broker Obligations for securities sold Related party and other notes payable Finance leases Other notes payable - SBA Loans Line of credit payable Mortgage notes payable - Hotel, net Mortgage notes payable - real estate, net Total liabilities Shareholders' deficit: Preferred stock, $.01 par value, 100,000 shares authorized; none issued Common stock, $.01 par value, 4,000,000 shares authorized; 3,404,982 and 3,404,982 issued; 2,284,085 and 2,288,809 outstanding, respectively Additional paid-in capital Accumulated deficit Treasury stock, at cost, 1,120,897 and 1,116,173 shares, respectively Total Intergroup shareholders' deficit Noncontrolling interest Total shareholders' deficit Total liabilities and shareholders' deficit Preferred stock, par value Preferred stock, shares authorized Preferred stock , shares issued Common stock, par value Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Treasury stock, shares Statement [Table] Statement [Line Items] Revenues: Total revenues Costs and operating expenses: Depreciation and amortization expenses General and administrative expenses Total costs and operating expenses (Loss) income from operations Other income (expense): Interest expense - mortgages Gain on sale of real estate Net loss on marketable securities Net gain (loss) on marketable securities - Comstock Impairment loss on other investments Dividend and interest income Trading and margin interest expense Total other income (expense), net Income before income taxes Income tax expense Net income Less: Net income attributable to the noncontrolling interest Net income attributable to InterGroup Corporation Net income per share Basic Diluted Net income per share attributable to InterGroup Corporation Basic Diluted Weighted average number of basic common shares outstanding Weighted average number of diluted common shares outstanding Beginning balance Beginning balance, shares Net income Stock options expense Investment in Santa Fe Purchase of treasury stock Ending balance Ending balance, shares Statement of Cash Flows [Abstract] Cash flows from operating activities: Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization Gain on sale of real estate Deferred taxes Net unrealized (gain) loss on marketable securities Impairment loss on other investments Stock compensation expense Changes in operating assets and liabilities: Investment in marketable securities Other assets Accounts payable and other liabilities - Justice Accounts payable and other liabilities Due to securities broker Obligations for securities sold Net cash (used in) provided by operating activities Cash flows from investing activities: Payments for hotel investments Payments for real estate investments Payments for investment in Santa Fe Proceeds from sale of real estate Proceeds from other investments Net cash provided by (used in) investing activities Cash flows from financing activities: Net payments of mortgage and other notes payable Issuance costs of refinancing mortgage and other notes payable Purchase of treasury stock Net cash used in financing activities Net increase in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at the beginning of the period Cash, cash equivalents and restricted cash at the end of the period Supplemental information: Interest paid Taxes paid Non-cash transaction: Additions to Hotel equipment through capital lease Accounting Policies [Abstract] Basis of Presentation and Significant Accounting Policies Liquidity Revenue from Contract with Customer [Abstract] Revenue Investments, All Other Investments [Abstract] Investment in Hotel, Net Real Estate [Abstract] Investment in Real Estate, Net Investment In Marketable Securities Investment in Marketable Securities Other Investments [Abstract] Other Investments, Net Fair Value Disclosures [Abstract] Fair Value Measurements Cash and Cash Equivalents [Abstract] Cash, Cash Equivalents and Restricted Cash Share-based Payment Arrangement [Abstract] Stock Based Compensation Plans Segment Reporting [Abstract] Segment Information Related Party Transactions [Abstract] Related Party and Other Financing Transactions Payables and Accruals [Abstract] Accounts Payable and Other Liabilities - Justice Accounts Payable and Other Liabilities Subsequent Events [Abstract] Subsequent Events Due to Securities Broker Obligations for Securities Sold Income Tax Recently Issued and Adopted Accounting Pronouncements Schedule of Material Financial Obligations Schedule of Disaggregation of Revenue Schedule of Investment in Hotel Schedule of Investment in Real Estate Schedule of Trading Securities Schedule of Net Loss on Marketable Securities Comprising of Realized and Unrealized Gains (Losses) Schedule of Other Investments, Net Schedule of Fair Value Measurement on Recurring Basis Schedule of Fair Value Measurements on Non-recurring Basis Schedule of Cash, Cash Equivalents and Restricted Cash Schedule of Stock Option Activity Schedule of Segment Reporting Information Summary of Related Party and Other Notes Payable Schedule of Minimum Future Lease Payments Schedule of Future Minimum Principal Payments Schedule of Accounts Payable and Other Liabilities - Justice Schedule of Accounts Payable and Other Liabilities Long-Lived Tangible Asset [Axis] Statistical Measurement [Axis] Power to vote percentage interest Ownership interest percentage Agreement description Bears interest percentage Subsequent Event Type [Axis] Net cash (used in) provided by operating activities Cash, cash equivalents, and restricted cash Deposits Proceeds from loan Qualified expenses Future qualified expenses Debt maturity date Debt interest rate Revolving line of credit amount Line of credit, available to be drawn Sale of properties Gain on sale of property Proceeds from sale of property Repayment of InterGroup's RLOC Payment from the sale Voting interest 2021 (9 Months) 2022 2023 2024 2025 Thereafter Total Contract with customer, liability Contract with customer liability, revenue recognized Total Hotel revenue Cost Accumulated Depreciation Net Book Value Proceeds from sale of property Gain on sale of property Proceeds from sale of property, net Repayment of line of credit Real estate investment, Gross Real estate investment, Accumulated depreciation Real estate investment, Land held for development Real estate investment, Net Investment marketable securities percentage Unrealized losses related to securities Unrealized losses related to investment Collateral Held [Axis] Cost Gross unrealized gain Gross unrealized loss Net unrealized loss Fair value Investments, Debt and Equity Securities [Abstract] Realized loss on marketable securities, net Unrealized gain (loss) on marketable securities, net Unrealized gain (loss) on marketable securities related to Comstock Net loss on marketable securities Other investments Other non-marketable investments Net loss Restricted Cash and Cash Equivalents [Abstract] Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows Schedule Of Stock Based Compensation [Table] Stock Based Compensation [Line Items] Stock based compensation Unamortized compensation related to stock option Recognized weighted average period Share based compensation arrangement by share based payment awards exercised Share based compensation arrangement by share based payment options surrendered Share based compensation arrangement by share based payment option shares issued Plan term Option term description Number of Shares, Outstanding, Beginning Balance Number of Shares, Granted Number of Shares, Exercised Number of Shares, Forfeited Number of Shares, Exchanged Number of Shares, Outstanding, Ending Balance Number of Shares, Exercisable, Ending Balance Number of Shares, Vested and expected to vest, Ending Balance Weighted Average Exercise Price, Outstanding, Beginning Balance Weighted Average Exercise Price, Granted Weighted Average Exercise Price, Exercised Weighted Average Exercise Price, Forfeited Weighted Average Exercise Price, Exchanged Weighted Average Exercise Price, Outstanding, Ending Balance Weighted Average Exercise Price, Exercisable, Ending Balance Weighted Average Exercise Price, Vested and expected to vest, Ending Balance Weighted Average Remaining Life, Outstanding, Beginning Balance Weighted Average Remaining Life, Outstanding, Ending Balance Weighted Average Remaining Life, Exercisable, Ending Balance Weighted Average Remaining Life, Vested and expected to vest, Ending Balance Aggregate Intrinsic Value, Outstanding, Beginning Balance Aggregate Intrinsic Value, Outstanding, Ending Balance Aggregate Intrinsic Value, Exercisable, Ending Balance Aggregate Intrinsic Value, Vested and expected to vest, Ending Balance Number of reportable segments Number of operating segments Schedule of Segment Reporting Information, by Segment [Table] Segment Reporting Information [Line Items] Revenues Segment operating expenses Segment income (loss) Interest expense - mortgage and related party Depreciation and amortization expense Gain from sale of real estate Loss from investments Income tax benefit Net income (loss) Total assets Notes reduced Debt instrument, payment terms Key money incentive fee Key money plus accrued interest amount Finance lease obligations Redemption of limited partnership interest to repay Revolving line of credit Drawn to pay off mortgage note payable Variable interest rate LIBOR Increase in line of credit facility Maturity date description Mortgage due to related party amount Mortgage and mezzanine amount Debt instrument term Proceeds from line of credit Loan outstanding amount Lease descriptions Financial leases, rate per annum Debt principal amount Loan fee percentage Unsecured loan Repayment of line of credit Total related party and other notes payable 2021 2022 2023 Total minimum lease payments Less interest on finance lease Present value of future minimum lease payments 2021 2022 2023 2024 2025 There after Trade payable Advance deposits Property tax payable Payroll and related accruals Mortgage interest payable Withholding and other taxes payable Security deposit Other payables Total accounts payable and other liabilities - 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Chairman and President [Member] Represents information pertaining to CIBC Bank, USA. Commercial Property [Member]. Communications Member. Comstock [Member]. Comstock [Member] Consumer Cyclical [Member] Corporate Bonds [Member] Cred Reit Holdco LLC [Member]. Energy [Member] Federal [Member]. Finance Lease ROU Assets [Member] Financial Services [Member] Furniture and Equipment [Member] Garage [Member] Hilton [Member] Hotel Management Agreement [Member]. Hotel Operating Expenses Member. Hotel Operations [Member]. Hotel Rooms [Member]. Incentive Stock [Member]. Increase decrease in accounts payable and other liabilities - Justice. Net change during the reporting period in the carrying amount of obligations for securities sold. Industrials [Member] Insurance [Member] InterGroup Shareholder' Deficit [Member] InterGroup Shareholders' Deficit [Member] Interest Free Development Incentive Note [Member]. Interest Rate Agreement [Member]. Intergroup [Member]. Intergroup Woodland Village, Inc [Member] Interstate Management Company Llc [Member]. Investment in Hotel, Net [Text Block] Investment in Marketable Securities [Text Block] The amount represents the investment in property net. This element represents the investment in subsidiaries during the period. Investment Transactions [Member]. John V Winfield [Member]. Justice Member. LIBOR [Member]. Las Colinas [Member]. Los Angeles 8 [Member]. Los Angeles 11 [Member]. Los Angeles 15 [Member]. Los Angeles 5 [Member]. Los Angeles 4 [Member]. Los Angeles 14 [Member]. Los Angeles [Member]. Los Angeles 9 [Member]. Los Angeles 1 [Member]. Los Angeles 7 [Member]. Los Angeles 6 [Member]. Los Angeles 10 [Member]. Los Angeles 13 [Member]. Los Angeles 3 [Member]. Los Angeles 12 [Member]. Los Angeles 2 [Member]. Represents the information pertaining to market based vesting requirement. Mezzanine Loans [Member]. Morris Country [Member]. Mortgage Loan [Member] Mortgage Loans [Member]. Mortgage Notes [Member]. Carrying amount as of the balance sheet date of mortgage notes payable related to hotel property, plant and equipment. Carrying amount as of the balance sheet date of mortgage notes payable relating to real estate property. New Mazzanine Agreement [Member]. New Mezzanine Loan Agreement [Member] 9 Months 2020 [Member] Non Employee Directors [Member]. Note Payable Hilton Member. Note Payable Interstate Member. Carrying value of obligations for securities sold as at the reporting date. Disclosure of accounting policy for obligations for securities sold [Policy Text Block] Other Investments, Net [Text Block] Other [Member] Other Notes Payable Member. Other Operating Departments [Member] The cash outflow associated with the acquisition of or advances to an entity that is related to it subsidiary. Portsmouth [Member]. Portsmouth [Member] Private Equity Hedge Fund at Cost [Member]. REITs and Real Estate Companies [Member]. Real Estate Operating Expenses Member. Real Estate Operation Member. Real Estate, Type of Property [Axis]. The entire disclosure of related party and other financing transactions [Text Block] Related Party Debt and Other Notes Payable [Member]. SF Hotel [Member]. SF Hotel 1 [Member]. Santa Fe [Member] Santa Fe [Member]. Schedule of Investment in Hotel [Table Text Block] St. Louis [Member]. Summary of Related Party and Other Notes Payable [Table Text Block] Technology Member. ThereAfter [Member] Represents the information pertaining to time vesting requirements. 12-Unit Apartment Complex [Member]. Two Customer Member. 2008 RSU Plan[Member] Two Thousand Seven Stock Plan [Member]. Two Thousand Ten Incentive Plan [Member]. Unit Apartment Complex [Member]. Year 2024 [Member] Year 2021 [Member] Year 2023 [Member] Year 2022 [Member] Amount of impairment losses on other specified investments recognized in earnings during the reporting period. Contribution Agreement [Member] Mortgage Note Payable Two [Member] Mortgage Note Payable One [Member] 3 Months 2020 [Member] CARES Act [Member] Furniture, Fixtures and Equipment Reserves [Member] Property Improvement Plan [Member] Hotel Senior Lender [Member] Other notes payable – SBA Loans. Schedule of Future Minimum Principal Payments [Table Text Block] Payment from the sale. Qualified expenses. Future qualified expenses. Mortgage Note Payable [Member] Agreement description. Other Operating Department Member Investment in hotel cost. Investment in hotel accumulated depreciation. Real estate investment, land held for development. Investment marketable securities percentage. Fair value of net loss. Key money incentive. Key money plus accrued interest amount. Financial leases, rate per annum. Loan fee percentage. Drawn to pay off mortgage note payable. Mortgage due to related party amount. SBA Loans Payable Member Schedule of stock based compensation. Schedule of stock based compensation. Restricted Stock Units Plan [Member] Two Thousand Eight [Member] Omnibus [Member] Board Of Directors [Member] John Winfield [Member] Non Qualified Stock Options [Member] Incentive Stock Options [Member] David C Gonzalez [Member] Number of Shares, Exchanged. Weighted Average Exercise Price, Exchanged. Weighted Average Remaining Life, Outstanding, Ending Balance. Three Point Seven Three Las Colinas [Member] Three Point Seven Five Los Angeles Two [Member] Three Point Seven Five Los Angeles Three [Member] Three Point Seven Five Los Angeles Six [Member] Three Point Seven Five Los Angeles Seven [Member] Three Point Seven Five Los Angeles One [Member] Three Point Seven Five Los Angeles Four [Member] Three Point Seven Five Los Angeles Five [Member] Three Point Five One Morris County [Member] Three Point Five Nine Los Angeles [Member] Three Point Eight Seven Florence [Member] Four Point Zero Five St Louis [Member] Four Point Seven Five Los Angeles [Member] Represents the information pertaining to Four Point Nine One Los Angeles. Four Point Five One Morris County [Member] Four Point Eight Five Los Angeles [Member] Five Point Two Eight Percent Sf Hotel Member Five Point Nine Seven Los Angeles [Member] Five Point Eight Nine Los Angeles Two [Member] Five Point Eight Nine Los Angeles [Member] Two Point Sixty Seven Percent Loss Angeles [Member] Seven Point Two Five Percent SF Hostel [Member] Mortgage Notes Payable Real Estate [Member] Mortgage Notes Payable Hotel [Member] Three Point Eighty Seven Percent Florence [Member] Three Point Seven Three Percent LasColinas [Member] Three Point One seven Morris County [Member] Three Point Fifty Nine Los Angeles [Member] Four Point Seven Five Percent Loss Angeles [Member] Five Point Two Eight Percent Sf Hotel [Member] New Mortgage Loans [Member] 150 Unit apartment Unit Complex [Member] NineUnit Apartment Complex [Member] One Customer [Member] Chairman and CEO [Member] Buildings Improvements [Member] Rental Property [Member] Other Investments [Member] 3.09% Los Angeles [Member] 7.25% SF Hotel [Member] 3.75% Los Angeles Six [Member] 3.75% Los Angeles Seven [Member] 5.60% Los Angeles [Member] 4.91% Los Angeles [Member] Stock Options [Member] Justice Operating Company, LLC [Member] License Agreement [Member] Proceeds from sale of property, net. 9.75% SF Hotel [Member] Mr Winfield [Member] Sole General Partner [Member] Liquidity [Text Block] Issuance costs of refinancing mortgage and other notes payable. Accounts Payable and Other Liabilities - Justice. [Text Block] Due to Securities Broker [Policy Text Block] Schedule of Material Financial Obligations [Table Text Block] Schedule of Accounts Payable and Other Liabilities - Justice [Table Text Block] Accounts payable and other liabilities - Justice. Future Property Improvement Plan [Member] Mortgage and Subordinated Notes Payable [Member] Interest [Member] Amount of long-term debt payable, sinking fund requirement, and other securities issued that are redeemable by holder at fixed or determinable price and date, maturing after four fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach). Other Preferred Stock, at Cost [Member] Communication Services [Member] Share based compensation arrangement by share based payment options surrendered. Share based compensation arrangement by share based payment option shares issued. Plan term. Option term description. Redemption of limited partnership interest to repay. Repayment of line of credit. Advance deposits. Withholding and other taxes payable. Accounts payable and other liabilities - Justice. New Fannie Mortgage Note Payable [Member] 633 Ocean Avenue Santa Monica Property [Member] Repayment of prior mortgage amount. Unrealized gain (loss) on marketable securities, net. SantaFeMember IntergroupMember Liabilities Treasury Stock, Value Stockholders' Equity Attributable to Parent Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Liabilities and Equity Depreciation, Depletion and Amortization, Nonproduction General and Administrative Expense Costs and Expenses Interest Expense, Debt ImpairmentLossOnOtherInvestments Interest Expense, Other Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Income Tax Expense (Benefit) Net Income (Loss) Attributable to Noncontrolling Interest Net Income (Loss) Attributable to Parent Earnings Per Share, Basic Earnings Per Share, Diluted Shares, Outstanding Treasury Stock, Value, Acquired, Cost Method Gain (Loss) on Disposition of Assets Marketable Securities, Unrealized Gain (Loss) Increase (Decrease) in Debt Securities, Trading, and Equity Securities, FV-NI Increase (Decrease) in Other Operating Assets IncreaseDecreaseInAccountsPayableAndAccruedLiabilitiesJustice Increase (Decrease) in Accounts Payable and Accrued Liabilities Increase (Decrease) in Due to Related Parties Increase Decrease In Obligations For Securities Sold Payments to Acquire Property, Plant, and Equipment Payments to Acquire Real Estate Held-for-investment Payments To Acquire Interest In Subsidiaries Net Cash Provided by (Used in) Investing Activities Repayments of Other Debt IssuanceCostsOfRefinancingMortgageAndOtherNotesPayable Payments for Repurchase of Common Stock Net Cash Provided by (Used in) Financing Activities Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations Long-term Debt InvestmentInHotelAccumulatedDepreciation Proceeds from Sale of Productive Assets Gain (Loss) on Disposition of Property Plant Equipment Real Estate Investment Property, Accumulated Depreciation Debt Securities, Trading, Amortized Cost Debt Securities, Trading, Unrealized Loss Marketable Securities, Gain (Loss) Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value Operating Expenses Finance Lease, Liability, to be Paid, Year Two Finance Lease, Liability, to be Paid, Year Three Finance Lease, Liability, Payment, Due Finance Lease, Liability, Undiscounted Excess Amount Long-Term Debt, Maturity, Year Five EX-101.PRE 11 intg-20200930_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.20.2
Document and Entity Information - shares
3 Months Ended
Sep. 30, 2020
Nov. 03, 2020
Cover [Abstract]    
Entity Registrant Name INTERGROUP CORP  
Entity Central Index Key 0000069422  
Document Type 10-Q  
Document Period End Date Sep. 30, 2020  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   2,283,916
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2021  
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Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
ASSETS    
Investment in Hotel, net $ 38,325,000 $ 38,769,000
Investment in real estate, net 46,885,000 50,338,000
Investment in marketable securities 8,666,000 6,178,000
Other investments, net 98,000 278,000
Cash and cash equivalents 19,444,000 14,163,000
Restricted cash 11,693,000 14,123,000
Other assets, net 1,855,000 1,985,000
Deferred tax asset 2,408,000 4,383,000
Total assets 129,374,000 130,217,000
Liabilities:    
Accounts payable and other liabilities - Justice 6,731,000 7,414,000
Accounts payable and other liabilities 4,550,000 4,213,000
Due to securities broker 294,000 1,576,000
Obligations for securities sold 307,000 294,000
Related party and other notes payable 4,525,000 4,654,000
Finance leases 1,015,000 1,098,000
Other notes payable - SBA Loans 5,172,000 5,172,000
Line of credit payable 2,985,000
Mortgage notes payable - Hotel, net 111,137,000 111,446,000
Mortgage notes payable - real estate, net 65,206,000 65,612,000
Total liabilities 198,937,000 204,464,000
Shareholders' deficit:    
Preferred stock, $.01 par value, 100,000 shares authorized; none issued
Common stock, $.01 par value, 4,000,000 shares authorized; 3,404,982 and 3,404,982 issued; 2,284,085 and 2,288,809 outstanding, respectively 33,000 33,000
Additional paid-in capital 6,631,000 6,626,000
Accumulated deficit (38,991,000) (43,541,000)
Treasury stock, at cost, 1,120,897 and 1,116,173 shares, respectively (15,135,000) (14,995,000)
Total Intergroup shareholders' deficit (47,462,000) (51,877,000)
Noncontrolling interest (22,101,000) (22,370,000)
Total shareholders' deficit (69,563,000) (74,247,000)
Total liabilities and shareholders' deficit $ 129,374,000 $ 130,217,000
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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2020
Jun. 30, 2020
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 100,000 100,000
Preferred stock , shares issued
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 4,000,000 4,000,000
Common stock, shares issued 3,404,982 3,404,982
Common stock, shares outstanding 2,284,085 2,288,809
Treasury stock, shares 1,120,897 1,116,173
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Revenues:    
Total revenues $ 6,909,000 $ 19,146,000
Costs and operating expenses:    
Depreciation and amortization expenses (1,191,000) (1,213,000)
General and administrative expenses (1,366,000) (760,000)
Total costs and operating expenses (9,478,000) (15,271,000)
(Loss) income from operations (2,569,000) 3,875,000
Other income (expense):    
Interest expense - mortgages (2,315,000) (2,397,000)
Gain on sale of real estate 12,043,000
Net loss on marketable securities (253,000) (145,000)
Net gain (loss) on marketable securities - Comstock 95,000 (304,000)
Impairment loss on other investments (62,000)
Dividend and interest income 124,000 130,000
Trading and margin interest expense (269,000) (293,000)
Total other income (expense), net 9,363,000 (3,009,000)
Income before income taxes 6,794,000 866,000
Income tax expense (1,975,000) (222,000)
Net income 4,819,000 644,000
Less: Net income attributable to the noncontrolling interest (269,000) (308,000)
Net income attributable to InterGroup Corporation $ 4,550,000 $ 336,000
Net income per share    
Basic $ 2.11 $ 0.28
Diluted 1.84 0.24
Net income per share attributable to InterGroup Corporation    
Basic 1.99 0.15
Diluted $ 1.74 $ 0.13
Weighted average number of basic common shares outstanding 2,287,555 2,309,393
Weighted average number of diluted common shares outstanding 2,621,550 2,639,788
Hotel [Member]    
Revenues:    
Total revenues $ 3,425,000 $ 15,429,000
Costs and operating expenses:    
Total costs and operating expenses (5,033,000) (11,348,000)
Real Estate [Member]    
Revenues:    
Total revenues 3,484,000 3,717,000
Costs and operating expenses:    
Total costs and operating expenses $ (1,888,000) $ (1,950,000)
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.20.2
Condensed Consolidated Statements of Shareholders' Deficit (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Treasury Stock [Member]
InterGroup Shareholder' Deficit [Member]
Noncontrolling Interest [Member]
Total
Beginning balance at Jun. 30, 2019 $ 33,000 $ 10,342,000 $ (39,760,000) $ (14,347,000) $ (43,732,000) $ (24,697,000) $ (68,429,000)
Beginning balance, shares at Jun. 30, 2019 3,404,982            
Net income 336,000 336,000 308,000 644,000
Stock options expense 8,000 8,000 8,000
Investment in Santa Fe (147,000) (147,000) 74,000 (73,000)
Purchase of treasury stock (156,000) (156,000) (156,000)
Ending balance at Sep. 30, 2019 $ 33,000 10,203,000 (39,424,000) (14,503,000) (43,691,000) (24,315,000) (68,006,000)
Ending balance, shares at Sep. 30, 2019 3,404,982            
Beginning balance at Jun. 30, 2020 $ 33,000 6,626,000 (43,541,000) (14,995,000) (51,877,000) (22,370,000) (74,247,000)
Beginning balance, shares at Jun. 30, 2020 3,404,982            
Net income 4,550,000 4,550,000 269,000 4,819,000
Stock options expense 5,000 5,000 5,000
Purchase of treasury stock (140,000) (140,000) (140,000)
Ending balance at Sep. 30, 2020 $ 33,000 $ 6,631,000 $ (38,991,000) $ (15,135,000) $ (47,462,000) $ (22,101,000) $ (69,563,000)
Ending balance, shares at Sep. 30, 2020 3,404,982            
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Cash flows from operating activities:    
Net income $ 4,819,000 $ 644,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities:    
Depreciation and amortization 1,146,000 1,224,000
Gain on sale of real estate (12,043,000)
Deferred taxes 1,975,000
Net unrealized (gain) loss on marketable securities (104,000) 375,000
Impairment loss on other investments 62,000
Stock compensation expense 5,000 8,000
Changes in operating assets and liabilities:    
Investment in marketable securities (2,384,000) 784,000
Other assets 130,000 (219,000)
Accounts payable and other liabilities - Justice (683,000) (540,000)
Accounts payable and other liabilities 337,000 929,000
Due to securities broker (1,282,000) (229,000)
Obligations for securities sold 13,000 (225,000)
Net cash (used in) provided by operating activities (8,009,000) 2,751,000
Cash flows from investing activities:    
Payments for hotel investments (105,000) (624,000)
Payments for real estate investments (294,000) (267,000)
Payments for investment in Santa Fe (73,000)
Proceeds from sale of real estate 15,178,000
Proceeds from other investments 118,000 48,000
Net cash provided by (used in) investing activities 14,897,000 (916,000)
Cash flows from financing activities:    
Net payments of mortgage and other notes payable (3,863,000) (1,387,000)
Issuance costs of refinancing mortgage and other notes payable (34,000)
Purchase of treasury stock (140,000) (156,000)
Net cash used in financing activities (4,037,000) (1,543,000)
Net increase in cash, cash equivalents and restricted cash 2,851,000 292,000
Cash, cash equivalents and restricted cash at the beginning of the period 28,286,000 25,132,000
Cash, cash equivalents and restricted cash at the end of the period 31,137,000 25,424,000
Supplemental information:    
Interest paid 2,345,000 2,445,000
Taxes paid 153,000
Non-cash transaction:    
Additions to Hotel equipment through capital lease $ 30,000
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.20.2
Basis of Presentation and Significant Accounting Policies
3 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies

NOTE 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, 2020. The September 30, 2020 Condensed Consolidated Balance Sheet was derived from the Consolidated Balance Sheet as included in the Company’s Form 10-K for the year ended June 30, 2020.

 

The results of operations for the three months ended September 30, 2020 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2021.

 

Basic and diluted income per share is computed by dividing net income 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 September 30, 2020, the Company had the power to vote 87.4% 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 3.7% interest in the common stock in Santa Fe owned by the Company’s Chairman and CEO, John V. Winfield, pursuant to a voting trust agreement entered into on June 30, 1998. Mr. Winfield, Chairman of the Board of both Santa Fe and InterGroup, is a control person of both entities.

 

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’s primary business is conducted through its general and limited partnership interest in Justice Investors Limited Partnership; a California limited partnership (“Justice” or the “Partnership”). InterGroup also directly owns approximately 13.7% of the common stock of Portsmouth.

 

Justice, through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”) owns and operates a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage. Mezzanine is a wholly-owned subsidiary 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) through January 31, 2030.

 

Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel, along with its five-level parking garage, with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee payable to Interstate shall be one and seven-tenths percent (1.70%) of total Hotel revenue. On October 25, 2019, Interstate merged with Aimbridge Hospitality, North America’s largest independent hotel management firm. With the completion of the merger, the newly combined company will be positioned under the Aimbridge Hospitality name in the Americas.

 

In addition to the operations of the Hotel, the Company also generates income from the ownership, management and, when appropriate, sale of real estate. Properties include fifteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States, but are concentrated in Dallas, Texas and Southern California. The Company also has an investment in unimproved real property. As of September 30, 2020, all of the Company’s residential and commercial rental properties are managed in-house.

 

Due to Securities Broker

 

Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability.

 

Obligations for Securities Sold

 

Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the condensed consolidated statements of operations.

 

Income Tax

 

The Company consolidates Justice (“Hotel”) for financial reporting purposes and is not taxed on its non-controlling interest in the Hotel. The income tax expense during the three months ended September 30, 2020 and 2019 represent the income tax effect on the Company’s pretax income which includes its share in the net (loss) income of the Hotel.

 

Recently Issued and Adopted Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Effective July 1, 2019, we adopted ASU 2016-02 using the modified retrospective approach provided by ASU 2018-11. We elected certain practical expedients permitted under the transition guidance, including the election to carryforward historical lease classification. We also elected the short-term lease practical expedient, which allowed us to not recognize leases with a term of less than twelve months on our consolidated balance sheets. In addition, we elected the lease and non-lease components practical expedient, which allowed us to calculate the present value of the fixed payments without performing an allocation of lease and non-lease components. We did not record any operating lease right-of-use (“ROU”) assets and operating lease liabilities upon adoption of the new standard as the aggregate value of the ROU assets and operating lease liabilities are immaterial relative to our total assets and liabilities as of June 30, 2020 and 2019. The standard did not have an impact on our other finance leases, statements of operations or cash flows. See Note 4 and Note 11 for balances of finance lease ROU assets and liabilities, respectively.

 

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 timelier recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2023. The Company is currently reviewing the effect of ASU No. 2016-13.

 

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company has adopted the new standard effective July 1, 2020 and the adoption of this guidance does not have a material impact on its condensed consolidated financial statements.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.20.2
Liquidity
3 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Liquidity

NOTE 2 - LIQUIDITY

 

Historically, our cash flows have been primarily generated from our Hotel and real estate operations. However, the responses by federal, state, and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our liquidity. For the three months ended September 30, 2020, our net cash flow used in operations was $8,009,000. For the three months ended September 30, 2019, our net cash flow provided by operations was $2,751,000. We have taken several steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.

 

The Hotel had $9,562,000 and $10,666,000 of restricted cash held by its senior lender Wells Fargo Bank, N.A. (“Lender”) as of September 30, 2020 and June 30, 2020, respectively. Of the $10,666,000 restricted cash held as of June 30, 2020, $2,432,000 was for a possible future property improvement plan (“PIP”) requested by our franchisor, Hilton. On August 19, 2020, Lender released PIP deposits in the amount of $2,379,000 to the Hotel. The funds were utilized to fund operating expenses, including franchise and management fees and other expenses.

 

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of September 30, 2020, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of September 30, 2020, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has a 1.00% interest rate. All payments of principal and interests are deferred until July 2021, and the repayment obligations under both loans may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All unforgiven portion of the principal and accrued interest will be due at maturity.

 

In order to increase its liquidity position and to take advantage of the favorable interest rate environment, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise, or should management consider the interest rate environment favorable. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) and the entire $8,000,000 is available to be drawn down as of September 30, 2020 should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. Santa Fe included the gain in the calculation of tax provision for the three months ended September 30, 2020. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale. Santa Fe will not seek a replacement property.

 

As the sole general partner of Justice that controls approximately 93.3% of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup and/or Santa Fe to meet any capital calls and its other obligations during the next twelve months and beyond. On August 28, 2020, the Board of InterGroup and Santa Fe passed resolutions, respectively, to provide funding to Portsmouth if necessary. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain conditions in order to raise additional capital.

 

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance of the Hotel.

 

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel and our real estate properties. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations. After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy and low revenue per available room (“RevPAR”) were to persist. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. We believe that our cash on hand, along with other potential aforementioned sources of liquidity that management may be able to obtain, will be sufficient to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond. However, there can be no guarantee that management will be successful with its plan.

 

The following table provides a summary as of September 30, 2020, the Company’s material financial obligations which also including interest payments.

 

          9 Months     Year     Year     Year     Year        
    Total     2021     2022     2023     2024     2025     Thereafter  
Mortgage and subordinated notes payable   $ 177,586,000     $ 10,445,000     $ 3,100,000     $ 28,244,000     $ 108,113,000     $ 3,494,000     $ 24,190,000  
Other notes payable     10,698,000       854,000       6,220,000       750,000       567,000       567,000       1,740,000  
Interest     32,580,000       6,886,000       8,419,000       7,625,000       4,412,000       904,000       4,334,000  
Total   $ 220,864,000     $ 18,185,000     $ 17,739,000     $ 36,619,000     $ 113,092,000     $ 4,965,000     $ 30,264,000  
XML 20 R9.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue
3 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue

NOTE 3 – REVENUE

 

Our revenue from real estate is primarily rental income from residential and commercial property leases which is recorded when due from residents and is recognized monthly as earned. The following table present our Hotel revenue disaggregated by revenue streams.

 

For the three months ended September 30,   2020     2019  
Hotel revenues:                
Hotel rooms   $ 2,890,000     $ 13,314,000  
Food and beverage     37,000       1,222,000  
Garage     470,000       736,000  
Other operating departments     28,000       157,000  
Total hotel revenue   $ 3,425,000     $ 15,429,000  

 

Performance obligations

 

We identified the following performance obligations, for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services:

 

  Cancelable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs.
     
  Noncancelable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the room reservation.
     
  Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.
     
  Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above.

 

Hotel revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component.

 

We do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the nature of our business, our revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at our hotel are refunded to hotel guests if the guest cancels within the specified time period, before any services are rendered. Refunds related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are rendered.

 

Contract assets and liabilities

 

We do not have any material contract assets as of September 30, 2020 and June 30, 2020 other than trade and other receivables, net on our condensed consolidated balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

 

We record contract liabilities when cash payments are received or due in advance of guests staying at our hotel, which are presented within accounts payable and other liabilities on our condensed consolidated balance sheets. Contract liabilities decreased to $263,000 as of September 30, 2020, from $375,000 as of June 30, 2020. The decrease for the three months ended September 30, 2020 was primarily driven by $112,000 of revenue recognized and refunds issued to guests as a result of the COVID-19 outbreak.

 

Contract costs

 

We consider sales commissions earned to be incremental costs of obtaining a contract with our customers. As a practical expedient, we expense these costs as incurred as our contracts with customers and lease agreements do not extend beyond one year.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Hotel, Net
3 Months Ended
Sep. 30, 2020
Investments, All Other Investments [Abstract]  
Investment in Hotel, Net

NOTE 4 – INVESTMENT IN HOTEL, NET

 

Investment in hotel consisted of the following as of:

 

          Accumulated     Net Book  
September 30, 2020   Cost     Depreciation     Value  
                   
Land   $ 2,738,000     $ -     $ 2,738,000  
Finance lease ROU assets     1,805,000       (368,000 )     1,437,000  
Furniture and equipment     30,634,000       (27,631,000 )     3,003,000  
Building and improvements     64,005,000       (32,858,000 )     31,147,000  
Investment in Hotel, net   $ 99,182,000     $ (60,857,000 )   $ 38,325,000  

 

          Accumulated     Net Book  
June 30, 2020   Cost     Depreciation     Value  
                   
Land   $ 2,738,000     $ -     $ 2,738,000  
Finance lease ROU assets     1,775,000       (291,000 )     1,484,000  
Furniture and equipment     30,528,000       (27,498,000 )     3,030,000  
Building and improvements     64,005,000       (32,488,000 )     31,517,000  
Investment in Hotel, net   $ 99,046,000     $ (60,277,000 )   $ 38,769,000  
XML 22 R11.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Real Estate, Net
3 Months Ended
Sep. 30, 2020
Real Estate [Abstract]  
Investment in Real Estate, Net

NOTE 5 – INVESTMENT IN REAL ESTATE, NET

 

The Company’s investment in real estate includes fifteen apartment complexes, one commercial real estate property and three single-family houses. The properties are located throughout the United States, but are concentrated in Dallas, Texas and Southern California. The Company also has an investment in unimproved real property. Investment in real estate consisted of the following:

 

As of   September 30, 2020     June 30, 2020  
Land   $ 21,568,000     $ 23,565,000  
Buildings, improvements and equipment     67,198,000       69,417,000  
Accumulated depreciation     (43,349,000 )     (44,112,000 )
      45,417,000       48,870,000  
Land held for development     1,468,000       1,468,000  
Investment in real estate, net   $ 46,885,000     $ 50,338,000  

 

On August 28, 2020, the Company sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,043,000. We will manage our federal and state income tax liability, and anticipates the utilization of our available net operating losses and capital loss carryforwards. We received net proceeds of $12,163,000 after selling costs and repayment of the RLOC of $2,985,000 as we had drawn on our RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. We will not seek a replacement property.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Marketable Securities
3 Months Ended
Sep. 30, 2020
Investment In Marketable Securities  
Investment in Marketable Securities

NOTE 6 – 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 September 30, 2020 and June 30, 2020, 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        
Investment   Cost     Unrealized Gain     Unrealized Loss     Unrealized Loss     Fair Value  
As of                                        
September 30, 2020                                        
Corporate                                        
Equities   $ 13,793,000     $ 1,116,000     $ (6,243,000 )   $ (5,127,000 )   $ 8,666,000  
As of                                        
June 30, 2020                                        
Corporate                                        
Equities   $ 11,459,000     $ 902,000     $ (6,183,000 )   $ (5,281,000 )   $ 6,178,000  

 

As of September 30, 2020 and June 30, 2020, approximately 9% and 11%, respectively, of the investment in marketable securities balance above is comprised of the common stock of Comstock Mining Inc (“Comstock”). As of September 30, 2020 and June 30, 2020, the Company had $5,627,000 and $5,734,000, respectively, of unrealized losses related to securities held for over one year; of which $5,333,000 and $5,427,000 are related to its investment in Comstock, respectively.

 

Net gains (losses) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of net loss on marketable securities for the three months ended September 30, 2020 and 2019, respectively:

 

For the three months ended September 30,   2020     2019  
Realized loss on marketable securities, net   $ (262,000 )   $ (74,000 )
Unrealized gain (loss) on marketable securities, net     9,000       (71,000 )
Unrealized gain (loss) on marketable securities related to Comstock     95,000       (304,000 )
Net loss on marketable securities   $ (158,000 )   $ (449,000 )
XML 24 R13.htm IDEA: XBRL DOCUMENT v3.20.2
Other Investments, Net
3 Months Ended
Sep. 30, 2020
Other Investments [Abstract]  
Other Investments, Net

NOTE 7 – OTHER INVESTMENTS, NET

 

The Company may also invest, with the approval of the Executive Strategic Real Estate and 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 consolidated balance sheet as part of other investments, net of other than temporary impairment losses.

 

Other investments, net consist of the following:

 

Type   September 30, 2020     June 30, 2020  
Private equity hedge fund, at cost   $ 95,000     $ 157,000  
Other preferred stock, at cost     3,000       121,000  
    $ 98,000     $ 278,000  
XML 25 R14.htm IDEA: XBRL DOCUMENT v3.20.2
Fair Value Measurements
3 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements

NOTE 8 - 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:

 

As of   September 30, 2020     June 30, 2020  
Assets:   Total - Level 1     Total - Level 1  
Investment in marketable securities:                
REITs and real estate companies   $ 4,353,000     $ 2,365,000  
Energy     999,000       767,000  
Basic material     987,000       1,209,000  
Financial services     624,000       282,000  
Consumer cyclical     592,000       295,000  
Technology     451,000       121,000  
Industrials     390,000       484,000  
Communication services     180,000       157,000  
Healthcare     90,000       43,000  
Corporate bonds     -       417,000  
Other     -       38,000  
    $ 8,666,000     $ 6,178,000  

 

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. 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 three months ended  
Assets   Level 3     September 30, 2020     September 30, 2020  
                   
Other non-marketable investments   $ 98,000     $ 98,000     $ (62,000 )
                         

 

                Net loss for the three months ended  
Assets   Level 3     June 30, 2020     September 30, 2019  
                         
Other non-marketable investments   $ 278,000     $ 278,000     $ -  

 

For the three months ended September 30, 2020 and 2019, we received distribution from other non-marketable investments of $118,000 and $48,000, respectively.

 

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.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.20.2
Cash, Cash Equivalents and Restricted Cash
3 Months Ended
Sep. 30, 2020
Cash and Cash Equivalents [Abstract]  
Cash, Cash Equivalents and Restricted Cash

NOTE 9 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows.

 

As of   September 30, 2020     June 30, 2020  
             
Cash and cash equivalents   $ 19,444,000     $ 14,163,000  
Restricted cash     11,693,000       14,123,000  
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows   $ 31,137,000     $ 28,286,000  

 

Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves for the Hotel and real estate properties. As of June 30, 2020, restricted cash also includes key money received from Interstate that is restricted for capital improvements for the Hotel. As of September 30, 2020, the key money is included in the balance of cash and cash equivalents in the condensed consolidated balance sheet as the Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.20.2
Stock Based Compensation Plans
3 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement [Abstract]  
Stock Based Compensation Plans

NOTE 10 – 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, 2020 for more detailed information on the Company’s stock-based compensation plans.

 

During the three months ended September 30, 2020 and 2019, the Company recorded stock option compensation cost of $5,000 and $8,000, respectively, related to stock options that were previously issued.

 

As of September 30, 2020, there was a total of $13,000 of unamortized compensation related to stock options which is expected to be recognized over the weighted-average period of 1.42 years.

 

In December 2018, the Company’s President and Chief Executive Officer, John V. Winfield exercised 26,805 vested Incentive Stock Options by surrendering 17,439 shares of the Company’s common stock at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded related to the issuance.

 

On February 25, 2020, shareholders of the Company voted in favor of amendments to the Company’s 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”) which would amend Section 1.3 of the 2010 Incentive Plan to extend the term from ten (10) years to sixteen (16) years, and Section 6.4 of the 2010 Incentive Plan to change “tenth (10th) anniversary date” to “twentieth (20th) anniversary date”. This would increase the term of the 2010 Incentive Plan to 20 years (expiring in February 2030 instead of February 2020) and also permit the existence of options with a term longer than ten years. The purpose of the amendment to the term is to extend its existence as our only equity incentive plan. The purpose of amendment of the allowable term of options is so that the Board may extend the term of the 100,000 options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020, in recognition of Mr. Winfield’s contributions to and leadership of our Company. Upon approval of these amendments by the shareholders, our Board of Directors extended the term of Mr. Winfield’s options as described in this paragraph. As a result of extending Mr. Winfield’s options, the Company recorded stock option compensation cost of $116,000 in March 2020.

 

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, 2019 through September 30, 2020:

 

          Number of     Weighted Average     Weighted Average   Aggregate  
          Shares     Exercise Price     Remaining Life   Intrinsic Value  
                             
Oustanding at     July 1, 2019       341,195     $ 16.95     3.07 years   $ 4,680,000  
Granted             -       -              
Exercised             -       -              
Forfeited             -       -              
Exchanged             -       -              
Outstanding at     June 30, 2020       341,195     $ 16.95     3.83 years   $ 3,271,000  
Exercisable at     June 30, 2020       323,195     $ 16.38     3.67 years   $ 3,271,000  
Vested and Expected to vest at     June 30, 2020       341,195     $ 16.95     3.83 years   $ 3,271,000  
                                     
Oustanding at     July 1, 2020       341,195     $ 16.95     3.83 years   $ 3,271,000  
Granted             -       -              
Exercised             -       -              
Forfeited             -       -              
Exchanged             -       -              
Outstanding at     September 30, 2020       341,195     $ 16.95     3.58 years   $ 4,448,000  
Exercisable at     September 30, 2020       333,995     $ 16.73     3.51 years   $ 4,428,000  
Vested and Expected to vest at     September 30, 2020       341,195     $ 16.95     3.58 years   $ 4,448,000  
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.20.2
Segment Information
3 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment Information

NOTE 11 – 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 months ended September 30, 2020 and 2019. Operating income (loss) from hotel operations consists of the operation of the hotel and the garage. Operating income from real estate operations consists of the operation of rental properties. Operating loss from investment transactions consists of net investment gains (losses), 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) benefit for the entire Company.

  

As of and for the three months   Hotel     Real Estate     Investment              
ended September 30, 2020   Operations     Operations     Transactions     Corporate     Total  
Revenues   $ 3,425,000     $ 3,484,000     $ -     $ -     $ 6,909,000  
Segment operating expenses     (5,033,000 )     (1,887,000 )     -       (1,366,000 )     (8,286,000 )
Segment income (loss)     (1,608,000 )     1,597,000       -       (1,366,000 )     (1,377,000 )
Interest expense - mortgage and related party     (1,700,000 )     (615,000 )     -       -       (2,315,000 )
Depreciation and amortization expense     (579,000 )     (612,000 )     -       -       (1,191,000 )
Gain from sale of real estate     -       12,043,000       -       -       12,043,000  
Loss from investments     -       -       (365,000 )     -       (365,000 )
Income tax expense     -       -       -       (1,975,000 )     (1,975,000 )
Net income (loss)   $ (3,887,000 )   $ 12,413,000     $ (365,000 )   $ (3,341,000 )   $ 4,820,000  
Total assets   $ 50,854,000     $ 46,885,000     $ 8,764,000     $ 22,871,000     $ 129,374,000  

 

For the three months   Hotel     Real Estate     Investment              
ended September 30, 2019   Operations     Operations     Transactions     Corporate     Total  
Revenues   $ 15,429,000     $ 3,717,000     $ -     $ -     $ 19,146,000  
Segment operating expenses     (11,348,000 )     (1,950,000 )     -       (760,000 )     (14,058,000 )
Segment income (loss)     4,081,000       1,767,000       -       (760,000 )     5,088,000  
Interest expense - mortgage and related party     (1,792,000 )     (605,000 )     -       -       (2,397,000 )
Depreciation and amortization expense     (593,000 )     (620,000 )     -       -       (1,213,000 )
Loss from investments     -       -       (612,000 )     -       (612,000 )
Income tax expense     -       -       -       (222,000 )     (222,000 )
Net income (loss)   $ 1,696,000     $ 542,000     $ (612,000 )   $ (982,000 )   $ 644,000  
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party and Other Financing Transactions
3 Months Ended
Sep. 30, 2020
Related Party Transactions [Abstract]  
Related Party and Other Financing Transactions

NOTE 12 – RELATED PARTY AND OTHER FINANCING TRANSACTIONS

 

The following summarizes the balances of related party and other notes payable as of September 30, 2020 and June 30, 2020, respectively.

 

As of   September 30, 2020     June 30, 2020  
Note payable - Hilton     2,929,000       3,008,000  
Note payable - Interstate     1,583,000       1,646,000  
SBA Loans     5,172,000       5,172,000  
Total related party and other notes payable   $ 9,684,000     $ 9,826,000  

 

Note payable to Hilton (Franchisor) is a self-exhausting, interest free development incentive note which is reduced by approximately $316,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton.

 

On February 1, 2017, Justice entered into an HMA with Interstate to manage the Hotel with an effective takeover date of February 3, 2017. The term of the 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 aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second anniversary of the takeover date. As of September 30, 2020, balance of the key money is $809,000 and is included in cash and cash equivalents in the condensed consolidated balance sheet as the Hotel obtained approval from Interstate to use the funds for hotel operations during the first quarter of fiscal year 2021. As of June 30, 2020, balance of the key money plus accrued interest is $1,009,000 and is included in restricted cash in the condensed consolidated balance sheet. Unamortized portion of the key money is included in the related party notes payable in the condensed consolidated balance sheets.

 

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan - Justice”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. The Partnership received proceeds of $4,719,000 from the SBA Loan - Justice. In accordance with the requirements of the CARES Act, Justice has used proceeds from the loan primarily for payroll costs. As of September 30, 2020, Justice had used all proceeds of the SBA Loan - Justice in qualified expenses. The SBA Loan - Justice is scheduled to mature on April 9, 2022 and has a 1.00% interest rate. On April 27, 2020, InterGroup entered into a loan agreement (“SBA Loan - InterGroup”) with CIBC Bank USA under the CARES Act and received loan proceeds in the amount of $453,000. As of September 30, 2020, InterGroup had used all of the $453,000 loan proceeds in qualified payroll expenses. The SBA Loan – InterGroup is scheduled to mature on April 27, 2022 and has a 1.00% interest rate. All payments of principal and interests are deferred until July 2021, and the repayment obligations under both loans may be forgiven if the funds are used for payroll and other qualified expenses. The SBA Loans are subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All unforgiven portion of the principal and accrued interest will be due at maturity.

 

As of September 30, 2020, the Company had finance lease obligations outstanding of $1,015,000. These finance leases expire in various years through 2023 at rates ranging from 4.62% to 6.25% per annum. Minimum future lease payments for assets under finance leases as of September 30, 2020 are as follows:

 

For the year ending June 30,        
2021     $ 389,000  
2022       508,000  
2023       188,000  
Total minimum lease payments       1,085,000  
Less interest on finance lease       (70,000 )
Present value of future minimum lease payments     $ 1,015,000  

 

Future minimum principal payments for all related party and other financing transactions are as follows:

 

For the year ending June 30,        
2021     $ 854,000  
2022       6,220,000  
2023       750,000  
2024       567,000  
2025       567,000  
There after       1,740,000  
      $ 10,698,000  

 

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 in December 2013. 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 through January 2017. Beginning in February 2017, the loan began to amortize over a thirty-year period through its maturity date of January 2024. Outstanding principal balance on the loan was $91,923,000 and $92,292,000 as of September 30, 2020 and June 30, 2020, respectively. As additional security for the mortgage loan, there is a limited guaranty executed by Portsmouth in favor of the mortgage lender. The mezzanine loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine interest only loan had an interest rate of 9.75% per annum and a maturity date of January 1, 2024. As additional security for the mezzanine loan, there is a limited guaranty executed by Portsmouth in favor of the mezzanine lender. On July 31, 2019, Mezzanine refinanced the mezzanine loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan which had a 9.75% per annum interest rate was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly.

 

Effective May 11, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain certain net worth and liquidity. As of September 30, 2020, InterGroup is in compliance with both requirements. However, due to the Hotel’s current low occupancy and its negative impact on the Hotel’s cash flow, Justice Operating Company, LLC may not meet certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lock-box by the Lender for all cash collected by the Hotel. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR.

 

On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 1, 2021. The balance of this loan was $3,000,000 as of September 30, 2020 and June 30, 2020, and is eliminated in the condensed consolidated balance sheets.

 

In July 2018, InterGroup obtained a revolving $5,000,000 line of credit (“RLOC”) from CIBC Bank USA (“CIBC”). On July 31, 2018, $2,969,000 was drawn from the RLOC to pay off the mortgage note payable at Intergroup Woodland Village, Inc. (“Woodland Village”) and a new mortgage note payable was established at Woodland Village due to InterGroup for the amount drawn. Woodland Village holds a three-story apartment complex in Santa Monica, California and is a subsidiary of Santa Fe and the Company. The RLOC carries a variable interest rate of 30-day LIBOR plus 3%. Interest is paid on a monthly basis. The RLOC and all accrued and unpaid interest were due in July 2019. In July 2019, the Company obtained a modification from CIBC which increased the RLOC by $3,000,000 and extended the maturity date from July 24, 2019 to July 23, 2020. The $2,969,000 mortgage due to InterGroup carries same terms as InterGroup’s RLOC. In July 2020, InterGroup entered into a second modification agreement with CIBC which extended the maturity date of its RLOC to July 21, 2021. The $2,969,000 mortgage due to InterGroup was also extended to July 21, 2021. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale.

 

Four of the Portsmouth directors serve as directors of InterGroup. Two of those directors also serve as directors of Santa Fe. The two Santa Fe directors also serve as directors of InterGroup.

 

As Chairman of the Executive Strategic Real Estate and Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Portsmouth and Santa Fe and oversees the investment activity of those companies. Effective June 2016, Mr. Winfield became the Managing Director of Justice. 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. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of the Portsmouth and Santa Fe, at risk in substantially the same manner.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.20.2
Accounts Payable and Other Liabilities - Justice
3 Months Ended
Sep. 30, 2020
Payables and Accruals [Abstract]  
Accounts Payable and Other Liabilities - Justice

NOTE 13 – ACCOUNTS PAYABLE AND OTHER LIABILITIES - JUSTICE

 

The following summarizes the balances of accounts payable and other liabilities – Justice as of September 30, 2020 and June 30, 2020.

 

As of   September 30, 2020     June 30, 2020  
             
Trade payable   $ 1,004,000     $ 3,000,000  
Advance deposits     263,000       375,000  
Property tax payable     1,048,000       523,000  
Payroll and related accruals     2,211,000       1,969,000  
Mortgage interest payable     525,000       527,000  
Withholding and other taxes payable     506,000       370,000  
Security deposit     52,000       52,000  
Other payables     1,122,000       598,000  
Total accounts payable and other liabilities - Justice   $ 6,731,000     $ 7,414,000  
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.20.2
Accounts Payable and Other Liabilities
3 Months Ended
Sep. 30, 2020
Payables and Accruals [Abstract]  
Accounts Payable and Other Liabilities

NOTE 14 – ACCOUNTS PAYABLE AND OTHER LIABILITIES

 

The following summarizes the balances of accounts payable and other liabilities as of September 30, 2020 and June 30, 2020.

 

As of   September 30, 2020     June 30, 2020  
             
Trade payable   $ 419,000     $ 709,000  
Advance deposits     296,000       422,000  
Property tax payable     958,000       554,000  
Payroll and related accruals     694,000       42,000  
Interest payable     216,000       218,000  
Withholding and other taxes payable     1,051,000       1,189,000  
Security deposit     733,000       745,000  
Other payables     183,000       334,000  
Total accounts payable and other liabilities   $ 4,550,000     $ 4,213,000  

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.20.2
Subsequent Events
3 Months Ended
Sep. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events

NOTE 15 – SUBSEQUENT EVENTS

 

On October 30, 2020, the Company refinanced its Ocean Avenue Santa Monica property’s $4.8 million Fannie Mae mortgage with a new Fannie Mae mortgage in the amount of $8.4 million at a fixed rate of 2.52% for 10-years with interest only payments for two years. The Company received net proceeds of approximately $3.5 million and no prepayment penalty was due.

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.20.2
Basis of Presentation and Significant Accounting Policies (Policies)
3 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Due to Securities Broker

Due to Securities Broker

 

Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability. 

Obligations for Securities Sold

Obligations for Securities Sold

 

Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the condensed consolidated statements of operations.

Income Tax

Income Tax

 

The Company consolidates Justice (“Hotel”) for financial reporting purposes and is not taxed on its non-controlling interest in the Hotel. The income tax expense during the three months ended September 30, 2020 and 2019 represent the income tax effect on the Company’s pretax income which includes its share in the net (loss) income of the Hotel.

Recently Issued and Adopted Accounting Pronouncements

Recently Issued and Adopted Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Effective July 1, 2019, we adopted ASU 2016-02 using the modified retrospective approach provided by ASU 2018-11. We elected certain practical expedients permitted under the transition guidance, including the election to carryforward historical lease classification. We also elected the short-term lease practical expedient, which allowed us to not recognize leases with a term of less than twelve months on our consolidated balance sheets. In addition, we elected the lease and non-lease components practical expedient, which allowed us to calculate the present value of the fixed payments without performing an allocation of lease and non-lease components. We did not record any operating lease right-of-use (“ROU”) assets and operating lease liabilities upon adoption of the new standard as the aggregate value of the ROU assets and operating lease liabilities are immaterial relative to our total assets and liabilities as of June 30, 2020 and 2019. The standard did not have an impact on our other finance leases, statements of operations or cash flows. See Note 4 and Note 11 for balances of finance lease ROU assets and liabilities, respectively.

 

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 timelier recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2023. The Company is currently reviewing the effect of ASU No. 2016-13.

 

In August 2018, the FASB issued Accounting Standard Update No. 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820) (ASU 2018-13), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company has adopted the new standard effective July 1, 2020 and the adoption of this guidance does not have a material impact on its condensed consolidated financial statements.

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.20.2
Liquidity (Tables)
3 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Schedule of Material Financial Obligations

The following table provides a summary as of September 30, 2020, the Company’s material financial obligations which also including interest payments.

 

          9 Months     Year     Year     Year     Year        
    Total     2021     2022     2023     2024     2025     Thereafter  
Mortgage and subordinated notes payable   $ 177,586,000     $ 10,445,000     $ 3,100,000     $ 28,244,000     $ 108,113,000     $ 3,494,000     $ 24,190,000  
Other notes payable     10,698,000       854,000       6,220,000       750,000       567,000       567,000       1,740,000  
Interest     32,580,000       6,886,000       8,419,000       7,625,000       4,412,000       904,000       4,334,000  
Total   $ 220,864,000     $ 18,185,000     $ 17,739,000     $ 36,619,000     $ 113,092,000     $ 4,965,000     $ 30,264,000  
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue (Tables)
3 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Schedule of Disaggregation of Revenue

The following table present our Hotel revenue disaggregated by revenue streams.

 

For the three months ended September 30,   2020     2019  
Hotel revenues:                
Hotel rooms   $ 2,890,000     $ 13,314,000  
Food and beverage     37,000       1,222,000  
Garage     470,000       736,000  
Other operating departments     28,000       157,000  
Total hotel revenue   $ 3,425,000     $ 15,429,000  
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Hotel, Net (Tables)
3 Months Ended
Sep. 30, 2020
Investments, All Other Investments [Abstract]  
Schedule of Investment in Hotel

Investment in hotel consisted of the following as of:

 

          Accumulated     Net Book  
September 30, 2020   Cost     Depreciation     Value  
                   
Land   $ 2,738,000     $ -     $ 2,738,000  
Finance lease ROU assets     1,805,000       (368,000 )     1,437,000  
Furniture and equipment     30,634,000       (27,631,000 )     3,003,000  
Building and improvements     64,005,000       (32,858,000 )     31,147,000  
Investment in Hotel, net   $ 99,182,000     $ (60,857,000 )   $ 38,325,000  

 

          Accumulated     Net Book  
June 30, 2020   Cost     Depreciation     Value  
                   
Land   $ 2,738,000     $ -     $ 2,738,000  
Finance lease ROU assets     1,775,000       (291,000 )     1,484,000  
Furniture and equipment     30,528,000       (27,498,000 )     3,030,000  
Building and improvements     64,005,000       (32,488,000 )     31,517,000  
Investment in Hotel, net   $ 99,046,000     $ (60,277,000 )   $ 38,769,000  
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Real Estate, Net (Tables)
3 Months Ended
Sep. 30, 2020
Real Estate [Abstract]  
Schedule of Investment in Real Estate

Investment in real estate consisted of the following:

 

As of   September 30, 2020     June 30, 2020  
Land   $ 21,568,000     $ 23,565,000  
Buildings, improvements and equipment     67,198,000       69,417,000  
Accumulated depreciation     (43,349,000 )     (44,112,000 )
      45,417,000       48,870,000  
Land held for development     1,468,000       1,468,000  
Investment in real estate, net   $ 46,885,000     $ 50,338,000  
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Marketable Securities (Tables)
3 Months Ended
Sep. 30, 2020
Investment In Marketable Securities  
Schedule of Trading Securities

Trading securities are summarized as follows:

 

          Gross     Gross     Net        
Investment   Cost     Unrealized Gain     Unrealized Loss     Unrealized Loss     Fair Value  
As of                                        
September 30, 2020                                        
Corporate                                        
Equities   $ 13,793,000     $ 1,116,000     $ (6,243,000 )   $ (5,127,000 )   $ 8,666,000  
As of                                        
June 30, 2020                                        
Corporate                                        
Equities   $ 11,459,000     $ 902,000     $ (6,183,000 )   $ (5,281,000 )   $ 6,178,000  
Schedule of Net Loss on Marketable Securities Comprising of Realized and Unrealized Gains (Losses)

Net gains (losses) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of net loss on marketable securities for the three months ended September 30, 2020 and 2019, respectively:

 

For the three months ended September 30,   2020     2019  
Realized loss on marketable securities, net   $ (262,000 )   $ (74,000 )
Unrealized gain (loss) on marketable securities, net     9,000       (71,000 )
Unrealized gain (loss) on marketable securities related to Comstock     95,000       (304,000 )
Net loss on marketable securities   $ (158,000 )   $ (449,000 )
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.20.2
Other Investments, Net (Tables)
3 Months Ended
Sep. 30, 2020
Other Investments [Abstract]  
Schedule of Other Investments, Net

Other investments, net consist of the following:

 

Type   September 30, 2020     June 30, 2020  
Private equity hedge fund, at cost   $ 95,000     $ 157,000  
Other preferred stock, at cost     3,000       121,000  
    $ 98,000     $ 278,000  
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.20.2
Fair Value Measurements (Tables)
3 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
Schedule of Fair Value Measurement on Recurring Basis

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

 

As of   September 30, 2020     June 30, 2020  
Assets:   Total - Level 1     Total - Level 1  
Investment in marketable securities:                
REITs and real estate companies   $ 4,353,000     $ 2,365,000  
Energy     999,000       767,000  
Basic material     987,000       1,209,000  
Financial services     624,000       282,000  
Consumer cyclical     592,000       295,000  
Technology     451,000       121,000  
Industrials     390,000       484,000  
Communication services     180,000       157,000  
Healthcare     90,000       43,000  
Corporate bonds     -       417,000  
Other     -       38,000  
    $ 8,666,000     $ 6,178,000  
Schedule of Fair Value Measurements on Non-recurring Basis

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 three months ended  
Assets   Level 3     September 30, 2020     September 30, 2020  
                   
Other non-marketable investments   $ 98,000     $ 98,000     $ (62,000 )
                         

 

                Net loss for the three months ended  
Assets   Level 3     June 30, 2020     September 30, 2019  
                         
Other non-marketable investments   $ 278,000     $ 278,000     $ -  
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.20.2
Cash, Cash Equivalents and Restricted Cash (Tables)
3 Months Ended
Sep. 30, 2020
Cash and Cash Equivalents [Abstract]  
Schedule of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows.

 

As of   September 30, 2020     June 30, 2020  
             
Cash and cash equivalents   $ 19,444,000     $ 14,163,000  
Restricted cash     11,693,000       14,123,000  
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows   $ 31,137,000     $ 28,286,000  
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.20.2
Stock Based Compensation Plans (Tables)
3 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement [Abstract]  
Schedule of Stock Option Activity

The following table summarizes the stock options activity from July 1, 2019 through September 30, 2020:

 

          Number of     Weighted Average     Weighted Average   Aggregate  
          Shares     Exercise Price     Remaining Life   Intrinsic Value  
                             
Oustanding at     July 1, 2019       341,195     $ 16.95     3.07 years   $ 4,680,000  
Granted             -       -              
Exercised             -       -              
Forfeited             -       -              
Exchanged             -       -              
Outstanding at     June 30, 2020       341,195     $ 16.95     3.83 years   $ 3,271,000  
Exercisable at     June 30, 2020       323,195     $ 16.38     3.67 years   $ 3,271,000  
Vested and Expected to vest at     June 30, 2020       341,195     $ 16.95     3.83 years   $ 3,271,000  
                                     
Oustanding at     July 1, 2020       341,195     $ 16.95     3.83 years   $ 3,271,000  
Granted             -       -              
Exercised             -       -              
Forfeited             -       -              
Exchanged             -       -              
Outstanding at     September 30, 2020       341,195     $ 16.95     3.58 years   $ 4,448,000  
Exercisable at     September 30, 2020       333,995     $ 16.73     3.51 years   $ 4,428,000  
Vested and Expected to vest at     September 30, 2020       341,195     $ 16.95     3.58 years   $ 4,448,000  
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.20.2
Segment Information (Tables)
3 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information

Information below represents reported segments for the three months ended September 30, 2020 and 2019. Operating income (loss) from hotel operations consists of the operation of the hotel and the garage. Operating income from real estate operations consists of the operation of rental properties

As of and for the three months   Hotel     Real Estate     Investment              
ended September 30, 2020   Operations     Operations     Transactions     Corporate     Total  
Revenues   $ 3,425,000     $ 3,484,000     $ -     $ -     $ 6,909,000  
Segment operating expenses     (5,033,000 )     (1,887,000 )     -       (1,366,000 )     (8,286,000 )
Segment income (loss)     (1,608,000 )     1,597,000       -       (1,366,000 )     (1,377,000 )
Interest expense - mortgage and related party     (1,700,000 )     (615,000 )     -       -       (2,315,000 )
Depreciation and amortization expense     (579,000 )     (612,000 )     -       -       (1,191,000 )
Gain from sale of real estate     -       12,043,000       -       -       12,043,000  
Loss from investments     -       -       (365,000 )     -       (365,000 )
Income tax expense     -       -       -       (1,975,000 )     (1,975,000 )
Net income (loss)   $ (3,887,000 )   $ 12,413,000     $ (365,000 )   $ (3,341,000 )   $ 4,820,000  
Total assets   $ 50,854,000     $ 46,885,000     $ 8,764,000     $ 22,871,000     $ 129,374,000  

 

For the three months   Hotel     Real Estate     Investment              
ended September 30, 2019   Operations     Operations     Transactions     Corporate     Total  
Revenues   $ 15,429,000     $ 3,717,000     $ -     $ -     $ 19,146,000  
Segment operating expenses     (11,348,000 )     (1,950,000 )     -       (760,000 )     (14,058,000 )
Segment income (loss)     4,081,000       1,767,000       -       (760,000 )     5,088,000  
Interest expense - mortgage and related party     (1,792,000 )     (605,000 )     -       -       (2,397,000 )
Depreciation and amortization expense     (593,000 )     (620,000 )     -       -       (1,213,000 )
Loss from investments     -       -       (612,000 )     -       (612,000 )
Income tax expense     -       -       -       (222,000 )     (222,000 )
Net income (loss)   $ 1,696,000     $ 542,000     $ (612,000 )   $ (982,000 )   $ 644,000  
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party and Other Financing Transactions (Tables)
3 Months Ended
Sep. 30, 2020
Related Party Transactions [Abstract]  
Summary of Related Party and Other Notes Payable

The following summarizes the balances of related party and other notes payable as of September 30, 2020 and June 30, 2020, respectively.

 

As of   September 30, 2020     June 30, 2020  
Note payable - Hilton     2,929,000       3,008,000  
Note payable - Interstate     1,583,000       1,646,000  
SBA Loans     5,172,000       5,172,000  
Total related party and other notes payable   $ 9,684,000     $ 9,826,000  
Schedule of Minimum Future Lease Payments

Minimum future lease payments for assets under finance leases as of September 30, 2020 are as follows:

 

For the year ending June 30,        
2021     $ 389,000  
2022       508,000  
2023       188,000  
Total minimum lease payments       1,085,000  
Less interest on finance lease       (70,000 )
Present value of future minimum lease payments     $ 1,015,000  
Schedule of Future Minimum Principal Payments

Future minimum principal payments for all related party and other financing transactions are as follows:

 

For the year ending June 30,        
2021     $ 854,000  
2022       6,220,000  
2023       750,000  
2024       567,000  
2025       567,000  
There after       1,740,000  
      $ 10,698,000  

XML 45 R34.htm IDEA: XBRL DOCUMENT v3.20.2
Accounts Payable and Other Liabilities - Justice (Tables)
3 Months Ended
Sep. 30, 2020
Payables and Accruals [Abstract]  
Schedule of Accounts Payable and Other Liabilities - Justice

The following summarizes the balances of accounts payable and other liabilities – Justice as of September 30, 2020 and June 30, 2020.

 

As of   September 30, 2020     June 30, 2020  
             
Trade payable   $ 1,004,000     $ 3,000,000  
Advance deposits     263,000       375,000  
Property tax payable     1,048,000       523,000  
Payroll and related accruals     2,211,000       1,969,000  
Mortgage interest payable     525,000       527,000  
Withholding and other taxes payable     506,000       370,000  
Security deposit     52,000       52,000  
Other payables     1,122,000       598,000  
Total accounts payable and other liabilities - Justice   $ 6,731,000     $ 7,414,000  
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.20.2
Accounts Payable and Other Liabilities (Tables)
3 Months Ended
Sep. 30, 2020
Payables and Accruals [Abstract]  
Schedule of Accounts Payable and Other Liabilities

The following summarizes the balances of accounts payable and other liabilities as of September 30, 2020 and June 30, 2020.

 

As of   September 30, 2020     June 30, 2020  
             
Trade payable   $ 419,000     $ 709,000  
Advance deposits     296,000       422,000  
Property tax payable     958,000       554,000  
Payroll and related accruals     694,000       42,000  
Interest payable     216,000       218,000  
Withholding and other taxes payable     1,051,000       1,189,000  
Security deposit     733,000       745,000  
Other payables     183,000       334,000  
Total accounts payable and other liabilities   $ 4,550,000     $ 4,213,000  

XML 47 R36.htm IDEA: XBRL DOCUMENT v3.20.2
Basis of Presentation and Significant Accounting Policies (Details Narrative)
3 Months Ended
Sep. 28, 2018
Feb. 03, 2017
Sep. 30, 2020
Agreement description     Justice entered into a Hotel management agreement ("HMA") with Interstate Management Company, LLC ("Interstate") to manage the Hotel, along with its five-level parking garage, with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee payable to Interstate shall be one and seven-tenths percent (1.70%) of total Hotel revenue. On October 25, 2019, Interstate merged with Aimbridge Hospitality, North America's largest independent hotel management firm. With the completion of the merger, the newly combined company will be positioned under the Aimbridge Hospitality name in the Americas.
Bears interest percentage 4.75%    
Mortgage Note Payable [Member]      
Bears interest percentage   1.70%  
Portsmouth [Member]      
Ownership interest percentage     68.80%
InterGroup [Member]      
Ownership interest percentage     13.70%
Santa Fe [Member]      
Power to vote percentage interest     87.40%
Santa Fe [Member] | Chairman and CEO [Member]      
Power to vote percentage interest     3.70%
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.20.2
Liquidity (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Aug. 28, 2020
Aug. 28, 2020
Apr. 30, 2020
Apr. 27, 2020
Apr. 09, 2020
Jul. 02, 2014
Jun. 30, 2020
Sep. 30, 2020
Sep. 30, 2019
Aug. 19, 2020
Net cash (used in) provided by operating activities               $ (8,009,000) $ 2,751,000  
Cash, cash equivalents, and restricted cash             $ 28,286,000 31,137,000    
Proceeds from loan     $ 6,814,000       1,144,000      
Debt maturity date     Apr. 30, 2030              
Property Improvement Plan [Member]                    
Deposits                   $ 2,379,000
Hotel Senior Lender [Member]                    
Cash, cash equivalents, and restricted cash             10,666,000 $ 9,562,000    
Hotel Senior Lender [Member] | Property Improvement Plan [Member]                    
Cash, cash equivalents, and restricted cash             $ 2,432,000      
Sole General Partner [Member]                    
Voting interest             93.30%      
Contribution Agreement [Member]                    
Repayment of InterGroup's RLOC $ 2,985,000                  
InterGroup [Member]                    
Debt maturity date           Jul. 01, 2021        
Debt interest rate           12.00%        
InterGroup [Member] | Contribution Agreement [Member]                    
Repayment of InterGroup's RLOC   $ 2,985,000                
Payment from the sale   662,000                
Santa Fe [Member]                    
Sale of properties   15,650,000                
Gain on sale of property   12,043,000                
Proceeds from sale of property   $ 12,163,000                
Santa Fe [Member] | Contribution Agreement [Member]                    
Proceeds from loan $ 12,163,000                  
CIBC Bank [Member] | CARES Act [Member]                    
Proceeds from loan       $ 453,000 $ 4,719,000          
Debt maturity date       Apr. 27, 2022 Apr. 09, 2022          
Debt interest rate       1.00% 1.00%          
CIBC Bank [Member] | InterGroup [Member] | CARES Act [Member]                    
Qualified expenses       $ 453,000     $ 453,000      
CIBC Bank [Member] | Justice [Member] | CARES Act [Member]                    
Qualified expenses         $ 3,568,000   3,568,000      
Future qualified expenses         $ 1,151,000   1,151,000      
Cibc Bank Usa [Member]                    
Revolving line of credit amount             8,000,000      
Line of credit, available to be drawn             $ 8,000,000      
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.20.2
Liquidity - Schedule of Material Financial Obligations (Details)
Sep. 30, 2020
USD ($)
2021 (9 Months) $ 18,185,000
2022 17,739,000
2023 36,619,000
2024 113,092,000
2025 4,965,000
Thereafter 30,264,000
Total 220,864,000
Mortgage and Subordinated Notes Payable [Member]  
2021 (9 Months) 10,445,000
2022 3,100,000
2023 28,244,000
2024 108,113,000
2025 3,494,000
Thereafter 24,190,000
Total 177,586,000
Other Notes Payable [Member]  
2021 (9 Months) 854,000
2022 6,220,000
2023 750,000
2024 567,000
2025 567,000
Thereafter 1,740,000
Total 10,698,000
Interest [Member]  
2021 (9 Months) 6,886,000
2022 8,419,000
2023 7,625,000
2024 4,412,000
2025 904,000
Thereafter 4,334,000
Total $ 32,580,000
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue (Details Narrative) - USD ($)
3 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]    
Contract with customer, liability $ 263,000 $ 375,000
Contract with customer liability, revenue recognized $ 112,000  
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($)
3 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Total Hotel revenue $ 6,909,000 $ 19,146,000
Hotel Rooms [Member]    
Total Hotel revenue 2,890,000 13,314,000
Food and Beverage [Member]    
Total Hotel revenue 37,000 1,222,000
Garage [Member]    
Total Hotel revenue 470,000 736,000
Other Operating Departments [Member]    
Total Hotel revenue 28,000 157,000
Hotel [Member]    
Total Hotel revenue $ 3,425,000 $ 15,429,000
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Hotel, Net - Schedule of Investment in Hotel (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Cost $ 99,182,000 $ 99,046,000
Accumulated Depreciation (60,857,000) (60,277,000)
Net Book Value 38,325,000 38,769,000
Land [Member]    
Cost 2,738,000 2,738,000
Accumulated Depreciation
Net Book Value 2,738,000 2,738,000
Finance Lease ROU Assets [Member]    
Cost 1,805,000 1,775,000
Accumulated Depreciation (368,000) (291,000)
Net Book Value 1,437,000 1,484,000
Furniture and Equipment [Member]    
Cost 30,634,000 30,528,000
Accumulated Depreciation (27,631,000) (27,498,000)
Net Book Value 3,003,000 3,030,000
Building and Improvements [Member]    
Cost 64,005,000 64,005,000
Accumulated Depreciation (32,858,000) (32,488,000)
Net Book Value $ 31,147,000 $ 31,517,000
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.20.2
Investment In Real Estate, Net (Details Narrative)
Aug. 28, 2020
USD ($)
Contribution Agreement [Member]  
Repayment of line of credit $ 2,985,000
Santa Fe [Member]  
Proceeds from sale of property 15,650,000
Gain on sale of property 12,043,000
Proceeds from sale of property, net $ 12,163,000
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Real Estate, Net - Schedule of Investment in Real Estate (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Real estate investment, Gross $ 45,417,000 $ 48,870,000
Real estate investment, Accumulated depreciation (43,349,000) (44,112,000)
Real estate investment, Land held for development 1,468,000 1,468,000
Real estate investment, Net 46,885,000 50,338,000
Land [Member]    
Real estate investment, Gross 21,568,000 23,565,000
Buildings, Improvements and Equipment [Member]    
Real estate investment, Gross $ 67,198,000 $ 69,417,000
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Marketable Securities (Details Narrative) - Comstock [Member] - USD ($)
3 Months Ended 12 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Investment marketable securities percentage 9.00% 11.00%
Unrealized losses related to securities $ 5,627,000 $ 5,734,000
Unrealized losses related to investment $ 5,333,000 $ 5,427,000
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Marketable Securities - Schedule of Trading Securities (Details) - USD ($)
3 Months Ended 12 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Jun. 30, 2020
Net unrealized loss $ (253,000) $ (145,000)  
Corporate Equities [Member]      
Cost 13,793,000   $ 11,459,000
Gross unrealized gain 1,116,000   902,000
Gross unrealized loss (6,243,000)   (6,183,000)
Net unrealized loss (5,127,000)   (5,281,000)
Fair value $ 8,666,000   $ 6,178,000
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Marketable Securities - Schedule of Net Loss on Marketable Securities Comprising of Realized and Unrealized Gains (Losses) (Details) - USD ($)
3 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract]    
Realized loss on marketable securities, net $ (262,000) $ (74,000)
Unrealized gain (loss) on marketable securities, net 9,000 (71,000)
Unrealized gain (loss) on marketable securities related to Comstock 95,000 (304,000)
Net loss on marketable securities $ (158,000) $ (449,000)
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.20.2
Other Investments, Net - Schedule of Other Investments, Net (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Other investments $ 98,000 $ 278,000
Private Equity Hedge Fund, at Cost [Member]    
Other investments 95,000 157,000
Other Preferred Stock, at Cost [Member]    
Other investments $ 3,000 $ 121,000
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.20.2
Fair Value Measurements (Details Narrative) - USD ($)
3 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Fair Value Disclosures [Abstract]    
Proceeds from other investments $ 118,000 $ 48,000
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.20.2
Fair Value Measurements - Schedule of Fair Value Measurement on Recurring Basis (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Investment in marketable securities $ 8,666,000 $ 6,178,000
Level 1 [Member]    
Investment in marketable securities 8,666,000 6,178,000
Level 1 [Member] | REITs and Real Estate Companies [Member]    
Investment in marketable securities 4,353,000 2,365,000
Level 1 [Member] | Energy [Member]    
Investment in marketable securities 999,000 767,000
Level 1 [Member] | Basic Material [Member]    
Investment in marketable securities 987,000 1,209,000
Level 1 [Member] | Financial Services [Member]    
Investment in marketable securities 624,000 282,000
Level 1 [Member] | Consumer Cyclical [Member]    
Investment in marketable securities 592,000 295,000
Level 1 [Member] | Technology [Member]    
Investment in marketable securities 451,000 121,000
Level 1 [Member] | Industrials [Member]    
Investment in marketable securities 390,000 484,000
Level 1 [Member] | Communication Services [Member]    
Investment in marketable securities 180,000 157,000
Level 1 [Member] | Healthcare [Member]    
Investment in marketable securities 90,000 43,000
Level 1 [Member] | Corporate Bonds [Member]    
Investment in marketable securities 417,000
Level 1 [Member] | Other [Member]    
Investment in marketable securities $ 38,000
XML 61 R50.htm IDEA: XBRL DOCUMENT v3.20.2
Fair Value Measurements - Schedule of Fair Value Measurements on Non-recurring Basis (Details) - USD ($)
3 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Jun. 30, 2020
Other non-marketable investments $ 98,000   $ 278,000
Net loss (62,000)  
Level 3 [Member]      
Other non-marketable investments $ 98,000   $ 278,000
XML 62 R51.htm IDEA: XBRL DOCUMENT v3.20.2
Cash, Cash Equivalents and Restricted Cash - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Restricted Cash and Cash Equivalents [Abstract]    
Cash and cash equivalents $ 19,444,000 $ 14,163,000
Restricted cash 11,693,000 14,123,000
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 31,137,000 $ 28,286,000
XML 63 R52.htm IDEA: XBRL DOCUMENT v3.20.2
Stock Based Compensation Plans (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Feb. 25, 2020
Dec. 31, 2018
Sep. 30, 2020
Sep. 30, 2019
Jun. 30, 2020
Mar. 31, 2020
Stock Based Compensation [Line Items]            
Stock based compensation     $ 5,000 $ 8,000    
Unamortized compensation related to stock option     $ 13,000      
Recognized weighted average period     1 year 5 months 1 day      
Share based compensation arrangement by share based payment awards exercised        
2010 Incentive Plan [Member]            
Stock Based Compensation [Line Items]            
Plan term 20 years          
2010 Incentive Plan [Member] | John V. Winfield [Member]            
Stock Based Compensation [Line Items]            
Stock based compensation           $ 116,000
Share based compensation arrangement by share based payment option shares issued 100,000          
Option term description Options granted to John Winfield on March 16, 2010 from ten years to sixteen years so that these options will terminate on March 16, 2026 instead of on March 16, 2020          
2010 Incentive Plan [Member] | Minimum [Member]            
Stock Based Compensation [Line Items]            
Plan term 10 years          
2010 Incentive Plan [Member] | Maximum [Member]            
Stock Based Compensation [Line Items]            
Plan term 16 years          
Vested Incentive Stock Options [Member] | John V. Winfield [Member]            
Stock Based Compensation [Line Items]            
Share based compensation arrangement by share based payment awards exercised   26,805        
Share based compensation arrangement by share based payment options surrendered   17,439        
Share based compensation arrangement by share based payment option shares issued   9,366        
XML 64 R53.htm IDEA: XBRL DOCUMENT v3.20.2
Stock-based Compensation Plans - Schedule of Stock Option Activity (Details) - USD ($)
3 Months Ended 12 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]    
Number of Shares, Outstanding, Beginning Balance 341,195 341,195
Number of Shares, Granted
Number of Shares, Exercised
Number of Shares, Forfeited
Number of Shares, Exchanged
Number of Shares, Outstanding, Ending Balance 341,195 341,195
Number of Shares, Exercisable, Ending Balance 333,995 323,195
Number of Shares, Vested and expected to vest, Ending Balance 341,195 341,195
Weighted Average Exercise Price, Outstanding, Beginning Balance $ 16.95 $ 16.95
Weighted Average Exercise Price, Granted
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Forfeited
Weighted Average Exercise Price, Exchanged
Weighted Average Exercise Price, Outstanding, Ending Balance 16.95 16.95
Weighted Average Exercise Price, Exercisable, Ending Balance 16.73 16.38
Weighted Average Exercise Price, Vested and expected to vest, Ending Balance $ 16.95 $ 16.95
Weighted Average Remaining Life, Outstanding, Beginning Balance 3 years 9 months 29 days 3 years 26 days
Weighted Average Remaining Life, Outstanding, Ending Balance 3 years 6 months 29 days 3 years 9 months 29 days
Weighted Average Remaining Life, Exercisable, Ending Balance 3 years 6 months 3 days 3 years 8 months 2 days
Weighted Average Remaining Life, Vested and expected to vest, Ending Balance 3 years 6 months 29 days 3 years 9 months 29 days
Aggregate Intrinsic Value, Outstanding, Beginning Balance $ 3,271,000 $ 4,680,000
Aggregate Intrinsic Value, Outstanding, Ending Balance 4,448,000 3,271,000
Aggregate Intrinsic Value, Exercisable, Ending Balance 4,428,000 3,271,000
Aggregate Intrinsic Value, Vested and expected to vest, Ending Balance $ 4,448,000 $ 3,271,000
XML 65 R54.htm IDEA: XBRL DOCUMENT v3.20.2
Segment Information (Details Narrative)
3 Months Ended
Sep. 30, 2020
Numbers
Segment Reporting [Abstract]  
Number of reportable segments 3
Number of operating segments 3
XML 66 R55.htm IDEA: XBRL DOCUMENT v3.20.2
Segment Information - Schedule of Segment Reporting Information (Details) - USD ($)
3 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Jun. 30, 2020
Segment Reporting Information [Line Items]      
Revenues $ 6,909,000 $ 19,146,000  
Segment operating expenses (8,286,000) (14,058,000)  
Segment income (loss) (2,569,000) 3,875,000  
Interest expense - mortgage and related party (2,315,000) (2,397,000)  
Depreciation and amortization expense (1,191,000) (1,213,000)  
Gain from sale of real estate 12,043,000    
Loss from investments (365,000) (612,000)  
Income tax benefit (1,975,000) (222,000)  
Net income (loss) 4,819,000 644,000  
Total assets 129,374,000   $ 130,217,000
Hotel Operations [Member]      
Segment Reporting Information [Line Items]      
Revenues 3,425,000 15,429,000  
Segment operating expenses (5,033,000) (11,348,000)  
Segment income (loss) (1,608,000) 4,081,000  
Interest expense - mortgage and related party (1,700,000) (1,792,000)  
Depreciation and amortization expense (579,000) (593,000)  
Gain from sale of real estate    
Loss from investments  
Income tax benefit  
Net income (loss) (3,887,000) 1,696,000  
Total assets 50,854,000    
Real Estate Operations [Member]      
Segment Reporting Information [Line Items]      
Revenues 3,484,000 3,717,000  
Segment operating expenses (1,887,000) (1,950,000)  
Segment income (loss) 1,597,000 1,767,000  
Interest expense - mortgage and related party (615,000) (605,000)  
Depreciation and amortization expense (612,000) (620,000)  
Gain from sale of real estate 12,043,000    
Loss from investments  
Income tax benefit  
Net income (loss) 12,413,000 542,000  
Total assets 46,885,000    
Investment Transactions [Member]      
Segment Reporting Information [Line Items]      
Revenues  
Segment operating expenses  
Segment income (loss)  
Interest expense - mortgage and related party  
Depreciation and amortization expense  
Gain from sale of real estate    
Loss from investments (365,000) (612,000)  
Income tax benefit  
Net income (loss) (365,000) (612,000)  
Total assets 8,764,000    
Corporate [Member]      
Segment Reporting Information [Line Items]      
Revenues  
Segment operating expenses (1,366,000) (760,000)  
Segment income (loss) (1,366,000) (760,000)  
Interest expense - mortgage and related party  
Depreciation and amortization expense  
Gain from sale of real estate    
Loss from investments  
Income tax benefit (1,975,000) (222,000)  
Net income (loss) (3,341,000) $ (982,000)  
Total assets $ 22,871,000    
XML 67 R56.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party and Other Financing Transactions (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Aug. 28, 2020
Apr. 30, 2020
Apr. 27, 2020
Apr. 09, 2020
Jul. 31, 2019
Sep. 28, 2018
Jul. 31, 2018
Jul. 31, 2018
Jul. 02, 2014
Jul. 31, 2020
Jun. 30, 2020
Jul. 31, 2019
Sep. 30, 2020
May 11, 2017
Agreement description                         Justice entered into a Hotel management agreement ("HMA") with Interstate Management Company, LLC ("Interstate") to manage the Hotel, along with its five-level parking garage, with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee payable to Interstate shall be one and seven-tenths percent (1.70%) of total Hotel revenue. On October 25, 2019, Interstate merged with Aimbridge Hospitality, North America's largest independent hotel management firm. With the completion of the merger, the newly combined company will be positioned under the Aimbridge Hospitality name in the Americas.  
Key money plus accrued interest amount                     $ 1,009,000   $ 809,000  
Proceeds from loan   $ 6,814,000                 1,144,000      
Debt maturity date   Apr. 30, 2030                        
Bears interest percentage           4.75%                
Finance lease obligations                     1,098,000   1,015,000  
Maturity date description           The note matures in October 2048.                
Mortgage and mezzanine amount           $ 1,000,000                
Debt instrument term           5 years                
Proceeds from line of credit                          
Loan outstanding amount                     92,292,000   $ 91,923,000  
Lease descriptions                         These finance leases expire in various years through 2023 at rates ranging from 4.62% to 6.25% per annum.  
Mortgage Loan [Member]                            
Debt maturity date                         Jan. 01, 2024  
Debt interest rate                         9.75%  
Minimum [Member]                            
Financial leases, rate per annum                         4.62%  
Maximum [Member]                            
Financial leases, rate per annum                         6.25%  
InterGroup [Member]                            
Debt maturity date                 Jul. 01, 2021          
Debt interest rate                 12.00%          
Variable interest rate LIBOR               The RLOC carries a variable interest rate of 30-day LIBOR plus 3%.            
Increase in line of credit facility                       $ 3,000,000    
Maturity date description                   Extended to July 2021.   July 24, 2019 to July 23, 2020    
Mortgage due to related party amount         $ 2,969,000         $ 2,969,000   $ 2,969,000   $ 97,000,000
Mortgage and mezzanine amount                           $ 20,000,000
Debt instrument term                 2 years          
Loan outstanding amount                     3,000,000   $ 3,000,000  
Debt principal amount                 $ 4,250,000          
Loan fee percentage                 3.00%          
Unsecured loan                     3,000,000      
Partnership [Member]                            
Debt maturity date                         Jan. 31, 2024  
Bears interest percentage                         5.275%  
Redemption of limited partnership interest to repay                         $ 42,940,000  
Mortgage due to related party amount                         97,000,000  
Mortgage and mezzanine amount                         $ 20,000,000  
Debt instrument term                         30 years  
Cred Reit Holdco LLC [Member]                            
Debt maturity date         Jan. 01, 2024                  
Debt interest rate         9.75%             9.75%    
Bears interest percentage         7.25%                  
Mortgage and mezzanine amount         $ 20,000,000             $ 20,000,000    
CIBC Bank [Member] | Cred Reit Holdco LLC [Member]                            
Revolving line of credit             $ 5,000,000 $ 5,000,000            
Drawn to pay off mortgage note payable             $ 2,969,000              
Hotel Management Agreement [Member]                            
Agreement description                         The term of the 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 aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second (2nd) anniversary of the takeover date.  
Key money incentive fee                         $ 2,000,000  
CARES Act [Member] | CIBC Bank [Member]                            
Proceeds from loan     $ 453,000 $ 4,719,000                    
Debt maturity date     Apr. 27, 2022 Apr. 09, 2022                    
Debt interest rate     1.00% 1.00%                    
CARES Act [Member] | CIBC Bank [Member] | InterGroup [Member]                            
Qualified expenses     $ 453,000               453,000      
CARES Act [Member] | CIBC Bank [Member] | Justice [Member]                            
Qualified expenses       $ 3,568,000             3,568,000      
Future qualified expenses       $ 1,151,000             $ 1,151,000      
Contribution Agreement [Member] | Santa Fe [Member]                            
Proceeds from loan $ 12,163,000                          
Drawn to pay off mortgage note payable 15,650,000                          
Proceeds from line of credit 662,000                          
Repayment of line of credit $ 2,985,000                          
Hilton [Member]                            
Notes reduced                         $ 316,000  
Debt instrument, payment terms                         Through 2030  
XML 68 R57.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party and Other Financing Transactions - Summary of Related Party and Other Notes Payable (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Total related party and other notes payable $ 4,525,000 $ 4,654,000
Note payable - Hilton [Member]    
Total related party and other notes payable 2,929,000 3,008,000
Note payable - Interstate [Member]    
Total related party and other notes payable 1,583,000 1,646,000
SBALoans [Member]    
Total related party and other notes payable 5,172,000 5,172,000
Other Notes Payable [Member]    
Total related party and other notes payable $ 9,684,000 $ 9,826,000
XML 69 R58.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party and Other Financing Transactions - Schedule of Minimum Future Lease Payments (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Related Party Transactions [Abstract]    
2021 $ 389,000  
2022 508,000  
2023 188,000  
Total minimum lease payments 1,085,000  
Less interest on finance lease (70,000)  
Present value of future minimum lease payments $ 1,015,000 $ 1,098,000
XML 70 R59.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party and Other Financing Transactions - Schedule of Future Minimum Principal Payments (Details)
Sep. 30, 2020
USD ($)
2021 $ 17,739,000
2022 36,619,000
2023 113,092,000
2024 4,965,000
Total 220,864,000
Related Party Debt and Other Notes Payable [Member]  
2021 854,000
2022 6,220,000
2023 750,000
2024 567,000
2025 567,000
There after 1,740,000
Total $ 10,698,000
XML 71 R60.htm IDEA: XBRL DOCUMENT v3.20.2
Accounts Payable and Other Liabilities - Justice - Schedule of Accounts Payable and Other Liabilities - Justice (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Trade payable $ 419,000 $ 709,000
Advance deposits 296,000 422,000
Property tax payable 958,000 554,000
Payroll and related accruals 694,000 42,000
Mortgage interest payable 216,000 218,000
Withholding and other taxes payable 1,051,000 1,189,000
Security deposit 733,000 745,000
Other payables 183,000 334,000
Justice [Member]    
Trade payable 1,004,000 3,000,000
Advance deposits 263,000 375,000
Property tax payable 1,048,000 523,000
Payroll and related accruals 2,211,000 1,969,000
Mortgage interest payable 525,000 527,000
Withholding and other taxes payable 506,000 370,000
Security deposit 52,000 52,000
Other payables 1,122,000 598,000
Total accounts payable and other liabilities - Justice $ 6,731,000 $ 7,414,000
XML 72 R61.htm IDEA: XBRL DOCUMENT v3.20.2
Accounts Payable and Other Liabilities - Schedule of Accounts Payable and Other Liabilities (Details) - USD ($)
Sep. 30, 2020
Jun. 30, 2020
Payables and Accruals [Abstract]    
Trade payable $ 419,000 $ 709,000
Advance deposits 296,000 422,000
Property tax payable 958,000 554,000
Payroll and related accruals 694,000 42,000
Interest payable 216,000 218,000
Withholding and other taxes payable 1,051,000 1,189,000
Security deposit 733,000 745,000
Other payables 183,000 334,000
Total accounts payable and other liabilities $ 4,550,000 $ 4,213,000
XML 73 R62.htm IDEA: XBRL DOCUMENT v3.20.2
Subsequent Events (Details Narrative) - USD ($)
1 Months Ended
Oct. 30, 2020
Apr. 30, 2020
Sep. 28, 2018
Feb. 03, 2017
Jun. 30, 2020
Loan amount     $ 1,000,000    
Bears interest percentage     4.75%    
Debt instrument term     5 years    
Proceeds from loan   $ 6,814,000     $ 1,144,000
Mortgage Note Payable [Member]          
Bears interest percentage       1.70%  
Subsequent Event [Member] | Mortgage Note Payable [Member] | 633 Ocean Avenue Santa Monica Property [Member]          
Repayment of prior mortgage amount $ 4,800,000        
Subsequent Event [Member] | New Fannie Mortgage Note Payable [Member]          
Loan amount $ 8,400,000        
Bears interest percentage 2.52%        
Debt instrument term 10 years        
Debt Instrument, Description The Company refinanced its Ocean Avenue Santa Monica property’s $4.8 million Fannie Mae mortgage with a new Fannie Mae mortgage in the amount of $8.4 million at a fixed rate of 2.52% for 10-years with interest only payments for two years.        
Proceeds from loan $ 3,500,000        
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