LIQUIDITY

6 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [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 have a material detrimental impact on our liquidity. For the six months ended December 31, 2023, our net cash flow used for operations was $80,000. We have cautiously re-established certain services at our Hotel but have continued to take steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets. As the hospitality and travel environment continues its recovery, Portsmouth will continue to evaluate what services it brings back. During the six months ended December 31, 2023, Portsmouth continued to make capital improvements to the hotel in the amount of $1,918,000 and anticipates continuing its guest room upgrade program during the remaining of fiscal year 2024. During the six months ended December 31, 2023 the Company made capital improvements in the amount of $2,682,000 to its multi-family and commercial real estate.

The Company had cash and cash equivalents of $9,371,000 and $5,960,000 as of December 31, 2023 and June 30, 2023, respectively. The Company had restricted cash of $2,936,000 and $6,914,000 as of December 31, 2023 and June 30, 2023, respectively. The Company had marketable securities, net of margin due to securities brokers, of $14,354,000 and $15,328,000 as of December 31, 2023 and June 30, 2023, respectively. These marketable securities are short-term investments and liquid in nature.

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 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000. Upon the dissolution of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. As of June 30, 2023 the balance of the loan was $15,700,000 net of loan amortization costs of zero. Portsmouth agreed to a 0.5% loan extension and modification fee payable to InterGroup. During the six months ended December 31, 2023, Portsmouth borrowed an additional $2,500,000 to fund its hotel operations. As of December 31, 2023 the balance of the loan was $18,200,000 and Portsmouth has not made any paid-downs to its note payable to InterGroup. All material intercompany accounts and transactions have been eliminated in consolidation.

In December 2023, the Company obtained a second mortgage on its 358-unit apartment located in Las Colinas, Texas in the amount of $4,573,000. The term of the loan is approximately 7 years with interest rate at 7.60%. The loan matures in November 2031.

The Company’s 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 at all our properties.

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

The following table provides a summary as of December 31, 2023, the Company’s material financial obligations which also includes interest payments.

			6 Months		Year		Year		Year		Year
	Total		2024		2025		2026		2027		2028		Thereafter
Mortgage and subordinated notes payable	$	196,126,000	$	107,102,000	$	9,317,000	$	1,162,000	$	3,296,000	$	1,770,000	$	73,479,000
Other notes payable		2,671,000		283,000		567,000		567,000		463,000		317,000		474,000
Interest		28,007,000		3,586,000		3,259,000		2,752,000		2,645,000		2,648,000		13,117,000
Total	$	226,804,000	$	110,971,000	$	13,143,000	$	4,481,000	$	6,404,000	$	4,735,000	$	87,070,000