10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2013

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 0-6877

SANTA FE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

NEVADA	95-2452529
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

10940 Wilshire Blvd., Suite 2150, Los Angeles, California 90024

(Address of principal executive offices) (Zip Code)

(310) 889-2500

(Registrant’s telephone number, including area code)

_________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

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

x Yes ¨ No

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

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

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

¨ Yes x No

The number of shares outstanding of registrant’s Common Stock, as of May 3, 2013, was 1,241,810.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and June 30, 2012.	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months ended March 31, 2013 and 2012.	4
	Condensed Consolidated Statements of Operations (Unaudited) for the Nine Months ended March 31, 2013 and 2012.	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months ended March 31, 2013 and 2012.	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	13
Item 4.	Controls and Procedures.	21
	PART II – OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	22
Item 5.	Other Information	22
Item 6.	Exhibits.	23
Signatures		23

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PART I

FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

SANTA FE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of	March 31, 2013		June 30, 2012
	(Unaudited)
ASSETS
Investment in hotel, net	$	37,316,000	$	36,481,000
Investment in real estate, net		5,058,000		5,105,000
Investment in marketable securities		4,971,000		4,050,000
Other investments, net		8,002,000		8,171,000
Cash and cash equivalents		291,000		1,143,000
Accounts receivable, net		1,943,000		1,641,000
Other assets, net		3,369,000		3,342,000
Deferred tax asset		3,218,000		3,236,000
Total assets	$	64,168,000	$	63,169,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and other liabilities	$	10,032,000	$	8,745,000
Due to securities broker		1,236,000		53,000
Obligations for securities sold		164,000		321,000
Other notes payable		1,646,000		2,072,000
Mortgage notes payable - real estate		3,547,000		3,577,000
Mortgage notes payable - hotel		43,645,000		44,321,000
Total liabilities		60,270,000		59,089,000
Commitments and contingencies
Shareholders' equity:
Common stock - par value $.10 per share;
Authorized - 2,000,000;
Issued 1,339,638 and outstanding 1,241,810		134,000		134,000
Additional paid-in capital		8,808,000		8,808,000
Retained earnings (acculumlated deficit)		(198,000)		169,000
Treasury stock, at cost, 97,828 shares		(951,000)		(951,000)
Total Santa Fe shareholders' equity		7,793,000		8,160,000
Noncontrolling interest		(3,895,000)		(4,080,000)
Total shareholders' equity		3,898,000		4,080,000
Total liabilities and shareholders' equity	$	64,168,000	$	63,169,000

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

 

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SANTA FE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

For the three months ended March 31,	2013		2012
Revenues:
Hotel	$	10,475,000	$	10,154,000
Real estate		135,000		146,000
Total revenues		10,610,000		10,300,000
Costs and operating expenses:
Hotel operating expenses		(9,563,000)		(8,572,000)
Real estate operating expenses		(66,000)		(50,000)
Depreciation and amortization expense		(601,000)		(585,000)
General and administrative expense		(254,000)		(253,000)
Total costs and operating expenses		(10,484,000)		(9,460,000)
Income from operations		126,000		840,000
Other income (expense):
Interest expense		(673,000)		(704,000)
Net income on marketable securities		17,000		655,000
Net unrealized loss on other investments		-		(17,000)
Impairment loss on other investments		-		(40,000)
Dividend and interest income		6,000		20,000
Trading and margin interest expense		(122,000)		(137,000)
Other expense, net		(772,000)		(223,000)
Income (loss) before income taxes		(646,000)		617,000
Income tax benefit (expense)		141,000		(126,000)
Net (loss) income		(505,000)		491,000
Less: Net loss (income) attributable to the noncontrolling interest		246,000		(221,000)
Net (loss) income attributable to Santa Fe	$	(259,000)	$	270,000
Basic and diluted net (loss) income per share attributable to Santa Fe	$	(0.21)	$	0.22
Weighted average number of common shares outstanding - basic and diluted		1,241,810		1,241,810

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

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SANTA FE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED) 

For the nine months ended March 31,	2013		2012
Revenues:
Hotel	$	33,581,000	$	31,675,000
Real estate		417,000		430,000
Total revenues		33,998,000		32,105,000
Costs and operating expenses:
Hotel operating expenses		(28,125,000)		(24,513,000)
Real estate operating expenses		(189,000)		(156,000)
Depreciation and amortization expense		(1,806,000)		(1,710,000)
General and administrative expense		(754,000)		(687,000)
Total costs and operating expenses		(30,874,000)		(27,066,000)
Income from operations		3,124,000		5,039,000
Other income (expense):
Interest expense		(2,054,000)		(2,146,000)
Net loss on marketable securities		(332,000)		(1,575,000)
Net unrealized loss on other investments		(169,000)		(284,000)
Impairment loss on other investments		-		(427,000)
Dividend and interest income		276,000		327,000
Trading and margin interest expense		(351,000)		(373,000)
Other expense, net		(2,630,000)		(4,478,000)
Income before income taxes		494,000		561,000
Income tax (expense) benefit		(18,000)		49,000
Net income		476,000		610,000
Less: Net income attributable to the noncontrolling interest		(843,000)		(1,697,000)
Net loss attributable to Santa Fe	$	(367,000)	$	(1,087,000)
Basic and diluted net loss per share attributable to Santa Fe	$	(0.30)	$	(0.88)
Weighted average number of common shares outstanding - basic and diluted		1,241,810		1,241,810

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

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SANTA FE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the nine months ended March 31,	2013		2012
Cash flows from operating activities:
Net income	$	476,000	$	610,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Net unrealized loss on marketable securities		510,000		1,460,000
Unrealized loss on other investments		169,000		284,000
Impairment loss on other investments		-		427,000
Depreciation and amortization		1,806,000		1,710,000
Changes in assets and liabilities:
Investment in marketable securities		(1,431,000)		973,000
Accounts receivable		(302,000)		356,000
Other assets		(109,000)		(809,000)
Accounts payable and other liabilities		1,287,000		(126,000)
Due to securities broker		1,183,000		(1,427,000)
Obligations for securities sold		(157,000)		109,000
Deferred tax asset		18,000		(49,000)
Net cash provided by operating activities		3,450,000		3,518,000
Cash flows from investing activities:
Hotel and real estate investments		(2,512,000)		(2,133,000)
Proceeds from other investments		-		160,000
Net cash used in investing activities		(2,512,000)		(1,973,000)
Cash flows from financing activities:
Distributions and dividends to noncontrolling interest		(658,000)		(500,000)
Payments on mortgage notes payable		(706,000)		(682,000)
Payments on other notes payable		(426,000)		(348,000)
Net cash used in financing activities		(1,790,000)		(1,530,000)
Net (decrease) increase in cash and cash equivalents:		(852,000)		15,000
Cash and cash equivalents at the beginning of the period		1,143,000		745,000
Cash and cash equivalents at the end of the period	$	291,000	$	760,000
Supplemental information:
Interest paid	$	2,136,000	$	2,240,000

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

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SANTA FE FINANCIAL 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 Santa Fe Financial Corporation (“Santa Fe” 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 Santa Fe and the notes therein included in the Company's Annual Report on Form 10-K for the year ended June 30, 2012. The June 30, 2012 Condensed Consolidated Balance Sheet was derived from the Company’s Form 10-K for the year ended June 30, 2012.

The results of operations for the three and nine months ended March 31, 2013 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2013.

As of March 31, 2013, Santa Fe owns approximately 68.8% of the outstanding common shares of Portsmouth Square, Inc. (“Portsmouth”), a public company. Santa Fe is an 80.5%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 12.9% of the common stock of Portsmouth.

The Company’s primary business is conducted through Portsmouth’s general and limited partnership interest in Justice Investors, a California limited partnership (“Justice” or the “Partnership”). Portsmouth has a 50.0% limited partnership interest in Justice and serves as one of the two general partners. The other general partner, Evon Corporation (“Evon”), served as the managing general partner until December 1, 2008 at which time Portsmouth assumed the role of managing general partner.

Justice owns a 543-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the Hotel) and related facilities including a five level underground parking garage. The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with Hilton Hotels Corporation. Justice also has a Management Agreement with Prism Hospitality L.P. (Prism) to perform the day-to-day management functions of the Hotel. The parking garage that is part of the Hotel property is managed by Ace Parking pursuant to a contract with the Partnership. Justice also leases a portion of the lobby level of the Hotel to a day spa operator.

Portsmouth also receives management fees as a general partner of Justice for its services in overseeing and managing the Partnership’s assets. Those fees are eliminated in consolidation.

In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate. On December 31, 1997, the Company acquired a controlling 55.4% interest in Intergroup Woodland Village, Inc. ("Woodland Village") from InterGroup. Woodland Village's major asset is a 27-unit apartment complex located in Los Angeles, California. The Company also owns a two-unit apartment building in Los Angeles, California.

Basic income (loss) per share is calculated based upon the weighted average number of common shares outstanding during each respective period. During the three and nine months ended March 31, 2013 and 2012, the Company did not have any potentially dilutive securities outstanding.

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In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.” ASU 2011-05 changes the way other comprehensive income (“OCI”) appears within the financial statements. Companies will be required to show net income, OCI and total comprehensive income in one continuous statement or in two separate but consecutive statements. Components of OCI may no longer be presented solely in the statement of changes in shareholders’ deficit. ASU 2011-05 was effective for the Company beginning July 1, 2012. For the three and nine months ended March 31, 2013 and 2012, the Company had no components of Comprehensive Income other than Net Income itself.

The Company has evaluated subsequent events through the date the condensed consolidated financial statements were issued.

NOTE 2 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

			Accumulated		Net Book
March 31, 2013	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		21,954,000		(19,038,000)		2,916,000
Building and improvements		53,795,000		(21,291,000)		32,504,000
	$	77,645,000	$	(40,329,000)	$	37,316,000

			Accumulated		Net Book
June 30, 2012	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		20,855,000		(18,187,000)		2,668,000
Building and improvements		52,383,000		(20,466,000)		31,917,000
	$	75,134,000	$	(38,653,000)	$	36,481,000

NOTE 3 – INVESTMENT IN REAL ESTATE, NET

The Company owns and operates a 27-unit and 2-unit multi-family apartment complex located in Los Angeles, California and owns land held for development located in Maui, Hawaii. Investment in real estate consisted of the following:  

As of	March 31, 2013		June 30, 2012
Land	$	2,430,000	$	2,430,000
Buildings, improvements and equipment		2,580,000		2,580,000
Accumulated depreciation		(925,000)		(878,000)
		4,085,000		4,132,000
Land held for development		973,000		973,000
Investment in real estate, net	$	5,058,000	$	5,105,000

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NOTE 4 - INVESTMENT IN MARKETABLE SECURITIES

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

At March 31, 2013 and June 30, 2012, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

			Gross		Gross		Net		Fair
Investment	Cost		Unrealized Gain		Unrealized Loss		Unrealized Gain		Value
As of March 31, 2013
Corporate
Equities	$	4,425,000	$	1,623,000	$	(1,077,000)	$	546,000	$	4,971,000
As of June 30, 2012
Corporate
Equities	$	3,038,000	$	1,970,000	$	(958,000)	$	1,012,000	$	4,050,000

As of March 31, 2013 and June 30, 2012, the Company had $1,006,000 and $756,000, respectively, of unrealized losses related to securities held for over one year.

Net income (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the three and nine months ended March 31, 2013 and 2012, respectively.  

For the three months ended March 31,	2013		2012
Realized gain on marketable securities	$	144,000	$	388,000
Unrealized (loss) gain on marketable securities		(127,000)		267,000
Net income on marketable securities	$	17,000	$	655,000

For the nine months ended March 31,	2013		2012
Realized gain (loss) on marketable securities	$	178,000	$	(115,000)
Unrealized loss on marketable securities		(510,000)		(1,460,000)
Net loss on marketable securities	$	(332,000)	$	(1,575,000)

NOTE 5 – OTHER INVESTMENTS, NET

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

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Other investments, net consist of the following: 

Type	March 31, 2013		June 30, 2012
Preferred stock - Comstock, at cost	$	6,659,000	$	6,659,000
Private equity hedge fund, at cost		1,164,000		1,164,000
Corporate debt and equity instruments, at cost		168,000		168,000
Warrants - at fair value		11,000		180,000
	$	8,002,000	$	8,171,000

NOTE 6 - FAIR VALUE MEASUREMENTS

The carrying values of the Company’s non-financial instruments approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, due to securities broker 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 March 31, 2013
Assets:	Level 1		Level 2		Level 3		Total
Cash equivalents - money market	$	3,000	$	-	$	-	$	3,000
Other investments - warrants		-		-		11,000		11,000
Investment in marketable securities:
Basic materials		2,390,000		-		-		2,390,000
Technology		798,000		-		-		798,000
Financial services		720,000		-		-		720,000
REITs and real estate companies		147,000		-		-		147,000
Other		916,000		-		-		916,000
		4,971,000		-		-		4,971,000
	$	4,974,000	$	-	$	11,000	$	4,985,000

As of June 30, 2012
Assets:	Level 1		Level 2		Level 3		Total
Cash equivalents - money market	$	3,000	$	-	$	-	$	3,000
Other investments - warrants		-		-		180,000		180,000
Investment in marketable securities:
Basic materials		2,475,000		-		-		2,475,000
Technology		379,000		-		-		379,000
Financial services		337,000		-		-		337,000
REITs and real estate companies		205,000		-		-		205,000
Other		654,000		-		-		654,000
		4,050,000		-		-		4,050,000
	$	4,053,000	$	-	$	180,000	$	4,233,000

The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date. The fair value of the warrants was determined based upon a Black-Scholes option valuation model.

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

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									Net loss for the nine months
Assets	Level 1		Level 2		Level 3		March 31, 2013		ended March 31, 2013
Other non-marketable investments	$	-	$	-	$	7,991,000	$	7,991,000	$	-

									Net loss for the nine months
Assets	Level 1		Level 2		Level 3		June 30, 2012		ended March 31, 2012
Other non-marketable investments	$	-	$	-	$	7,991,000	$	7,991,000	$	(427,000)

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

NOTE 7 – SEGMENT INFORMATION

The Company operates in three reportable segments, the operation of the hotel (“Hotel Operations”), 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 same information. Information below represents reporting segments for the three and nine months ended March 31, 2013 and 2012, respectively. Operating income for rental properties consist of rental income. Operating income from hotel operations consists of the operation of the hotel and operation of the garage. Operating income (loss) from investment transactions consist of net investment gain (loss) and dividend and interest income.

As of and for the three months	Hotel		Real Estate		Investment
ended March 31, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	10,475,000	$	135,000	$	-	$	-	$	10,610,000
Segment operating expenses		(9,563,000)		(66,000)		-		(254,000)		(9,883,000)
Segment income (loss)		912,000		69,000		-		(254,000)		727,000
Interest expense		(648,000)		(25,000)		-		-		(673,000)
Depreciation and amortization expense		(585,000)		(16,000)		-		-		(601,000)
Loss from investments		-		-		(99,000)		-		(99,000)
Income tax benefit		-		-		-		141,000		141,000
Net income (loss)	$	(321,000)	$	28,000	$	(99,000)	$	(113,000)	$	(505,000)
Total assets	$	37,316,000	$	5,058,000	$	12,973,000	$	8,821,000	$	64,168,000

As of and for the three months	Hotel		Real Estate		Investment
ended March 31, 2012	Operations		Operations		Transactions		Other		Total
Revenues	$	10,154,000	$	146,000	$	-	$	-	$	10,300,000
Segment operating expenses		(8,572,000)		(50,000)		-		(253,000)		(8,875,000)
Segment income (loss)		1,582,000		96,000		-		(253,000)		1,425,000
Interest expense		(676,000)		(28,000)		-		-		(704,000)
Depreciation and amortization expense		(570,000)		(15,000)		-		-		(585,000)
Income from investments		-		-		481,000		-		481,000
Income tax expense		-		-		-		(126,000)		(126,000)
Net income (loss)	$	336,000	$	53,000	$	481,000	$	(379,000)	$	491,000
Total assets	$	36,368,000	$	5,121,000	$	14,435,000	$	9,008,000	$	64,932,000

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As of and for the nine months	Hotel		Real Estate		Investment
ended March 31, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	33,581,000	$	417,000	$	-	$	-	$	33,998,000
Segment operating expenses		(28,125,000)		(189,000)		-		(754,000)		(29,068,000)
Segment income (loss)		5,456,000		228,000		-		(754,000)		4,930,000
Interest expense		(1,972,000)		(82,000)		-		-		(2,054,000)
Depreciation and amortization expense		(1,759,000)		(47,000)		-		-		(1,806,000)
Loss from investments		-		-		(576,000)		-		(576,000)
Income tax expense		-		-		-		(18,000)		(18,000)
Net income (loss)	$	1,725,000	$	99,000	$	(576,000)	$	(772,000)	$	476,000
Total assets	$	37,316,000	$	5,058,000	$	12,973,000	$	8,821,000	$	64,168,000

As of and for the nine months	Hotel		Real Estate		Investment
ended March 31, 2012	Operations		Operations		Transactions		Other		Total
Revenues	$	31,675,000	$	430,000	$	-	$	-	$	32,105,000
Segment operating expenses		(24,513,000)		(156,000)		-		(687,000)		(25,356,000)
Segment income (loss)		7,162,000		274,000		-		(687,000)		6,749,000
Interest expense		(2,059,000)		(87,000)		-		-		(2,146,000)
Depreciation and amortization expense		(1,663,000)		(47,000)		-		-		(1,710,000)
Loss from investments		-		-		(2,332,000)		-		(2,332,000)
Income tax benefit		-		-		-		49,000		49,000
Net income (loss)	$	3,440,000	$	140,000	$	(2,332,000)	$	(638,000)	$	610,000
Total assets	$	36,368,000	$	5,121,000	$	14,435,000	$	9,008,000	$	64,932,000

NOTE 8 – RELATED PARTY TRANSACTIONS

In December 2012, Justice declared a limited partnership distribution in the amount of $1,200,000, of which Portsmouth received $600,000. In December 2011, Justice declared a limited partnership distribution in the aggregate amount of $1,000,000, of which Portsmouth received $500,000. Both of the amounts received by Portsmouth were eliminated in consolidation.

Certain shared costs and expenses primarily administrative expenses including rent and insurance, are allocated among the Company and its subsidiary, Portsmouth, and the Company’s parent, InterGroup, based on management’s estimate of the pro rata utilization of resources. For the three and nine months ended March 31, 2013 and 2012, the Company and Portsmouth made payments to InterGroup of $36,000 and $108,000, respectively, for each respective period.

During the three months ended March 31, 2013 and 2012, the Company received management fees from Justice Investors totaling $88,000 and $84,000, respectively. During the nine months ended March 31, 2013 and 2012, the Company received management fees from Justice Investors totaling $291,000 and $273,000, respectively. These amounts were eliminated in consolidation.

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

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

- 12 -

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

FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Company may from time to time make forward-looking statements and projections concerning future expectations. When used in this discussion, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “could,” “might” and similar expressions, are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties, such as national and worldwide economic conditions, including the impact of recessionary conditions on tourism, travel and the lodging industry, the impact of terrorism and war on the national and international economies, including tourism and securities markets, energy and fuel costs, natural disasters, general economic conditions and competition in the hotel industry in the San Francisco area, seasonality, labor relations and labor disruptions, actual and threatened pandemics such as swine flu, partnership distributions, the ability to obtain financing at favorable interest rates and terms, securities markets, regulatory factors, litigation and other factors discussed below in this Report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012, that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

RESULTS OF OPERATIONS

The Company's principal sources of revenue continue to be derived from the investment of its 68.8% owned subsidiary, Portsmouth, in the Justice Investors limited partnership (“Justice” or the “Partnership”), rental income from its investments in multi-family real estate properties and income received from investment of its cash and securities assets. Portsmouth has a 50.0% limited partnership interest in Justice and serves as the managing general partner of Justice. Evon Corporation (“Evon”) serves as the other general partner. Justice owns a 543 room hotel property located at 750 Kearny Street, San Francisco, California 94108, known as the “Hilton San Francisco Financial District” (the “Hotel”) and related facilities, including a five-level underground parking garage. The financial statements of Justice have been consolidated with those of the Company.

The Hotel is operated by the Partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with Hilton Hotels Corporation. The term of the Agreement is for a period of 15 years commencing on January 12, 2006, with an option to extend the license term for another five years, subject to certain conditions. Justice also has a Management Agreement with Prism Hospitality L.P. (“Prism”) to perform the day-to-day management functions of the Hotel.

The parking garage that is part of the Hotel property is managed by Ace Parking pursuant to a contract with the Partnership. Justice also leases a portion of the lobby level of the Hotel to a day spa operator. Portsmouth also receives management fees as a general partner of Justice for its services in overseeing and managing the Partnership’s assets. Those fees are eliminated in consolidation.

In addition to the operations of the Hotel, the Company also generates income from the ownership and management of real estate. On December 31, 1997, the Company acquired a controlling 55.4% interest in Intergroup Woodland Village, Inc. ("Woodland Village") from InterGroup. Woodland Village's major asset is a 27-unit apartment complex located in Los Angeles, California. The Company also owns a two-unit apartment building in Los Angeles, California.

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Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012

The Company had a net loss of $505,000 for the three months ended March 31, 2013 compared to net income of $491,000 for the three months ended March 31, 2012. The change is primarily attributable to a net loss from hotel operations during the current period, partially offset by lower income from marketable securities.

The Company had a net loss from hotel operations of $321,000 for the three months ended March 31, 2013, compared to net income of $336,000 for the three months ended March 31, 2012. The decrease in net income is primarily attributable to a significant increase in operating expenses in the current period and decreases in food and beverage revenues, partially offset by an increase in room revenues room compared to the prior year period.

The following table sets forth a more detailed presentation of Hotel operations for the three months ended March 31, 2013 and 2012.

For the three months ended March 31,	2013		2012
Hotel revenues:
Hotel rooms	$	8,139,000	$	7,767,000
Food and beverage		1,483,000		1,524,000
Garage		688,000		671,000
Other operating departments		165,000		192,000
Total hotel revenues		10,475,000		10,154,000
Operating expenses excluding interest, depreciation and amortization		(9,563,000)		(8,572,000)
Operating income before interest, depreciation and amortization		912,000		1,582,000
Interest		(648,000)		(676,000)
Depreciation and amortization		(585,000)		(570,000)
Net (loss) income from hotel operations	$	(321,000)	$	336,000

For the three months ended March 31, 2013, the Hotel generated operating income of $912,000 before interest, depreciation and amortization, on total operating revenues of $10,475,000 compared to operating income of $1,582,000 before interest, depreciation and amortization, on total operating revenues of $10,154,000 for the three months ended March 31, 2012. Room revenues increased by $372,000 for the three months ended March 31, 2013 compared to the three months ended March 31, 2012, food and beverage revenues decreased by $41,000 and garage revenues increased by $17,000 for the same period. Despite the overall increase in total hotel revenues, operating income was negatively impacted by an increase of $991,000 in operating expenses during the current period due to several factors.

Major factors for the increase in operating expenses were an increase in contractual union wages and benefits in all operating departments and higher commissions paid for certain group and city-wide convention business in the current period. There was also a loss of approximately $368,000 in the Hotel’s food and beverage operations attributable to higher labor costs and lower banquet and catering revenues. Franchise and management fees, which are based on a percentage of revenues, also increased as well as costs for certain promotions for Hilton Honors members during the current period.

The following table sets forth the average daily room rate, average occupancy percentage and room revenue per available room (“RevPar”) of the Hotel for the three months ended March 31, 2013 and 2012.

Three Months Ended March 31,	Average Daily Rate		Average Occupancy %			RevPar
2013	$	198	84	%	$	167
2012	$	188	84	%	$	157

Room revenues remained strong as the San Francisco market continued to have good demand for higher rated business. The Hotel’s average daily rate increased by $10 for the three months ended March 31, 2013 compared to the three months ended March 31, 2012, while occupancy percentages remained the same. As a result, the Hotel was able to achieve a RevPar number that was $10 higher than the comparative three month period.

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Our highest priority is guest satisfaction. We believe that enhancing the guest experience differentiates the Hotel from our competition by building the most sustainable guest loyalty. In Fiscal 2012, we launched and celebrated our new executive lounge on the 26^th floor, featuring inspiring views of the San Francisco city skyline. We upgraded the lobby and common areas. We also improved our restaurant facilities, food and beverage services and now provide advanced technological amenities throughout our lobby. During the current quarter, we completed a significant, “green” project that retrofits all of our guest room windows with new “double-pane” inserts that result in greater energy savings and better sound attenuation for our guests. Our guest responses to these improvements have been very positive. The Hotel is also a leader in implementing Hilton’s Huanying (“Welcome”) program that features a tailored experience for Chinese travelers. We continue taking steps that further develop our ties with the local Chinese community and the city of San Francisco, representing good corporate citizenship and promoting important, new business opportunities.

Moving forward, we will continue to focus on cultivating more international business, especially from China, and capturing a greater percentage of the higher rated business, leisure and group travel. We will also continue in our efforts to upgrade our guest rooms and facilities and explore new and innovative ways to differentiate the Hotel from its competition, as well as focusing on returning our food and beverage operations to profitability. During the last twelve months, we have seen steady improvement in business and leisure travel. If that trend in the San Francisco market and the hotel industry continues, it should translate into an increase in room revenues and profitability. However, like all hotels, it will remain subject to the uncertain domestic and global economic environment and other risk factors beyond our control, such as the effect of natural disasters.

The Company had net income on marketable securities of $17,000 for the three months ended March 31, 2013 compared to net income on marketable securities of $655,000 for the three months ended March 31, 2012. For the three months ended March 31, 2013, the Company had a net realized gain of $144,000 and a net unrealized loss of $127,000. For the three months ended March 31, 2012, the Company had a net realized gain of $388,000 and a net unrealized gain of $267,000. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

During the three months ended March 31, 2012, the Company performed an impairment analysis of its other investments and determined that one of its investments had an other than temporary impairment and recorded impairment losses of $40,000. There were no such losses during the three months ended March 31, 2013.

The Company and its subsidiary, Portsmouth, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. Since Portsmouth consolidates Justice (Hotel) for financial reporting purposes and is not taxed on its 50% non-controlling interest in the Hotel, variability in the tax provision results from the relative significance of the non-controlling interest and the magnitude of the pretax income or loss at the Company and its subsidiary. The income tax benefit (expense) during the three months ended March 31, 2013 and 2012 represents income tax benefit (expense) of Portsmouth. Santa Fe’s income tax was zero due to its net loss and the full valuation of its deferred income tax asset from net operating loss carryover.  

Nine Months Ended March 31, 2013 Compared to Nine Months Ended March 31, 2012

The Company had net income of $476,000 for the nine months ended March 31, 2013 compared to net income of $610,000 for the nine months ended March 31, 2012. The change is primarily due to the lower loss from investing activities, partially offset by the decreased income from hotel operations during the current period.

The Company had net income from hotel operations of $1,725,000 for the nine months ended March 31, 2013, compared to net income of $3,440,000 for the nine months ended March 31, 2012. The decrease in net income is attributable to a significant increase in operating expenses in the current period and a decrease in other revenues, partially offset by an increase in room, food and beverage and garage revenues room compared to the prior year period.

- 15 -

 

The following table sets forth a more detailed presentation of Hotel operations for the nine months ended March 31, 2013 and 2012. 

For the nine months ended March 31,	2013		2012
Hotel revenues:
Hotel rooms	$	26,352,000	$	24,562,000
Food and beverage		4,502,000		4,329,000
Garage		2,107,000		2,053,000
Other operating departments		620,000		731,000
Total hotel revenues		33,581,000		31,675,000
Operating expenses excluding interest, depreciation and amortization		(28,125,000)		(24,513,000)
Operating income before interest, depreciation and amortization		5,456,000		7,162,000
Interest		(1,972,000)		(2,059,000)
Depreciation and amortization		(1,759,000)		(1,663,000)
Net income from hotel operations	$	1,725,000	$	3,440,000

For the nine months ended March 31, 2013, the Hotel generated operating income of $5,456,000 before interest, depreciation and amortization, on total operating revenues of $33,581,000 compared to operating income of $7,162,000 before interest, depreciation and amortization, on total operating revenues of $31,675,000 for the nine months ended March 31, 2012. Room revenues increased by $1,790,000 for the nine months ended March 31, 2013 compared to the nine months ended March 31, 2012, food and beverage revenues increased by $173,000 and garage revenues increased by $54,000, while other revenues decreased by $111,000 for the same period. Despite the increase in total hotel revenues, operating income was negatively impacted by a significant increase of $3,612,000 in operating expenses during the current period due to several factors.

Major factors for the increase in operating expenses were an increase in contractual union wages and benefits in all operating departments, a reserve established for other wage costs and higher commissions on certain group and city-wide convention business in the current period. There was also a loss of approximately $1,032,000 in the Hotel’s food and beverage operations primarily attributable to higher labor costs and increased staffing for new food operations as part of a plan to capture anticipated business from the newly constructed City College of San Francisco campus next to the Hotel. That business did not materialize as City College opened with an enrollment of only 20% of its expected capacity of 5,000 to 7,000 students per day during the week. In addition, Hurricane Sandy resulted in cancellations of higher rated corporate and group business in October and November 2012 that was replaced by lower rated crew and transient business that did not utilize the Hotel’s food and beverage outlets or banquet and catering services. In the prior nine month period, the Hotel also recorded a credit for property taxes in the amount of $270,000 for an over accrual of taxes related to the reassessment of the improvements of the Hotel that was less than anticipated. Franchise and management fees, which are based on a percentage of revenues, also increased as well as costs for certain promotions for Hilton Honors members during the current period.

The following table sets forth the average daily room rate, average occupancy percentage and room revenue per available room (“RevPar”) of the Hotel for the nine months ended March 31, 2013 and 2012.

Nine Months Ended March 31,	Average Daily Rate		Average Occupancy %			RevPar
2013	$	201	88	%	$	177
2012	$	189	87	%	$	164

The operating results of the Hotel’s rooms department remained strong as the San Francisco market continued to show signs of recovery. The Hotel’s average daily rate increased by $12 for the nine months ended March 31, 2013 compared to the nine months ended March 31, 2012. The increase in occupancy of 1% was due to increased demand for hotel rooms in San Francisco and the Hotel’s ability to capture a greater share of those rooms within its market set. As a result, the Hotel was able to achieve a RevPar number that was $13 higher than the comparative nine month period. Those results made it possible for Justice Investors to declare a limited partnership distribution in December 2012 in the total amount of $1,200,000, of which Portsmouth received $600,000. In December 2011, Justice declared a limited partnership distribution in the aggregate amount of $1,000,000, of which Portsmouth received $500,000.

- 16 -

 

Our highest priority is guest satisfaction. We believe that enhancing the guest experience differentiates the Hotel from our competition by building the most sustainable guest loyalty. In Fiscal 2012, we launched and celebrated our new executive lounge on the 26^th floor, featuring inspiring views of the San Francisco city skyline. We upgraded the lobby and common areas. We also improved our restaurant facilities, food and beverage services and now provide advanced technological amenities throughout our lobby. During the current quarter, we completed a significant, “green” project that retrofits all of our guest room windows with new “double-pane” inserts that result in greater energy savings and better sound attenuation for our guests. Our guest responses to these improvements have been very positive. The Hotel is also a leader in implementing Hilton’s Huanying (“Welcome”) program that features a tailored experience for Chinese travelers. We continue taking steps that further develop our ties with the local Chinese community and the city of San Francisco, representing good corporate citizenship and promoting important, new business opportunities.

Moving forward, we will continue to focus on cultivating more international business, especially from China, and capturing a greater percentage of the higher rated business, leisure and group travel. We will also continue in our efforts to upgrade our guest rooms and facilities and explore new and innovative ways to differentiate the Hotel from its competition, as well as focusing on returning our food and beverage operations to profitability. During the last twelve months, we have seen steady improvement in business and leisure travel. If that trend in the San Francisco market and the hotel industry continues, it should translate into an increase in room revenues and profitability. However, like all hotels, it will remain subject to the uncertain domestic and global economic environment and other risk factors beyond our control, such as the effect of natural disasters like Hurricane Sandy.

The Company had a net loss on marketable securities of $332,000 for the nine months ended March 31, 2013 compared to a net loss marketable securities of $1,575,000 for the nine months ended March 31, 2012. For the nine months ended March 31, 2013, the Company had a net realized gain of $178,000 and a net unrealized loss of $510,000. For the nine months ended March 31, 2012, the Company had a net realized loss of $115,000 and a net unrealized loss of $1,460,000. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

During the nine months ended March 31, 2013, the Company had an unrealized loss of $169,000 related to other investments compared to an unrealized loss of $284,000 for the nine months ended March 31, 2012. The decrease in the unrealized loss is due to the lower decline in the estimated fair value of stock warrants the Company owns during the current period.

During the nine months ended March 31, 2012, the Company performed an impairment analysis of its other investments and determined that one of its investments had an other than temporary impairment and recorded impairment losses of $427,000. There were no such losses during the nine months ended March 31, 2013.

The Company and its subsidiary, Portsmouth, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. Since Portsmouth consolidates Justice (Hotel) for financial reporting purposes and is not taxed on its 50% non-controlling interest in the Hotel, variability in the tax provision results from the relative significance of the non-controlling interest and the magnitude of the pretax income or loss at the Company and its subsidiary. The income tax (expense) benefit during the nine months ended March 31, 2013 and 2012 represents income tax (expense) benefit of Portsmouth. Santa Fe’s income tax was zero due to its net loss and the full valuation of its deferred income tax asset from net operating loss carryover.

MARKETABLE SECURITIES

As of March 31, 2013 and June 30, 2012, the Company had investments in marketable equity securities of $4,971,000 and $4,050,000, respectively. The following table shows the composition of the Company’s marketable securities portfolio by selected industry groups as:

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As of March 31, 2013			% of Total
			Investment
Industry Group	Fair Value		Securities
Basic materials	$	2,390,000	48.1	%
Technology		798,000	16.1	%
Financial services		720,000	14.5	%
REITs and real estate companies		147,000	3.0	%
Other		916,000	18.3	%
	$	4,971,000	100.0	%

As of June 30, 2012			% of Total
			Investment
Industry Group	Fair Value		Securities
Basic materials	$	2,475,000	61.1	%
Technology		379,000	9.4	%
Financial services		337,000	8.3	%
REITs and real estate companies		205,000	5.1	%
Other		654,000	16.1	%
	$	4,050,000	100.0	%

The Company’s investment portfolio is diversified with 30 different equity positions. The Company holds three equity securities that is comprised of more than 10% of the equity value of the portfolio. The largest security represents 45.5% of the portfolio and consists of the common stock of Comstock Mining, Inc. (“Comstock” - NYSE MKT: LODE) which is included in the basic materials industry group. The amount of the Company’s investment in any particular issuer may increase or decrease, and additions or deletions to its securities portfolio may occur, at any time. While it is the internal policy of the Company to limit its initial investment in any single equity to less than 10% of its total portfolio value, that investment could eventually exceed 10% as a result of equity appreciation or reduction of other positions. A significant percentage of the portfolio consists of common stock in Comstock that was obtained through dividend payments by Comstock on its 7.5% Series A-1 Convertible Preferred Stock. Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date.

The following table shows the net gain or loss on the Company’s marketable securities and the associated margin interest and trading expenses for the respective years.

For the three months ended March 31,	2013		2012
Net income on marketable securities	$	17,000	$	655,000
Net unrealized loss on other investments		-		(17,000)
Impairment loss on other investments		-		(40,000)
Dividend and interest income		6,000		20,000
Margin interest expense		(30,000)		(40,000)
Trading and management expenses		(92,000)		(97,000)
	$	(99,000)	$	481,000

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For the nine months ended March 31,	2012		2012
Net loss on marketable securities	$	(332,000)	$	(1,575,000)
Net unrealized loss on other investments		(169,000)		(284,000)
Impairment loss on other investments		-		(427,000)
Dividend and interest income		276,000		327,000
Margin interest expense		(82,000)		(94,000)
Trading and management expenses		(269,000)		(279,000)
	$	(576,000)	$	(2,332,000)

LIQUIDITY AND SOURCES OF CAPITAL 

The Company’s cash flows are primarily generated from its Hotel operations, and general partner management fees and limited partnership distributions from Justice Investors. The Company also receives cash flow generated from the investment of its cash and marketable securities, other investments and the ownership of real estate. 

Due to the significant downturn in the San Francisco hotel market beginning in September 2008 and the continued weakness in domestic and international economies, no Partnership distributions were paid in fiscal 2011 and 2010. During such periods, the Company had to depend more on the revenues generated from the investment of its cash and marketable securities and from its general partner management fees. Since we have seen improvement in the operations of the Hotel, and the San Francisco market in general, Justice was in a position to pay a limited partnership distribution in December 2012 in an aggregate amount of $1,200,000, of which Portsmouth received $600,000. In December 2011, Justice paid a limited partnership distribution in an aggregate amount of $1,000,000, of which Portsmouth received $500,000. The general partners of Justice will continue to monitor and review the operations and financial results of the Hotel and to set the amount of any future distributions that may be appropriate based on operating results, cash flows and other factors, including establishment of reasonable reserves for debt payments and operating contingencies. 

In December 2012, Portsmouth declared a special cash dividend of $0.25 per common share or $183,000, which was paid on December 28, 2012 to shareholders of record as of December 21, 2012. 

The new Justice Compensation Agreement that became effective on December 1, 2008, when Portsmouth assumed the role of managing general partner of Justice, has provided additional cash flows to the Company. Under the new Compensation Agreement, Portsmouth is now entitled to 80% of the minimum base fee to be paid to the general partners of $285,000, while under the prior agreement, Portsmouth was entitled to receive only 20% of the minimum base fee. As a result of that new agreement and the increase in Hotel gross revenues in the current period, total general partner fees paid to Portsmouth for the nine months ended March 31, 2013 increased to $291,000, compared to $273,000 for the nine month period ended March 31, 2012. 

To meet its substantial financial commitments for the renovation and transition of the Hotel to a Hilton, Justice had to rely on borrowings to meet its obligations. On July 27, 2005, Justice entered into a first mortgage loan with The Prudential Insurance Company of America in a principal amount of $30,000,000 (the “Prudential Loan”). The term of the Prudential Loan is for 120 months at a fixed interest rate of 5.22% per annum. The Prudential Loan calls for monthly installments of principal and interest in the amount of approximately $165,000, calculated on a 30-year amortization schedule. The Loan is collateralized by a first deed of trust on the Partnership’s Hotel property, including all improvements and personal property thereon and an assignment of all present and future leases and rents. The Prudential Loan is without recourse to the limited and general partners of Justice. The principal balance of the Prudential Loan was $26,198,000 as of March 31, 2013. 

On March 27, 2007, Justice entered into a second mortgage loan with Prudential (the “Second Prudential Loan”) in a principal amount of $19,000,000. The term of the Second Prudential Loan is for 100 months and matures on August 5, 2015, the same date as the first Prudential Loan. The Second Prudential Loan is at a fixed interest rate of 6.42% per annum and calls for monthly installments of principal and interest in the amount of $119,000, calculated on a 30-year amortization schedule. The Second Prudential Loan is collateralized by a second deed of trust on the Partnership’s Hotel property, including all improvements and personal property thereon and an assignment of all present and future leases and rents. The Second Prudential Loan is also without recourse to the limited and general partners of Justice. The principal balance of the Second Prudential Loan was $17,447,000 as of March 31, 2013. 

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Effective April 29, 2010, the Partnership obtained a modification of its $2,500,000 unsecured revolving line of credit facility with East West Bank that was to mature on April 30, 2010, and converted that line of credit facility to an unsecured term loan. The modification provides that Justice will pay the $2,500,000 balance on its line of credit facility over a period of four years, to mature on April 30, 2014. This term loan calls for monthly principal and interest payments of $41,000, calculated on a nine-year amortization schedule, with interest only from May 1, 2010 to August 31, 2010. Pursuant to the modification, the annual floating interest rate was reduced by 0.5% to the Wall Street Journal Prime Rate plus 2.5% (with a minimum floor rate of 5.0% per annum). The modification provides for new financial covenants that include specific financial ratios and a return to minimum profitability after June 30, 2011. Management believes that the Partnership has the ability to meet the specific covenants and the Partnership was in compliance with the covenants as of March 31, 2013. As of March 31, 2013, the interest rate was 5.75% and the outstanding balance was $1,272,000. 

Despite an uncertain economy, the Hotel has continued to generate positive cash flows. While the debt service requirements related to the two Prudential loans, as well as the term loan to pay off the line of credit, may create some additional risk for the Company and its ability to generate cash flows in the future, management believes that cash flows from the operations of the Hotel and the garage will continue to be sufficient to meet all of the Partnership’s current and future obligations and financial requirements. Management also believes that there is sufficient equity in the Hotel assets to support future borrowings, if necessary, to fund any new capital improvements and other requirements. 

The Company has invested in short-term, income-producing instruments and in equity and debt securities when deemed appropriate. The Company's marketable securities are classified as trading with unrealized gains and losses recorded through the consolidated statements of operations. 

Management believes that its cash, marketable securities, other investments, real estate operations and the cash flows generated from those assets and from partnership distributions and management fees, will be adequate to meet the Company’s current and future obligations. 

MATERIAL CONTRACTUAL OBLIGATIONS 

The following table provides a summary as of March 31, 2013, the Company’s material financial obligations which also including interest payments.

			3 Months		Year		Year		Year		Year
	Total		2013		2014		2015		2016		2017		Thereafter
Mortgage notes payable	$	47,192,000	$	246,000	$	1,022,000	$	1,081,000	$	41,508,000	$	72,000	$	3,263,000
Other notes payable		1,646,000		254,000		1,388,000		4,000		-		-		-
Interest		7,379,000		709,000		2,694,000		2,560,000		555,000		158,000		703,000
Total	$	56,217,000	$	1,209,000	$	5,104,000	$	3,645,000	$	42,063,000	$	230,000	$	3,966,000

OFF BALANCE SHEET ARRANGEMENTS 

The Company has no off balance sheet arrangements. 

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 Prism has the power and ability under the terms of its management agreement to adjust hotel room rates on an ongoing basis, there should be minimal impact on partnership revenues due to inflation. 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. 

- 20 -

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 and nine months ended March 31, 2013. Please refer to the Company’s Annual Report on Form 10-K for a summary of the critical accounting policies. 

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.

- 21 -

PART II. 

OTHER INFORMATION 

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

(a) None. 

(b) Not applicable. 

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

Santa Fe did not repurchase any of its own securities during the third quarter of its fiscal year ending June 30, 2013 and does not have any publicly announced repurchase program. The following table reflects purchases of Santa Fe’s common stock made by its parent company, The InterGroup Corporation, for its own account, during the third quarter of fiscal 2013. InterGroup can be considered an affiliated purchaser. 

SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

				(c) Total Number	(d) Maximum Number
	(a) Total	(b)		of Shares Purchased	of shares that May
Fiscal	Number of	Average		as Part of Publicly	Yet be Purchased
2013	Shares	Price Paid		Announced Plans	Under the Plans
Period	Purchased	Per Share		or Programs	or Programs
Month #1
January 1-
January 31)	-		-	-	N/A
Month #2
February 1-
February 28)	-		-	-	N/A
Month #3
(March 1-
March 31)	5,450	$	19.56	-	N/A
TOTAL:	5,450	$	19.56	-	N/A

Item 5. Other Information. 

As reported in the Company’s report on Form 8-K filed on March 29, 2013, Santa Fe’s subsidiary, Portsmouth, mailed a letter to the limited partners of Justice making a proposal (the Proposal”) whereby Justice will offer to redeem, for cash, all or part of the limited partnership interests of limited partners wishing to tender their limited partnership interests back to the Partnership (the “Redemption”) with the final Redemption Price to be determined through a Dutch Auction procedure at prices ranging from $800,000 to $900,000 per 1% interest. The Redemption is conditioned on there being a minimum tender of at least 34% of the limited partnership interests at prices within the range stated above. The proposed Redemption would be funded through a refinancing of the Hotel which would take advantage of current favorable interest rates and which we believe would help provide for the long-term financial stability of the Partnership. Under the Proposal, the Partnership would reserve the right, in its sole discretion, to redeem limited partnership interests in excess of 34% if funds were still available.

- 22 -

In addition to the minimum 34% tender requirement, the Proposal is subject to: (1) the approval by at least 75% of the limited partnership interests to remove Evon Corporation as the other general partner of Justice; (2) the approval by at least 75% of the limited partnership interests to amend the Justice Limited Partnership Agreement to (a) provide for a single general partner and (b) delete certain provisions of the Limited Partnership Agreement which restrict certain transfers of limited partnership interests, which revisions would be necessary to effectuate the proposed Redemption; (3) approval of the proposed Redemption and refinancing of the Hotel; and (4) consummation of the refinancing of the Hotel. Portsmouth will vote its 50% limited partnership interest in favor of the amendments to the Limited Partnership Agreement and any proposals necessary to effectuate the Redemption and the refinancing of the Hotel. Under the Proposal, all Redemption elections and consents to the above actions must be received no later than April 15, 2013 (unless that deadline is extended in the sole discretion of the Partnership). That deadline was extended to May 15, 2013 and further extensions might be possible. It is expected that the Redemption could be effectuated within ninety (90) days after all conditions of the Proposal have been met.

All limited partners are free to elect to participate in the Redemption or not to participate in the Redemption. Those limited partners that do not participate in the Redemption (including Portsmouth) will remain as limited partners in Justice. Assuming that the minimum 34% participation threshold is reached and all other conditions necessary to effectuate the Redemption and refinancing of the Hotel are satisfied, the limited partnership interests of those limited partners who do not elect to participate in the Redemption will increase in an amount proportionate with the percentages of the limited partnership interests that are redeemed. 

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.

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. 

		SANTA FE FINANCIAL CORPORATION
			(Registrant)
Date:	May 10, 2013	by	/s/ John V. Winfield
			John V. Winfield, President,
			Chairman of the Board and
			Chief Executive Officer
Date:	May 10, 2013	by	/s/ Michael G. Zybala
			Michael G. Zybala,
			Vice President and Secretary
Date:	May 10, 2013	by	/s/ David T. Nguyen
			David T. Nguyen, Treasurer
			and Controller

- 23 -

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, John V. Winfield, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Santa Fe Financial 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: May 10, 2013

/s/ John V. Winfield

John V. Winfield

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David T. Nguyen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Santa Fe Financial 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: May 10, 2013

/s/ David T. Nguyen

David T. Nguyen

Treasurer and Controller

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

Certification of Principal Executive Officer Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act Of 2002

In connection with the Quarterly Report of Santa Fe Financial Corporation (the "Company") on Form 10-Q for the quarterly period ended March 31, 2013, 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: May 10, 2013

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

EX-32.2

EXHIBIT 32.2

Certification of Principal Financial Officer Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act Of 2002

In connection with the Quarterly Report of Santa Fe Financial Corporation (the "Company") on Form 10-Q for the quarterly period ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David T. Nguyen, Treasurer and Controller of the Company, serving as its Principal Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

⋅	The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and
⋅	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David T. Nguyen

David T. Nguyen

Treasurer and Controller

(Principal Financial Officer)

Date: May 10, 2013

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

XML

INVESTMENT IN MARKETABLE SECURITIES (Details Textual) (USD $)	Mar. 31, 2013	Jun. 30, 2012
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	$ 1,006,000	$ 756,000

XML

INVESTMENT IN MARKETABLE SECURITIES

9 Months Ended

Mar. 31, 2013

Investments, Debt and Equity Securities [Abstract]

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

NOTE 4 - INVESTMENT IN MARKETABLE SECURITIES

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

At March 31, 2013 and June 30, 2012, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

			Gross		Gross		Net		Fair
Investment	Cost		Unrealized Gain		Unrealized Loss		Unrealized Gain		Value
As of March 31, 2013
Corporate
Equities	$	4,425,000	$	1,623,000	$	(1,077,000)	$	546,000	$	4,971,000
As of June 30, 2012
Corporate
Equities	$	3,038,000	$	1,970,000	$	(958,000)	$	1,012,000	$	4,050,000

As of March 31, 2013 and June 30, 2012, the Company had $1,006,000 and $756,000, respectively, of unrealized losses related to securities held for over one year.

Net income (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the three and nine months ended March 31, 2013 and 2012, respectively.  

For the three months ended March 31,	2013		2012
Realized gain on marketable securities	$	144,000	$	388,000
Unrealized (loss) gain on marketable securities		(127,000)		267,000
Net income on marketable securities	$	17,000	$	655,000

For the nine months ended March 31,	2013		2012
Realized gain (loss) on marketable securities	$	178,000	$	(115,000)
Unrealized loss on marketable securities		(510,000)		(1,460,000)
Net loss on marketable securities	$	(332,000)	$	(1,575,000)

XML

FAIR VALUE MEASUREMENTS (Details Textual)	Mar. 31, 2013
Cost Method Investment Ownership Percentage	20.00%

XML

FAIR VALUE MEASUREMENTS (Details 1) (USD $)	9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Jun. 30, 2012
Other non-marketable investments	$ 7,991,000		$ 7,991,000
Net loss	0	(427,000)
Other Investments [Member] | Fair Value, Inputs, Level 1 [Member]
Other non-marketable investments	0		0
Other Investments [Member] | Fair Value, Inputs, Level 2 [Member]
Other non-marketable investments	0		0
Other Investments [Member] | Fair Value, Inputs, Level 3 [Member]
Other non-marketable investments	$ 7,991,000		$ 7,991,000

XML

SEGMENT INFORMATION (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Revenues	$ 10,610,000	$ 10,300,000	$ 33,998,000	$ 32,105,000
Segment operating expenses	(9,883,000)	(8,875,000)	(29,068,000)	(25,356,000)
Segment income (loss)	727,000	1,425,000	4,930,000	6,749,000
Interest expense	(673,000)	(704,000)	(2,054,000)	(2,146,000)
Depreciation and amortization expense	(601,000)	(585,000)	(1,806,000)	(1,710,000)
Loss from investments	(99,000)	481,000	(576,000)	(2,332,000)
Income tax benefit (expense)	141,000	(126,000)	(18,000)	49,000
Net (loss) income	(505,000)	491,000	476,000	610,000
Total assets	64,168,000	64,932,000	64,168,000	64,932,000
Hotel Operations [Member]
Revenues	10,475,000	10,154,000	33,581,000	31,675,000
Segment operating expenses	(9,563,000)	(8,572,000)	(28,125,000)	(24,513,000)
Segment income (loss)	912,000	1,582,000	5,456,000	7,162,000
Interest expense	(648,000)	(676,000)	(1,972,000)	(2,059,000)
Depreciation and amortization expense	(585,000)	(570,000)	(1,759,000)	(1,663,000)
Loss from investments	0	0	0	0
Income tax benefit (expense)	0	0	0	0
Net (loss) income	(321,000)	336,000	1,725,000	3,440,000
Total assets	37,316,000	36,368,000	37,316,000	36,368,000
Real Estate Operations [Member]
Revenues	135,000	146,000	417,000	430,000
Segment operating expenses	(66,000)	(50,000)	(189,000)	(156,000)
Segment income (loss)	69,000	96,000	228,000	274,000
Interest expense	(25,000)	(28,000)	(82,000)	(87,000)
Depreciation and amortization expense	(16,000)	(15,000)	(47,000)	(47,000)
Loss from investments	0	0	0	0
Income tax benefit (expense)	0	0	0	0
Net (loss) income	28,000	53,000	99,000	140,000
Total assets	5,058,000	5,121,000	5,058,000	5,121,000
Investment Transactions [Member]
Revenues	0	0	0	0
Segment operating expenses	0	0	0	0
Segment income (loss)	0	0	0	0
Interest expense	0	0	0	0
Depreciation and amortization expense	0	0	0	0
Loss from investments	(99,000)	481,000	(576,000)	(2,332,000)
Income tax benefit (expense)	0	0	0	0
Net (loss) income	(99,000)	481,000	(576,000)	(2,332,000)
Total assets	12,973,000	14,435,000	12,973,000	14,435,000
All Other Segments [Member]
Revenues	0	0	0	0
Segment operating expenses	(254,000)	(253,000)	(754,000)	(687,000)
Segment income (loss)	(254,000)	(253,000)	(754,000)	(687,000)
Interest expense	0	0	0	0
Depreciation and amortization expense	0	0	0	0
Loss from investments	0	0	0	0
Income tax benefit (expense)	141,000	(126,000)	(18,000)	49,000
Net (loss) income	(113,000)	(379,000)	(772,000)	(638,000)
Total assets	$ 8,821,000	$ 9,008,000	$ 8,821,000	$ 9,008,000

XML

RELATED PARTY TRANSACTIONS (Details Textual) (USD $)	3 Months Ended		6 Months Ended		9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Mar. 31, 2013	Mar. 31, 2012
Distributions and dividends to noncontrolling interest					$ 658,000	$ 500,000
Portsmouth [Member]
Related Party Transaction, Amounts of Transaction	36,000	108,000			36,000	108,000
Investment Income, Dividend			600,000	500,000
Justice Investors [Member]
Related Party Transaction, Amounts of Transaction	88,000	84,000			291,000	273,000
Distributions and dividends to noncontrolling interest			$ 1,200,000	$ 1,000,000

XML

INVESTMENT IN REAL ESTATE, NET

9 Months Ended

Mar. 31, 2013

Real Estate and Accumulated Depreciation Disclosure [Abstract]

Real Estate and Accumulated Depreciation Disclosure [Text Block]

NOTE 3 – INVESTMENT IN REAL ESTATE, NET

The Company owns and operates a 27-unit and 2-unit multi-family apartment complex located in Los Angeles, California and owns land held for development located in Maui, Hawaii. Investment in real estate consisted of the following:  

As of	March 31, 2013		June 30, 2012
Land	$	2,430,000	$	2,430,000
Buildings, improvements and equipment		2,580,000		2,580,000
Accumulated depreciation		(925,000)		(878,000)
		4,085,000		4,132,000
Land held for development		973,000		973,000
Investment in real estate, net	$	5,058,000	$	5,105,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2013	Jun. 30, 2012
ASSETS
Investment in hotel, net	$ 37,316,000	$ 36,481,000
Investment in real estate, net	5,058,000	5,105,000
Investment in marketable securities	4,971,000	4,050,000
Other investments, net	8,002,000	8,171,000
Cash and cash equivalents	291,000	1,143,000
Accounts receivable, net	1,943,000	1,641,000
Other assets, net	3,369,000	3,342,000
Deferred tax asset	3,218,000	3,236,000
Total assets	64,168,000	63,169,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities	10,032,000	8,745,000
Due to securities broker	1,236,000	53,000
Obligations for securities sold	164,000	321,000
Other notes payable	1,646,000	2,072,000
Mortgage notes payable - real estate	3,547,000	3,577,000
Mortgage notes payable - hotel	43,645,000	44,321,000
Total liabilities	60,270,000	59,089,000
Commitments and contingencies
Shareholders' equity:
Common stock - par value $.10 per share; Authorized - 2,000,000;cIssued 1,339,638 and outstanding 1,241,810	134,000	134,000
Additional paid-in capital	8,808,000	8,808,000
Retained earnings (acculumlated deficit)	(198,000)	169,000
Treasury stock, at cost, 97,828 shares	(951,000)	(951,000)
Total Santa Fe shareholders' equity	7,793,000	8,160,000
Noncontrolling interest	(3,895,000)	(4,080,000)
Total shareholders' equity	3,898,000	4,080,000
Total liabilities and shareholders' equity	$ 64,168,000	$ 63,169,000

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements included herein have been prepared by Santa Fe Financial Corporation (“Santa Fe” 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 Santa Fe and the notes therein included in the Company's Annual Report on Form 10-K for the year ended June 30, 2012. The June 30, 2012 Condensed Consolidated Balance Sheet was derived from the Company’s Form 10-K for the year ended June 30, 2012.

The results of operations for the three and nine months ended March 31, 2013 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2013.

As of March 31, 2013, Santa Fe owns approximately 68.8% of the outstanding common shares of Portsmouth Square, Inc. (“Portsmouth”), a public company. Santa Fe is an 80.5%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 12.9% of the common stock of Portsmouth.

The Company’s primary business is conducted through Portsmouth’s general and limited partnership interest in Justice Investors, a California limited partnership (“Justice” or the “Partnership”). Portsmouth has a 50.0% limited partnership interest in Justice and serves as one of the two general partners. The other general partner, Evon Corporation (“Evon”), served as the managing general partner until December 1, 2008 at which time Portsmouth assumed the role of managing general partner.

Justice owns a 543-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the Hotel) and related facilities including a five level underground parking garage. The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with Hilton Hotels Corporation. Justice also has a Management Agreement with Prism Hospitality L.P. (Prism) to perform the day-to-day management functions of the Hotel. The parking garage that is part of the Hotel property is managed by Ace Parking pursuant to a contract with the Partnership. Justice also leases a portion of the lobby level of the Hotel to a day spa operator.

Portsmouth also receives management fees as a general partner of Justice for its services in overseeing and managing the Partnership’s assets. Those fees are eliminated in consolidation.

In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate. On December 31, 1997, the Company acquired a controlling 55.4% interest in Intergroup Woodland Village, Inc. ("Woodland Village") from InterGroup. Woodland Village's major asset is a 27-unit apartment complex located in Los Angeles, California. The Company also owns a two-unit apartment building in Los Angeles, California.

Basic income (loss) per share is calculated based upon the weighted average number of common shares outstanding during each respective period. During the three and nine months ended March 31, 2013 and 2012, the Company did not have any potentially dilutive securities outstanding.

In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.” ASU 2011-05 changes the way other comprehensive income (“OCI”) appears within the financial statements. Companies will be required to show net income, OCI and total comprehensive income in one continuous statement or in two separate but consecutive statements. Components of OCI may no longer be presented solely in the statement of changes in shareholders’ deficit. ASU 2011-05 was effective for the Company beginning July 1, 2012. For the three and nine months ended March 31, 2013 and 2012, the Company had no components of Comprehensive Income other than Net Income itself.

The Company has evaluated subsequent events through the date the condensed consolidated financial statements were issued.

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INVESTMENT IN REAL ESTATE, NET (Details) (USD $)	Mar. 31, 2013	Jun. 30, 2012
Accumulated depreciation	$ (925,000)	$ (878,000)
Real Estate Investments, Net	4,085,000	4,132,000
Land held for development	973,000	973,000
Investment in real estate, net	5,058,000	5,105,000
Land [Member]
Real Estate Investment Property, at Cost	2,430,000	2,430,000
Buildings Improvements and Equipment [Member]
Real Estate Investment Property, at Cost	$ 2,580,000	$ 2,580,000

XML

INVESTMENT IN MARKETABLE SECURITIES (Details 1) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Realized gain on marketable securities	$ 144,000	$ 388,000	$ 178,000	$ (115,000)
Unrealized (loss) gain on marketable securities	(127,000)	267,000	(510,000)	(1,460,000)
Net income on marketable securities	$ 17,000	$ 655,000	$ (332,000)	$ (1,575,000)

XML

INVESTMENT IN HOTEL, NET

9 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 2 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

			Accumulated		Net Book
March 31, 2013	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		21,954,000		(19,038,000)		2,916,000
Building and improvements		53,795,000		(21,291,000)		32,504,000
	$	77,645,000	$	(40,329,000)	$	37,316,000

			Accumulated		Net Book
June 30, 2012	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		20,855,000		(18,187,000)		2,668,000
Building and improvements		52,383,000		(20,466,000)		31,917,000
	$	75,134,000	$	(38,653,000)	$	36,481,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Mar. 31, 2013	Jun. 30, 2012
Common stock, par value (in dollars per share)	$ 0.1	$ 0.1
Common Stock, Shares Authorized	2,000,000	2,000,000
Common Stock, Shares, Issued	1,339,638	1,241,810
Common Stock, Shares, Outstanding	1,339,638	1,241,810
Treasury Stock, Shares	97,828	97,828

XML

OTHER INVESTMENTS, NET (Tables)

9 Months Ended

Mar. 31, 2013

Other Investments [Abstract]

Other Investments [Table Text Block]

Other investments, net consist of the following: 

Type	March 31, 2013		June 30, 2012
Preferred stock - Comstock, at cost	$	6,659,000	$	6,659,000
Private equity hedge fund, at cost		1,164,000		1,164,000
Corporate debt and equity instruments, at cost		168,000		168,000
Warrants - at fair value		11,000		180,000
	$	8,002,000	$	8,171,000

XML

Document And Entity Information	9 Months Ended
	Mar. 31, 2013	May 03, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	sfef
Entity Common Stock, Shares Outstanding		1,241,810
Entity Registrant Name	SANTA FE FINANCIAL CORP
Entity Central Index Key	0000086759
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company

XML

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

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

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

As of March 31, 2013
Assets:	Level 1		Level 2		Level 3		Total
Cash equivalents - money market	$	3,000	$	-	$	-	$	3,000
Other investments - warrants		-		-		11,000		11,000
Investment in marketable securities:
Basic materials		2,390,000		-		-		2,390,000
Technology		798,000		-		-		798,000
Financial services		720,000		-		-		720,000
REITs and real estate companies		147,000		-		-		147,000
Other		916,000		-		-		916,000
		4,971,000		-		-		4,971,000
	$	4,974,000	$	-	$	11,000	$	4,985,000

As of June 30, 2012
Assets:	Level 1		Level 2		Level 3		Total
Cash equivalents - money market	$	3,000	$	-	$	-	$	3,000
Other investments - warrants		-		-		180,000		180,000
Investment in marketable securities:
Basic materials		2,475,000		-		-		2,475,000
Technology		379,000		-		-		379,000
Financial services		337,000		-		-		337,000
REITs and real estate companies		205,000		-		-		205,000
Other		654,000		-		-		654,000
		4,050,000		-		-		4,050,000
	$	4,053,000	$	-	$	180,000	$	4,233,000

Fair Value Measurements, Nonrecurring [Table Text Block]

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

									Net loss for the nine months
Assets	Level 1		Level 2		Level 3		March 31, 2013		ended March 31, 2013
Other non-marketable investments	$	-	$	-	$	7,991,000	$	7,991,000	$	-

									Net loss for the nine months
Assets	Level 1		Level 2		Level 3		June 30, 2012		ended March 31, 2012
Other non-marketable investments	$	-	$	-	$	7,991,000	$	7,991,000	$	(427,000)

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Revenues:
Hotel	$ 10,475,000	$ 10,154,000	$ 33,581,000	$ 31,675,000
Real estate	135,000	146,000	417,000	430,000
Total revenues	10,610,000	10,300,000	33,998,000	32,105,000
Costs and operating expenses:
Hotel operating expenses	(9,563,000)	(8,572,000)	(28,125,000)	(24,513,000)
Real estate operating expenses	(66,000)	(50,000)	(189,000)	(156,000)
Depreciation and amortization expense	(601,000)	(585,000)	(1,806,000)	(1,710,000)
General and administrative expense	(254,000)	(253,000)	(754,000)	(687,000)
Total costs and operating expenses	(10,484,000)	(9,460,000)	(30,874,000)	(27,066,000)
Income from operations	126,000	840,000	3,124,000	5,039,000
Other income (expense):
Interest expense	(673,000)	(704,000)	(2,054,000)	(2,146,000)
Net income on marketable securities	17,000	655,000	(332,000)	(1,575,000)
Net unrealized loss on other investments	0	(17,000)	(169,000)	(284,000)
Impairment loss on other investments	0	(40,000)	0	(427,000)
Dividend and interest income	6,000	20,000	276,000	327,000
Trading and margin interest expense	(122,000)	(137,000)	(351,000)	(373,000)
Other expense, net	(772,000)	(223,000)	(2,630,000)	(4,478,000)
Income (loss) before income taxes	(646,000)	617,000	494,000	561,000
Income tax benefit (expense)	141,000	(126,000)	(18,000)	49,000
Net (loss) income	(505,000)	491,000	476,000	610,000
Less: Net loss (income) attributable to the noncontrolling interest	246,000	(221,000)	(843,000)	(1,697,000)
Net (loss) income attributable to Santa Fe	$ (259,000)	$ 270,000	$ (367,000)	$ (1,087,000)
Basic and diluted net (loss) income per share attributable to Santa Fe (in dollars per share)	$ (0.21)	$ 0.22	$ (0.30)	$ (0.88)
Weighted average number of common shares outstanding - basic and diluted (in shares)	1,241,810	1,241,810	1,241,810	1,241,810

XML

SEGMENT INFORMATION

9 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 7 – SEGMENT INFORMATION

The Company operates in three reportable segments, the operation of the hotel (“Hotel Operations”), 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 same information. Information below represents reporting segments for the three and nine months ended March 31, 2013 and 2012, respectively. Operating income for rental properties consist of rental income. Operating income from hotel operations consists of the operation of the hotel and operation of the garage. Operating income (loss) from investment transactions consist of net investment gain (loss) and dividend and interest income.

As of and for the three months	Hotel		Real Estate		Investment
ended March 31, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	10,475,000	$	135,000	$	-	$	-	$	10,610,000
Segment operating expenses		(9,563,000)		(66,000)		-		(254,000)		(9,883,000)
Segment income (loss)		912,000		69,000		-		(254,000)		727,000
Interest expense		(648,000)		(25,000)		-		-		(673,000)
Depreciation and amortization expense		(585,000)		(16,000)		-		-		(601,000)
Loss from investments		-		-		(99,000)		-		(99,000)
Income tax benefit		-		-		-		141,000		141,000
Net income (loss)	$	(321,000)	$	28,000	$	(99,000)	$	(113,000)	$	(505,000)
Total assets	$	37,316,000	$	5,058,000	$	12,973,000	$	8,821,000	$	64,168,000

As of and for the three months	Hotel		Real Estate		Investment
ended March 31, 2012	Operations		Operations		Transactions		Other		Total
Revenues	$	10,154,000	$	146,000	$	-	$	-	$	10,300,000
Segment operating expenses		(8,572,000)		(50,000)		-		(253,000)		(8,875,000)
Segment income (loss)		1,582,000		96,000		-		(253,000)		1,425,000
Interest expense		(676,000)		(28,000)		-		-		(704,000)
Depreciation and amortization expense		(570,000)		(15,000)		-		-		(585,000)
Income from investments		-		-		481,000		-		481,000
Income tax expense		-		-		-		(126,000)		(126,000)
Net income (loss)	$	336,000	$	53,000	$	481,000	$	(379,000)	$	491,000
Total assets	$	36,368,000	$	5,121,000	$	14,435,000	$	9,008,000	$	64,932,000

  

As of and for the nine months	Hotel		Real Estate		Investment
ended March 31, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	33,581,000	$	417,000	$	-	$	-	$	33,998,000
Segment operating expenses		(28,125,000)		(189,000)		-		(754,000)		(29,068,000)
Segment income (loss)		5,456,000		228,000		-		(754,000)		4,930,000
Interest expense		(1,972,000)		(82,000)		-		-		(2,054,000)
Depreciation and amortization expense		(1,759,000)		(47,000)		-		-		(1,806,000)
Loss from investments		-		-		(576,000)		-		(576,000)
Income tax expense		-		-		-		(18,000)		(18,000)
Net income (loss)	$	1,725,000	$	99,000	$	(576,000)	$	(772,000)	$	476,000
Total assets	$	37,316,000	$	5,058,000	$	12,973,000	$	8,821,000	$	64,168,000

As of and for the nine months	Hotel		Real Estate		Investment
ended March 31, 2012	Operations		Operations		Transactions		Other		Total
Revenues	$	31,675,000	$	430,000	$	-	$	-	$	32,105,000
Segment operating expenses		(24,513,000)		(156,000)		-		(687,000)		(25,356,000)
Segment income (loss)		7,162,000		274,000		-		(687,000)		6,749,000
Interest expense		(2,059,000)		(87,000)		-		-		(2,146,000)
Depreciation and amortization expense		(1,663,000)		(47,000)		-		-		(1,710,000)
Loss from investments		-		-		(2,332,000)		-		(2,332,000)
Income tax benefit		-		-		-		49,000		49,000
Net income (loss)	$	3,440,000	$	140,000	$	(2,332,000)	$	(638,000)	$	610,000
Total assets	$	36,368,000	$	5,121,000	$	14,435,000	$	9,008,000	$	64,932,000

XML

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 6 - FAIR VALUE MEASUREMENTS

The carrying values of the Company’s non-financial instruments approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, due to securities broker 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 March 31, 2013
Assets:	Level 1		Level 2		Level 3		Total
Cash equivalents - money market	$	3,000	$	-	$	-	$	3,000
Other investments - warrants		-		-		11,000		11,000
Investment in marketable securities:
Basic materials		2,390,000		-		-		2,390,000
Technology		798,000		-		-		798,000
Financial services		720,000		-		-		720,000
REITs and real estate companies		147,000		-		-		147,000
Other		916,000		-		-		916,000
		4,971,000		-		-		4,971,000
	$	4,974,000	$	-	$	11,000	$	4,985,000

As of June 30, 2012
Assets:	Level 1		Level 2		Level 3		Total
Cash equivalents - money market	$	3,000	$	-	$	-	$	3,000
Other investments - warrants		-		-		180,000		180,000
Investment in marketable securities:
Basic materials		2,475,000		-		-		2,475,000
Technology		379,000		-		-		379,000
Financial services		337,000		-		-		337,000
REITs and real estate companies		205,000		-		-		205,000
Other		654,000		-		-		654,000
		4,050,000		-		-		4,050,000
	$	4,053,000	$	-	$	180,000	$	4,233,000

The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date. The fair value of the warrants was determined based upon a Black-Scholes option valuation model.

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

									Net loss for the nine months
Assets	Level 1		Level 2		Level 3		March 31, 2013		ended March 31, 2013
Other non-marketable investments	$	-	$	-	$	7,991,000	$	7,991,000	$	-

									Net loss for the nine months
Assets	Level 1		Level 2		Level 3		June 30, 2012		ended March 31, 2012
Other non-marketable investments	$	-	$	-	$	7,991,000	$	7,991,000	$	(427,000)

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

XML

INVESTMENT IN MARKETABLE SECURITIES (Details) (USD $)	9 Months Ended	12 Months Ended
	Mar. 31, 2013	Jun. 30, 2012
Investment - Corporate Equities
Cost	$ 4,425,000	$ 3,038,000
Gross Unrealized Gain	1,623,000	1,970,000
Gross Unrealized Loss	(1,077,000)	(958,000)
Net Unrealized Gain	546,000	1,012,000
Fair Value	$ 4,971,000	$ 4,050,000

XML

SEGMENT INFORMATION (Tables)

9 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

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

The Company operates in three reportable segments, the operation of the hotel (“Hotel Operations”), 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 same information. Information below represents reporting segments for the three and nine months ended March 31, 2013 and 2012, respectively. Operating income for rental properties consist of rental income. Operating income from hotel operations consists of the operation of the hotel and operation of the garage. Operating income (loss) from investment transactions consist of net investment gain (loss) and dividend and interest income.

As of and for the three months	Hotel		Real Estate		Investment
ended March 31, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	10,475,000	$	135,000	$	-	$	-	$	10,610,000
Segment operating expenses		(9,563,000)		(66,000)		-		(254,000)		(9,883,000)
Segment income (loss)		912,000		69,000		-		(254,000)		727,000
Interest expense		(648,000)		(25,000)		-		-		(673,000)
Depreciation and amortization expense		(585,000)		(16,000)		-		-		(601,000)
Loss from investments		-		-		(99,000)		-		(99,000)
Income tax benefit		-		-		-		141,000		141,000
Net income (loss)	$	(321,000)	$	28,000	$	(99,000)	$	(113,000)	$	(505,000)
Total assets	$	37,316,000	$	5,058,000	$	12,973,000	$	8,821,000	$	64,168,000

As of and for the three months	Hotel		Real Estate		Investment
ended March 31, 2012	Operations		Operations		Transactions		Other		Total
Revenues	$	10,154,000	$	146,000	$	-	$	-	$	10,300,000
Segment operating expenses		(8,572,000)		(50,000)		-		(253,000)		(8,875,000)
Segment income (loss)		1,582,000		96,000		-		(253,000)		1,425,000
Interest expense		(676,000)		(28,000)		-		-		(704,000)
Depreciation and amortization expense		(570,000)		(15,000)		-		-		(585,000)
Income from investments		-		-		481,000		-		481,000
Income tax expense		-		-		-		(126,000)		(126,000)
Net income (loss)	$	336,000	$	53,000	$	481,000	$	(379,000)	$	491,000
Total assets	$	36,368,000	$	5,121,000	$	14,435,000	$	9,008,000	$	64,932,000

  

As of and for the nine months	Hotel		Real Estate		Investment
ended March 31, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	33,581,000	$	417,000	$	-	$	-	$	33,998,000
Segment operating expenses		(28,125,000)		(189,000)		-		(754,000)		(29,068,000)
Segment income (loss)		5,456,000		228,000		-		(754,000)		4,930,000
Interest expense		(1,972,000)		(82,000)		-		-		(2,054,000)
Depreciation and amortization expense		(1,759,000)		(47,000)		-		-		(1,806,000)
Loss from investments		-		-		(576,000)		-		(576,000)
Income tax expense		-		-		-		(18,000)		(18,000)
Net income (loss)	$	1,725,000	$	99,000	$	(576,000)	$	(772,000)	$	476,000
Total assets	$	37,316,000	$	5,058,000	$	12,973,000	$	8,821,000	$	64,168,000

As of and for the nine months	Hotel		Real Estate		Investment
ended March 31, 2012	Operations		Operations		Transactions		Other		Total
Revenues	$	31,675,000	$	430,000	$	-	$	-	$	32,105,000
Segment operating expenses		(24,513,000)		(156,000)		-		(687,000)		(25,356,000)
Segment income (loss)		7,162,000		274,000		-		(687,000)		6,749,000
Interest expense		(2,059,000)		(87,000)		-		-		(2,146,000)
Depreciation and amortization expense		(1,663,000)		(47,000)		-		-		(1,710,000)
Loss from investments		-		-		(2,332,000)		-		(2,332,000)
Income tax benefit		-		-		-		49,000		49,000
Net income (loss)	$	3,440,000	$	140,000	$	(2,332,000)	$	(638,000)	$	610,000
Total assets	$	36,368,000	$	5,121,000	$	14,435,000	$	9,008,000	$	64,932,000

XML

INVESTMENT IN REAL ESTATE, NET (Tables)

9 Months Ended

Mar. 31, 2013

Real Estate and Accumulated Depreciation Disclosure [Abstract]

Schedule of Real Estate Properties [Table Text Block]

The Company owns and operates a 27-unit and 2-unit multi-family apartment complex located in Los Angeles, California and owns land held for development located in Maui, Hawaii. Investment in real estate consisted of the following:  

As of	March 31, 2013		June 30, 2012
Land	$	2,430,000	$	2,430,000
Buildings, improvements and equipment		2,580,000		2,580,000
Accumulated depreciation		(925,000)		(878,000)
		4,085,000		4,132,000
Land held for development		973,000		973,000
Investment in real estate, net	$	5,058,000	$	5,105,000

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RELATED PARTY TRANSACTIONS

9 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 8 – RELATED PARTY TRANSACTIONS

In December 2012, Justice declared a limited partnership distribution in the amount of $1,200,000, of which Portsmouth received $600,000. In December 2011, Justice declared a limited partnership distribution in the aggregate amount of $1,000,000, of which Portsmouth received $500,000. Both of the amounts received by Portsmouth were eliminated in consolidation.

Certain shared costs and expenses primarily administrative expenses including rent and insurance, are allocated among the Company and its subsidiary, Portsmouth, and the Company’s parent, InterGroup, based on management’s estimate of the pro rata utilization of resources. For the three and nine months ended March 31, 2013 and 2012, the Company and Portsmouth made payments to InterGroup of $36,000 and $108,000, respectively, for each respective period.

During the three months ended March 31, 2013 and 2012, the Company received management fees from Justice Investors totaling $88,000 and $84,000, respectively. During the nine months ended March 31, 2013 and 2012, the Company received management fees from Justice Investors totaling $291,000 and $273,000, respectively. These amounts were eliminated in consolidation.

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

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

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INVESTMENT IN HOTEL, NET (Tables)

9 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Investment in hotel consisted of the following as of:

			Accumulated		Net Book
March 31, 2013	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		21,954,000		(19,038,000)		2,916,000
Building and improvements		53,795,000		(21,291,000)		32,504,000
	$	77,645,000	$	(40,329,000)	$	37,316,000

			Accumulated		Net Book
June 30, 2012	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		20,855,000		(18,187,000)		2,668,000
Building and improvements		52,383,000		(20,466,000)		31,917,000
	$	75,134,000	$	(38,653,000)	$	36,481,000

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INVESTMENT IN MARKETABLE SECURITIES (Tables)

9 Months Ended

Mar. 31, 2013

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Table Text Block]

At March 31, 2013 and June 30, 2012, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

			Gross		Gross		Net		Fair
Investment	Cost		Unrealized Gain		Unrealized Loss		Unrealized Gain		Value
As of March 31, 2013
Corporate
Equities	$	4,425,000	$	1,623,000	$	(1,077,000)	$	546,000	$	4,971,000
As of June 30, 2012
Corporate
Equities	$	3,038,000	$	1,970,000	$	(958,000)	$	1,012,000	$	4,050,000

Gain (Loss) on Investments [Table Text Block]

Net income (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the three and nine months ended March 31, 2013 and 2012, respectively.  

For the three months ended March 31,	2013		2012
Realized gain on marketable securities	$	144,000	$	388,000
Unrealized (loss) gain on marketable securities		(127,000)		267,000
Net income on marketable securities	$	17,000	$	655,000

For the nine months ended March 31,	2013		2012
Realized gain (loss) on marketable securities	$	178,000	$	(115,000)
Unrealized loss on marketable securities		(510,000)		(1,460,000)
Net loss on marketable securities	$	(332,000)	$	(1,575,000)

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INVESTMENT IN HOTEL, NET (Details) (USD $)	9 Months Ended	12 Months Ended
	Mar. 31, 2013	Jun. 30, 2012
Cost	$ 77,645,000	$ 75,134,000
Accumulated Depreciation	(40,329,000)	(38,653,000)
Net Book Value	37,316,000	36,481,000
Land [Member]
Cost	1,896,000	1,896,000
Accumulated Depreciation	0	0
Net Book Value	1,896,000	1,896,000
Furniture and Fixtures [Member]
Cost	21,954,000	20,855,000
Accumulated Depreciation	(19,038,000)	(18,187,000)
Net Book Value	2,916,000	2,668,000
Building Improvements [Member]
Cost	53,795,000	52,383,000
Accumulated Depreciation	(21,291,000)	(20,466,000)
Net Book Value	$ 32,504,000	$ 31,917,000

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OTHER INVESTMENTS, NET (Details) (USD $)	Mar. 31, 2013	Jun. 30, 2012
Other investments, net	$ 8,002,000	$ 8,171,000
Warrant [Member]
Other investments, net	11,000	180,000
Corporate Debt Securities [Member]
Other investments, net	168,000	168,000
Private Equity Funds [Member]
Other investments, net	1,164,000	1,164,000
Convertible Preferred Stock [Member]
Other investments, net	$ 6,659,000	$ 6,659,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income	$ 476,000	$ 610,000
Adjustments to reconcile net income to net cash provided by operating activities:
Net unrealized loss on marketable securities	510,000	1,460,000
Unrealized loss on other investments	169,000	284,000
Impairment loss on other investments	0	427,000
Depreciation and amortization	1,806,000	1,710,000
Changes in assets and liabilities:
Investment in marketable securities	(1,431,000)	973,000
Accounts receivable	(302,000)	356,000
Other assets	(109,000)	(809,000)
Accounts payable and other liabilities	1,287,000	(126,000)
Due to securities broker	1,183,000	(1,427,000)
Obligations for securities sold	(157,000)	109,000
Deferred tax asset	18,000	(49,000)
Net cash provided by operating activities	3,450,000	3,518,000
Cash flows from investing activities:
Hotel and real estate investments	(2,512,000)	(2,133,000)
Proceeds from other investments	0	160,000
Net cash used in investing activities	(2,512,000)	(1,973,000)
Cash flows from financing activities:
Distributions and dividends to noncontrolling interest	(658,000)	(500,000)
Payments on mortgage notes payable	(706,000)	(682,000)
Payments on other notes payable	(426,000)	(348,000)
Net cash used in financing activities	(1,790,000)	(1,530,000)
Net (decrease) increase in cash and cash equivalents:	(852,000)	15,000
Cash and cash equivalents at the beginning of the period	1,143,000	745,000
Cash and cash equivalents at the end of the period	291,000	760,000
Supplemental information:
Interest paid	$ 2,136,000	$ 2,240,000

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OTHER INVESTMENTS, NET

9 Months Ended

Mar. 31, 2013

Other Investments [Abstract]

Other Investments Disclosure [Text Block]

NOTE 5 – OTHER INVESTMENTS, NET

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

Other investments, net consist of the following: 

Type	March 31, 2013		June 30, 2012
Preferred stock - Comstock, at cost	$	6,659,000	$	6,659,000
Private equity hedge fund, at cost		1,164,000		1,164,000
Corporate debt and equity instruments, at cost		168,000		168,000
Warrants - at fair value		11,000		180,000
	$	8,002,000	$	8,171,000

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FAIR VALUE MEASUREMENTS (Details) (USD $)	Mar. 31, 2013	Jun. 30, 2012
Fair Value	$ 4,971,000	$ 4,050,000
Fair Value, Measurements, Recurring [Member]
Cash equivalents - money market	3,000	3,000
Other investments - warrants	11,000	180,000
Fair Value	4,971,000	4,050,000
Assets, Fair Value Disclosure	4,985,000	4,233,000
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Cash equivalents - money market	3,000	3,000
Other investments - warrants	0	0
Fair Value	4,971,000	4,050,000
Assets, Fair Value Disclosure	4,974,000	4,053,000
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Cash equivalents - money market	0	0
Other investments - warrants	0	0
Fair Value	0	0
Assets, Fair Value Disclosure	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Cash equivalents - money market	0	0
Other investments - warrants	11,000	180,000
Fair Value	0	0
Assets, Fair Value Disclosure	11,000	180,000
Basic Materials [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	2,390,000	2,475,000
Basic Materials [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	2,390,000	2,475,000
Basic Materials [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Basic Materials [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Technology [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	798,000	379,000
Technology [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	798,000	379,000
Technology [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Technology [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Financial Services [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	720,000	337,000
Financial Services [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	720,000	337,000
Financial Services [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Financial Services [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Reits and Real Estate Companies [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	147,000	205,000
Reits and Real Estate Companies [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	147,000	205,000
Reits and Real Estate Companies [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Reits and Real Estate Companies [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Others [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	916,000	654,000
Others [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	916,000	654,000
Others [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	0	0
Others [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value	$ 0	$ 0

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Textual)	Dec. 31, 1997	Mar. 31, 2013 Portsmouth [Member]	Mar. 31, 2013 Intergroup [Member]
Equity Method Investment, Ownership Percentage		68.80%	80.50%
Noncontrolling Interest, Ownership Percentage by Parent	55.40%		12.90%