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 September 30, 2014

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 October 3, 2014 was 1,241,810.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and June 30, 2014.	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three months ended September 30, 2014 and 2013.	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three months ended September 30, 2014 and 2013.	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	12
Item 4.	Controls and Procedures.	17
	PART II – OTHER INFORMATION
Item 6.	Exhibits.	17
Signatures		18

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PART I

FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

SANTA FE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS    

As of	September 30, 2014			June 30, 2014
	(Unaudited)
ASSETS
Investment in hotel, net	$	38,504,000		$	37,883,000
Investment in real estate, net		4,965,000			4,981,000
Investment in marketable securities		3,996,000			4,931,000
Other investments, net		8,174,000			8,210,000
Cash and cash equivalents		1,837,000			1,139,000
Restricted cash - redemption		20,551,000			16,163,000
Restricted cash - mortgage impounds		846,000			944,000
Accounts receivable - hotel, net		2,347,000			1,964,000
Other assets, net		4,538,000			4,858,000
Deferred tax asset		7,428,000			7,246,000
Total assets	$	93,186,000		$	88,319,000
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities:
Accounts payable and other liabilities	$	13,528,000		$	16,893,000
Redemption payable		20,551,000			16,163,000
Due to securities broker		-			998,000
Obligations for securities sold		1,177,000			102,000
Other notes payable		4,642,000			282,000
Mortgage notes payable - real estate		3,457,000			3,472,000
Mortgage notes payable - hotel		117,000,000			117,000,000
Total liabilities		160,355,000			154,910,000
Commitments and contingencies
Shareholders' deficit:
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
Accumulated deficit		(50,788,000	)		(50,259,000	)
Treasury stock, at cost, 97,828 shares		(951,000	)		(951,000	)
Total Santa Fe shareholders' deficit		(42,797,000	)		(42,268,000	)
Noncontrolling interest		(24,372,000	)		(24,323,000	)
Total shareholders' deficit		(67,169,000	)		(66,591,000	)
Total liabilities and shareholders' deficit	$	93,186,000		$	88,319,000

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 September 30,	2014			2013
Revenues:
Hotel	$	14,830,000		$	13,305,000
Real estate		166,000			147,000
Total revenues		14,996,000			13,452,000
Costs and operating expenses:
Hotel operating expenses		(11,838,000	)		(9,532,000	)
Real estate operating expenses		(60,000	)		(143,000	)
Depreciation and amortization expense		(681,000	)		(640,000	)
General and administrative expense		(276,000	)		(245,000	)
Total costs and operating expenses		(12,855,000	)		(10,560,000	)
Income from operations		2,141,000			2,892,000
Other income (expense):
Interest expense - mortgages		(2,049,000	)		(661,000	)
Net (loss) gain on marketable securities		(696,000	)		134,000
Net unrealized loss on other investments		(36,000	)		-
Dividend and interest income		6,000			5,000
Trading and margin interest expense		(126,000	)		(131,000	)
Other expense, net		(2,901,000	)		(653,000	)
Income (loss) before income taxes		(760,000	)		2,239,000
Income tax benefit (expense)		182,000			(471,000	)
Net (loss) income		(578,000	)		1,768,000
Less:  Net loss (income) attributable to the noncontrolling interest		49,000			(1,417,000	)
Net (loss) income attributable to Santa Fe	$	(529,000	)	$	351,000
Basic and diluted net (loss) income per share attributable to Santa Fe	$	(0.43	)	$	0.28
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 three months ended September 30,	2014			2013
Cash flows from operating activities:
Net (loss) income	$	(578,000	)	$	1,768,000
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Net unrealized loss (gain) on marketable securities		792,000			(245,000	)
Unrealized loss on other investments		36,000			-
Depreciation and amortization		681,000			640,000
Changes in assets and liabilities:
Investment in marketable securities		143,000			(504,000	)
Accounts receivable		(383,000	)		(172,000	)
Other assets		347,000			418,000
Accounts payable and other liabilities		(3,365,000	)		(1,401,000	)
Due to securities broker		(998,000	)		(79,000	)
Obligations for securities sold		1,075,000			729,000
Deferred tax asset		(182,000	)		471,000
Net cash (used in) provided by operating activities		(2,432,000	)		1,625,000
Cash flows from investing activities:
Payments for hotel and real estate investments		(1,313,000	)		(520,000	)
Net cash used in investing activities		(1,313,000	)		(520,000	)
Cash flows from financing activities:
Restriced cash - mortgage impounds		98,000			-
Proceeds from other notes payable		4,469,000			-
Payments on other notes payable		(109,000	)		(228,000	)
Payments on mortgage notes payable		(15,000	)		(250,000	)
Net cash provided by (used in) financing activities		4,443,000			(478,000	)
Net increase in cash and cash equivalents:		698,000			627,000
Cash and cash equivalents at the beginning of the period		1,139,000			688,000
Cash and cash equivalents at the end of the period	$	1,837,000		$	1,315,000
Supplemental information:
Interest paid	$	2,083,000		$	711,000

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, 2014. The June 30, 2014 Condensed Consolidated Balance Sheet was derived from the Company’s Form 10-K for the year ended June 30, 2014.

The results of operations for the three months ended September 30, 2014 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2015.

For the three months ended September 30, 2014 and 2013, the Company had no components of comprehensive income other than net income itself.

Santa Fe Financial Corporation, a Nevada corporation, (“Santa Fe” or the “Company”) owns approximately 68.8% of the outstanding common shares of Portsmouth Square, Inc. (“Portsmouth”), a public company. Santa Fe is an 80.9%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 12.9% of the common stock of Portsmouth, a public company.

Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors, a California limited partnership (“Justice” or the “Partnership”). Portsmouth controls approximately 93% of the voting interest in Justice and is the sole general partner. The financial statements of Justice are consolidated with those of the Company.

Justice, through its subsidiaries Justice Holdings Company, LLC (“Holdings”), a Delaware Limited Liability Company, Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), owns a 543-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the Hotel) and related facilities including a five level underground parking garage. Holdings and Mezzanine are both a wholly-owned subsidiaries of the Partnership; Operating is a wholly-owned subsidiary of Mezzanine. Mezzanine is the Mezzanine borrower under certain indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating, The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with Hilton Hotels Corporation. Justice also has a Management Agreement with Prism Hospitality L.P. (“Prism”) to perform management functions for the Hotel. The management agreement with Prism had an original term of ten years and can be terminated at any time with or without cause by the Partnership owner. Effective January 2014, the management agreement with Prism was amended by the Partnership. Effective December 1, 2013, GMP Management, Inc., a company owned by a Justice limited partner and related party, also provides management services for the Partnership pursuant to a Management Services Agreement, which is for a term of 3 years, but which can be terminated earlier by the Partnership for cause.

Management believes that the revenues expected to be generated from the operations of the hotel, garage and leases will be sufficient to meet all of the Partnership’s current and future obligations and financial requirements. Management also believes that there is significant value in the Hotel to support additional borrowings, if necessary.

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.

Basic income per share is calculated based upon the weighted average number of common shares outstanding during each respective period. During the three months ended September 30, 2014 and 2013, the Company did not have any potentially dilutive securities outstanding.

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NOTE 2 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

			Accumulated			Net Book
September 30, 2014	Cost		Depreciation			Value
Land	$	1,896,000	$	-		$	1,896,000
Furniture and equipment		24,760,000		(20,399,000	)		4,361,000
Building and improvements		55,066,000		(22,819,000	)		32,247,000
	$	81,722,000	$	(43,218,000	)	$	38,504,000

			Accumulated			Net Book
			Accumulated			Net Book
June 30, 2014	Cost		Depreciation			Value
Land	$	1,896,000	$	-		$	1,896,000
Furniture and equipment		23,306,000		(20,074,000	)		3,232,000
Building and improvements		55,281,000		(22,526,000	)		32,755,000
	$	80,483,000	$	(42,600,000	)	$	37,883,000

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	September 30, 2014			June 30, 2014
Land	$	2,430,000		$	2,430,000
Buildings, improvements and equipment		2,580,000			2,580,000
Accumulated depreciation		(1,018,000	)		(1,002,000	)
		3,992,000			4,008,000
Land held for development		973,000			973,000
Investment in real estate, net	$	4,965,000		$	4,981,000

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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 transfer to its shareholders through income and/or capital gain.

At September 30, 2014 and June 30, 2014, 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 September 30, 2014
Corporate
Equities	$	4,544,000	$	426,000	$	(974,000	)	$	(548,000	)	$	3,996,000
As of June 30, 2014
Corporate
Equities	$	4,603,000	$	1,250,000	$	(922,000	)	$	328,000		$	4,931,000

As of September 30, 2014 and June 30, 2014, the Company had $933,000 and $901,000, respectively, of unrealized losses related to securities held for over one year.

Net gain (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 months ended September 30, 2014 and 2013, respectively.

For the three months ended September 30,	2014			2013
Realized gain (loss) on marketable securities	$	96,000		$	(111,000	)
Unrealized (loss) gain on marketable securities		(792,000	)		245,000
Net (loss) gain on marketable securities	$	(696,000	)	$	134,000

NOTE 5 – OTHER INVESTMENTS, NET

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

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Other investments, net consist of the following:

Type	September 30, 2014		June 30, 2014
Preferred stock - Comstock, at cost	$	6,659,000	$	6,659,000
Private equity hedge fund, at cost		1,025,000		1,025,000
Corporate debt and equity instruments, at cost		168,000		168,000
Other preferred stock, at cost		240,000		240,000
Warrants - at fair value		82,000		118,000
	$	8,174,000	$	8,210,000

NOTE 6 - FAIR VALUE MEASUREMENTS

The carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, 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 September 30, 2014
Assets:	Level 1		Level 2		Level 3		Total
Other investments - warrants	$	-	$	-	$	82,000	$	82,000
Investment in marketable securities:
Basic materials		1,900,000		-		-		1,900,000
Technology and telecommunications		1,040,000						1,040,000
Entertainment		457,000						457,000
Financial services		234,000		-		-		234,000
REITs and real estate companies		170,000		-		-		170,000
Other		195,000		-		-		195,000
		3,996,000		-		-		3,996,000
	$	3,996,000	$	-	$	82,000	$	4,078,000

As of June 30, 2014
Assets:	Level 1		Level 2		Level 3		Total
Other investments - warrants	$	-	$	-	$	118,000	$	118,000
Investment in marketable securities:
Basic materials		2,657,000		-		-		2,657,000
Technology		479,000		-		-		479,000
Financial services		287,000		-		-		287,000
REITs and real estate companies		278,000		-		-		278,000
Other		1,230,000		-		-		1,230,000
		4,931,000		-		-		4,931,000
	$	4,931,000	$	-	$	118,000	$	5,049,000

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 three months
Assets	Level 1		Level 2		Level 3		September 30, 2014		ended September 30, 2014
Other non-marketable investments	$	-	$	-	$	8,092,000	$	8,092,000	$	-

									Net loss for the three months
Assets	Level 1		Level 2		Level 3		June 30, 2014		ended September 30, 2013
Other non-marketable investments	$	-	$	-	$	8,092,000	$	8,092,000	$	-

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 months ended September 30, 2014 and 2013, 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 from investment transactions consist of net investment gain and dividend and interest income.

As of and for the three months	Hotel			Real Estate			Investment
ended September 30, 2014	Operations			Operations			Transactions			Other			Total
Revenues	$	14,830,000		$	166,000		$	-		$	-		$	14,996,000
Segment operating expenses		(11,838,000	)		(60,000	)		-			(276,000	)		(12,174,000	)
Segment income (loss)		2,992,000			106,000			-			(276,000	)		2,822,000
Interest expense		(2,024,000	)		(25,000	)		-			-			(2,049,000	)
Depreciation and amortization expense		(666,000	)		(15,000	)		-			-			(681,000	)
Income from investments		-			-			(852,000	)		-			(852,000	)
Income tax benefit		-			-			-			182,000			182,000
Net income (loss)	$	302,000		$	66,000		$	(852,000	)	$	(94,000	)	$	(578,000	)
Total assets	$	38,504,000		$	4,965,000		$	12,170,000		$	37,547,000		$	93,186,000

As of and for the three months	Hotel			Real Estate			Investment
ended September 30, 2013	Operations			Operations			Transactions		Other			Total
Revenues	$	13,305,000		$	147,000		$	-	$	-		$	13,452,000
Segment operating expenses		(9,532,000	)		(143,000	)		-		(245,000	)		(9,920,000	)
Segment income (loss)		3,773,000			4,000			-		(245,000	)		3,532,000
Interest expense		(635,000	)		(26,000	)		-		-			(661,000	)
Depreciation and amortization expense		(624,000	)		(16,000	)		-		-			(640,000	)
Income from investments		-			-			8,000		-			8,000
Income tax expense		-			-			-		(471,000	)		(471,000	)
Net income (loss)	$	2,514,000		$	(38,000	)	$	8,000	$	(716,000	)	$	1,768,000
Total assets	$	37,491,000		$	5,027,000		$	13,887,000	$	8,867,000		$	65,272,000

NOTE 8 – RELATED PARTY TRANSACTIONS

On July 2, 2014, the Partnership obtained from the Intergroup Corporation (parent company of Portsmouth) an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. Intergroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The proceeds of the loan were applied to the July 2014 payments to Holdings described in Note 19 of the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

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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 months ended September 30, 2014 and 2013, the Company and Portsmouth made payments to InterGroup of $36,000 for each respective period.

During the three months ended September 30, 2014 and 2013, the Company received management fees from Justice Investors totaling $140,000 and $112,000, respectively.

In connection with the redemption of limited partnership interests of Justice Investors, Limited Partnership (which took place during fiscal year ended June 30, 2014), Justice Operating Company, LLC agreed to pay a total of $1,550,000 in fees to certain officers and directors of the Company for services rendered in connection with the redemption of partnership interests, refinancing of Justice’s properties and reorganization of Justice Investors. This agreement was superseded by a letter dated December 11, 2013 from Justice Investors, Limited Partnership, in which Justice Investors Limited Partnership assumed the payment obligations of Justice Operating Company, LLC. The first payment under this agreement was made concurrently with the closing of the loan agreements, with the remaining payments due upon Justice Investor’s having adequate available cash as described in the letter. As of September 30, 2014, $1,250,000 of these fees remain outstanding.

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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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, 2014, 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. 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 management functions for the Hotel. The management agreement with Prism had an original term of ten years and can be terminated at any time with or without cause by the Partnership owner. Effective January 2014, the management agreement with Prism was amended by the Partnership. Effective December 1, 2013, GMP Management, Inc., a company owned by a Justice limited partner and related party, also provides management services for the Partnership pursuant to a Management Services Agreement, which is for a term of 3 years, but which can be terminated earlier by the Partnership for cause. The parking garage that is part of the Hotel property is managed by Ace Parking pursuant to a contract with the Partnership. 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.

Three months Ended September 30, 2014 Compared to Three months Ended September 30, 2013

The Company had a net loss of $578,000 for the three months ended September 30, 2014 compared to net income of $1,768,000 for the three months ended September 30, 2013. The change is primarily attributable to lower income from hotel operations as the result of the higher mortgage interest expense due to the higher mortgage balance and higher legal expenses associated with an ongoing legal matter related to the Justice partnership redemption and from losses on the Company’s marketable securities portfolio, partially offset by the continued improvement of Hotel revenues.

The Company had net income from hotel operations of $302,000 for the three months ended September 30, 2014, compared to net income of $2,514,000 for the three months ended September 30, 2013. The change in the net income as noted above was due to higher mortgage interest expense as the result of the higher mortgage balance and higher legal expenses. This is partially offset by the increase in revenues at the Hotel resulting from higher average room rates.

- 12 -

The following table sets forth a more detailed presentation of Hotel operations for the three months ended September 30, 2014 and 2013.

For the three months ended September 30,	2014			2013
Hotel revenues:
Hotel rooms	$	12,344,000		$	11,054,000
Food and beverage		1,573,000			1,328,000
Garage		697,000			755,000
Other operating departments		216,000			168,000
Total hotel revenues		14,830,000			13,305,000
Operating expenses excluding interest, depreciation and amortization expenses		(11,838,000	)		(9,532,000	)
Operating income before interest, depreciation and amortization expenses		2,992,000			3,773,000
Interest expense		(2,024,000	)		(635,000	)
Depreciation and amortization expense		(666,000	)		(624,000	)
Net income from hotel operations	$	302,000		$	2,514,000

For the three months ended September 30, 2014, the Hotel generated operating income of $2,992,000 before interest and depreciation and amortization expenses on total revenues of $14,830,000 compared to income of $3,773,000 before interest and depreciation and amortization expenses on total operating revenues of $13,305,000 for the three months ended September 30, 2013. Room revenues increased by $1,290,000 for the three months ended September 30, 2014 compared to the three months ended September 30, 2013 primarily as the result of higher room rates as the result of two big San Francisco conventions. Food and beverage revenue increased by $245,000 as the result of higher banquet revenue volume.

Operating expenses increased by $2,306,000 compared to the prior period primarily due to legal fees, higher room occupancy and higher food and beverage related expenses, higher franchise and credit card fees as the result in the increase in revenues and higher property taxes as the result of the redemption the limited partners and the refinancing of the Hotel.

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 September 30, 2014 and 2013.

Three Months Ended September 30,	Average Daily Rate		Average Occupancy %			RevPAR
2014	$	258		96	%	$	247
2013	$	235		94	%	$	221

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 $23 for the three months ended September 30, 2014 compared to the three months ended September 30, 2013, while occupancy percentages increase to 96% from 94%. As a result, the Hotel was able to achieve a RevPAR number that was $26 higher than the comparative three month period.

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. During fiscal 2014, we introduced significant product enhancements including “The Cloud” (technology lounge) dedicated to the HHonors top tier members, three new premium executive meeting rooms on the lobby level designed for top corporate meetings, major sports HD television events and one meeting room that is convertible into a Karaoke lounge. We have also upgraded our Team Members lounge and locker rooms and relocated our Sales Department to the lobby level to better access for hotel clients. In addition, a Wellness Center is nearing completion on the fifth floor and will feature a new spa and an expanded fitness center.  The hotel lobby is undergoing a comprehensive soft goods upgrade and will present a new level of style, comfort and arrival experience. And finally, the Hotel in conjunction with the Chinese Cultural Center is developing a landscape area on the Pedestrian Bridge that connects the hotel to Portsmouth Square. 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.

- 13 -

Rental revenue from the Company’s real estate operations increased to $166,000 from $147,000 as the result of lower vacancy losses and increased rental rates while operating expenses also decreased to $60,000 from $143,000 as the result of lower repairs and maintenance related expenses. Management continues to review and analyze the Company’s real estate operations to improve occupancy and rental rates, reduce expenses and improve efficiencies.

The Company had a net loss on marketable securities of $696,000 for the three months ended September 30, 2014 compared to a net gain on marketable securities of $134,000 for the three months ended September 30, 2013. For the three months ended September 30, 2014, the Company had a net realized gain of $96,000 and a net unrealized loss of $792,000. For the three months ended September 30, 2013, the Company had a net realized loss of $111,000 and a net unrealized gain of $245,000. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

The Company and its subsidiary, Portsmouth, compute and file income tax returns and prepare discrete income tax provisions for financial reporting.  The income tax benefit (expense) during the three months ended September 30, 2014 and 2013 represents primarily the income tax effect on the Portsmouth’s pretax (loss) income which includes its share in net income (loss) of the Hotel. The Company’s tax benefit as a percentage of the Portsmouth’s income (loss) before income taxes has increased in the quarter ended September 30, 2014 due to the redemption and a larger ownership in Justice.

MARKETABLE SECURITIES

As of September 30, 2014 and June 30, 2014, the Company had investments in marketable equity securities of $3,996,000 and $4,931,000, respectively. The following table shows the composition of the Company’s marketable securities portfolio by selected industry groups as:

As of September 30, 2014			% of Total
			Investment
Industry Group	Fair Value		Securities
Basic materials	$	1,900,000		47.5	%
Technology and telecommunications		1,040,000		26.0	%
Entertainment		457,000		11.4	%
Financial services		234,000		5.9	%
REITs and real estate companies		170,000		4.3	%
Other		195,000		4.9	%
	$	3,996,000		100.0	%

As of June 30, 2014			% of Total
			Investment
Industry Group	Fair Value		Securities
Basic materials	$	2,657,000		53.9	%
Technology		479,000		9.7	%
Financial services		287,000		5.8	%
REITs and real estate companies		278,000		5.6	%
Other		1,230,000		25.0	%
	$	4,931,000		100.0	%

- 14 -

The Company’s investment in marketable securities portfolio is diversified with 17 different equity positions. The Company holds four equity securities that are individually more than 10% of the equity value of the portfolio. The largest security represents 47.5% 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. . The Company also owns Comstock convertible preferred stock that is valued at $6,659,000 as of September 30, 2014 and June 30, 2014 and included in Other Investments.

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 September 30,	2014			2013
Net (loss) gain on marketable securities	$	(696,000	)	$	134,000
Net unrealized loss on other investments		(36,000	)		-
Dividend and interest income		6,000			5,000
Margin interest expense		(34,000	)		(50,000	)
Trading and management expenses		(92,000	)		(81,000	)
	$	(852,000	)	$	8,000

FINANCIAL CONDITION AND LIQUIDITY

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 revenues generated from the investment of its cash and marketable securities, other investments and the ownership of real estate.

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

To fund redemption of limited partnership interests and to repay the prior mortgage, Justice obtained a $97,000,000 mortgage loan and a $20,000,000 mezzanine loan. The mortgage loan is secured by the Partnership’s principal asset, the Hilton San Francisco-Financial District. The mortgage loan initially bears an interest rate of 5.28% per annum and matures in January 2024. As additional security for the mortgage loan, there is a limited guaranty executed by the Company in favor of mortgage lender. The mezzanine loan is a secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine loan initially bears interest at 9.75% per annum and matures in January 2024. As additional security for the mezzanine loan, there is a limited guaranty executed by the Company in favor of mezzanine lender.

On July 2, 2014, the Partnership obtained from the Intergroup Corporation (parent company of Portsmouth) an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. Intergroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The proceeds of the loan were applied to the July 2014 payments to Holdings described in Note 19 of the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

- 15 -

Despite an uncertain economy, the Hotel has continued to generate positive cash flows. While the debt service requirements related the new loans, may create some additional risk for the Company and its ability to generate cash flows in the future, management believes that cash flows from the operations of the Hotel and the garage will continue to be sufficient to meet all of the Partnership’s current and future obligations and financial requirements. 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 the partnership 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 September 30, 2014, the Company’s material financial obligations which also including interest payments.

			9 Months		Year		Year		Year		Year
	Total		2015		2016		2017		2018		2019		Thereafter
Mortgage notes payable	$	120,457,000	$	49,000	$	69,000	$	744,000	$	1,473,000	$	1,552,000	$	116,570,000
Redemption payable		20,551,000		20,551,000		-		-		-		-		-
Other notes payable		4,642,000		138,000		175,000		4,329,000		-		-		-
Interest		62,755,000		5,819,000		7,752,000		7,690,000		7,224,000		6,640,000		27,630,000
Total	$	208,405,000	$	26,557,000	$	7,996,000	$	12,763,000	$	8,697,000	$	8,192,000	$	144,200,000

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.

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

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Critical accounting policies are those that are most significant to the presentation of our financial position and results of operations and require judgments by management in order to make estimates about the effect of matters that are inherently uncertain. The preparation of these condensed financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to the consolidation of our subsidiaries, to our revenues, allowances for bad debts, accruals, asset impairments, other investments, income taxes and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions. There have been no material changes to the Company’s critical accounting policies during the three months ended September 30, 2014. Please refer to the Company’s Annual Report on Form 10-K for the year ended June 30, 2014 for a summary of the critical accounting policies.

- 16 -

Item 4. Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

PART II.

OTHER INFORMATION

Item 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.

- 17 -

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: November 14, 2014	by	/s/ John V. Winfield
		John V. Winfield, President,
		Chairman of the Board and
		Chief Executive Officer
Date: November 14, 2014	by	/s/ David T. Nguyen
		David T. Nguyen, Treasurer
		and Controller

- 18 -

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: November 14, 2014

/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: November 14, 2014

/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 September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John V. Winfield, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

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

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

/s/ John V. Winfield

John V. Winfield

President and Chief Executive Officer

(Principal Executive Officer)

Date: November 14, 2014

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 September 30, 2014, 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: November 14, 2014

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 $)	3 Months Ended	12 Months Ended
	Sep. 30, 2014	Jun. 30, 2014
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	$ 933,000	$ 901,000

XML

INVESTMENT IN MARKETABLE SECURITIES

3 Months Ended

Sep. 30, 2014

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 transfer to its shareholders through income and/or capital gain.

At September 30, 2014 and June 30, 2014, 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 September 30, 2014
Corporate
Equities	$	4,544,000	$	426,000	$	(974,000)	$	(548,000)	$	3,996,000
As of June 30, 2014
Corporate
Equities	$	4,603,000	$	1,250,000	$	(922,000)	$	328,000	$	4,931,000

As of September 30, 2014 and June 30, 2014, the Company had $933,000 and $901,000, respectively, of unrealized losses related to securities held for over one year.

Net gain (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 months ended September 30, 2014 and 2013, respectively.

For the three months ended September 30,	2014		2013
Realized gain (loss) on marketable securities	$	96,000	$	(111,000)
Unrealized (loss) gain on marketable securities		(792,000)		245,000
Net (loss) gain on marketable securities	$	(696,000)	$	134,000

XML

FAIR VALUE MEASUREMENTS (Details Textual)	3 Months Ended
	Sep. 30, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost Method Investments, Additional Information	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.

XML

FAIR VALUE MEASUREMENTS (Details 1) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other non-marketable investments	$ 8,092,000		$ 8,092,000
Net loss	0	0
Other Investments [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other non-marketable investments	0		0
Other Investments [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other non-marketable investments	0		0
Other Investments [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other non-marketable investments	$ 8,092,000		$ 8,092,000

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SEGMENT INFORMATION (Details) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
Segment Reporting Information [Line Items]
Revenues	$ 14,996,000	$ 13,452,000
Segment operating expenses	(12,174,000)	(9,920,000)
Segment income (loss)	2,822,000	3,532,000
Interest expense	(2,049,000)	(661,000)
Depreciation and amortization expense	(681,000)	(640,000)
Income from investments	(852,000)	8,000
Income tax benefit	182,000	(471,000)
Net income (loss)	(578,000)	1,768,000
Total assets	93,186,000	65,272,000	88,319,000
Hotel [Member]
Segment Reporting Information [Line Items]
Revenues	14,830,000	13,305,000
Segment operating expenses	(11,838,000)	(9,532,000)
Segment income (loss)	2,992,000	3,773,000
Interest expense	(2,024,000)	(635,000)
Depreciation and amortization expense	(666,000)	(624,000)
Income from investments	0	0
Income tax benefit	0	0
Net income (loss)	302,000	2,514,000
Total assets	38,504,000	37,491,000
Real Estate Operations [Member]
Segment Reporting Information [Line Items]
Revenues	166,000	147,000
Segment operating expenses	(60,000)	(143,000)
Segment income (loss)	106,000	4,000
Interest expense	(25,000)	(26,000)
Depreciation and amortization expense	(15,000)	(16,000)
Income from investments	0	0
Income tax benefit	0	0
Net income (loss)	66,000	(38,000)
Total assets	4,965,000	5,027,000
Investment Transactions [Member]
Segment Reporting Information [Line Items]
Revenues	0	0
Segment operating expenses	0	0
Segment income (loss)	0	0
Interest expense	0	0
Depreciation and amortization expense	0	0
Income from investments	(852,000)	8,000
Income tax benefit	0	0
Net income (loss)	(852,000)	8,000
Total assets	12,170,000	13,887,000
Other Property [Member]
Segment Reporting Information [Line Items]
Revenues	0	0
Segment operating expenses	(276,000)	(245,000)
Segment income (loss)	(276,000)	(245,000)
Interest expense	0	0
Depreciation and amortization expense	0	0
Income from investments	0	0
Income tax benefit	182,000	(471,000)
Net income (loss)	(94,000)	(716,000)
Total assets	$ 37,547,000	$ 8,867,000

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RELATED PARTY TRANSACTIONS (Details Textual) (USD $)	3 Months Ended		12 Months Ended	0 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014	Jul. 02, 2014 Intergroup [Member]
Related Party Transaction [Line Items]
Management Fees Revenue, Total	$ 140,000	$ 112,000
Costs and Expenses, Related Party	36,000	36,000
Management Fee Expense			1,550,000
Debt Instrument Fee Percent				3.00%
Debt Instrument, Face Amount				4,250,000
Debt Instrument, Interest Rate, Stated Percentage				12.00%
Debt Instrument, Term				2 years
Management Fee Payable	$ 1,250,000

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INVESTMENT IN REAL ESTATE, NET (Apartment Building [Member])

3 Months Ended

Sep. 30, 2014

Apartment Building [Member]

Real Estate Properties [Line Items]

Real Estate 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	September 30, 2014		June 30, 2014
Land	$	2,430,000	$	2,430,000
Buildings, improvements and equipment		2,580,000		2,580,000
Accumulated depreciation		(1,018,000)		(1,002,000)
		3,992,000		4,008,000
Land held for development		973,000		973,000
Investment in real estate, net	$	4,965,000	$	4,981,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2014	Jun. 30, 2014
ASSETS
Investment in hotel, net	$ 38,504,000	$ 37,883,000
Investment in real estate, net	4,965,000	4,981,000
Investment in marketable securities	3,996,000	4,931,000
Other investments, net	8,174,000	8,210,000
Cash and cash equivalents	1,837,000	1,139,000
Restricted cash - redemption	20,551,000	16,163,000
Restricted cash - mortgage impounds	846,000	944,000
Accounts receivable - hotel, net	2,347,000	1,964,000
Other assets, net	4,538,000	4,858,000
Deferred tax asset	7,428,000	7,246,000
Total assets	93,186,000	88,319,000
Liabilities:
Accounts payable and other liabilities	13,528,000	16,893,000
Redemption payable	20,551,000	16,163,000
Due to securities broker	0	998,000
Obligations for securities sold	1,177,000	102,000
Other notes payable	4,642,000	282,000
Mortgage notes payable - real estate	3,457,000	3,472,000
Mortgage notes payable - hotel	117,000,000	117,000,000
Total liabilities	160,355,000	154,910,000
Commitments and contingencies
Shareholders' deficit:
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
Accumulated deficit	(50,788,000)	(50,259,000)
Treasury stock, at cost, 97,828 shares	(951,000)	(951,000)
Total Santa Fe shareholders' deficit	(42,797,000)	(42,268,000)
Noncontrolling interest	(24,372,000)	(24,323,000)
Total shareholders' deficit	(67,169,000)	(66,591,000)
Total liabilities and shareholders' deficit	$ 93,186,000	$ 88,319,000

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Sep. 30, 2014

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, 2014. The June 30, 2014 Condensed Consolidated Balance Sheet was derived from the Company’s Form 10-K for the year ended June 30, 2014.

The results of operations for the three months ended September 30, 2014 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2015.

For the three months ended September 30, 2014 and 2013, the Company had no components of comprehensive income other than net income itself.

Santa Fe Financial Corporation, a Nevada corporation, (“Santa Fe” or the “Company”) owns approximately 68.8% of the outstanding common shares of Portsmouth Square, Inc. (“Portsmouth”), a public company. Santa Fe is an 80.9%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 12.9% of the common stock of Portsmouth, a public company.

Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors, a California limited partnership (“Justice” or the “Partnership”). Portsmouth controls approximately  93% of the voting interest in Justice and is the sole general partner. The financial statements of Justice are consolidated with those of the Company.

Justice, through its subsidiaries Justice Holdings Company, LLC (“Holdings”), a Delaware Limited Liability Company, Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), owns a 543-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the Hotel) and related facilities including a five level underground parking garage. Holdings and Mezzanine are both a wholly-owned subsidiaries of the Partnership; Operating is a wholly-owned subsidiary of Mezzanine. Mezzanine is the Mezzanine borrower under certain indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating, The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with Hilton Hotels Corporation. Justice also has a Management Agreement with Prism Hospitality L.P. (“Prism”) to perform management functions for the Hotel. The management agreement with Prism had an original term of ten years and can be terminated at any time with or without cause by the Partnership owner. Effective January 2014, the management agreement with Prism was amended by the Partnership. Effective December 1, 2013, GMP Management, Inc., a company owned by a Justice limited partner and related party, also provides management services for the Partnership pursuant to a Management Services Agreement, which is for a term of 3 years, but which can be terminated earlier by the Partnership for cause.

Management believes that the revenues expected to be generated from the operations of the hotel, garage and leases will be sufficient to meet all of the Partnership’s current and future obligations and financial requirements. Management also believes that there is significant value in the Hotel to support additional borrowings, if necessary.

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.

Basic income per share is calculated based upon the weighted average number of common shares outstanding during each respective period. During the three months ended September 30, 2014 and 2013, the Company did not have any potentially dilutive securities outstanding.

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INVESTMENT IN REAL ESTATE, NET (Details) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Property, Plant and Equipment [Line Items]
Investment in real estate, net	$ 38,504,000	$ 37,883,000
Apartment Building [Member]
Property, Plant and Equipment [Line Items]
Accumulated depreciation	(1,018,000)	(1,002,000)
Real Estate Investments, Net	3,992,000	4,008,000
Land held for development	973,000	973,000
Investment in real estate, net	4,965,000	4,981,000
Land [Member] | Apartment Building [Member]
Property, Plant and Equipment [Line Items]
Cost	2,430,000	2,430,000
Buildings, Improvements and Equipment [Member] | Apartment Building [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 2,580,000	$ 2,580,000

XML

INVESTMENT IN MARKETABLE SECURITIES (Details 1) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Schedule of Trading Securities and Other Trading Assets [Line Items]
Realized gain (loss) on marketable securities	$ 96,000	$ (111,000)
Unrealized (loss) gain on marketable securities	(792,000)	245,000
Net (loss) gain on marketable securities	$ (696,000)	$ 134,000

XML

INVESTMENT IN HOTEL, NET (Hotel [Member])

3 Months Ended

Sep. 30, 2014

Hotel [Member]

Real Estate Properties [Line Items]

Real Estate Disclosure [Text Block]

NOTE 2 – INVESTMENT IN HOTEL, NET

Investment in hotel consisted of the following as of:

			Accumulated		Net Book
September 30, 2014	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		24,760,000		(20,399,000)		4,361,000
Building and improvements		55,066,000		(22,819,000)		32,247,000
	$	81,722,000	$	(43,218,000)	$	38,504,000

			Accumulated		Net Book
			Accumulated		Net Book
June 30, 2014	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		23,306,000		(20,074,000)		3,232,000
Building and improvements		55,281,000		(22,526,000)		32,755,000
	$	80,483,000	$	(42,600,000)	$	37,883,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Sep. 30, 2014	Jun. 30, 2014
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common Stock, Shares Authorized	2,000,000	2,000,000
Common Stock, Shares, Issued	1,339,638	1,339,638
Common Stock, Shares, Outstanding	1,241,810	1,241,810
Treasury Stock, Shares	97,828	97,828

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OTHER INVESTMENTS, NET (Tables)

3 Months Ended

Sep. 30, 2014

Other Investments [Abstract]

Other Investments [Table Text Block]

Other investments, net consist of the following: 

Type	September 30, 2014		June 30, 2014
Preferred stock - Comstock, at cost	$	6,659,000	$	6,659,000
Private equity hedge fund, at cost		1,025,000		1,025,000
Corporate debt and equity instruments, at cost		168,000		168,000
Other preferred stock, at cost		240,000		240,000
Warrants - at fair value		82,000		118,000
	$	8,174,000	$	8,210,000

XML

Document And Entity Information	3 Months Ended
	Sep. 30, 2014	Oct. 03, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
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
Trading Symbol	SFEF
Entity Common Stock, Shares Outstanding		1,241,810

XML

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Sep. 30, 2014

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 September 30, 2014
Assets:	Level 1		Level 2		Level 3		Total
Other investments - warrants	$	-	$	-	$	82,000	$	82,000
Investment in marketable securities:
Basic materials		1,900,000		-		-		1,900,000
Technology and telecommunications		1,040,000						1,040,000
Entertainment		457,000						457,000
Financial services		234,000		-		-		234,000
REITs and real estate companies		170,000		-		-		170,000
Other		195,000		-		-		195,000
		3,996,000		-		-		3,996,000
	$	3,996,000	$	-	$	82,000	$	4,078,000

As of June 30, 2014
Assets:	Level 1		Level 2		Level 3		Total
Other investments - warrants	$	-	$	-	$	118,000	$	118,000
Investment in marketable securities:
Basic materials		2,657,000		-		-		2,657,000
Technology		479,000		-		-		479,000
Financial services		287,000		-		-		287,000
REITs and real estate companies		278,000		-		-		278,000
Other		1,230,000		-		-		1,230,000
		4,931,000		-		-		4,931,000
	$	4,931,000	$	-	$	118,000	$	5,049,000

Fair Value Measurements, Nonrecurring [Table Text Block]

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

									Net loss for the three months
Assets	Level 1		Level 2		Level 3		September 30, 2014		ended September 30, 2014
Other non-marketable investments	$	-	$	-	$	8,092,000	$	8,092,000	$	-

										Net loss for the three months
Assets		Level 1		Level 2	Level 3			June 30, 2014		ended September 30, 2013
Other non-marketable investments	$	-	$	-	$	8,092,000	$	8,092,000	$	-

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Revenues:
Hotel	$ 14,830,000	$ 13,305,000
Real estate	166,000	147,000
Total revenues	14,996,000	13,452,000
Costs and operating expenses:
Hotel operating expenses	(11,838,000)	(9,532,000)
Real estate operating expenses	(60,000)	(143,000)
Depreciation and amortization expense	(681,000)	(640,000)
General and administrative expense	(276,000)	(245,000)
Total costs and operating expenses	(12,855,000)	(10,560,000)
Income from operations	2,141,000	2,892,000
Other income (expense):
Interest expense - mortgages	(2,049,000)	(661,000)
Net (loss) gain on marketable securities	(696,000)	134,000
Net unrealized loss on other investments	(36,000)	0
Dividend and interest income	6,000	5,000
Trading and margin interest expense	(126,000)	(131,000)
Other expense, net	(2,901,000)	(653,000)
Income (loss) before income taxes	(760,000)	2,239,000
Income tax benefit (expense)	182,000	(471,000)
Net (loss) income	(578,000)	1,768,000
Less: Net loss (income) attributable to the noncontrolling interest	49,000	(1,417,000)
Net (loss) income attributable to Santa Fe	$ (529,000)	$ 351,000
Basic and diluted net (loss) income per share attributable to Santa Fe (in dollars per share)	$ (0.43)	$ 0.28
Weighted average number of common shares outstanding - basic and diluted (in shares)	1,241,810	1,241,810

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SEGMENT INFORMATION

3 Months Ended

Sep. 30, 2014

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 months ended September 30, 2014 and 2013, 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 from investment transactions consist of net investment gain and dividend and interest income.

As of and for the three months	Hotel		Real Estate		Investment
ended September 30, 2014	Operations		Operations		Transactions		Other		Total
Revenues	$	14,830,000	$	166,000	$	-	$	-	$	14,996,000
Segment operating expenses		(11,838,000)		(60,000)		-		(276,000)		(12,174,000)
Segment income (loss)		2,992,000		106,000		-		(276,000)		2,822,000
Interest expense		(2,024,000)		(25,000)		-		-		(2,049,000)
Depreciation and amortization expense		(666,000)		(15,000)		-		-		(681,000)
Income from investments		-		-		(852,000)		-		(852,000)
Income tax benefit		-		-		-		182,000		182,000
Net income (loss)	$	302,000	$	66,000	$	(852,000)	$	(94,000)	$	(578,000)
Total assets	$	38,504,000	$	4,965,000	$	12,170,000	$	37,547,000	$	93,186,000

As of and for the three months	Hotel		Real Estate		Investment
ended September 30, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	13,305,000	$	147,000	$	-	$	-	$	13,452,000
Segment operating expenses		(9,532,000)		(143,000)		-		(245,000)		(9,920,000)
Segment income (loss)		3,773,000		4,000		-		(245,000)		3,532,000
Interest expense		(635,000)		(26,000)		-		-		(661,000)
Depreciation and amortization expense		(624,000)		(16,000)		-		-		(640,000)
Income from investments		-		-		8,000		-		8,000
Income tax expense		-		-		-		(471,000)		(471,000)
Net income (loss)	$	2,514,000	$	(38,000)	$	8,000	$	(716,000)	$	1,768,000
Total assets	$	37,491,000	$	5,027,000	$	13,887,000	$	8,867,000	$	65,272,000

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FAIR VALUE MEASUREMENTS

3 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 6 - FAIR VALUE MEASUREMENTS

The carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, 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 September 30, 2014
Assets:	Level 1		Level 2		Level 3		Total
Other investments - warrants	$	-	$	-	$	82,000	$	82,000
Investment in marketable securities:
Basic materials		1,900,000		-		-		1,900,000
Technology and telecommunications		1,040,000						1,040,000
Entertainment		457,000						457,000
Financial services		234,000		-		-		234,000
REITs and real estate companies		170,000		-		-		170,000
Other		195,000		-		-		195,000
		3,996,000		-		-		3,996,000
	$	3,996,000	$	-	$	82,000	$	4,078,000

As of June 30, 2014
Assets:	Level 1		Level 2		Level 3		Total
Other investments - warrants	$	-	$	-	$	118,000	$	118,000
Investment in marketable securities:
Basic materials		2,657,000		-		-		2,657,000
Technology		479,000		-		-		479,000
Financial services		287,000		-		-		287,000
REITs and real estate companies		278,000		-		-		278,000
Other		1,230,000		-		-		1,230,000
		4,931,000		-		-		4,931,000
	$	4,931,000	$	-	$	118,000	$	5,049,000

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 three months
Assets	Level 1		Level 2		Level 3		September 30, 2014		ended September 30, 2014
Other non-marketable investments	$	-	$	-	$	8,092,000	$	8,092,000	$	-

										Net loss for the three months
Assets		Level 1		Level 2	Level 3			June 30, 2014		ended September 30, 2013
Other non-marketable investments	$	-	$	-	$	8,092,000	$	8,092,000	$	-

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

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INVESTMENT IN MARKETABLE SECURITIES (Details) (USD $)	3 Months Ended			3 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014	Sep. 30, 2014 Equity Securities [Member]	Jun. 30, 2014 Equity Securities [Member]
Investment - Corporate Equities
Cost				$ 4,544,000	$ 4,603,000
Gross Unrealized Gain				426,000	1,250,000
Gross Unrealized Loss				(974,000)	(922,000)
Net Unrealized Gain	(792,000)	245,000		(548,000)	328,000
Fair Value	$ 3,996,000		$ 4,931,000	$ 3,996,000	$ 4,931,000

XML

SEGMENT INFORMATION (Tables)

3 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

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

Operating income from investment transactions consist of net investment gain and dividend and interest income.

As of and for the three months	Hotel		Real Estate		Investment
ended September 30, 2014	Operations		Operations		Transactions		Other		Total
Revenues	$	14,830,000	$	166,000	$	-	$	-	$	14,996,000
Segment operating expenses		(11,838,000)		(60,000)		-		(276,000)		(12,174,000)
Segment income (loss)		2,992,000		106,000		-		(276,000)		2,822,000
Interest expense		(2,024,000)		(25,000)		-		-		(2,049,000)
Depreciation and amortization expense		(666,000)		(15,000)		-		-		(681,000)
Income from investments		-		-		(852,000)		-		(852,000)
Income tax benefit		-		-		-		182,000		182,000
Net income (loss)	$	302,000	$	66,000	$	(852,000)	$	(94,000)	$	(578,000)
Total assets	$	38,504,000	$	4,965,000	$	12,170,000	$	37,547,000	$	93,186,000

As of and for the three months	Hotel		Real Estate		Investment
ended September 30, 2013	Operations		Operations		Transactions		Other		Total
Revenues	$	13,305,000	$	147,000	$	-	$	-	$	13,452,000
Segment operating expenses		(9,532,000)		(143,000)		-		(245,000)		(9,920,000)
Segment income (loss)		3,773,000		4,000		-		(245,000)		3,532,000
Interest expense		(635,000)		(26,000)		-		-		(661,000)
Depreciation and amortization expense		(624,000)		(16,000)		-		-		(640,000)
Income from investments		-		-		8,000		-		8,000
Income tax expense		-		-		-		(471,000)		(471,000)
Net income (loss)	$	2,514,000	$	(38,000)	$	8,000	$	(716,000)	$	1,768,000
Total assets	$	37,491,000	$	5,027,000	$	13,887,000	$	8,867,000	$	65,272,000

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INVESTMENT IN REAL ESTATE, NET (Tables) (Apartment Building [Member])

3 Months Ended

Sep. 30, 2014

Apartment Building [Member]

Real Estate Properties [Line Items]

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	September 30, 2014		June 30, 2014
Land	$	2,430,000	$	2,430,000
Buildings, improvements and equipment		2,580,000		2,580,000
Accumulated depreciation		(1,018,000)		(1,002,000)
		3,992,000		4,008,000
Land held for development		973,000		973,000
Investment in real estate, net	$	4,965,000	$	4,981,000

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RELATED PARTY TRANSACTIONS

3 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 8 – RELATED PARTY TRANSACTIONS

On July 2, 2014, the Partnership obtained from the Intergroup Corporation (parent company of Portsmouth) an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. Intergroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The proceeds of the loan were applied to the July 2014 payments to Holdings described in Note 19 of the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

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 months ended September 30, 2014 and 2013, the Company and Portsmouth made payments to InterGroup of $36,000 for each respective period.

During the three months ended September 30, 2014 and 2013, the Company received management fees from Justice Investors totaling $140,000 and $112,000, respectively.

In connection with the redemption of limited partnership interests of Justice Investors, Limited Partnership (which took place during fiscal year ended June 30, 2014), Justice Operating Company, LLC agreed to pay a total of $1,550,000 in fees to certain officers and directors of the Company for services rendered in connection with the redemption of partnership interests, refinancing of Justice’s properties and reorganization of Justice Investors. This agreement was superseded by a letter dated December 11, 2013 from Justice Investors, Limited Partnership, in which Justice Investors Limited Partnership assumed the payment obligations of Justice Operating Company, LLC. The first payment under this agreement was made concurrently with the closing of the loan agreements, with the remaining payments due upon Justice Investor’s having adequate available cash as described in the letter. As of September 30, 2014, $1,250,000 of these fees remain outstanding.

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) (Hotel [Member])

3 Months Ended

Sep. 30, 2014

Hotel [Member]

Real Estate Properties [Line Items]

Schedule of Real Estate Properties [Table Text Block]

Investment in hotel consisted of the following as of:

			Accumulated		Net Book
September 30, 2014	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		24,760,000		(20,399,000)		4,361,000
Building and improvements		55,066,000		(22,819,000)		32,247,000
	$	81,722,000	$	(43,218,000)	$	38,504,000

			Accumulated		Net Book
			Accumulated		Net Book
June 30, 2014	Cost		Depreciation		Value
Land	$	1,896,000	$	-	$	1,896,000
Furniture and equipment		23,306,000		(20,074,000)		3,232,000
Building and improvements		55,281,000		(22,526,000)		32,755,000
	$	80,483,000	$	(42,600,000)	$	37,883,000

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INVESTMENT IN MARKETABLE SECURITIES (Tables)

3 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Table Text Block]

Trading securities are summarized as follows:

			Gross		Gross		Net		Fair
Investment	Cost		Unrealized Gain		Unrealized Loss		Unrealized Gain		Value
As of September 30, 2014
Corporate
Equities	$	4,544,000	$	426,000	$	(974,000)	$	(548,000)	$	3,996,000
As of June 30, 2014
Corporate
Equities	$	4,603,000	$	1,250,000	$	(922,000)	$	328,000	$	4,931,000

Gain (Loss) on Investments [Table Text Block]

Below is the composition of the two components for the three months ended September 30, 2014 and 2013, respectively.

For the three months ended September 30,	2014		2013
Realized gain (loss) on marketable securities	$	96,000	$	(111,000)
Unrealized (loss) gain on marketable securities		(792,000)		245,000
Net (loss) gain on marketable securities	$	(696,000)	$	134,000

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INVESTMENT IN HOTEL, NET (Details) (Hotel [Member], USD $)	Sep. 30, 2014	Jun. 30, 2014
Property, Plant and Equipment [Line Items]
Cost	$ 81,722,000	$ 80,483,000
Accumulated Depreciation	(43,218,000)	(42,600,000)
Net Book Value	38,504,000	37,883,000
Land [Member]
Property, Plant and Equipment [Line Items]
Cost	1,896,000	1,896,000
Accumulated Depreciation	0	0
Net Book Value	1,896,000	1,896,000
Furniture and Equipment [member]
Property, Plant and Equipment [Line Items]
Cost	24,760,000	23,306,000
Accumulated Depreciation	(20,399,000)	(20,074,000)
Net Book Value	4,361,000	3,232,000
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	55,066,000	55,281,000
Accumulated Depreciation	(22,819,000)	(22,526,000)
Net Book Value	$ 32,247,000	$ 32,755,000

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OTHER INVESTMENTS, NET (Details) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Other Investment [Line Items]
Other investments, net	$ 8,174,000	$ 8,210,000
Preferred stock - Comstock, at cost [Member]
Other Investment [Line Items]
Other investments, net	6,659,000	6,659,000
Private equity hedge fund, at cost [Member]
Other Investment [Line Items]
Other investments, net	1,025,000	1,025,000
Corporate debt and equity instruments, at cost [Member]
Other Investment [Line Items]
Other investments, net	168,000	168,000
Other preferred stock, at cost [Member]
Other Investment [Line Items]
Other investments, net	240,000	240,000
Warrants - at fair value [Member]
Other Investment [Line Items]
Other investments, net	$ 82,000	$ 118,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net (loss) income	$ (578,000)	$ 1,768,000
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Net unrealized loss (gain) on marketable securities	792,000	(245,000)
Unrealized loss on other investments	36,000	0
Depreciation and amortization	681,000	640,000
Changes in assets and liabilities:
Investment in marketable securities	143,000	(504,000)
Accounts receivable	(383,000)	(172,000)
Other assets	347,000	418,000
Accounts payable and other liabilities	(3,365,000)	(1,401,000)
Due to securities broker	(998,000)	(79,000)
Obligations for securities sold	1,075,000	729,000
Deferred tax asset	(182,000)	471,000
Net cash (used in) provided by operating activities	(2,432,000)	1,625,000
Cash flows from investing activities:
Payments for hotel and real estate investments	(1,313,000)	(520,000)
Net cash used in investing activities	(1,313,000)	(520,000)
Cash flows from financing activities:
Restriced cash - mortgage impounds	98,000	0
Proceeds from other notes payable	4,469,000	0
Payments on other notes payable	(109,000)	(228,000)
Payments on mortgage notes payable	(15,000)	(250,000)
Net cash provided by (used in) financing activities	4,443,000	(478,000)
Net increase in cash and cash equivalents:	698,000	627,000
Cash and cash equivalents at the beginning of the period	1,139,000	688,000
Cash and cash equivalents at the end of the period	1,837,000	1,315,000
Supplemental information:
Interest paid	$ 2,083,000	$ 711,000

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OTHER INVESTMENTS, NET

3 Months Ended

Sep. 30, 2014

Other Investments [Abstract]

Other Investments Disclosure [Text Block]

NOTE 5 – OTHER INVESTMENTS, NET

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

Other investments, net consist of the following: 

Type	September 30, 2014		June 30, 2014
Preferred stock - Comstock, at cost	$	6,659,000	$	6,659,000
Private equity hedge fund, at cost		1,025,000		1,025,000
Corporate debt and equity instruments, at cost		168,000		168,000
Other preferred stock, at cost		240,000		240,000
Warrants - at fair value		82,000		118,000
	$	8,174,000	$	8,210,000

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FAIR VALUE MEASUREMENTS (Details) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other investments - warrants	$ 82,000	$ 118,000
Investment in marketable securities	3,996,000	4,931,000
Assets, Fair Value Disclosure	4,078,000	5,049,000
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other investments - warrants	0	0
Investment in marketable securities	3,996,000	4,931,000
Assets, Fair Value Disclosure	3,996,000	4,931,000
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other investments - warrants	0	0
Investment in marketable securities	0	0
Assets, Fair Value Disclosure	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other investments - warrants	82,000	118,000
Investment in marketable securities	0	0
Assets, Fair Value Disclosure	82,000	118,000
Basic materials [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	1,900,000	2,657,000
Basic materials [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	1,900,000	2,657,000
Basic materials [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	0	0
Basic materials [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	0	0
Technology [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	1,040,000	479,000
Technology [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	1,040,000	479,000
Technology [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities		0
Technology [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities		0
Entertainment [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	457,000
Entertainment [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	457,000
Financial services [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	234,000	287,000
Financial services [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	234,000	287,000
Financial services [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	0	0
Financial services [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	0	0
REITs and real estate companies [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	170,000	278,000
REITs and real estate companies [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	170,000	278,000
REITs and real estate companies [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	0	0
REITs and real estate companies [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	0	0
Other [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	195,000	1,230,000
Other [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	195,000	1,230,000
Other [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	0	0
Other [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment in marketable securities	$ 0	$ 0

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Textual)	3 Months Ended
	Sep. 30, 2014
Basis Of Presentation And Significant Accounting Policies [Line Items]
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest	93.00%
Management Services, Term	3 years
Portsmouth [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Equity Method Investment, Ownership Percentage	68.80%
Intergroup [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Equity Method Investment, Ownership Percentage	80.90%
Noncontrolling Interest, Ownership Percentage by Parent	12.90%
Woodland Village Inc [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Equity Method Investment, Ownership Percentage	55.40%