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LIQUIDITY

12 Months Ended

Jun. 30, 2024

NOTE 2 - LIQUIDITY

Historically, our cash flows have been primarily generated from our Hotel operations. However, the current state of affairs of the City of San Francisco, its political challenges as well as the way its local government’s policies with regard to safety, drug abuse, homelessness, crime, etc., have caused the City of San Francisco to be one of the slowest cities in the country to fully recover from the COVID-19 pandemic. Additionally, since San Francisco is a top-heavy tech company city, the “remote work” initiatives have caused a slowdown in business travel and in person meetings. Prior to the COVID-19 pandemic, our Hotel enjoyed most of its revenues from business travel, conventions, self-contained groups, etc., and post pandemic, most revenues are generated from leisure travel which is generally at a lower guest room rate. For the fiscal years ended June 30, 2024 our net cash provided by operating activities was $108,000. We continue to maintain several steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets. As the hospitality and travel environment continues to slowly recover in San Francisco, the Company will continue to evaluate what services bring back. During the fiscal year ended June 30, 2024, the Company continued to make capital improvements to the Hotel in the amount of $4,078,000 and has completed its hotel renovation program.

The Company had cash and cash equivalents of $3,511,000 and $2,295,000 as of June 30, 2024 and 2023, respectively. The Company had restricted cash of $1,264,000 and $2,911,000 as of June 30, 2024 and 2023, respectively. The Company had marketable securities, net of margin due to securities brokers, of $209,000 and $359,000 as of June 30, 2024 and 2023, respectively. These marketable securities are short-term investments and liquid in nature.

On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 31, 2023. On December 16, 2020, the Partnership and InterGroup entered into a loan modification agreement which increased the Partnership’s borrowing from InterGroup as needed up to $10,000,000. Upon the dissolution of the Partnership in December 2021, Portsmouth assumed the Partnership’s note payable to InterGroup in the amount of $11,350,000. On December 31, 2021, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing from InterGroup as needed up to $16,000,000. In July 2023, the note maturity date was extended to July 31, 2025 and the borrowing amount available was increased to $20,000,000. In March 2024, Portsmouth and InterGroup entered into a loan modification agreement which increased Portsmouth’s borrowing amount to $30,000,000. Portsmouth agreed to a 0.5% loan modification fee for the increased borrowing of $10,000,000 payable to InterGroup. During the fiscal year ending June 30, 2024 and 2023, InterGroup advanced to the Hotel $10,793,000 and $1,500,000, respectively, to fund its hotel operations. As of June 30, 2024 and 2023, the amounts due to InterGroup were $26,493,000 and $15,700,000, respectively. The Company has not made any paid-downs to its note payable to InterGroup. The Company could amend its by-laws and increase the number of authorized shares to issue additional shares to raise capital in the public markets if needed.

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

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel. We will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. However, there can be no guarantee that management will be successful with its plan.

The following table provides a summary as of June 30, 2024, the Company’s material financial obligations which also including interest payments:

			Year		Year		Year		Year		Year
	Total		2025		2026		2027		2028		2029		Thereafter
Mortgage notes payable	$	101,462,000	$	101,462,000	$	-	$	-	$	-	$	-	$	-
Related party notes payable		26,493,000		-		26,493,000		-		-		-		-
Oher notes payable		2,388,000		567,000		567,000		463,000		317,000		317,000		157,000
Interest		8,576,000		8,304,000		272,000		-		-		-		-
Total	$	138,919,000	$	110,333,000	$	27,332,000	$	463,000	$	317,000	$	317,000	$	157,000