LIQUIDITY

9 Months Ended

Mar. 31, 2025

Liquidity

LIQUIDITY

NOTE 2 – LIQUIDITY

Historically, the Company has relied primarily on cash flows generated from operations at its hotel property, the Hilton San Francisco Financial District (the “Hotel”), as its primary source of liquidity. However, the pace of recovery in the San Francisco hospitality market remains slower than anticipated due to several factors, including a sustained decline in business travel driven by remote work trends, as well as broader municipal challenges such as safety concerns, homelessness, and increased crime. These conditions have limited demand in key customer segments and shifted the Hotel’s revenue base toward lower-yielding leisure travel.

As a result, the Company experienced net cash used in operating activities of $5,235,000 for the nine months ended March 31, 2025. In response to ongoing market pressures, the Company has adopted several capital preservation initiatives, including deferral of non-essential capital projects, temporary suspension of certain Hotel services, renegotiation of vendor agreements, and reduction of controllable operating expenses. During the same period, the Company continued to invest in property enhancements, incurring capital expenditure of $911,000.

As of March 31, 2025, the Company had:

● Cash and cash equivalents of $3,004,000 (compared to $3,511,000 as of June 30, 2024),

● Restricted cash of $6,972,000 (compared to $1,264,000 as of June 30, 2024), and

● Marketable securities, net of margin balances, of $99,000 (compared to $209,000 as of June 30, 2024). These securities are considered liquid and available for short-term needs.

Related Party Financing

To supplement its liquidity position, the Company maintains access to an unsecured loan facility with its parent company, The InterGroup Corporation (“InterGroup”), a related party. The initial facility, dated July 2, 2014, has undergone several amendments. In March 2025, the facility was amended to:

● Increase the available borrowing capacity to $40,000,000, and

● Extend the maturity date to July 31, 2027.

During the nine months ended March 31, 2025, the Company borrowed an additional $11,615,000 under this facility to support Hotel operations. As of March 31, 2025, the outstanding loan balance was $38,108,000, with no principal repayments made to date.

To further enhance liquidity flexibility, the Company may consider amending its by-laws to authorize the issuance of additional shares for potential equity capital raises, should public market conditions permit.

Liquidity Outlook and Going Concern Considerations

The Company’s short-term liquidity requirements include payments for Hotel operating costs, payroll, management and franchise fees, taxes, corporate overhead, interest on outstanding debt, and regular maintenance. Long-term liquidity requirements primarily include scheduled debt maturities and continued capital investments to maintain the Hotel’s competitive positioning.

As described in Note 1, the Company has made substantial progress in refinancing its mortgage and mezzanine debt obligations, which previously raised doubt regarding its near-term financial viability. On March 28, 2025, the Company completed the refinancing of its senior mortgage and modified its mezzanine debt structure, both of which provide near-term relief and reduce imminent refinancing risk.

Nonetheless, the Company’s liquidity position continues to be impacted by broader macroeconomic and market-specific factors, including high interest rates, ongoing weakness in San Francisco’s business travel segment, and elevated operating costs. These uncertainties, combined with the need to maintain compliance with newly established debt covenants, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the issuance of these financial statements.

Management continues to evaluate financing strategies, capital allocation decisions, and operating efficiencies to preserve liquidity. There can be no assurance, however, that these initiatives will be sufficient to meet all of the Company’s liquidity requirements, particularly in the event of continued market underperformance.

The following table provides a summary as of March 31, 2025, the Company’s material financial obligations which also including interest payments:

			3 Months		Year		Year		Year		Year
	Total		2025		2026		2027		2028		2029		Thereafter
Mortgage notes payable	$	103,300,000	$	-	$	-	$	103,300,000	$	-	$	-	$	-
Hilton/Aimbridge other notes payable		2,121,000		142,000		567,000		463,000		317,000		317,000		315,000
Related party notes payable		38,108,000		-		-		-		38,108,000		-		-
Interest mortgage notes payable		19,095,000		1,725,000		8,916,000		8,454,000		-		-		-
Interest related party note payable		18,015,000		1,166,000		4,580,000		4,573,000		7,696,000		-		-
Total	$	180,639,000	$	3,033,000	$	14,063,000	$	116,790,000	$	46,121,000	$	317,000	$	315,000