The InterGroup(INTG) - 2024 Q1 - Quarterly Report

Financial Performance - As of September 30, 2023, the Company reported a net loss of $1,622,000 compared to a net loss of $201,000 for the same period in 2022, primarily due to increased revenues at the Hotel offset by higher operating costs[90]. - Hotel revenues decreased by 9.9% to $11,093,000 for the three months ended September 30, 2023, down from $12,310,000 in the same period of 2022[91]. - The average daily room rate decreased by $12 to $218, and average occupancy dropped by 6.0% to 88% for the three months ended September 30, 2023, compared to the same period in 2022[93]. - The Company had a net loss on marketable securities of $785,000 for the three months ended September 30, 2023, compared to a net loss of $810,000 for the same period in 2022[95]. - The income tax benefit for the three months ended September 30, 2023, primarily reflects the combined income tax effect of Portsmouth's pretax loss, which includes the net loss from the Hotel[117]. Revenue Sources - Revenue from real estate operations increased to $4,417,000 for the three months ended September 30, 2023, up from $4,078,000 in the same period of 2022, primarily due to decreased vacancy at a Missouri property undergoing renovation[94]. - The Company’s total hotel revenues for the three months ended September 30, 2023, included $9,561,000 from room revenues, $627,000 from food and beverage, and $825,000 from garage operations[91]. Cash and Investments - As of September 30, 2023, the Company had cash and cash equivalents of $6,686,000, an increase from $5,960,000 as of June 30, 2023[101]. - The Company had marketable securities valued at $13,629,000 as of September 30, 2023, down from $15,328,000 as of June 30, 2023[101]. - The Company’s investment portfolio is diversified with 31 different equity positions as of September 30, 2023, with the largest security position representing 15% of the portfolio[98]. Debt and Financing - The Company has an uncollateralized $5,000,000 revolving line of credit, which was reduced to $2,000,000 in July 2022, and is fully available as of September 30, 2023[103]. - As of September 30, 2023, the Hotel has an outstanding balance of $106,896,000 in senior mortgage and mezzanine loans, maturing on January 1, 2024, with an accumulated deficit of $107,287,000[106]. - The Company is exploring refinancing options for its debt but faces uncertainty in accessing further financing, which raises substantial doubt about its ability to continue as a going concern for one year after the financial statement issuance date[107]. - Total material financial obligations as of September 30, 2023, amount to $220,477,000, including $192,143,000 in mortgage and subordinated notes payable and $25,521,000 in interest payments[112]. Renovation and Future Plans - Approximately 307 guestrooms have been renovated as of September 30, 2023, with plans to complete the full renovation by the end of March 2024, which is expected to lead to increased average daily rates and positive cash flows[108]. - The Company anticipates that rental increases from its residential rental properties will offset expected increases in property operating expenses[114]. Accounting and Compliance - There have been no material changes to the Company's critical accounting policies during the nine months ended September 30, 2023[115]. - The Company assesses the realizability of deferred tax assets quarterly, recognizing a valuation allowance when it is more likely than not that some or all of the deferred tax assets are not realizable[118]. - There were no indicators of impairment on hotel investments or intangible assets, and no impairment losses were recorded during the three months ended September 30, 2023[119]. - The Company has no off-balance sheet arrangements[110].