Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Aug. 30, 2019 | Dec. 31, 2018 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2019 | ||
Entity Registrant Name | SANTA FE FINANCIAL CORP | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 6,545,000 | ||
Entity Common Stock, Shares Outstanding | 1,241,810 | ||
Entity Central Index Key | 0000086759 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Trading Symbol | SFEF |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
ASSETS | ||
Investment in Hotel, net | $ 36,336,000 | $ 37,359,000 |
Investment in real estate, net | 4,866,000 | 4,961,000 |
Investment in marketable securities | 2,679,000 | 4,439,000 |
Other investments, net | 351,000 | 474,000 |
Cash and cash equivalents | 9,800,000 | 7,647,000 |
Restricted cash | 11,027,000 | 7,119,000 |
Accounts receivable - Hotel, net | 848,000 | 1,799,000 |
Other assets, net | 1,643,000 | 1,546,000 |
Deferred tax assets | 6,402,000 | 5,159,000 |
Total assets | 73,952,000 | 70,503,000 |
Liabilities: | ||
Accounts payable and other liabilities | 16,765,000 | 15,017,000 |
Due to securities broker | 396,000 | 1,068,000 |
Obligations for securities sold | 625,000 | 919,000 |
Related party and other notes payable | 8,221,000 | 8,641,000 |
Capital leases | 1,486,000 | 1,355,000 |
Mortgage notes payable - real estate | 3,315,000 | 3,188,000 |
Mortgage notes payable - Hotel | 113,087,000 | 114,372,000 |
Total liabilities | 143,895,000 | 144,560,000 |
Commitments and contingencies (Note 17) | ||
Shareholders' deficit: | ||
Common stock - par value $.10 per share; Authorized - 2,000,000; Issued 1,339,638 and outstanding 1,241,810 as of June 30, 2019 and 2018 | 134,000 | 134,000 |
Additional paid-in capital | 8,808,000 | 8,808,000 |
Accumulated deficit | (54,183,000) | (57,442,000) |
Treasury stock, at cost, 97,828 shares as of June 30, 2019 and 2018 | (951,000) | (951,000) |
Total Santa Fe shareholders' deficit | (46,192,000) | (49,451,000) |
Noncontrolling interest | (23,751,000) | (24,606,000) |
Total shareholders' deficit | (69,943,000) | (74,057,000) |
Total liabilities and shareholders' deficit | $ 73,952,000 | $ 70,503,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2019 | Jun. 30, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
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 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues: | ||
Total revenues | $ 60,205,000 | $ 57,434,000 |
Costs and operating expenses: | ||
Hotel operating expenses | (44,466,000) | (40,103,000) |
Recovery of legal settlement costs | 0 | 5,775,000 |
Real estate operating expenses | (218,000) | (193,000) |
Depreciation and amortization expense | (2,515,000) | (2,711,000) |
General and administrative expense | (1,115,000) | (1,404,000) |
Total costs and operating expenses | (48,314,000) | (38,636,000) |
Income from operations | 11,891,000 | 18,798,000 |
Other income (expense): | ||
Interest expense - mortgage | (7,864,000) | (7,893,000) |
Loss on disposal of assets | (398,000) | 0 |
Net loss on marketable securities | (575,000) | (1,072,000) |
Net unrealized loss on other investments | 0 | (21,000) |
Impairment loss on other investments | (61,000) | (124,000) |
Dividend and interest income | 198,000 | 61,000 |
Trading and margin interest expense | (336,000) | (345,000) |
Net other expense | (9,036,000) | (9,394,000) |
Income before income taxes | 2,855,000 | 9,404,000 |
Income tax benefit (expense) | 1,409,000 | (5,986,000) |
Net income | 4,264,000 | 3,418,000 |
Less: Net income attributable to the noncontrolling interest | (1,005,000) | (1,922,000) |
Net income attributable to Santa Fe | $ 3,259,000 | $ 1,496,000 |
Basic and diluted income per share attributable to Santa Fe | $ 2.62 | $ 1.20 |
Weighted average number of common shares outstanding | 1,241,810 | 1,241,810 |
Hotel [Member] | ||
Revenues: | ||
Total revenues | $ 59,881,000 | $ 57,099,000 |
Real Estate [Member] | ||
Revenues: | ||
Total revenues | $ 324,000 | $ 335,000 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Treasury Stock [Member] | Noncontrolling Interest [Member] | Shareholders' Equity [Member] | Total |
Balance at Jun. 30, 2017 | $ 134,000 | $ 8,808,000 | $ (58,938,000) | $ (951,000) | $ (26,528,000) | $ (50,947,000) | $ (77,475,000) |
Balance (in shares) at Jun. 30, 2017 | 1,339,638 | ||||||
Net income | 1,496,000 | 1,922,000 | 1,496,000 | 3,418,000 | |||
Balance at Jun. 30, 2018 | $ 134,000 | 8,808,000 | (57,442,000) | (951,000) | (24,606,000) | (49,451,000) | (74,057,000) |
Balance (in shares) at Jun. 30, 2018 | 1,339,638 | ||||||
Net income | 3,259,000 | 1,005,000 | 3,259,000 | 4,264,000 | |||
Investment in Justice | (150,000) | (150,000) | |||||
Balance at Jun. 30, 2019 | $ 134,000 | $ 8,808,000 | $ (54,183,000) | $ (951,000) | $ (23,751,000) | $ (46,192,000) | $ (69,943,000) |
Balance (in shares) at Jun. 30, 2019 | 1,339,638 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 4,264,000 | $ 3,418,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Net unrealized loss on marketable securities | 500,000 | 1,386,000 |
Unrealized loss on other investments | 0 | 21,000 |
Deferred tax asset | (1,243,000) | 5,768,000 |
Impairment loss on other investments | 61,000 | 124,000 |
Loss on disposal of assets | 398,000 | 0 |
Depreciation and amortization | 2,289,000 | 2,433,000 |
Changes in assets and liabilities: | ||
Investment in marketable securities | 1,260,000 | 49,000 |
Accounts receivable - hotel, net | 951,000 | (363,000) |
Other assets, net | (97,000) | 137,000 |
Accounts payable and other liabilities | 1,748,000 | (2,385,000) |
Due to securities broker | (672,000) | 63,000 |
Obligations for securities sold | (294,000) | (352,000) |
Net cash provided by operating activities | 9,165,000 | 10,299,000 |
Cash flows from investing activities: | ||
Hotel and real estate investments | (1,413,000) | (270,000) |
Proceeds from Sale and Maturity of Other Investments | 62,000 | 77,000 |
Investment in Justice | (150,000) | 0 |
Net cash used in investing activities | (1,501,000) | (193,000) |
Cash flows from financing activities: | ||
Net payments of mortgage and other notes payable | (1,603,000) | (2,610,000) |
Net cash used in financing activities | (1,603,000) | (2,610,000) |
Net increase in cash, cash equivalents and restricted cash: | 6,061,000 | 7,496,000 |
Cash, cash equivalents and restricted cash at the beginning of the year | 14,766,000 | 7,270,000 |
Cash, cash equivalents and restricted cash at the end of the year | 20,827,000 | 14,766,000 |
Supplemental information: | ||
Income tax payment | (50,000) | (28,000) |
Interest paid | (7,963,000) | (8,056,000) |
Non-cash transactions: | ||
Additions to Hotel equipment through capital lease | $ 382,000 | $ 1,364,000 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES Description of Business 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 82.2%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 13.4% 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 has a 93.3% limited partnership interest in Justice and is the sole general partner. Justice, through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), owns a 544‑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. Kearny Street Parking LLC (“Parking”) is the operator of the garage. Mezzanine is a wholly-owned subsidiary of the Partnership; Operating is a wholly-owned subsidiary of Mezzanine. Mezzanine is the borrower under certain mezzanine 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 HLT Franchise Holding LLC (Hilton). Justice had a ten-year management agreement with Prism Hospitality L.P. (“Prism”) to perform certain management functions for the Hotel. Prism’s management agreement was terminated upon its expiration date of February 3, 2017. Effective December 1, 2013, GMP Management, Inc. (“GMP”), a company owned by a Justice limited partner and a related party, also provided management services for the Partnership pursuant to a management services agreement, with a three-year term, subject to the Partnership’s right to terminate earlier for cause. In June 2016, GMP resigned. On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the form of a self-exhausting, interest free note payable in the amount of $2,000,000 in a separate key money agreement. The $2,000,000 is included in restricted cash balances in the consolidated balance sheets as of June 30, 2019 and 2018. As of June 30, 2019 and 2018, unamortized portion of the key money was $1,896,000 and $2,000,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets. In addition to the operations of the Hotel, the Company also generates revenue 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. Principles of Consolidation The consolidated financial statements include the accounts of the Company, Portsmouth and Woodland Village. All significant inter-company transactions and balances have been eliminated. Investment in Hotel, net Property and equipment are stated at cost. Building improvements are depreciated on a straight-line basis over their useful lives ranging from 3 to 39 years. Furniture, fixtures, and equipment are depreciated on a straight-line basis over their useful lives ranging from 3 to 7 years. Repairs and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. The cost of assets sold or retired and the related accumulated depreciation are removed from the accounts; any resulting gain or loss is included in other income (expenses). The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Partnership will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses were recorded for the years ended June 30, 2019 and 2018. Investment in Real Estate, net Rental properties are stated at cost less accumulated depreciation. Depreciation of rental property is provided on the straight-line method based upon estimated useful lives of 5 to 40 years for buildings and improvements and 5 to 10 years for equipment. Expenditures for repairs and maintenance are charged to expense as incurred and major improvements are capitalized. The Company also reviews its rental property assets for impairment. No impairment losses on the investment in real estate have been recorded for the years ended June 30, 2019 and 2018. Investment in Marketable Securities Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable securities are classified as trading securities with all unrealized gains and losses on the Company’s investment portfolio recorded through the consolidated statements of operations. Other Investments, net Other investments include non-marketable securities (carried at cost, net of any impairments loss) and non –marketable warrants (carried at fair value). The Company has no significant influence or control over the entities that issue these 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. For the years ended June 30, 2019 and 2018, the Company recorded impairment losses related to other investments of $61,000 and $124,000, respectively. As of June 30, 2019 and 2018, the allowance for impairment losses was $3,894,000 and $3,833,000, respectively. Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased and are carried at cost, which approximates fair value. As of June 30, 2019 and 2018, the Company does not have any cash equivalents. Restricted Cash Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves. It also includes key money received from Interstate that is restricted for capital improvements for the Hotel. Accounts Receivable - Hotel, net Accounts receivable from Hotel customers are carried at cost less an allowance for doubtful accounts that is based on management’s assessment of the collectability of accounts receivable. The Partnership extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. Other Assets, net Other assets include prepaid insurance, accounts receivable, franchise fees, and other miscellaneous assets. Franchise fees are stated at cost and amortized over the life of the agreement (15 years). Income Taxes Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing corporate income tax by, among other things, lowering corporate income tax rates. As the Company has a June 30 fiscal year-end, the lower corporate income tax rate was phased in, resulting in a statutory federal rate of approximately 28% for our fiscal year ending June 30, 2018, and 21% for subsequent fiscal years. The decrease in corporate tax rate reduced the Company’s deferred tax asset to the lower federal base rate of 21%. As a result, a provisional net charge of $2,723,000 was included in the income tax expense for the year ended June 30, 2018. Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. Due to Securities Broker Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability. Obligations for Securities Sold Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations. Accounts Payable and Other Liabilities Accounts payable and other liabilities include trade payables, advance customer deposits, accrued wages, accrued real estate taxes, and other liabilities. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows: Level 1 –inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 –inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 –inputs to the valuation methodology are unobservable and significant to the fair value. Treasury Stock The Company records the acquisition of treasury stock under the cost method. Revenue Recognition On July 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers , using the modified retrospective approach to all contracts resulting in no cumulative adjustment to accumulated deficit. The adoption of this standard did not impact the timing of our revenue recognition based on the short-term, day-to-day nature of our operations. See Note 2 – Revenue. Advertising Costs Advertising costs are expensed as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising costs were $282,000 and $302,000 for the years ended June 30, 2019 and 2018, respectively. Basic and Diluted Loss per Share Basic loss per share is calculated based upon the weighted average number of common shares outstanding during each fiscal year. As of June 30, 2019 and 2018, the Company did not have any potentially dilutive securities outstanding. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to the recording of allowance for doubtful accounts and allowance for impairment losses which are based on management’s assessment of the collectability of accounts receivable and the fair market value of nonmarketable securities, respectively, as of the end of the fiscal year. Actual results may differ from those estimates. Debt Issuance Costs Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability and are amortized over the life of the debt. Loan amortization costs are included in interest expense in the consolidated statement of operations. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (ASU 2014‑09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015‑14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014‑09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016‑08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We applied the modified retrospective transition method to all contracts upon the adoption of ASU 2014-09 effective July 1, 2018. We provided the additional required disclosures, but the cumulative adjustment from our comparative periods was zero in our consolidated financial statements. See Note 2 – Revenue. In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-18, Restricted Cash. ASU 2016-18 requires companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Additionally, ASU 2016-18 requires a disclosure of a reconciliation between the statement of financial position and the statement of cash flows when the balance sheet includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. ASU 2016-18 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. The Company adopted ASU 2016-18 effective July 1, 2018. The adoption of ASU 2016-18 impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842) (ASU 2016‑02), which supersedes existing guidance on accounting for leases in Leases (Topic 840) and generally requires all leases, including operating leases, to be recognized in the statement of financial position as right-of-use assets and lease liabilities by lessees. The provisions of ASU 2016‑02 are to be applied using a modified retrospective approach and are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. We adopted ASU 2016-02 on July 1, 2019. The Company is currently reviewing the effect of ASU No. 2016‑02. On June 16, 2016, the FASB issued ASU 2016‑13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the timelier recognition of losses. ASU No. 2016‑13 will be effective for us as of January 1, 2020. The Company is currently reviewing the effect of ASU No. 2016‑13. |
REVENUE
REVENUE | 12 Months Ended |
Jun. 30, 2019 | |
REVENUE | |
REVENUE | NOTE 2 – REVENUE Our revenue from real estate is primarily rental income from residential property leases which is recorded when due from residents and is recognized monthly as earned. The following table present our Hotel revenue disaggregated by revenue streams. For the year ended June 30, 2019 2018 Hotel revenues: Hotel rooms $ 51,243,000 $ 46,475,000 Food and beverage 5,353,000 7,222,000 Garage 2,875,000 3,011,000 Other operating departments 410,000 391,000 Total Hotel revenue $ 59,881,000 $ 57,099,000 Performance obligations We identified the following performance obligations for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services: · Cancelable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs. · Noncancelable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the room reservation. · Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest. · Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above. Hotel revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component. We do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the nature of our business, our revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at our hotel are refunded to hotel guests if the guest cancels within the specified time period, before any services are rendered. Refunds related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are rendered. Contract assets and liabilities We do not have any material contract assets as of June 30, 2019 and 2018, other than trade and other receivables, net on our consolidated balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected. We record contract liabilities when cash payments are received or due in advance of guests staying at our hotel, which are presented within accounts payable and other liabilities on our consolidated balance sheets. Contract costs We consider sales commissions earned to be incremental costs of obtaining a contract with our customers. As a practical expedient, we expense these costs as incurred as our contracts with customers are less than one year. |
JUSTICE INVESTORS
JUSTICE INVESTORS | 12 Months Ended |
Jun. 30, 2019 | |
JUSTICE INVESTORS | |
JUSTICE INVESTORS | NOTE 3 – JUSTICE INVESTORS Justice Investors Limited Partnership, a California limited partnership (“Justice” or the “Partnership”), was formed in 1967 to acquire real property in San Francisco, California, for the development and lease of the Hotel and related facilities. The Partnership has one general partner, Portsmouth Square, Inc., a California corporation (“Portsmouth”) and approximately 23 voting limited partners, including Portsmouth. Management believes that the revenues and cash flows 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 appreciated value in the Hotel property in excess of the net book value to support additional borrowings, if necessary. |
INVESTMENT IN HOTEL, NET
INVESTMENT IN HOTEL, NET | 12 Months Ended |
Jun. 30, 2019 | |
INVESTMENT IN HOTEL, NET | |
INVESTMENT IN HOTEL, NET | NOTE 4 – INVESTMENT IN HOTEL, NET Investment in Hotel consisted of the following as of: Accumulated Net Book June 30, 2019 Cost Depreciation Value Land $ 1,896,000 $ — $ 1,896,000 Furniture and equipment 31,106,000 (26,876,000) 4,230,000 Building and improvements 59,341,000 (29,131,000) 30,210,000 $ 92,343,000 $ (56,007,000) $ 36,336,000 Accumulated Net Book June 30, 2018 Cost Depreciation Value Land $ 1,896,000 $ — $ 1,896,000 Furniture and equipment 29,350,000 (25,877,000) 3,473,000 Building and improvements 59,798,000 (27,808,000) 31,990,000 $ 91,044,000 $ (53,685,000) $ 37,359,000 |
INVESTMENT IN REAL ESTATE, NET
INVESTMENT IN REAL ESTATE, NET | 12 Months Ended |
Jun. 30, 2019 | |
INVESTMENT IN REAL ESTATE, NET | |
INVESTMENT IN REAL ESTATE, NET | NOTE 5 – INVESTMENT IN REAL ESTATE, NET The Company owns and operates a 27‑unit and a 2‑unit multi-family apartment complex located in Los Angeles, California and owns land held for development located in Maui, Hawaii. As of June 30 2019, and 2018, investment in real estate included the following: 2019 2018 Land $ 2,430,000 $ 2,430,000 Buildings, improvements and equipment 2,922,000 2,912,000 Accumulated depreciation (1,463,000) (1,354,000) 3,889,000 3,988,000 Land held for development 977,000 973,000 Investment in real estate, net $ 4,866,000 $ 4,961,000 Depreciation expense for the years ended June 30, 2019 and 2018 was $109,000 and $105,000, respectively. In August 2007, Portsmouth agreed to acquire 50% interest in InterGroup Uluniu, Inc., a Hawaiian corporation and a 100% owned subsidiary of InterGroup, for $973,000, which represents an amount equal to the costs paid by InterGroup for the acquisition and carrying costs of approximately two acres of unimproved land held for development located in Maui, Hawaii. As a related party transaction, the fairness of the financial terms of the transaction were reviewed and approved by the independent director of Portsmouth. |
INVESTMENT IN MARKETABLE SECURI
INVESTMENT IN MARKETABLE SECURITIES | 12 Months Ended |
Jun. 30, 2019 | |
INVESTMENT IN MARKETABLE SECURITIES | |
INVESTMENT IN MARKETABLE SECURITIES | NOTE 6 – INVESTMENT IN MARKETABLE SECURITIES The Company’s investment in marketable securities consists primarily of corporate equities. The Company has also periodically invested in corporate bonds and income producing securities, which may include interests in real estate based companies and REITs, where financial benefit could insure to its shareholders through income and/or capital gain. As of June 30, 2019 and 2018, 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 Loss Value As of June 30, 2019 Corporate Equities $ 10,922,000 $ 449,000 $ (8,692,000) $ (8,243,000) $ 2,679,000 As of June 30, 2018 Corporate Equities $ 12,187,000 $ 721,000 $ (8,469,000) $ (7,748,000) $ 4,439,000 As of June 30, 2019 and 2018, approximately 19% and 16% of the investment marketable securities balance above is comprised of the common stock of Comstock Mining Inc (“Comstock”). As of June 30, 2019 and 2018, the Company had $8,617,000 and $8,433,000, respectively, of unrealized losses related to securities held for over one year; of which $8,556,000 and $8,369,000 are related to its investment in Comstock, respectively. 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 years ended June 30, 2019 and 2018, respectively. For the year ended June 30, 2019 2018 Realized (loss) gain on marketable securities $ (75,000) $ 314,000 Unrealized loss on marketable securities related to Comstock (187,000) (1,729,000) Unrealized (loss) gain on marketable securities (313,000) 343,000 Net loss on marketable securities $ (575,000) $ (1,072,000) |
OTHER INVESTMENTS, NET
OTHER INVESTMENTS, NET | 12 Months Ended |
Jun. 30, 2019 | |
OTHER INVESTMENTS, NET | |
OTHER INVESTMENTS, NET | NOTE 7 – 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 consolidated balance sheet as part of other investments, net of other than temporary impairment losses. Other investments, net consist of the following: Type June 30, 2019 June 30, 2018 Private equity hedge fund, at cost $ 233,000 $ 344,000 Other investments 118,000 130,000 $ 351,000 $ 474,000 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jun. 30, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 8 – 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 June 30, 2019 Level 1 Assets: Investment in marketable securities: REITs and real estate companies $ 816,000 Consumer cyclical 636,000 Basic materials 537,000 Other 690,000 $ 2,679,000 As of June 30, 2018 Level 1 Assets: Investment in marketable securities: REITs and real estate companies $ Healthcare Basic materials 698,000 Other 1,419,000 $ 4,439,000 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 in 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 year Assets Level 3 June 30, 2019 ended June 30, 2019 Other non-marketable investments $ 351,000 $ 351,000 $ (61,000) Net loss for the year Assets Level 3 June 30, 2018 ended June 30, 2018 Other non-marketable investments $ 474,000 $ 474,000 $ (145,000) For fiscal year ended June 30, 2019 and 2018, we received distribution from other non-marketable investments of $61,000 and $69,000, respectively. 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. These investments are reviewed on a periodic basis for other-than-temporary impairment. When determining the fair value of these investments on a non-recurring basis, the Company uses valuation techniques such as the market approach and the unobservable inputs include factors such as conversion ratios and the stock price of the underlying convertible instruments. 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. |
OTHER ASSETS, NET
OTHER ASSETS, NET | 12 Months Ended |
Jun. 30, 2019 | |
OTHER ASSETS, NET | |
OTHER ASSETS, NET | NOTE 9 – OTHER ASSETS, NET Other assets consist of the following as of June 30: 2019 2018 Inventory - Hotel $ 61,000 $ 59,000 Prepaid expenses 587,000 409,000 Note receivable - related party 584,000 594,000 Miscellaneous assets, net 411,000 484,000 Total other assets $ 1,643,000 $ 1,546,000 |
RELATED PARTY AND OTHER FINANCI
RELATED PARTY AND OTHER FINANCING TRANSACTIONS | 12 Months Ended |
Jun. 30, 2019 | |
RELATED PARTY AND OTHER FINANCING TRANSACTIONS | |
RELATED PARTY AND OTHER FINANCING TRANSACTIONS | NOTE 10 – RELATED PARTY AND OTHER FINANCING TRANSACTIONS On July 2, 2014, the Partnership obtained from InterGroup (a related party) 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 December 31, 2019. The balance of this loan was $3,000,000 as of June 30, 2019 and 2018, and are included in the related party and other note payable in the consolidated balance sheets. Also included in the balance of the related party note payable at June 30, 2019 and 2018 is the obligation to Hilton (Franchisor) in the form of a self-exhausting, interest free development incentive note which will be reduced approximately $316,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton. As of June 30, 2019 and 2018, the balance of the note was $3,325,000 and $3,642,000, respectively. On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution is a self-exhausting, interest free note and shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second (2 nd ) anniversary of the takeover date. The $2,000,000 is included in restricted cash balances in the consolidated balance sheets as of June 30, 2019 and 2018. As of June 30, 2019 and 2018, unamortized portion of the key money was $1,896,000 and $2,000,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets. As of June 30, 2019, the Company had capital lease obligations outstanding of $1,486,000. These capital leases expire in various years through 2023 at rates ranging from 5.77% to 6.25% per annum. Minimum future lease payments for assets under capital leases as of June 30, 2019 are as follows: For the year ending June 30, 2020 $ 493,000 2021 492,000 2022 482,000 2023 182,000 Total minimum lease payments 1,649,000 Less interest on capital lease (163,000) Present value of future minimum lease payments $ 1,486,000 Future minimum principal payments for all related party and other financing transactions are as follows: For the year ending June 30, 2020 $ 3,980,000 2021 1,006,000 2022 1,022,000 2023 744,000 2024 567,000 Thereafter 2,388,000 $ 9,707,000 |
MORTGAGE NOTES PAYABLE
MORTGAGE NOTES PAYABLE | 12 Months Ended |
Jun. 30, 2019 | |
MORTGAGE NOTES PAYABLE | |
MORTGAGE NOTES PAYABLE | NOTE 11 – MORTGAGE NOTES PAYABLE On December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Partnership is the sole member of Mezzanine, and Mezzanine is the sole member of Operating. The Loan Agreements provide for a $97,000,000 Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used to fund the redemption of limited partnership interests and the pay-off of the prior mortgage. The Mortgage Loan is secured by the Partnership’s principal asset, the Hilton San Francisco-Financial District (the “Property”). The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024. The term of the loan is 10 years with interest only due in the first three years and principal and interest on the remaining seven years of the loan based on a thirty-year amortization schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance and capital improvement reserves. As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by the Company in favor of Mortgage Lender. The Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The Mezzanine Loan bears interest at 9.75% per annum and matures on January 1, 2024. Interest only, payments are due monthly. As additional security for the Mezzanine Loan, there is a limited guaranty executed by the Company in favor of Mezzanine Lender (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”). The Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations; (ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance or condemnation proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy of another person, transfer or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership is required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2019, management believes that InterGroup is in compliance with both requirements. Each of the Loan Agreements contains customary representations and warranties, events of default, reporting requirements, affirmative covenants and negative covenants, which impose restrictions on, among other things, organizational changes of the respective borrower, operations of the Property, agreements with affiliates and third parties. Each of the Loan Agreements also provides for mandatory prepayments under certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions set forth in the Loan Agreements. On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement ("New Mezzanine Loan Agreement") with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly. As of June 30, 2019 and 2018, the Company had the following mortgages: June 30, 2019 June 30, 2018 Interest Rate Origination Date Maturity Date $ 93,746,000 $ 95,018,000 Fixed 5.28% December 18, 2013 January 1, 2024 20,000,000 20,000,000 Fixed 9.75% (Fixed 7.25% effective August 1st, 2019) December 18, 2013 January 1, 2024 113,746,000 115,018,000 Mortgage notes payable - Hotel (659,000) (646,000) Net debt issuance costs $ 113,087,000 $ 114,372,000 Total mortgage notes payable - Hotel $ 2,969,000 $ — Variable (30-day LIBOR plus 3%) July 31, 2018 July 24, 2019 (extended to July 23, 2020 in July 2019) — $ 2,844,000 Fixed 4.85% November 4, 2010 December 1, 2020 346,000 356,000 Fixed 3.75% September 1, 2012 September 1, 2042 3,315,000 3,200,000 Mortgage notes payable - real estate — (12,000) Net debt issuance costs $ 3,315,000 $ 3,188,000 Total mortgage notes payable - real estate Future minimum payments for all mortgage notes payable are as follows: For the year ending June 30, 2020 $ 4,431,000 2021 1,557,000 2022 1,642,000 2023 1,732,000 2024 107,404,000 Thereafter 295,000 $ 117,061,000 |
MANAGEMENT AGREEMENTS
MANAGEMENT AGREEMENTS | 12 Months Ended |
Jun. 30, 2019 | |
MANAGEMENT AGREEMENTS | |
MANAGEMENT AGREEMENTS | NOTE 12 – MANAGEMENT AGREEMENTS On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second (2 nd ) anniversary of the takeover date. The $2,000,000 is included in restricted cash balances in the consolidated balance sheets as of June 30, 2019 and 2018. As of June 30, 2019 and 2018, unamortized portion of the key money was $1,896,000 and $2,000,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets. During the years ended June 30, 2019 and 2018, Interstate management fees were $1,206,000 and $957,000, respectively, and are included in Hotel operating expenses in the consolidated statements of operations. |
CONCENTRATION OF CREDIT RISK
CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Jun. 30, 2019 | |
CONCENTRATION OF CREDIT RISK | |
CONCENTRATION OF CREDIT RISK | NOTE 13 – CONCENTRATION OF CREDIT RISK As of June 30, 2019 and 2018, all accounts receivables are related to Hotel customers. The Hotel had one account that accounted for 32%, or $272,000 of accounts receivable at June 30, 2019, and two customers that accounted for 32%, or $572,000 of accounts receivable at June 30, 2018. The Partnership maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality. At times, such cash and cash equivalents holdings may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) or other federally insured limits. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2019 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14 – INCOME TAXES The Company and Portsmouth file separate tax returns for both federal and state purposes. The provision for income tax benefit (expense) consists of the following: For the years ended June 30, 2019 2018 Federal Current tax benefit (expense) $ 122,000 $ (167,000) Deferred tax benefit (expense) 1,168,000 (4,976,000) 1,290,000 (5,143,000) State Current tax benefit (expense) 44,000 (51,000) Deferred tax benefit (expense) 75,000 (792,000) 119,000 (843,000) Total income tax benefit (expense) $ 1,409,000 $ (5,986,000) On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing corporate income tax by, among other things, lowering corporate income tax rates. As the Company has a June 30 fiscal year-end, the lower corporate income tax rate was phased in, resulting in a statutory federal rate of approximately 28% for our fiscal year ending June 30, 2018, and 21% for subsequent fiscal years. The decrease in corporate tax rate reduced the Company’s deferred tax asset to the lower federal base rate of 21%. As a result, a provisional net charge of $2,723,000 was included in the income tax expense for the year ended June 30, 2018. A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows: For the years ended June 30, 2019 2018 Statutory federal tax rate 21.0 % 27.6 % State income taxes, net of federal tax benefit 7.4 % 6.4 % Valuation allowance (85.0) % 3.8 % Change in federal tax rate — % 31.7 % Other 1.1 % 0.1 % (55.5) % 69.6 % The components of the Company’s deferred tax assets and (liabilities) as of June 30, 2019 and 2018 are as follows: 2019 2018 Deferred tax assets Net operating loss carryforward $ 6,809,000 $ 7,462,000 Investment reserve 1,295,000 1,276,000 Capital loss carryforward 714,000 685,000 Tax Credits 605,000 733,000 Unrealized gains on marketable securities 797,000 648,000 Charitable Contributions 104,000 55,000 Accrued vacation 13,000 10,000 Interest expense 162,000 — Valuation allowance (524,000) (2,610,000) 9,975,000 8,259,000 Deferred tax liabilities Basis difference in Justice (2,636,000) (2,166,000) Depreciation and amortization (616,000) (625,000) State taxes (321,000) (309,000) (3,573,000) (3,100,000) Net deferred tax assets $ 6,402,000 $ 5,159,000 Management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of June 30, 2019, because of tax planning to generate taxable income in the future, management has determined that there is sufficient positive evidence to conclude that a significant portion of its deferred tax assets are realizable. As a result, the valuation allowance decreased by $2,086,000 and $778,000, respectively, during the fiscal years ended June 30, 2019 and 2018. As of June 30, 2019, the Company had federal and state operating loss carryforwards of $25,446,000 and $16,583,000, respectively. These carryforwards expire in varying amounts through 2037. Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. As of June 30, 2019, it has been determined there are no uncertain tax positions likely to impact the Company. The Partnership files tax returns as prescribed by the tax laws of the jurisdictions in which it operates and is subject to examination by federal, state and local jurisdictions, were applicable. As of June 30, 2019, tax years beginning in fiscal 2013 remain open to examination by the major tax jurisdictions, and are subject to the statute of limitations. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Jun. 30, 2019 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 15 – 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 year ended June 30, 2019 and 2018, respectively. Segment income from Hotel operations consists of the operation of the Hotel and operation of the garage. Segment loss from real estate operations consists of the operation of the rental properties. Segment loss from investments consists of net investment loss, dividend and interest income and investment related expenses. As of and for the year Hotel Real Estate Investment ended June 30, 2019 Operations Operations Transactions Other Total Revenues $ 59,881,000 $ 324,000 $ — $ - $ 60,205,000 Segment operating expenses (44,466,000) (218,000) — (1,115,000) (45,799,000) Segment income (loss) 15,415,000 106,000 — (1,115,000) 14,406,000 Interest expense - mortgage (7,634,000) (230,000) — — (7,864,000) Loss on disposal of assets (398,000) — — — (398,000) Depreciation and amortization expense (2,405,000) (110,000) — — (2,515,000) Loss from investments — — (774,000) — (774,000) Income tax benefit — — — 1,409,000 1,409,000 Net income (loss) $ 4,978,000 $ (234,000) $ (774,000) $ 294,000 $ 4,264,000 Total assets $ 58,648,000 $ 4,866,000 $ 3,030,000 $ 7,408,000 $ 73,952,000 As of and for the year Hotel Real Estate Investment ended June 30, 2018 Operations Operations Transactions Other Total Revenues $ 57,099,000 $ 335,000 $ — $ — $ 57,434,000 Segment operating expenses (40,103,000) (193,000) — (1,404,000) (41,700,000) Segment income (loss) 16,996,000 142,000 — (1,404,000) 15,734,000 Recovery of legal settlement costs 5,775,000 — — — 5,775,000 Interest expense - mortgage (7,806,000) (87,000) — — (7,893,000) Depreciation and amortization expense (2,606,000) (105,000) — — (2,711,000) Loss from investments — — (1,501,000) — (1,501,000) Income tax expense — — — (5,986,000) (5,986,000) Net income (loss) $ 12,359,000 $ (50,000) $ (1,501,000) $ (7,390,000) $ 3,418,000 Total assets $ 54,417,000 $ 4,961,000 $ 4,913,000 $ 6,212,000 $ 70,503,000 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jun. 30, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 16 – RELATED PARTY TRANSACTIONS As discussed in Note 10 – Related Party and Other Financing Transactions, on July 2, 2014, the Partnership obtained from the InterGroup Corporation an unsecured loan in the principal amount of $4,250,000. The balance of this loan was $3,000,000 as of June 30, 2019 and 2018, and are included in the related party and other notes payable in the consolidated balance sheets. The loan matures on December 31, 2019. In connection with the redemption of limited partnership interests of Justice, 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. This agreement was superseded by a letter dated December 11, 2013 from Justice, in which Justice assumed the payment obligations of Justice Operating Company, LLC. As of June 30, 2018, $200,000 of these fees remained payable and were paid off as of June 30, 2019. Certain shared costs and expenses, primarily administrative expenses, rent and insurance are allocated among the Company and InterGroup based on management’s estimate of the pro rata utilization of resources. For the years ended June 30, 2019 and 2018, these expenses were approximately $144,000 for each respective year. Five 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. As Chairman of the Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Portsmouth and InterGroup and oversees the investment activity of those companies. Depending on certain market conditions and various risk factors, the Chief Executive Officer, Portsmouth and InterGroup may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of the Portsmouth and InterGroup, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 17 – COMMITMENTS AND CONTINGENCIES Franchise Agreements The Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding LLC (“Hilton”) on November 24, 2004. The term of the License agreement was for an initial period of 15 years commencing on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement which amongst other things extended the License Agreement through 2030, and also provided the Partnership certain key money cash incentives to be earned through 2030. Since the opening of the Hotel in January 2006, the Partnership has incurred monthly royalties, program fees and information technology recapture charges equal to a percentage of the Hotel’s gross room revenue. Fees for such services during fiscal year 2019 and 2018 totaled approximately $4.1 million and $3.8 million, respectively. Hotel Employees Effective February 3, 2017, the Partnership had no employees. On February 3, 2017, Interstate assumed all labor union agreements and retained employees of their choice to continue providing services to the Hotel. As of June 30, 2019, approximately 85% of those employees were represented by one of four labor unions, and their terms of employment were determined under a collective bargaining agreement (“CBA”) to which the Partnership was a party. During the fiscal year ended June 30, 2019, the Partnership renewed the CBA for Local 39 (Stationary Engineers), and Local 665 (Parking Employees). CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2018 and was renewed in August 2019. CBA for Local 856 (International Brotherhood of Teamsters) will expire on December 31, 2022. Negotiation of collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Partnership and Interstate. The Partnership expects and anticipates that the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of each CBA, and incorporates these principles into its operating and budgetary practices. Legal Matters In April 2014, the Partnership commenced an arbitration action against Glaser Weil Fink Howard Avchen & Shapiro, LLP (formerly known as Glaser Weil Fink Jacobs Howard Avchen & Shapiro, LLP), Brett J. Cohen, Gary N. Jacobs, Janet S. McCloud, Paul B. Salvaty, and Joseph K. Fletcher III (collectively, the “Respondents”) in connection with the redemption transaction. The arbitration alleged legal malpractice against the Respondents and also sought declaratory relief regarding provisions of the option agreement in the redemption transaction and regarding the engagement letter with Respondents. Prior to arbitration proceedings, the parties agreed in principle to settle the matter, and entered into a settlement agreement and mutual general release in April 2018. The Respondents agreed to pay $8,300,000, which was received in May of 2018. $5,575,000 was recorded as a recovery of legal settlement cost and $2,725,000 was recorded as a reduction of legal expense for the fiscal year ended June 30, 2018. The Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company defends itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on the financial conditions or result of operations when resolved. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18 – SUBSEQUENT EVENTS On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement ("New Mezzanine Loan Agreement") with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly. In July 2019, InterGroup obtained a modification from CIBC Bank USA ("CIBC") which increased its $5,000,000 revolving line of credit (“RLOC ") by $3,000,000 and extended the maturity date from July 24, 2019 to July 23, 2020. The $2,969,000 mortgage due to InterGroup was also extended from July 24, 2019 to July 23, 2020. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Description of Business | Description of Business 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 82.2%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 13.4% 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 has a 93.3% limited partnership interest in Justice and is the sole general partner. Justice, through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), owns a 544‑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. Kearny Street Parking LLC (“Parking”) is the operator of the garage. Mezzanine is a wholly-owned subsidiary of the Partnership; Operating is a wholly-owned subsidiary of Mezzanine. Mezzanine is the borrower under certain mezzanine 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 HLT Franchise Holding LLC (Hilton). Justice had a ten-year management agreement with Prism Hospitality L.P. (“Prism”) to perform certain management functions for the Hotel. Prism’s management agreement was terminated upon its expiration date of February 3, 2017. Effective December 1, 2013, GMP Management, Inc. (“GMP”), a company owned by a Justice limited partner and a related party, also provided management services for the Partnership pursuant to a management services agreement, with a three-year term, subject to the Partnership’s right to terminate earlier for cause. In June 2016, GMP resigned. On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the form of a self-exhausting, interest free note payable in the amount of $2,000,000 in a separate key money agreement. The $2,000,000 is included in restricted cash balances in the consolidated balance sheets as of June 30, 2019 and 2018. As of June 30, 2019 and 2018, unamortized portion of the key money was $1,896,000 and $2,000,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets. In addition to the operations of the Hotel, the Company also generates revenue 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. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company, Portsmouth and Woodland Village. All significant inter-company transactions and balances have been eliminated. |
Investment in Hotel, net | Investment in Hotel, net Property and equipment are stated at cost. Building improvements are depreciated on a straight-line basis over their useful lives ranging from 3 to 39 years. Furniture, fixtures, and equipment are depreciated on a straight-line basis over their useful lives ranging from 3 to 7 years. Repairs and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. The cost of assets sold or retired and the related accumulated depreciation are removed from the accounts; any resulting gain or loss is included in other income (expenses). The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Partnership will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses were recorded for the years ended June 30, 2019 and 2018. |
Investment in Real Estate, net | Investment in Real Estate, net Rental properties are stated at cost less accumulated depreciation. Depreciation of rental property is provided on the straight-line method based upon estimated useful lives of 5 to 40 years for buildings and improvements and 5 to 10 years for equipment. Expenditures for repairs and maintenance are charged to expense as incurred and major improvements are capitalized. The Company also reviews its rental property assets for impairment. No impairment losses on the investment in real estate have been recorded for the years ended June 30, 2019 and 2018. |
Investment in Marketable Securities | Investment in Marketable Securities Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable securities are classified as trading securities with all unrealized gains and losses on the Company’s investment portfolio recorded through the consolidated statements of operations. |
Other Investments, net | Other Investments, net Other investments include non-marketable securities (carried at cost, net of any impairments loss) and non –marketable warrants (carried at fair value). The Company has no significant influence or control over the entities that issue these 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. For the years ended June 30, 2019 and 2018, the Company recorded impairment losses related to other investments of $61,000 and $124,000, respectively. As of June 30, 2019 and 2018, the allowance for impairment losses was $3,894,000 and $3,833,000, respectively. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased and are carried at cost, which approximates fair value. As of June 30, 2019 and 2018, the Company does not have any cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and capital addition reserves. It also includes key money received from Interstate that is restricted for capital improvements for the Hotel. |
Accounts Receivable - Hotel, net | Accounts Receivable - Hotel, net Accounts receivable from Hotel customers are carried at cost less an allowance for doubtful accounts that is based on management’s assessment of the collectability of accounts receivable. The Partnership extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. |
Other Assets, net | Other Assets, net Other assets include prepaid insurance, accounts receivable, franchise fees, and other miscellaneous assets. Franchise fees are stated at cost and amortized over the life of the agreement (15 years). |
Income Taxes | Income Taxes Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing corporate income tax by, among other things, lowering corporate income tax rates. As the Company has a June 30 fiscal year-end, the lower corporate income tax rate was phased in, resulting in a statutory federal rate of approximately 28% for our fiscal year ending June 30, 2018, and 21% for subsequent fiscal years. The decrease in corporate tax rate reduced the Company’s deferred tax asset to the lower federal base rate of 21%. As a result, a provisional net charge of $2,723,000 was included in the income tax expense for the year ended June 30, 2018. Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. |
Due to Securities Broker | Due to Securities Broker Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability. |
Obligations for Securities Sold | Obligations for Securities Sold Obligation for securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations. |
Accounts Payable and Other Liabilities | Accounts Payable and Other Liabilities Accounts payable and other liabilities include trade payables, advance customer deposits, accrued wages, accrued real estate taxes, and other liabilities. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows: Level 1 –inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 –inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 –inputs to the valuation methodology are unobservable and significant to the fair value. |
Treasury Stock | Treasury Stock The Company records the acquisition of treasury stock under the cost method |
Revenue Recognition | Revenue Recognition On July 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers , using the modified retrospective approach to all contracts resulting in no cumulative adjustment to accumulated deficit. The adoption of this standard did not impact the timing of our revenue recognition based on the short-term, day-to-day nature of our operations. See Note 2 – Revenue. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising costs were $282,000 and $302,000 for the years ended June 30, 2019 and 2018, respectively. |
Basic and Diluted Loss per Share | Basic and Diluted Loss per Share Basic loss per share is calculated based upon the weighted average number of common shares outstanding during each fiscal year. As of June 30, 2019 and 2018, the Company did not have any potentially dilutive securities outstanding. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to the recording of allowance for doubtful accounts and allowance for impairment losses which are based on management’s assessment of the collectability of accounts receivable and the fair market value of nonmarketable securities, respectively, as of the end of the fiscal year. Actual results may differ from those estimates. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability and are amortized over the life of the debt. Loan amortization costs are included in interest expense in the consolidated statement of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (ASU 2014‑09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015‑14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014‑09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016‑08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We applied the modified retrospective transition method to all contracts upon the adoption of ASU 2014-09 effective July 1, 2018. We provided the additional required disclosures, but the cumulative adjustment from our comparative periods was zero in our consolidated financial statements. See Note 2 – Revenue. In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-18, Restricted Cash. ASU 2016-18 requires companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Additionally, ASU 2016-18 requires a disclosure of a reconciliation between the statement of financial position and the statement of cash flows when the balance sheet includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. ASU 2016-18 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. The Company adopted ASU 2016-18 effective July 1, 2018. The adoption of ASU 2016-18 impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842) (ASU 2016‑02), which supersedes existing guidance on accounting for leases in Leases (Topic 840) and generally requires all leases, including operating leases, to be recognized in the statement of financial position as right-of-use assets and lease liabilities by lessees. The provisions of ASU 2016‑02 are to be applied using a modified retrospective approach and are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. We adopted ASU 2016-02 on July 1, 2019. The Company is currently reviewing the effect of ASU No. 2016‑02. On June 16, 2016, the FASB issued ASU 2016‑13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the timelier recognition of losses. ASU No. 2016‑13 will be effective for us as of January 1, 2020. The Company is currently reviewing the effect of ASU No. 2016‑13. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
REVENUE | |
Schedule of our hotel revenues disaggregated by revenue streams | . The following table present our Hotel revenue disaggregated by revenue streams. For the year ended June 30, 2019 2018 Hotel revenues: Hotel rooms $ 51,243,000 $ 46,475,000 Food and beverage 5,353,000 7,222,000 Garage 2,875,000 3,011,000 Other operating departments 410,000 391,000 Total Hotel revenue $ 59,881,000 $ 57,099,000 |
INVESTMENT IN HOTEL, NET (Table
INVESTMENT IN HOTEL, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
INVESTMENT IN HOTEL, NET | |
Schedule of Investment in Hotel | Investment in Hotel consisted of the following as of: Accumulated Net Book June 30, 2019 Cost Depreciation Value Land $ 1,896,000 $ — $ 1,896,000 Furniture and equipment 31,106,000 (26,876,000) 4,230,000 Building and improvements 59,341,000 (29,131,000) 30,210,000 $ 92,343,000 $ (56,007,000) $ 36,336,000 Accumulated Net Book June 30, 2018 Cost Depreciation Value Land $ 1,896,000 $ — $ 1,896,000 Furniture and equipment 29,350,000 (25,877,000) 3,473,000 Building and improvements 59,798,000 (27,808,000) 31,990,000 $ 91,044,000 $ (53,685,000) $ 37,359,000 |
INVESTMENT IN REAL ESTATE, NET
INVESTMENT IN REAL ESTATE, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
INVESTMENT IN REAL ESTATE, NET | |
Schedule of investment in real estate | The Company owns and operates a 27‑unit and a 2‑unit multi-family apartment complex located in Los Angeles, California and owns land held for development located in Maui, Hawaii. As of June 30 2019, and 2018, investment in real estate included the following: 2019 2018 Land $ 2,430,000 $ 2,430,000 Buildings, improvements and equipment 2,922,000 2,912,000 Accumulated depreciation (1,463,000) (1,354,000) 3,889,000 3,988,000 Land held for development 977,000 973,000 Investment in real estate, net $ 4,866,000 $ 4,961,000 |
INVESTMENT IN MARKETABLE SECU_2
INVESTMENT IN MARKETABLE SECURITIES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
INVESTMENT IN MARKETABLE SECURITIES | |
Schedule of Trading securities | As of June 30, 2019 and 2018, 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 Loss Value As of June 30, 2019 Corporate Equities $ 10,922,000 $ 449,000 $ (8,692,000) $ (8,243,000) $ 2,679,000 As of June 30, 2018 Corporate Equities $ 12,187,000 $ 721,000 $ (8,469,000) $ (7,748,000) $ 4,439,000 |
Schedule of Net gain (loss) on marketable securities | 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 years ended June 30, 2019 and 2018, respectively. For the year ended June 30, 2019 2018 Realized (loss) gain on marketable securities $ (75,000) $ 314,000 Unrealized loss on marketable securities related to Comstock (187,000) (1,729,000) Unrealized (loss) gain on marketable securities (313,000) 343,000 Net loss on marketable securities $ (575,000) $ (1,072,000) |
OTHER INVESTMENTS, NET (Tables)
OTHER INVESTMENTS, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
OTHER INVESTMENTS, NET | |
Schedule Of Other Investments,net | Other investments, net consist of the following: Type June 30, 2019 June 30, 2018 Private equity hedge fund, at cost $ 233,000 $ 344,000 Other investments 118,000 130,000 $ 351,000 $ 474,000 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
FAIR VALUE MEASUREMENTS | |
Schedule of assets measured at fair value on a recurring basis | The assets measured at fair value on a recurring basis are as follows: As of June 30, 2019 Level 1 Assets: Investment in marketable securities: REITs and real estate companies $ 816,000 Consumer cyclical 636,000 Basic materials 537,000 Other 690,000 $ 2,679,000 As of June 30, 2018 Level 1 Assets: Investment in marketable securities: REITs and real estate companies $ Healthcare Basic materials 698,000 Other 1,419,000 $ 4,439,000 |
Schedule of assets measured at fair value on a non-recurring basis | 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 year Assets Level 3 June 30, 2019 ended June 30, 2019 Other non-marketable investments $ 351,000 $ 351,000 $ (61,000) Net loss for the year Assets Level 3 June 30, 2018 ended June 30, 2018 Other non-marketable investments $ 474,000 $ 474,000 $ (145,000) |
OTHER ASSETS, NET (Tables)
OTHER ASSETS, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
OTHER ASSETS, NET | |
Schedule of Others assets | Other assets consist of the following as of June 30: 2019 2018 Inventory - Hotel $ 61,000 $ 59,000 Prepaid expenses 587,000 409,000 Note receivable - related party 584,000 594,000 Miscellaneous assets, net 411,000 484,000 Total other assets $ 1,643,000 $ 1,546,000 |
RELATED PARTY AND OTHER FINAN_2
RELATED PARTY AND OTHER FINANCING TRANSACTIONS (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Related Party Transaction [Line Items] | |
Schedule of Minimum future lease payments for assets under capital leases | Minimum future lease payments for assets under capital leases as of June 30, 2019 are as follows: For the year ending June 30, 2020 $ 493,000 2021 492,000 2022 482,000 2023 182,000 Total minimum lease payments 1,649,000 Less interest on capital lease (163,000) Present value of future minimum lease payments $ 1,486,000 |
Related Party And Other Financing Transactions [Member] | |
Related Party Transaction [Line Items] | |
Schedule of Future minimum principle payments | Future minimum principal payments for all related party and other financing transactions are as follows: For the year ending June 30, 2020 $ 3,980,000 2021 1,006,000 2022 1,022,000 2023 744,000 2024 567,000 Thereafter 2,388,000 $ 9,707,000 |
MORTGAGE NOTES PAYABLE (Tables)
MORTGAGE NOTES PAYABLE (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Schedule of mortgages | As of June 30, 2019 and 2018, the Company had the following mortgages: June 30, 2019 June 30, 2018 Interest Rate Origination Date Maturity Date $ 93,746,000 $ 95,018,000 Fixed 5.28% December 18, 2013 January 1, 2024 20,000,000 20,000,000 Fixed 9.75% (Fixed 7.25% effective August 1st, 2019) December 18, 2013 January 1, 2024 113,746,000 115,018,000 Mortgage notes payable - Hotel (659,000) (646,000) Net debt issuance costs $ 113,087,000 $ 114,372,000 Total mortgage notes payable - Hotel $ 2,969,000 $ — Variable (30-day LIBOR plus 3%) July 31, 2018 July 24, 2019 (extended to July 23, 2020 in July 2019) — $ 2,844,000 Fixed 4.85% November 4, 2010 December 1, 2020 346,000 356,000 Fixed 3.75% September 1, 2012 September 1, 2042 3,315,000 3,200,000 Mortgage notes payable - real estate — (12,000) Net debt issuance costs $ 3,315,000 $ 3,188,000 Total mortgage notes payable - real estate |
Mortgage Notes Payable [Member] | |
Schedule of Future minimum principle payments | Future minimum payments for all mortgage notes payable are as follows: For the year ending June 30, 2020 $ 4,431,000 2021 1,557,000 2022 1,642,000 2023 1,732,000 2024 107,404,000 Thereafter 295,000 $ 117,061,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
INCOME TAXES | |
Schedule of provision for income tax benefit (expense) | The Company and Portsmouth file separate tax returns for both federal and state purposes. The provision for income tax benefit (expense) consists of the following: For the years ended June 30, 2019 2018 Federal Current tax benefit (expense) $ 122,000 $ (167,000) Deferred tax benefit (expense) 1,168,000 (4,976,000) 1,290,000 (5,143,000) State Current tax benefit (expense) 44,000 (51,000) Deferred tax benefit (expense) 75,000 (792,000) 119,000 (843,000) Total income tax benefit (expense) $ 1,409,000 $ (5,986,000) |
Schedule of reconciliation of the statutory federal income tax rate | A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows: For the years ended June 30, 2019 2018 Statutory federal tax rate 21.0 % 27.6 % State income taxes, net of federal tax benefit 7.4 % 6.4 % Valuation allowance (85.0) % 3.8 % Change in federal tax rate — % 31.7 % Other 1.1 % 0.1 % (55.5) % 69.6 % |
Schedule of deferred tax assets and (liabilities) | The components of the Company’s deferred tax assets and (liabilities) as of June 30, 2019 and 2018 are as follows: 2019 2018 Deferred tax assets Net operating loss carryforward $ 6,809,000 $ 7,462,000 Investment reserve 1,295,000 1,276,000 Capital loss carryforward 714,000 685,000 Tax Credits 605,000 733,000 Unrealized gains on marketable securities 797,000 648,000 Charitable Contributions 104,000 55,000 Accrued vacation 13,000 10,000 Interest expense 162,000 — Valuation allowance (524,000) (2,610,000) 9,975,000 8,259,000 Deferred tax liabilities Basis difference in Justice (2,636,000) (2,166,000) Depreciation and amortization (616,000) (625,000) State taxes (321,000) (309,000) (3,573,000) (3,100,000) Net deferred tax assets $ 6,402,000 $ 5,159,000 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
SEGMENT INFORMATION | |
Schedule of segment loss from investments consists of net investment loss, dividend and interest income | Information below represents reporting segments for the year ended June 30, 2019 and 2018, respectively. Segment income from Hotel operations consists of the operation of the Hotel and operation of the garage. Segment loss from real estate operations consists of the operation of the rental properties. Segment loss from investments consists of net investment loss, dividend and interest income and investment related expenses. As of and for the year Hotel Real Estate Investment ended June 30, 2019 Operations Operations Transactions Other Total Revenues $ 59,881,000 $ 324,000 $ — $ - $ 60,205,000 Segment operating expenses (44,466,000) (218,000) — (1,115,000) (45,799,000) Segment income (loss) 15,415,000 106,000 — (1,115,000) 14,406,000 Interest expense - mortgage (7,634,000) (230,000) — — (7,864,000) Loss on disposal of assets (398,000) — — — (398,000) Depreciation and amortization expense (2,405,000) (110,000) — — (2,515,000) Loss from investments — — (774,000) — (774,000) Income tax benefit — — — 1,409,000 1,409,000 Net income (loss) $ 4,978,000 $ (234,000) $ (774,000) $ 294,000 $ 4,264,000 Total assets $ 58,648,000 $ 4,866,000 $ 3,030,000 $ 7,408,000 $ 73,952,000 As of and for the year Hotel Real Estate Investment ended June 30, 2018 Operations Operations Transactions Other Total Revenues $ 57,099,000 $ 335,000 $ — $ — $ 57,434,000 Segment operating expenses (40,103,000) (193,000) — (1,404,000) (41,700,000) Segment income (loss) 16,996,000 142,000 — (1,404,000) 15,734,000 Recovery of legal settlement costs 5,775,000 — — — 5,775,000 Interest expense - mortgage (7,806,000) (87,000) — — (7,893,000) Depreciation and amortization expense (2,606,000) (105,000) — — (2,711,000) Loss from investments — — (1,501,000) — (1,501,000) Income tax expense — — — (5,986,000) (5,986,000) Net income (loss) $ 12,359,000 $ (50,000) $ (1,501,000) $ (7,390,000) $ 3,418,000 Total assets $ 54,417,000 $ 4,961,000 $ 4,913,000 $ 6,212,000 $ 70,503,000 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jul. 01, 2018 | Feb. 03, 2017 | Feb. 03, 2017 | Dec. 01, 2013 | Jun. 30, 2019 | Jun. 30, 2018 |
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Management Agreement, Term | 10 years | |||||
Key Money Incentive Advance To Related Party | $ 2,000,000 | |||||
Unamortized Portion Of Key Money | 1,896,000 | $ 2,000,000 | ||||
Asset Impairment Charges | 0 | 0 | ||||
Other than Temporary Impairment Losses, Investments, Total | 61,000 | 124,000 | ||||
Allowance For Impairment Losses | $ 3,894,000 | $ 3,833,000 | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 27.60% | ||||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ 2,723,000 | |||||
Cumulative adjustment to accumulated deficit | $ 0 | |||||
Advertising Expense | 282,000 | $ 302,000 | ||||
Real Estate Investment [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Asset Impairment Charges | $ 0 | $ 0 | ||||
Franchise Fees [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Other Assets Amortization Period | 15 years | |||||
Furniture and equipment [Member] | Maximum [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||
Furniture and equipment [Member] | Minimum [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||
Building and Building Improvements [Member] | Maximum [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 39 years | |||||
Building and Building Improvements [Member] | Maximum [Member] | Real Estate Investment [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 40 years | |||||
Building and Building Improvements [Member] | Minimum [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||
Building and Building Improvements [Member] | Minimum [Member] | Real Estate Investment [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||
Equipment [Member] | Maximum [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 10 years | |||||
Equipment [Member] | Minimum [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||
Intergroup [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Equity Method Investment, Ownership Percentage | 82.20% | |||||
Noncontrolling Interest, Ownership Percentage by Parent | 13.40% | |||||
Portsmouth [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Equity Method Investment, Ownership Percentage | 68.80% | |||||
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest | 93.30% | |||||
Woodland Village Inc [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Equity Method Investment, Ownership Percentage | 55.40% | |||||
Prism [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Management Agreement, Term | 10 years | |||||
GMP [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Management Agreement, Term | 3 years | |||||
Interstate Management Company, LLC [Member] | ||||||
Basis Of Presentation And Significant Accounting Policies [Line Items] | ||||||
Management Agreement, Term | 10 years | |||||
Management Agreement, Renewal Term | 5 years | |||||
Key Money Incentive Advance To Related Party | $ 2,000,000 |
REVENUE - Disaggregation (Detai
REVENUE - Disaggregation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 60,205,000 | $ 57,434,000 |
Hotel [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 59,881,000 | 57,099,000 |
Hotel rooms (Member) | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 51,243,000 | 46,475,000 |
Food and beverage [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 5,353,000 | 7,222,000 |
Garage (Member) | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 2,875,000 | 3,011,000 |
Other operating departments (Member) | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 410,000 | $ 391,000 |
REVENUE - Additional informatio
REVENUE - Additional information (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
REVENUE | ||
Contract with Customer, Liability | $ 1,215,000 | $ 571,000 |
Contract with Customer, Liability, Revenue Recognized | $ 563,000 |
JUSTICE INVESTORS (Details)
JUSTICE INVESTORS (Details) | 12 Months Ended |
Jun. 30, 2019item | |
JUSTICE INVESTORS | |
Number of general partners | 1 |
Number of voting limited partners | 23 |
INVESTMENT IN HOTEL, NET (Detai
INVESTMENT IN HOTEL, NET (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Property, Plant and Equipment [Line Items] | ||
Cost | $ 92,343,000 | $ 91,044,000 |
Accumulated Depreciation | (56,007,000) | (53,685,000) |
Net Book Value | 36,336,000 | 37,359,000 |
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 | 31,106,000 | 29,350,000 |
Accumulated Depreciation | (26,876,000) | (25,877,000) |
Net Book Value | 4,230,000 | 3,473,000 |
Building and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 59,341,000 | 59,798,000 |
Accumulated Depreciation | (29,131,000) | (27,808,000) |
Net Book Value | $ 30,210,000 | $ 31,990,000 |
INVESTMENT IN REAL ESTATE, NE_2
INVESTMENT IN REAL ESTATE, NET (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
INVESTMENT IN REAL ESTATE, NET | ||
Land | $ 2,430,000 | $ 2,430,000 |
Buildings, improvements and equipment | 2,922,000 | 2,912,000 |
Accumulated depreciation | (1,463,000) | (1,354,000) |
Real Estate Investment Property Net | 3,889,000 | 3,988,000 |
Land held for development | 977,000 | 973,000 |
Investment in real estate, net | $ 4,866,000 | $ 4,961,000 |
INVESTMENT IN REAL ESTATE, NE_3
INVESTMENT IN REAL ESTATE, NET - Additional information (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Aug. 31, 2017 | |
InterGroup Uluniu Inc [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% | ||
Business Acquisition Cost Of Acquired Purchase Price | $ 973,000 | ||
Intergroup [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Investment In Real Estate [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 109,000 | $ 105,000 |
INVESTMENT IN MARKETABLE SECU_3
INVESTMENT IN MARKETABLE SECURITIES - Trading securities (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Investment - Corporate Equities | ||
Gross Unrealized Loss | $ (500,000) | $ (1,386,000) |
Net Unrealized Loss | (313,000) | 343,000 |
Fair Value | 2,679,000 | 4,439,000 |
Equity Securities [Member] | ||
Investment - Corporate Equities | ||
Cost | 10,922,000 | 12,187,000 |
Gross Unrealized Gain | 449,000 | 721,000 |
Gross Unrealized Loss | (8,692,000) | (8,469,000) |
Net Unrealized Loss | (8,243,000) | (7,748,000) |
Fair Value | $ 2,679,000 | $ 4,439,000 |
INVESTMENT IN MARKETABLE SECU_4
INVESTMENT IN MARKETABLE SECURITIES - Net gain (loss) on marketable securities (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
INVESTMENT IN MARKETABLE SECURITIES | ||
Realized (loss) gain on marketable securities | $ (75,000) | $ 314,000 |
Unrealized loss on marketable securities related to Comstock | (187,000) | (1,729,000) |
Unrealized (loss) gain on marketable securities | (313,000) | 343,000 |
Net loss on marketable securities | $ (575,000) | $ (1,072,000) |
INVESTMENT IN MARKETABLE SECU_5
INVESTMENT IN MARKETABLE SECURITIES - Additional information (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
INVESTMENT IN MARKETABLE SECURITIES | ||
Percentage Of Investment Marketable Securities | 19.00% | 16.00% |
Trading Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss | $ 8,617,000 | $ 8,433,000 |
Unrealized Gain (Loss) on Investments | $ 8,556,000 | $ 8,369,000 |
OTHER INVESTMENTS, NET (Details
OTHER INVESTMENTS, NET (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Other Investment [Line Items] | ||
Other investments, net | $ 351,000 | $ 474,000 |
Other Investments [Member] | ||
Other Investment [Line Items] | ||
Other investments, net | 118,000 | 130,000 |
Private Equity Hedge Fund [Member] | ||
Other Investment [Line Items] | ||
Other investments, net | $ 233,000 | $ 344,000 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets measured at fair value on a recurring basis (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in marketable securities | $ 2,679,000 | $ 4,439,000 |
REITs and real estate companies [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in marketable securities | 816,000 | 1,484,000 |
Consumer cyclical [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in marketable securities | 636,000 | |
HealthCare [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in marketable securities | 838,000 | |
Basic materials [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in marketable securities | 537,000 | 698,000 |
Other [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in marketable securities | $ 690,000 | $ 1,419,000 |
FAIR VALUE MEASUREMENTS - Ass_2
FAIR VALUE MEASUREMENTS - Assets measured at fair value on a non-recurring (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other non-marketable investments | $ 351,000 | $ 474,000 |
Net loss | (61,000) | (145,000) |
Other Investments [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other non-marketable investments | $ 351,000 | $ 474,000 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional information (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
FAIR VALUE MEASUREMENTS | ||
Proceeds from Sale of Other Investments | $ 61,000 | $ 69,000 |
OTHER ASSETS, NET (Details)
OTHER ASSETS, NET (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
OTHER ASSETS, NET | ||
Inventory - Hotel | $ 61,000 | $ 59,000 |
Prepaid expenses | 587,000 | 409,000 |
Note receivable - related party | 584,000 | 594,000 |
Miscellaneous assets, net | 411,000 | 484,000 |
Total other assets | $ 1,643,000 | $ 1,546,000 |
RELATED PARTY AND OTHER FINAN_3
RELATED PARTY AND OTHER FINANCING TRANSACTIONS - Minimum future lease payments for assets under capital leases (Details) | Jun. 30, 2019USD ($) |
RELATED PARTY AND OTHER FINANCING TRANSACTIONS | |
2020 | $ 493,000 |
2021 | 492,000 |
2022 | 482,000 |
2023 | 182,000 |
Total minimum lease payments | 1,649,000 |
Less interest on capital lease | (163,000) |
Present value of future minimum lease payments | $ 1,486,000 |
RELATED PARTY AND OTHER FINAN_4
RELATED PARTY AND OTHER FINANCING TRANSACTIONS - Future minimum principle payments (Details) - Related Party And Other Financing Transactions [Member] | Jun. 30, 2019USD ($) |
2020 | $ 3,980,000 |
2021 | 1,006,000 |
2022 | 1,022,000 |
2023 | 744,000 |
2024 | 567,000 |
Thereafter | 2,388,000 |
Long-term Debt | $ 9,707,000 |
RELATED PARTY AND OTHER FINAN_5
RELATED PARTY AND OTHER FINANCING TRANSACTIONS - Additional information (Details) - USD ($) | Feb. 03, 2017 | Jul. 02, 2014 | Jun. 30, 2019 | Jun. 30, 2018 |
Schedule Of Related Party Transactions By Related Party [Line Items] | ||||
Capital Lease Obligations | $ 1,486,000 | $ 1,355,000 | ||
Key Money Incentive Advance To Related Party | $ 2,000,000 | |||
Management Agreement, Term | 10 years | |||
Long Term Debt Expiration Terms | capital leases expire in various years through 2023 at rates ranging from 5.77% to 6.25% per annum | |||
Other Notes Payable | $ 8,221,000 | 8,641,000 | ||
Restricted Cash And Related Party Note Payable | 2,000,000 | 2,000,000 | ||
Unamortized Portion Of Key Money | 1,896,000 | 2,000,000 | ||
Unsecured Debt [Member] | ||||
Schedule Of Related Party Transactions By Related Party [Line Items] | ||||
Other Notes Payable | 3,000,000 | 3,000,000 | ||
Intergroup [Member] | ||||
Schedule Of Related Party Transactions By Related Party [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | |||
Debt Instrument, Face Amount | $ 4,250,000 | |||
Debt Instrument Fee Percent | 3.00% | |||
Debt Instrument, Term | 2 years | |||
Interest Free Development Incentive Note [Member] | ||||
Schedule Of Related Party Transactions By Related Party [Line Items] | ||||
Notes Reduction | 316,000 | |||
Other Notes Payable | $ 3,325,000 | $ 3,642,000 | ||
Maximum [Member] | Capital Lease Obligations [Member] | ||||
Schedule Of Related Party Transactions By Related Party [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 6.25% | |||
Minimum [Member] | Capital Lease Obligations [Member] | ||||
Schedule Of Related Party Transactions By Related Party [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5.77% |
MORTGAGE NOTES PAYABLE - Mortga
MORTGAGE NOTES PAYABLE - Mortgages (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Mortgage Notes Payable [Line Items] | ||
Mortgage Notes Payable Hotel | $ 113,087,000 | $ 114,372,000 |
Mortgage Notes Payable Real Estate | 3,315,000 | 3,188,000 |
Fixed Mortgage Notes Payable Hotel 5.28 [Member] | ||
Mortgage Notes Payable [Line Items] | ||
Mortgage Notes Payable Hotel | $ 93,746,000 | 95,018,000 |
Debt Instrument, Interest Rate, Stated Percentage | 5.28% | |
Debt Instrument, Maturity Date Range, Start | Dec. 18, 2013 | |
Debt Instrument, Maturity Date Range, End | Jan. 1, 2024 | |
Fixed Mortgage Notes Payable Hotel 9.75 [Member] | ||
Mortgage Notes Payable [Line Items] | ||
Mortgage Notes Payable Hotel | $ 20,000,000 | 20,000,000 |
Debt Instrument, Interest Rate, Stated Percentage | 9.75% | |
Debt Instrument, Interest Rate, Effective Percentage | 7.25% | |
Debt Instrument, Maturity Date Range, Start | Dec. 18, 2013 | |
Debt Instrument, Maturity Date Range, End | Jan. 1, 2024 | |
Mortgage Notes Payable Hotel [Member] | ||
Mortgage Notes Payable [Line Items] | ||
Deferred Finance Costs Net | $ (659,000) | (646,000) |
Mortgage Notes Payable Hotel, Gross | 113,746,000 | 115,018,000 |
Variable Mortgage Notes Payable Real Estate [Member] | ||
Mortgage Notes Payable [Line Items] | ||
Mortgage Notes Payable Real Estate | $ 2,969,000 | 0 |
Debt Instrument, Basis Spread on Variable Rate | 3.00% | |
Debt Instrument, Maturity Date Range, Start | Jul. 31, 2018 | |
Debt Instrument, Maturity Date Range, End | Jul. 24, 2019 | |
Fixed Mortgage Notes Payable Real Estate 4.85 [Member] | ||
Mortgage Notes Payable [Line Items] | ||
Mortgage Notes Payable Real Estate | $ 0 | 2,844,000 |
Debt Instrument, Interest Rate, Stated Percentage | 4.85% | |
Debt Instrument, Maturity Date Range, Start | Nov. 4, 2010 | |
Debt Instrument, Maturity Date Range, End | Dec. 1, 2020 | |
Fixed Mortgage Notes Payable Real Estate 3.75 [Member] | ||
Mortgage Notes Payable [Line Items] | ||
Mortgage Notes Payable Real Estate | $ 346,000 | 356,000 |
Debt Instrument, Interest Rate, Stated Percentage | 3.75% | |
Debt Instrument, Maturity Date Range, Start | Sep. 1, 2012 | |
Debt Instrument, Maturity Date Range, End | Sep. 1, 2042 | |
Mortgage Notes Payable Real Estate [Member] | ||
Mortgage Notes Payable [Line Items] | ||
Deferred Finance Costs Net | $ 0 | (12,000) |
Mortgage Notes Payable Real Estate, Gross | $ 3,315,000 | $ 3,200,000 |
MORTGAGE NOTES PAYABLE - Future
MORTGAGE NOTES PAYABLE - Future minimum payments (Details) - Mortgage Notes Payable [Member] | Jun. 30, 2019USD ($) |
Mortgage Notes Payable [Line Items] | |
2020 | $ 4,431,000 |
2021 | 1,557,000 |
2022 | 1,642,000 |
2023 | 1,732,000 |
2024 | 107,404,000 |
Thereafter | 295,000 |
Long-term Debt | $ 117,061,000 |
MORTGAGE NOTES PAYABLE - Additi
MORTGAGE NOTES PAYABLE - Additional information (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Jul. 31, 2019 | Jun. 30, 2019 | |
Mortgage Notes Payable [Line Items] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Periodic Payment Terms, Description | The term of the loan is 10 years with interest only due in the first three years and principal and interest on the remaining seven years of the loan based on a thirty-year amortization schedule. | |
Mezzanine Loan [Member] | ||
Mortgage Notes Payable [Line Items] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Face Amount of Mortgages | $ 20,000,000 | $ 20,000,000 |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Interest Rate | 7.25% | 9.75% |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Final Maturity Date | Jan. 1, 2024 | Jan. 1, 2024 |
Guarantor Obligations, Current Carrying Value | $ 20,000,000 | |
Mortgage Loans [Member] | ||
Mortgage Notes Payable [Line Items] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Face Amount of Mortgages | $ 97,000,000 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Interest Rate | 5.275% | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Final Maturity Date | Jan. 1, 2024 | |
Guarantor Obligations, Current Carrying Value | $ 97,000,000 |
MANAGEMENT AGREEMENTS (Details)
MANAGEMENT AGREEMENTS (Details) - USD ($) | Feb. 03, 2017 | Feb. 03, 2017 | Jun. 30, 2019 | Jun. 30, 2018 |
Management Agreement [Line Items] | ||||
Key Money Incentive Advance To Related Party | $ 2,000,000 | |||
Management Agreement, Term | 10 years | |||
Key Money Contribution Amortization Period | 8 years | |||
Restricted Cash And Related Party Note Payable | $ 2,000,000 | $ 2,000,000 | ||
Unamortized Portion Of Key Money | 1,896,000 | 2,000,000 | ||
Interstate Management Company, LLC [Member] | ||||
Management Agreement [Line Items] | ||||
Management Fee | 1,206,000 | $ 957,000 | ||
Key Money Incentive Advance To Related Party | $ 2,000,000 | |||
Management Agreement, Term | 10 years | |||
Management Agreement, Renewal Term | 5 years |
CONCENTRATION OF CREDIT RISK (D
CONCENTRATION OF CREDIT RISK (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Concentration Risk [Line Items] | ||
Accounts Receivable, Net | $ 848,000 | $ 1,799,000 |
Hotel [Member] | Accounts Receivable [Member] | One Customer [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 32.00% | |
Accounts Receivable, Net | $ 272,000 | |
Hotel [Member] | Accounts Receivable [Member] | Two Customer [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 32.00% | |
Accounts Receivable, Net | $ 572,000 |
INCOME TAXES - provision for in
INCOME TAXES - provision for income tax benefit (expense) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Federal | ||
Current tax benefit (expense) | $ 122,000 | $ (167,000) |
Deferred tax benefit (expense) | 1,168,000 | (4,976,000) |
Federal Income Tax Expense (Benefit), Continuing Operations | 1,290,000 | (5,143,000) |
State | ||
Current tax benefit (expense) | 44,000 | (51,000) |
Deferred tax benefit (expense) | 75,000 | (792,000) |
State and Local Income Tax Expense (Benefit), Continuing Operations | 119,000 | (843,000) |
Total income tax benefit (expense) | $ 1,409,000 | $ (5,986,000) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory federal income tax rate (Details) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
INCOME TAXES | ||
Statutory federal tax rate | 21.00% | 27.60% |
State income taxes, net of federal tax benefit | 7.40% | 6.40% |
Valuation allowance | (85.00%) | 3.80% |
Change in federal tax rate | 0.00% | 31.70% |
Other | 1.10% | 0.10% |
Effective Income Tax Rate Reconciliation, Percent | (55.50%) | 69.60% |
INCOME TAXES - Company's deferr
INCOME TAXES - Company's deferred tax assets and (liabilities) (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Deferred tax assets | ||
Net operating loss carryforward | $ 6,809,000 | $ 7,462,000 |
Investment reserve | 1,295,000 | 1,276,000 |
Capital loss carryforward | 714,000 | 685,000 |
Tax Credits | 605,000 | 733,000 |
Unrealized gains on marketable securities | 797,000 | 648,000 |
Charitable Contributions | 104,000 | 55,000 |
Accrued vacation | 13,000 | 10,000 |
Interest expense | 162,000 | 0 |
Valuation allowance | (524,000) | (2,610,000) |
Deferred Tax Assets, Net of Valuation Allowance | 9,975,000 | 8,259,000 |
Deferred tax liabilities | ||
Basis difference in Justice | (2,636,000) | (2,166,000) |
Depreciation and amortization | (616,000) | (625,000) |
State taxes | (321,000) | (309,000) |
Deferred Tax Liabilities, Gross | (3,573,000) | (3,100,000) |
Net deferred tax assets | $ 6,402,000 | $ 5,159,000 |
INCOME TAXES - Additional infor
INCOME TAXES - Additional information (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
INCOME TAXES | ||
Deferred Tax Assets, Operating Loss Carryforwards, Domestic | $ 25,446,000 | |
Deferred Tax Assets, Operating Loss Carryforwards, State and Local | 16,583,000 | |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 2,086,000 | $ 778,000 |
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ 2,723,000 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 27.60% |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) | 12 Months Ended | |
Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | |
Recovery of legal settlement costs | ||
Number of Reportable Segments | segment | 3 | |
Number of Operating Segments | segment | 3 | |
Revenues | $ 60,205,000 | $ 57,434,000 |
Segment income (loss) | 11,891,000 | 18,798,000 |
Recovery of legal settlement costs | 0 | 5,775,000 |
Interest expense - mortgage | (7,864,000) | (7,893,000) |
Loss on disposal of assets | 398,000 | 0 |
Depreciation and amortization expense | (2,515,000) | (2,711,000) |
Income tax benefit (expense) | 1,409,000 | (5,986,000) |
Net income (loss) | 4,264,000 | 3,418,000 |
Total assets | 73,952,000 | 70,503,000 |
Operating Segments [Member] | ||
Recovery of legal settlement costs | ||
Revenues | 60,205,000 | 57,434,000 |
Segment operating expenses | (45,799,000) | (41,700,000) |
Segment income (loss) | 14,406,000 | 15,734,000 |
Recovery of legal settlement costs | 5,775,000 | |
Interest expense - mortgage | (7,864,000) | (7,893,000) |
Loss on disposal of assets | (398,000) | |
Depreciation and amortization expense | (2,515,000) | (2,711,000) |
Loss from investments | (774,000) | (1,501,000) |
Income tax benefit (expense) | 1,409,000 | (5,986,000) |
Net income (loss) | 4,264,000 | 3,418,000 |
Total assets | 73,952,000 | 70,503,000 |
Hotel [Member] | Operating Segments [Member] | ||
Recovery of legal settlement costs | ||
Revenues | 59,881,000 | 57,099,000 |
Segment operating expenses | (44,466,000) | (40,103,000) |
Segment income (loss) | 15,415,000 | 16,996,000 |
Recovery of legal settlement costs | 5,775,000 | |
Interest expense - mortgage | (7,634,000) | (7,806,000) |
Loss on disposal of assets | (398,000) | |
Depreciation and amortization expense | (2,405,000) | (2,606,000) |
Loss from investments | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Net income (loss) | 4,978,000 | 12,359,000 |
Total assets | 58,648,000 | 54,417,000 |
Real Estate Operations [Member] | Operating Segments [Member] | ||
Recovery of legal settlement costs | ||
Revenues | 324,000 | 335,000 |
Segment operating expenses | (218,000) | (193,000) |
Segment income (loss) | 106,000 | 142,000 |
Recovery of legal settlement costs | 0 | |
Interest expense - mortgage | (230,000) | (87,000) |
Loss on disposal of assets | 0 | |
Depreciation and amortization expense | (110,000) | (105,000) |
Loss from investments | 0 | 0 |
Income tax benefit (expense) | 0 | 0 |
Net income (loss) | (234,000) | (50,000) |
Total assets | 4,866,000 | 4,961,000 |
Investment Transactions [Member] | Operating Segments [Member] | ||
Recovery of legal settlement costs | ||
Revenues | 0 | 0 |
Segment operating expenses | 0 | 0 |
Segment income (loss) | 0 | 0 |
Recovery of legal settlement costs | 0 | |
Interest expense - mortgage | 0 | 0 |
Loss on disposal of assets | 0 | |
Depreciation and amortization expense | 0 | 0 |
Loss from investments | (774,000) | (1,501,000) |
Income tax benefit (expense) | 0 | 0 |
Net income (loss) | (774,000) | (1,501,000) |
Total assets | 3,030,000 | 4,913,000 |
Other Property [Member] | Operating Segments [Member] | ||
Recovery of legal settlement costs | ||
Revenues | 0 | 0 |
Segment operating expenses | (1,115,000) | (1,404,000) |
Segment income (loss) | (1,115,000) | (1,404,000) |
Recovery of legal settlement costs | 0 | |
Interest expense - mortgage | 0 | 0 |
Loss on disposal of assets | 0 | |
Depreciation and amortization expense | 0 | 0 |
Loss from investments | 0 | 0 |
Income tax benefit (expense) | 1,409,000 | (5,986,000) |
Net income (loss) | 294,000 | (7,390,000) |
Total assets | $ 7,408,000 | $ 6,212,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jul. 02, 2014 | Jun. 30, 2019 | Jun. 30, 2018 | |
Related Party Transaction [Line Items] | |||
Costs and Expenses, Related Party | $ 144,000 | $ 144,000 | |
Payment for Management Fee | 200,000 | ||
Management Fee Payable | 200,000 | ||
Intergroup [Member] | |||
Related Party Transaction [Line Items] | |||
Payments of Ordinary Dividends, Noncontrolling Interest | $ 4,250,000 | ||
Debt Instrument, Debt Default, Amount | 3,000,000 | $ 3,000,000 | |
Justice [Member] | |||
Related Party Transaction [Line Items] | |||
Payment for Management Fee | $ 1,550,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | May 31, 2018 | |
Commitments And Contingencies Disclosure [Line Items] | |||
Franchise Agreements Expiry Period | 15 years | ||
Hotel Franchise Expenses | $ 4,100,000 | $ 3,800,000 | |
Reduction In Legal Expenses | 2,725,000 | ||
Recovery Of Legal Settlement Costs | $ 0 | 5,775,000 | |
Gain Contingency, Unrecorded Amount | $ 8,300,000 | ||
Respondents [Member] | |||
Commitments And Contingencies Disclosure [Line Items] | |||
Recovery Of Legal Settlement Costs | $ 5,575,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Jul. 31, 2019 | Jun. 30, 2019 | |
Subsequent Event [Member] | Revolving Credit Facility [Member] | ||
Line of Credit Facility, Current Borrowing Capacity | $ 5,000,000 | |
Line of Credit Facility, Increase (Decrease), Net | 3,000,000 | |
Proceeds from Lines of Credit | 2,969,000 | |
Mezzanine Loan [Member] | ||
Mezzanine Loan Amount | $ 20,000,000 | $ 20,000,000 |
Mezzanine Loan Interest Rate | 7.25% | 9.75% |
Mezzanine Loan Maturity Date | Jan. 1, 2024 | Jan. 1, 2024 |
Mezzanine Loan [Member] | Subsequent Event [Member] | ||
Mezzanine Loan Amount | $ 20,000,000 | |
Mezzanine Loan Interest Rate | 7.25% | |
Mezzanine Loan Maturity Date | Jan. 1, 2024 |