InterGroup Corporation — FY2026 Form 10-K
Reporting period: Year ended June 30, 2026; comparisons are with FY2025. InterGroup owns approximately 75.9% of Portsmouth Square, whose principal asset is the 558-room Hilton San Francisco Financial District. The Company also owns a multifamily and commercial real estate portfolio and invests in securities.
Financial performance
| Metric | FY2026 | FY2025 | Change |
|---|---|---|---|
| Total revenue | $73.951 million | $64.378 million | Up 14.9% |
| Income from operations | $11.866 million | $7.643 million | Up $4.223 million |
| Consolidated net income (loss) | $336,000 | ($7.547 million) | Improved $7.883 million |
| Net income (loss) attributable to InterGroup | $1.643 million | ($5.348 million) | Improved $6.991 million |
| Net cash from operating activities | $3.450 million | $5.893 million | Down $2.443 million |
| Interest expense on mortgages and mezzanine loans | $12.666 million | $13.556 million | Down $890,000 |
Hotel revenue rose 20.4% to $55.797 million; hotel segment income increased to $12.524 million from $8.732 million. Average daily rate was $253 versus $218, occupancy was 95% versus 92%, and RevPAR was $239 versus $200. Hotel operating expenses increased $5.642 million to $43.273 million, including higher labor and franchise-related costs; FY2025 expenses had benefited from a $1.030 million Aimbridge incentive-fee waiver.
Real estate revenue increased to $18.154 million from $18.015 million, while segment income rose to $8.853 million from $8.465 million. Marketable-securities operations recorded a $213,000 net loss, improved from a $2.502 million loss. Results also included a $3.508 million gain on the December 2025 sale of a 12-unit property and a $124,000 insurance recovery. FY2025 included a $1.416 million gain on debt extinguishment that did not recur.
Balance sheet, debt and liquidity
- At June 30, 2026, cash and cash equivalents were $6.356 million, restricted cash $10.943 million, and marketable securities $4.394 million. Restricted cash is generally unavailable for unrestricted corporate use. Total cash, cash equivalents and restricted cash were $17.299 million, up from $15.195 million.
- Total assets were $104.618 million; total liabilities were $218.615 million. Shareholders’ deficit was $113.997 million.
- Mortgage and mezzanine debt carrying value was $102.535 million for the Hotel and $90.696 million for non-Hotel real estate. Other notes payable were $1.413 million. Contractual debt maturities totaled $194.722 million, including $104.859 million scheduled in FY2027.
- The Hotel’s $67.0 million senior mortgage and $36.3 million mezzanine loan mature April 9, 2027, with extension options subject to conditions. Management calculated a 1.45:1.00 DSCR at June 30, 2026 against the 1.10:1.00 threshold for the first extension and expects to extend through April 9, 2028. Lender determination and other conditions still apply.
- Hotel receipts remain in a lender-controlled cash-management arrangement. Although management-calculated DSCR and Debt Yield exceeded stated release thresholds, the lender had not confirmed release conditions were met.
- Operating cash flow was $3.450 million. Investing activities provided $1.762 million, including $4.472 million net proceeds from the property sale; financing activities used $3.108 million. Capital expenditures were $2.198 million at the Hotel and $968,000 for other real estate.
Outlook, risks and unusual items
- Management believes liquidity sources and financing arrangements are sufficient for at least 12 months after issuance of the financial statements. This outlook depends on operating performance, debt-extension conditions, interest rates, capital needs and refinancing availability.
- The pedestrian bridge connecting the Hotel to Portsmouth Square was removed in August 2026. The Hotel closed from July 31 through August 9 and reopened August 10. Portsmouth is responsible for permanent Kearny Street entrance improvements; their cost is not yet reliably estimable. A July 2026 term sheet with the City provides for certain payments to Portsmouth, subject to repayment obligations beginning in 2029; a definitive settlement was still being negotiated.
- InterGroup extended its $40 million revolving facility to Portsmouth from July 2027 to July 2029. The $38.108 million outstanding balance is eliminated in consolidation and is not an external consolidated liquidity source.
- Key risks include dependence on one hotel in San Francisco, local travel and convention demand, substantial debt and refinancing exposure, rising labor and operating costs, hotel capital requirements, rent regulation, and reliance on Hilton and Aimbridge. Two securities represented approximately 43% of the marketable-equity portfolio’s fair value.
- The Company reported no material cybersecurity incidents in FY2026. Management concluded disclosure controls and internal control over financial reporting were effective and that a previously reported stock-compensation material weakness had been remediated. The 2026 audit opinion was unqualified and reported no critical audit matters; the auditor did not attest to internal control.
- Income tax expense was $2.283 million despite consolidated pretax income of $2.619 million. A $41.035 million valuation allowance remained against deferred tax assets. No impairment losses were recorded on Hotel or real estate assets.
Most important facts for investors to verify
- Whether the Hotel satisfies all lender requirements for the 2027 maturity extension, including the lender’s DSCR calculation, and whether cash-management restrictions are released.
- The definitive City settlement terms, repayment obligations, and total cost and timing of the Hotel entrance work after bridge removal.
- Whether improved Hotel demand and margins persist after the room conversion and the temporary closure, given rising expenses and San Francisco market concentration.
- Debt maturity and refinancing needs, especially the $104.859 million of contractual maturities in FY2027, and the availability of unrestricted liquidity.
- The sustainability of reported earnings excluding the property-sale gain, insurance recovery and volatile securities results, as well as the realizability of tax assets.