Company: INTG
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010724
Chunk: 46

Company: INTERGROUP CORP
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 46
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, in January 2024. In response,
Portsmouth entered into forbearance agreements with both lenders on April 29, 2024, which temporarily extended the loan maturity dates
to January 1, 2025, allowing time to pursue long-term refinancing.

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Despite
Portsmouth’s continued efforts, including active negotiations and timely debt service payments, the forbearance periods expired
without full repayment. As a result, the senior loan servicer issued a Notice of Termination on January 3, 2025, and the mezzanine lender
issued a subsequent Notice of Default on January 14, 2025. These notices reinstated the lenders’ full rights and remedies, including
acceleration and foreclosure actions.

On
March 28, 2025, Portsmouth completed a refinancing of its senior debt through a new $67.0 million mortgage loan with PRIME Finance. The
mortgage loan bears interest at a floating rate equal to 30-day SOFR plus 4.75%, subject to an interest rate cap that limits SOFR to
4.50%. The loan has a two-year initial term with three one-year extension options, subject to meeting certain financial and operational
covenants.

Simultaneously,
Portsmouth modified its mezzanine loan agreement with CRED Reit Holdco LLC, restructuring the outstanding mezzanine balance into a $36.3
million fixed-rate facility bearing interest at 7.25% per annum. The mezzanine loan shares the same maturity profile and extension structure
as the senior mortgage loan.

Management
believes that the successful refinancing materially improves Portsmouth’s near-term liquidity position and provides a stable capital
structure to support ongoing operations. Nevertheless, Portsmouth continues to face adverse macroeconomic and industry-specific conditions,
including persistently high interest rates, suppressed business travel demand in the San Francisco market, and elevated labor costs.
These factors, combined with uncertainty regarding future refinancing at maturity, create significant risks to Portsmouth’s cash
flows and financial flexibility.

While
Portsmouth has maintained compliance with debt service requirements and completed major renovations to enhance asset competitiveness,
including the ongoing lobby renovation and restoration of 14 guest rooms expected to return to inventory by June 30, 2025, management
cannot provide assurance that operating cash flows will be sufficient to meet all future obligations or that refinancing or extension
options will be available on favorable terms, if at all.

As
a result, management has concluded that substantial doubt exists about Portsmouth