Company: INTG
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010724
Chunk: 110

Company: INTERGROUP CORP
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 2
Chunk 110
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PAR—there can be no
assurance that unforeseen market or operational conditions will not adversely affect the Company’s liquidity position.

The
Company continues to evaluate strategic alternatives and operational adjustments in response to ongoing macroeconomic and market-specific
challenges in San Francisco’s hospitality sector.

Going
Concern

The
condensed consolidated financial statements of Portsmouth for the quarter ended March 31, 2025, have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. However,
as described below, certain conditions and events raise substantial doubt about Portsmouth’s ability to continue as a going concern
within one year following the issuance of these financial statements.

As
of March 31, 2025, Portsmouth had outstanding obligations under a senior mortgage loan and mezzanine loan that had previously matured
on January 1, 2024, with an aggregate principal balance of $100.3 million. Following the maturity date, Portsmouth received default notices
from both the senior loan servicer, LNR Partners, LLC, and the mezzanine lender, CRED Reit Holdco LLC, 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.

-27-

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