Company: INTG
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006758
Chunk: 10

Company: INTERGROUP CORP
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 10
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zzanine. Mezzanine is the
borrower under certain mezzanine indebtedness of Portsmouth. In December 2013, the Partnership conveyed ownership of the Hotel to Operating.
The Hotel is a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (“Hilton”)
through January 31, 2030.

Aimbridge
Hospitality (“Aimbridge”) manages the Hotel, along with its five-level parking garage, under certain Hotel management agreement
(“HMA”) with Operating. The term of the management agreement is for an initial period of ten years commencing on the February
3, 2017 date and automatically renews for successive one (1) year periods, to not exceed five years in the aggregate, subject to certain
conditions. Under the terms of the HMA, base management fee payable to Aimbridge shall be one and seven-tenths percent (1.70%) of total
Hotel revenue. In addition to the base management fee, Aimbridge shall be entitled to an annual incentive fee for each fiscal year equal
to ten percent (10%) of the amount by which Gross Operating Profit in the current fiscal year exceeds the previous fiscal year’s
Gross Operating Profit.

    -8-

However,
the Company after discussions with Aimbridge regarding a dispute in connection with the validity of the incentive fees as they relate
directly to the Covid pandemic, the Company and Aimbridge agreed that there were no incentive fees due to Aimbridge as the year-over-year
improvement resulted of the recovery from the pandemic. Therefore, Aimbridge agreed to waive $1,030,134 that was previously recorded
and agreed to establish a performance threshold of $15,257,301 earnings before interest, tax, depreciation, and amortization (“EBITDA”)
that would be otherwise payable with respect to fiscal years 2019 through 2023. The waive reduction was made as of September 30, 2024.

In
addition to the operations of the Hotel, the Company also generates income from the ownership of real estate. Properties include apartment
complexes, commercial real estate, and three single-family houses as strategic investments. The properties are located throughout the
United States but are concentrated in Texas and Southern California. The Company also has investments in unimproved real property. All
the Company’s residential rental properties and its commercial rental property are managed in-house.

There
have been no material changes to the Company’s significant accounting policies during