Company: INTG
Filing Date: 2025-09-30
Form Type: 10-K
Source: 0001493152-25-016154
Chunk: 181

Company: INTERGROUP CORP
Filing Date: 2025-09-30
Form: 10-K
Item: Item 7A
Chunk 181
---
 an annual incentive fee for each fiscal year equal to ten percent (10%) of the amount by which Gross Operating Profit (“GOP”,
as defined in the HMA) in the current fiscal year exceeds the previous fiscal year’s GOP.

For
the fiscal years ended June 30, 2025 and 2024, hotel management fees were $783,000 and $706,000, respectively with incentive fees of
$0, for both years, offset by key money amortization of $250,000 for both years that is included in Hotel operating expenses in the consolidated
statements of operations. Following discussions with Aimbridge regarding the impact of the COVID-19 pandemic on incentive fee eligibility,
the parties agreed that no incentive fees were payable for fiscal years 2019 through 2023. Specifically, Aimbridge agreed to waive $1,030,134
in previously recorded incentive fees, and both parties established a performance threshold for future incentive fee eligibility of $15,257,301
in earnings before interest, taxes, depreciation, and amortization (“EBITDA”) representing the EBITDA in 2017 when Aimbridge
began managing the Hotel. As a result, Operating recorded a reduction in Hotel operating expenses of $1,030,134 for the year ended June
30, 2025. Future incentive fees, if any, will be recognized when earned in accordance with the HMA. See also Note 9 – Other Financing
Transactions for information of the key money arrangement and related amortization. Under the HMA, Aimbridge, through Kearny Street Parking,
LLC, an indirect wholly owned subsidiary, manages the parking garage operations.

InterGroup
Real Estate Portfolio Management

In
contrast to the Hotel’s third-party HMA, InterGroup’s multifamily and commercial real estate portfolio is managed in-house.
Property-level operations, leasing, maintenance, and capital planning are overseen by the Company personnel rather than an external property
manager. This structure provides direct owner oversight and avoids third-party property management and asset management fees that would
otherwise be incurred; related payroll and benefits are recorded within real estate operating expenses. With this approach, management
has experienced enhanced responsiveness and cost control which are reflected in the consolidated operating statements.

NOTE
12 – CONCENTRATION OF CREDIT RISK

As
of June 30, 2025 and 2024, receivables related to Hotel customers were $396,000 and $519,000, respectively. Credit extended to tenants
at the Company’s