INTERGROUP CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

NOTE 1 -BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Description of the Business

The InterGroup Corporation, a Delaware corporation (“InterGroup” or the “Company”), was formed to buy, develop, operate and dispose of real property and to engage in various investment activities for the benefit of the Company and its shareholders.

Portsmouth owns and operates the Hilton San Francisco Financial District, a 558-room full-service hotel located at 750 Kearny Street in San Francisco, California, together with a five-level underground parking garage (collectively, the “Hotel”). Effective September 30, 2025, the Hotel’s available room inventory increased from 544 to 558 rooms following the conversion of 14 former administrative office spaces into guestrooms.

Justice Operating Company, LLC (“Operating”) an indirectly wholly owned subsidiary of Portsmouth, owns the Hotel. The Hotel operates under a franchise agreement with HLT Franchise Holding LLC (“Hilton”) through January 31, 2030.

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

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, including Portsmouth and Portsmouth’s subsidiaries. The Company owns approximately 75.9% of Portsmouth’s outstanding common stock, and the portion of Portsmouth’s net assets and results of operations not attributable to InterGroup is presented as noncontrolling interest. All significant intercompany transactions and balances have been eliminated. The Company evaluates its interests in other entities to determine whether such entities are variable interest entities (“VIEs”) and consolidates any VIEs for which the Company is the primary beneficiary pursuant toASC 810,Consolidation.

Investment in Hotel, Net

Property and equipment are stated at cost. Building and improvements are depreciated on a straight-line basis over their useful lives ranging from 15 to 39 years. Furniture, fixtures, and equipment are depreciated on a straight-line basis over their useful lives ranging from 3 to 7 years.

Repairs and maintenance are charged to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over their estimated useful lives. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts; any resulting gain or loss is included in other income (expense).

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability is evaluated by comparing the carrying amount of the asset or asset group with the estimated undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount is not recoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds fair value. No impairment losses were recorded for the years ended June 30, 2026 and 2025.

Investment in Real Estate, Net

Rental properties are stated at cost less accumulated depreciation. Depreciation of rental property is provided on the straight-line method based upon estimated useful lives of 5 to 40 years for buildings and improvements and 5 to 10 years for equipment. Expenditures for repairs and maintenance are charged to expense as incurred and major improvements are capitalized.

The Company also reviews its rental property assets for impairment. No impairment losses on the investment in real estate have been recorded for the years ended June 30, 2026 and 2025.

The cost of acquired real estate is allocated to land, buildings and improvements and other tangible assets, as applicable, and depreciable assets are depreciated on a straight-line basis over their estimated useful lives.

Investment in Marketable Securities

Marketable equity securities are measured at fair value based on quoted market prices, with changes in fair value recognized in earnings.

Cash and Cash Equivalents

The Company considers highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

Restricted cash consists of amounts held in lender-controlled accounts for real estate taxes, insurance, capital expenditures and other reserves required under the Company’s Hotel and other real estate financing arrangements.

Other Assets

Other assets include prepaid insurance, accounts receivable, prepaid expenses, and other miscellaneous assets.

Accounts receivable from the Hotel and rental property customers are stated at amounts expected to be collected, net of an allowance for credit losses measured under ASC 326 using historical loss experience, current conditions and reasonable and supportable forecasts. Receivables deemed uncollectible are written off against the allowance.

The Company extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. Collection experience may be affected by local tenant-protection measures and economic conditions in the markets in which we operate.

Due to Securities Broker

The Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. Various securities brokers have advanced funds to the Company for the purchase of marketable securities under standard margin agreements. These advanced funds are recorded as a liability and are collateralized by the related marketable securities; related interest is recognized in trading and margin interest expense.

Obligation for Securities Sold

Obligations for securities sold short and written options are recognized as liabilities and measured at fair value with changes in fair value recognized in earnings. Short positions may be covered with current holdings or subsequent purchases.

Accounts Payable and Other Liabilities

Accounts payable and other liabilities include trade payables, advanced customer deposits, accrued wages, accrued real estate taxes, and other liabilities.

Treasury Stock

The Company records the acquisition of treasury stock under the cost method. During the years ended June 30, 2026 and 2025, the Company purchased 5,593 and 24,550 shares of treasury stock, respectively.

Assets Held for Sale – Accounting Policy (Continuing Operations)

Long-lived assets are classified as held for sale when management commits to a plan to sell, the assets are available for immediate sale in their present condition, an active program to locate a buyer has been initiated, the sale is probable and expected to be completed within one year, and it is unlikely that the plan will be significantly changed or withdrawn.

Upon classification as held for sale, the assets are measured at the lower of their carrying amount or fair value less costs to sell. Any loss resulting from remeasurement is recognized in the consolidated statements of operations. Depreciation of assets classified as held for sale ceases at the time of classification.

Assets meeting the held-for-sale criteria are presented separately in the consolidated balance sheets. A disposal is reported within discontinued operations only when it represents a strategic shift that has or will have a major effect on the Company’s operations or financial results; otherwise, the results of the property remain within continuing operations.

Interest Rate Cap

The Company accounts for interest rate cap agreements as derivative instruments recognized in the consolidated balance sheets at fair value and remeasured at each reporting date.

All changes in fair value are recognized in earnings within other income (expense). The Company is required, pursuant to certain debt agreements, to maintain interest rate caps for specified periods or replace them upon expiration.

Revenue Recognition

The Company recognizes revenue in accordance withASC 606,Revenue from Contracts with Customers(Hotel and ancillary services) andASC 842,Leases(real estate leasing).

Hotel revenue consists primarily of room, food and beverage, parking and other ancillary revenue. Room revenue is recognized over the period rooms are occupied, and food and beverage, parking and other ancillary revenue is recognized when the related goods or services are provided. For arrangements containing multiple performance obligations, the transaction price is allocated to each performance obligation based on relative standalone selling prices.

Amounts received in advance are recorded as contract liabilities and recognized as revenue as the related performance obligations are satisfied. The Company does not disclose remaining performance obligations for contracts with an original expected duration of one year or less. See Note 3 – Revenue.

Rental income from the Company’s residential and commercial properties is recognized on a straight-line basis over the applicable lease term. Residential leases generally do not extend beyond one year. Variable consideration, including fees and reimbursements, is recognized as earned.

Advertising Costs

Advertising costs are expensed as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising costs were $164,000 and $263,000 for the years ended June 30, 2026 and 2025, respectively.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities and for tax carryforwards, using enacted tax rates expected to apply when the differences reverse. A valuation allowance is recognized when, based on available evidence, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes the tax benefit of an uncertain tax position only when it is more likely than not, based on its technical merits, that the position will be sustained upon examination. The recognized tax benefit is measured as the largest amount that is greater than 50% likely to be realized upon settlement. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense. See Note 13 – Income Taxes.

Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions.

Earnings Per Share

Basic net income (loss) per share attributable to InterGroup is computed by dividing net income (loss) attributable to InterGroup by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur if outstanding stock options or other potentially dilutive securities were exercised or converted into common stock. Stock options are included in diluted earnings per share using the treasury stock method when their effect is dilutive and are excluded when their effect is antidilutive.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures. Actual results may differ from those estimates.

Debt Issuance Costs

Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability and are amortized over the life of the debt. Amortization of debt issuance costs is included in interest expense in the consolidated statements of operations.

Recently Issued and Adopted Accounting Pronouncements

The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, effective July 1, 2025. The adoption did not affect the Company’s consolidated financial position, results of operations or cash flows and resulted in expanded income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as subsequently clarified by ASU 2025-01. The amendments require additional disaggregation of certain expense captions and are effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact on its disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient for estimating expected credit losses on certain current accounts receivable and contract assets and are effective for annual reporting periods beginning after December 15, 2025 and interim periods within those annual reporting periods. Accordingly, the guidance is effective for the Company beginning July 1, 2026. The Company is evaluating the impact of the guidance.

Other recently issued accounting pronouncements are not expected to have a material effect on the Company’s consolidated financial statements.

NOTE 2 –LIQUIDITY

The Company’s principal sources of liquidity are cash on hand, cash flows generated from its real estate and Hotel operations, marketable securities and property-level financing. As of June 30, 2026, the Company had cash and cash equivalents of $6.356 million, restricted cash of $10.943 million and marketable securities with a fair value of $4.394 million. The Company also had $427,000 due to a securities broker and $272,000 of obligations for securities sold, which are presented separately as liabilities in the consolidated balance sheet. The Company generated $3.450 million of net cash from operating activities during fiscal 2026.

Restricted cash primarily consists of amounts maintained in lender-controlled accounts for operating expenses, debt service and required reserves and is not generally available for unrestricted corporate purposes.

Senior Mortgage and Mezzanine Financing

Portsmouth’s $67.0 million senior mortgage loan and $36.3 million mezzanine loan have an initial maturity date of April 9, 2027 and provide for three one-year extension options, subject to specified conditions. As of June 30, 2026, Portsmouth was in compliance with all applicable loan covenants.

For the first one-year extension through April 9, 2028, the senior mortgage loan requires, among other conditions, a Debt Service Coverage Ratio (“DSCR”) of at least 1.10:1.00, measured as provided in the loan agreement. Based on management’s application of the methodology set forth in the loan agreement, Portsmouth’s calculated DSCR was approximately 1.45:1.00 as of June 30, 2026, compared with the 1.10:1.00 requirement applicable to the first extension. Because DSCR is ultimately determined by the lender under the loan agreement, the lender’s calculation may differ from management’s calculation. If the required DSCR is not satisfied at the applicable measurement date, the loan agreement permits Portsmouth, subject to its terms, to deposit additional funds into the lender-controlled Carry Reserve in an amount sufficient to satisfy the DSCR condition.

No Debt Yield requirement applies to the first extension. The first extension also requires, among other conditions, the absence of specified defaults or events of default, extension or replacement of the required interest-rate protection and a corresponding extension of the mezzanine loan. Management currently expects to satisfy the applicable conditions and exercise the first one-year extension option through April 9, 2028.

The Company expects to fund its ordinary-course operating expenses, debt service, required reserves and capital expenditures through existing cash, operating cash flows and available financing arrangements. The Company’s liquidity remains subject to Hotel and real estate operating performance, interest rates, capital requirements, debt-extension conditions and the availability of refinancing.

Related Party Financing

The Company provides Portsmouth with an unsecured revolving credit facility with total borrowing capacity of $40.0 million. The facility bears interest at 9% per annum, is prepayable without penalty, and requires payment of principal and accrued interest at maturity. As of June 30, 2026, $38.108 million was outstanding, and Portsmouth had $1.892 million of remaining borrowing capacity. Portsmouth made no additional borrowings under the facility during fiscal 2026, following the March 28, 2025 refinancing.

In August 2026, the Company and Portsmouth amended the facility to extend itsmaturity date from July 31, 2027 to July 31, 2029. All other material terms remained unchanged. The related balances and transactions are eliminated in consolidation. Accordingly, the facility provides liquidity to Portsmouth within the consolidated group but does not constitute an external source of liquidity to the Company on a consolidated basis.

Cash Management and Distribution Restrictions (Hotel Subsidiary)

Under Portsmouth’s March 28, 2025 senior mortgage loan, Hotel cash receipts are deposited into lender-controlled accounts pursuant to a cash-management arrangement. The cash-management arrangement is separate from Portsmouth’s compliance with its loan covenants and from the conditions applicable to the first extension. Release from the cash-management arrangement requires, among other conditions, the lender to determine that the Hotel has achieved a Debt Yield of at least 11% and a DSCR of at least 1.10:1.00 for two consecutive applicable calculation dates.

Based on management’s application of the methodology set forth in the loan agreement, the Hotel’s calculated trailing-twelve-month DSCR and Debt Yield were approximately 1.45:1.00 and 13.9%, respectively, as of June 30, 2026. Although these calculations exceeded the applicable financial thresholds, satisfaction of the release conditions is determined by the lender, and the lender had not confirmed that the applicable release conditions had been satisfied as of June 30, 2026. Accordingly, the cash-management arrangement remained in effect. The continued operation of the cash-management arrangement does not constitute a default or noncompliance with Portsmouth’s loan covenants. Funds in the cash-management arrangement are applied to operating expenses, debt service, lender-required reserves and other amounts in accordance with the applicable loan documents.

Liquidity Outlook

Management expects to meet the Company’s liquidity requirements through cash on hand, operating cash flows and its existing financing arrangements. As of June 30, 2026, Portsmouth was in compliance with all applicable covenants under its senior mortgage and mezzanine loan agreements, management’s calculated DSCR of approximately 1.45:1.00 exceeded the 1.10:1.00 requirement applicable to the first extension, and management expects to exercise the first one-year extension option.

Management believes the Company’s existing liquidity sources and financing arrangements are sufficient to meet its obligations for at least twelve months following issuance of these consolidated financial statements.

The Hotel debt and cash-management/lockbox reside at Portsmouth’s subsidiaries; while these provisions may limit distributions upstream to InterGroup while in effect, they do not impose liens on InterGroup’s non-Hotel properties. Portsmouth and InterGroup have provided limited guaranties of specified obligations under the Hotel’s senior mortgage and mezzanine financing, including customary non-recourse carve-outs, specified performance obligations and certain springing-recourse events. See Note 10 – Mortgage and Mezzanine Loans.

NOTE 3 –REVENUE

The following table presents the Company’s revenue disaggregated by major revenue streams:

Real estate revenue consists primarily of rental income from the Company’s multifamily and commercial properties and other property-related income.

Contract Assets and Liabilities

The Company had no material contract assets as of June 30, 2026 or 2025. Trade and other receivables arising from contracts with customers are presented separately in the consolidated balance sheets, net of the applicable allowance for credit losses.

Portsmouth records contract liabilities when cash payments are received or due in advance of guests staying at our hotel, which are presented within Accounts payable and other liabilities-Hotel on our consolidated balance sheets had an opening balance on July 1, 2025 of $505,000. As of June 30, 2026 contract liabilities were $472,000. The advance deposits received from customers for services to be performed after June 30, 2026.

Contract liabilities were $505,000 as of June 30, 2025 compared to $370,000 as of June 30, 2024. The increase for the twelve months ended June 30, 2025 was primarily driven by an increase in advance deposits received from customers for services to be performed after June 30, 2025. Contract liabilities are generally recognized as revenue within twelve months. The Company does not disclose the amount of remaining performance obligations for contracts with an original expected duration of one year or less.

Contract Costs

The Company applies the practical expedient that permits incremental costs of obtaining a contract to be expensed as incurred when the amortization period that otherwise would have applied is one year or less. Travel-agent and group booking commissions related to completed stays are expensed as incurred.

NOTE 4 –INVESTMENT IN HOTEL, NET

Investment in Hotel, net, consisted of the following:

Furniture and equipment are depreciated on a straight-line basis over estimated useful lives ranging from 3 to 7 years. Building and improvements are depreciated on a straight-line basis over estimated useful lives ranging from 15 to 39 years. Finance lease right-of-use assets are amortized over the applicable lease term. Depreciation and amortization expense related to Hotel assets was $3,741,000 and $3,634,000 for the years ended June 30, 2026 and 2025, respectively.

Note 4 reports Hotel depreciation and amortization of $3.741 million, while Note 14 – Segment Information reports $3.740 million. The $1,000 difference is due solely to rounding and does not represent an underlying accounting difference.

NOTE 5 -INVESTMENT IN REAL ESTATE, NET

At June 30, 2026, the Company’s investment in real estate consisted of twenty real estate holdings, consisting of nineteen operating properties located throughout the United States and approximately two acres of unimproved land in Maui, Hawaii. The operating properties include fifteen apartment complexes, three single-family houses and one commercial real estate property. The operating properties are held for use. See Note 10 for mortgage information and Note 1 for depreciation policies and impairment considerations.

Investment in real estate included the following:

Additions reflect capital improvements to the Company’s multifamily and commercial properties during the year. Depreciation expense reflects the change in accumulated depreciation for the period (from $55,146,000 to $58,198,000).

On February 24, 2025, the Company entered into a listing agreement to sell a 12-unit multifamily property located in Los Angeles County, California, and active marketing commenced in April 2025. The property met the criteria for classification as held for sale as of June 30, 2025 and was therefore excluded from Investment in real estate, net and presented separately as Assets held for sale in the June 30, 2025 consolidated balance sheet. The property was sold in December 2025 for $4.85 million, and the Company recognized a gain on sale of $3.508 million during the year ended June 30, 2026. See Note 18 – Disposition of Real Estate.

NOTE 6 -INVESTMENT IN MARKETABLE SECURITIES

As of June 30, 2026 and 2025, the Company’s marketable securities consisted of corporate equity securities. The Company may from time to time also invest in marketable debt securities and other income-producing securities.

Marketable equity securities are accounted for under ASC 321 and measured at fair value with changes in fair value recognized in earnings. Marketable debt securities, if held, are classified as trading securities under ASC 320 and measured at fair value with changes in fair value recognized in earnings. The following table summarizes cost and fair value information for marketable securities:

Net gain (loss) on marketable securities in the consolidated statements of operations comprises realized and unrealized components, as follows:

As of June 30, 2026, two individual equity securities collectively represented approximately 43% of the fair value of the Company’s marketable equity securities portfolio.

NOTE 7 -FAIR VALUE MEASUREMENTS

Fair value measurements are classified within a three-level hierarchy based on the observability of the inputs used. Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable inputs other than Level 1 quoted prices; and Level 3 inputs are significant unobservable inputs.

Assets measured at fair value on a recurring basis consisted of the following:

Marketable equity securities and obligations for securities sold are classified within Level 1 because their fair values are based on quoted prices in active markets for identical securities. See Note 6 – Investment in Marketable Securities.

The interest rate cap is classified within Level 2 because its fair value is determined using observable market inputs, including forward Term SOFR curves and implied volatility assumptions obtained from a third-party pricing service. The interest rate cap is not designated as a hedging instrument, and changes in its fair value are recognized in earnings. The interest rate cap had a notional amount of $67,000,000 as of June 30, 2026 and 2025 and is included in other assets in the consolidated balance sheets. See Note 10 – Mortgage and Mezzanine Loans.

There were no transfers between Levels 1, 2 and 3 during the periods presented, and there were no material changes in the Company’s fair value measurement methodologies.

NOTE 8 –OTHER ASSETS

Other assets consist of the following as of June 30:

Accounts receivable from the Hotel and rental property customers are carried at cost less allowance for credit losses measured under ASC 326 (CECL) using historical loss experience, current conditions, and reasonable and supportable forecasts. As of June 30, 2026, and 2025, the accounts receivable was $993,000 and $1,297,000, respectively, with related allowance of $503,000 and $772,000 at June 30, 2026 and 2025, respectively.

NOTE 9 –OTHER FINANCING TRANSACTIONS

The following summarizes the balances of other notes payable as of June 30, 2026 and 2025, respectively.

Hilton Development Incentive Note

The note payable to Hilton represents an interest-free development incentive note that is reduced by approximately $317,000 annually through 2030, subject to the Hotel remaining a Hilton franchisee. The outstanding balance was $1,267,000 and $1,583,000 as of June 30, 2026 and 2025, respectively.

Aimbridge Key Money

Operating received a $2,000,000 key-money contribution from Aimbridge under the Hotel management arrangement. The contribution is amortized in equal monthly amounts over an eight-year period beginning on the second anniversary of Aimbridge’s commencement of management services and is recognized as a reduction of Hotel operating expenses. The unamortized balance was $146,000 and $396,000 as of June 30, 2026 and 2025, respectively, and is included in other notes payable in the consolidated balance sheets. See Note 11 – Management Agreements.

Contractual Maturities and Scheduled Reductions

Contractual maturities and scheduled reductions of other notes payable as of June 30, 2026 were as follows:

NOTE 10 –MORTGAGE AND MEZZANINE LOANS

The Hotel senior mortgage and mezzanine loans are obligations of Portsmouth Square, Inc. (“Portsmouth”) subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), respectively. These loans are secured at the Hotel-subsidiary level and are generally non-recourse to InterGroup except for obligations covered by the guaranties described below. InterGroup’s non-Hotel real estate mortgages are obligations of InterGroup or its property-owning subsidiaries and are described separately below.

Obligor and recourse overview (as of and for the periods presented):

Current Senior Mortgage and Mezzanine Loans

On March 28, 2025, Justice Operating Company, LLC (“Operating”) entered into a $67,000,000 senior mortgage loan with Prime Finance Short Duration Holding Company 9, LLC (“Prime”), and Justice Mezzanine Company, LLC (“Mezzanine”) amended and restated its mezzanine loan with CRED REIT Holdco LLC in the principal amount of $36,300,000. The prior senior mortgage loan was repaid in full in connection with the refinancing.

The senior mortgage loan bears interest at a floating rate equal to the greater of 7.65% or Term SOFR plus 4.75% and is interest-only through its initial maturity date of April 9, 2027. The loan is secured by the Hotel. Operating is required to maintain interest-rate protection that currently caps Term SOFR at 4.50%. See Note 7 – Fair Value Measurements.

The mezzanine loan bears interest at a fixed rate of 7.25% through March 28, 2027 and 11.25% beginning March 29, 2027. It has an initial maturity date of April 9, 2027 and is secured by Mezzanine’s ownership interests in the entity that directly or indirectly owns Operating.

Extension Options

The senior mortgage and mezzanine loan agreements provide for three one-year extension options through April 9, 2028, April 9, 2029 and April 9, 2030, subject to satisfaction of specified conditions. Notice of an extension must generally be provided not less than 30 days and not more than 90 days before the then-scheduled maturity date.

For the first extension through April 9, 2028, the senior mortgage loan requires, among other conditions, a Debt Service Coverage Ratio (“DSCR”) of at least 1.10:1.00, calculated as of the last day of the calendar month immediately preceding the initial maturity date. The loan agreement expressly provides that no Debt Yield requirement applies to the first extension.

If DSCR is below 1.10:1.00 at the applicable first-extension measurement date, Operating may satisfy the DSCR condition by depositing additional funds into the lender-controlled Carry Reserve in an amount sufficient to achieve a pro forma DSCR of at least 1.10:1.00, provided the other extension conditions are satisfied or waived.

The second and third senior-loan extensions are subject to Debt Yield requirements of 13% and 14% and DSCR requirements of 1.40:1.00 and 1.50:1.00, respectively, together with the other conditions specified in the loan agreement. The mezzanine loan contains corresponding extension provisions, including the requirement that the senior mortgage loan be extended.

As of June 30, 2026, the Portsmouth and its applicable subsidiaries were in compliance with all applicable covenants under the senior mortgage and mezzanine loan agreements. Based on management’s application of the methodology set forth in the senior loan agreement, the Hotel’s calculated DSCR was approximately 1.45:1.00 as of June 30, 2026, compared with the 1.10:1.00 requirement applicable to the first extension. Management currently expects Portsmouth to exercise the first extension option. See Note 2 – Liquidity.

Cash Management Arrangement

Under the March 28, 2025, senior mortgage loan, Hotel cash receipts are deposited into lender-controlled accounts pursuant to a cash-management arrangement.

Release from the cash-management arrangement requires, among other conditions, Prime’s determination that the Hotel has achieved a Debt Yield of at least 11% and a DSCR of at least 1.10:1.00 for two consecutive applicable calculation dates.

Based on management’s application of the loan-agreement methodology, the Hotel’s calculated trailing-twelve-month DSCR and Debt Yield were approximately 1.45:1.00 and 13.9%, respectively, as of June 30, 2026. However, satisfaction of the cash-management release conditions is determined by Prime, and Prime had not confirmed that the applicable release conditions had been satisfied. Accordingly, the cash-management arrangement remained in effect as of June 30, 2026. The continued operation of the cash-management arrangement does not constitute a default or noncompliance with the Company’s loan covenants.

Funds in the cash-management arrangement are applied to operating expenses, debt service, lender-required reserves and other amounts in accordance with the applicable loan documents.

2025 Debt Extinguishment

The March 2025 amendment and restatement of the mezzanine loan was accounted for as a debt extinguishment under ASC 470-50. In connection with the transaction, CRED REIT Holdco LLC waived a $245,000 deferred forbearance fee and approximately $1,171,000 of accrued default interest. The Company recognized a gain on extinguishment of debt of approximately $1,416,000 during the year ended June 30, 2025.

Limited Guaranties

Under the March 28, 2025, refinancing, all guaranties associated with the prior 2013 senior mortgage and 2019 mezzanine facilities were terminated. The current senior mortgage and amended mezzanine facilities are generally non-recourse, subject to specified recourse liabilities and performance obligations. Portsmouth and InterGroup each provide limited guaranties of specified recourse obligations under the senior mortgage and mezzanine loan documents. The guaranties may become full recourse upon the occurrence of specified springing-recourse events under the applicable loan documents.

InterGroup Real Estate Mortgages (Non-Hotel)

These non-Hotel property mortgages are obligations of InterGroup or its property-owning subsidiaries and are separate from, and not cross-defaulted with, the Hotel-level financing of Portsmouth’s subsidiaries.

The Company’s mortgage and mezzanine loans are secured by the applicable collateral described above. As of June 30, 2026 and 2025, the loans were as follows:

Contractual Maturities

Contractual maturities as of June 30, 2026 were as follows:

NOTE 11 –MANAGEMENT AGREEMENTS

Hotel Management

Justice Operating Company, LLC (“Operating”) has a hotel management agreement (“HMA”) with Aimbridge Hospitality (“Aimbridge”) to manage the Hotel, including its parking garage. The HMA commenced on February 3, 2017 and has an initial ten-year term ending in February 2027, with up to five successive one-year renewal periods, subject to the terms of the agreement. Aimbridge receives a base management fee equal to 1.70% of total Hotel revenue.

The HMA originally provided for an annual incentive fee based on increases in Gross Operating Profit. In connection with a subsequent amendment to the incentive-fee provisions, the parties established $15,257,301, representing the Hotel’s 2017 EBITDA, as the performance baseline for future incentive-fee eligibility. Future incentive fees, if any, are determined in accordance with the amended HMA.

Base management fees were $944,000 and $783,000 for the years ended June 30, 2026 and 2025, respectively. No incentive fees were incurred in either year. Hotel operating expenses were reduced by key-money amortization of $250,000 each year.

During fiscal 2025, Aimbridge waived $1,030,134 of previously recorded incentive fees related to prior periods, resulting in a corresponding reduction in Hotel operating expenses for the year ended June 30, 2025. The waiver was a nonrecurring item and did not affect fiscal 2026 operating results.

See Note 9 – Other Financing Transactions for information regarding the Aimbridge key-money arrangement and Note 17 – Commitments and Contingencies for additional obligations under the HMA.

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, 2026 and 2025, the Company had accounts receivable related to Hotel customers and tenants of its rental properties. As of June 30, 2026 and 2025, receivables related to Hotel customers were $250,000 and $396,000, respectively. Gross accounts receivable from the Company’s rental properties were $744,000 and $906,000, respectively, with related allowances for credit losses of $503,000 and $772,000, respectively. Credit extended to tenants is generally limited by the duration of the applicable leases, and the Company pursues available remedies when amounts become delinquent.

The Company maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality. At times, these balances may exceed Federal Deposit Insurance Corporation (“FDIC”) or other federally insured limits. Additionally, certain cash and securities are held in brokerage accounts and may exceed Securities Investor Protection Corporation (“SIPC”) protection limits. The Company monitors counterparty creditworthiness, but balances in excess of applicable insurance or protection limits are subject to counterparty credit risk.

NOTE 13 –INCOME TAXES

The provision for the Company’s income tax (expense) benefit is comprised of the following:

The Company adopted ASU 2023-09 prospectively for the year ended June 30, 2026. Accordingly, the enhanced income tax disclosure requirements are presented for fiscal 2026 only.

The provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to income before taxes as a result of the following differences:

The components of the deferred tax asset and liabilities are as follows:

Management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of June 30, 2026, it has been determined that it is more likely than not that the deferred tax asset will not be recognized. Thus, there is a valuation allowance of $41,035,000 as of June 30, 2026. This was an increase of $1,721,000 from June 30, 2025.

As of June 30, 2026, the Company had net operating loss carryforwards (“NOL”) available for carryforward of approximately $40,166,000 and $69,314,000 for federal and state purposes, respectively. Of the $40,166,000 federal NOL carryforwards, $14,707,000 expire in varying amounts through 2037 and $24,459,000 of post-2017 NOLs can be carried forward indefinitely. Note that the post-2017 NOLs may only offset 80% of future taxable income. The Company had capital loss carryforwards of $3,267,000 for federal purposes and $4,593,000 state purposes.

The capital losses begin to expire in 2025 for both federal and state purposes. There are immaterial California state tax credits of $257,000 which expire in various years.

As of June 30, 2025, the Company had net operating loss carryforwards (“NOL”) available for carryforward of approximately $44,375,000 and $73,782,000 for federal and state purposes, respectively. Of the $43,375,000 federal NOL carryforwards, $14,707,000 expire in varying amounts through 2037 and $28,668,000 of post-2017 NOLs can be carried forward indefinitely. Note that the post-2017 NOLs may only offset 80% of future taxable income. The Company had capital loss carryforwards of $4,913,000 for federal and state purposes. The capital losses begin to expire in 2025 for both federal and state purposes. There are immaterial California state tax credits of $257,000 which expire in various years.

Below is the breakdown of the net operating losses for Intergroup and Portsmouth.

Utilization of certain tax attributes may be subject a substantial annual limitation if it should be determined that there has been a change in the ownership of more than 50 percent of the value of the Company’s stock, pursuant to Section 382 of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates and is subject to examination by federal, state, and local jurisdictions, where applicable.

As of June 30, 2026, tax years beginning in fiscal 2023 and 2022 remain open to examination by the federal and state tax jurisdictions, respectively, and are subject to the statute of limitations.

Uncertain Tax Positions

The Company regularly evaluates the likelihood of realizing the benefit from income tax positions that it has taken in various federal, state, and foreign filings by considering all relevant facts, circumstances and information available. If the Company determines it is more likely than not that the position will be sustained, a benefit will be recognized at the largest amount that it believes is cumulatively greater than 50% likely to be realized. The following table summarizes changes in the amount of the Company’s unrecognized tax benefits for uncertain tax positions:

As of June 30, 2026 and June 30, 2025, the Company had unrecognized tax benefits, which would affect the effective tax rate if recognized. The unrecognized tax benefit are not expected to reverse within the next 12 months. Interest and penalties related to income tax matters are classified as a component of income tax expense. As of June 30, 2026 and June 30, 2025, no interest and penalties were recorded.

NOTE 14 –SEGMENT INFORMATION

The Company operates inthree reportable segments: (i) Hotel Operations (the Hilton San Francisco District and its five-level parking garage), (ii) Real Estate Operations (the multifamily and commercial rental portfolio), and (iii) Investment Transactions (investment of cash in marketable securities and other investments). Corporate expenses and other amounts that are not allocated to the reportable segments are in “Other.”

The Company’s chief operating decision maker (“CODM”) is a group of senior executives. The CODM uses segment income (loss) as the primary measure for assessing segment performance and making resource-allocation decisions. For Hotel Operations, segment income represents Hotel revenue less Hotel operating expenses before depreciation and amortization and financing-related interest expense. For Investment Transactions, segment loss includes gains and losses on marketable securities, dividend and interest income, and trading and margin interest expense. There are no intersegment revenues. “Other” consists primarily of unallocated corporate general and administrative costs and income taxes.

Hotel Operations includes the operations of the Hotel and its five-level parking garage. The following tables present the Company’s reportable segment information for the years ended June 30, 2026 and 2025.

As of June 30, 2026 Note 4 reports Hotel depreciation and amortization of $3.741 million, while Note 14 reports $3.740 million. The $1,000 difference is due solely to rounding and does not represent an underlying accounting difference.

NOTE 15 –STOCK-BASED COMPENSATION PLANS

The Company currently has one equity compensation plan, The InterGroup Corporation 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”). The plan has been approved by the Company’s stockholders. As of June 30, 2026 and 2025, there wereno RSUs outstanding.

The InterGroup Corporation 2010 Omnibus Employee Incentive Plan

The 2010 Incentive Plan was approved by the Company’s shareholders on February 24, 2010 and authorizes up to 400,000 shares of common stock to be issued as equity compensation to officers and employees of the Company. The 2010 Incentive Plan provides for stock options, stock appreciation rights, performance awards and other stock-based compensation. Option awards are generally granted at an exercise price equal to the market price of the Company’s common stock on the grant date and vest based on continued service or other applicable vesting conditions. The 2010 Incentive Plan expires in February 2030. As of June 30, 2026 and 2025, approximately 114,000 and 14,000 shares, respectively, remained available for future grant under the 2010 Incentive Plan.

In March 2010, the Company granted 100,000 stock options at an exercise price of $10.30 per share. The options, which had been previously extended through March 16, 2026, expired unexercised on March 16, 2026.

In December 2013, the Company granted 133,195 non-qualified stock options at an exercise price of $18.65 per share. In December 2023, the expiration date of these options was extended from December 26, 2023 to December 26, 2029.

In March 2017, the Company granted 18,000 stock options at an exercise price of $27.30 per share. The options expireten years from the grant date and were fully vested as of June 30, 2026.

In October 2023, the Company granted 18,000 stock options at an exercise price of $28.90 per share. The options expireten years from the grant date and vest over three years, with 6,000 options vesting on each anniversary of the grant date.

During the years ended June 30, 2026 and 2025, the Company recorded stock option compensation expense of $44,000 and $105,000, respectively.

The following table summarizes stock option activity for the years ended June 30, 2026 and 2025:

Aggregate Intrinsic Value represents the amount by which the market price of the Company’s common stock exceeded the exercise price of in-the-money options at period end.

Unrecognized compensation cost related to unvested stock options outstanding at June 30, 2026 was not material and is expected to be recognized over the remaining requisite service period. Cash received from option exercises and the total intrinsic value of options exercised were $0 for each of the fiscal years ended June 30, 2026 and 2025. There were no stock options granted during fiscal 2026 or 2025.

NOTE 16 –RELATED PARTY TRANSACTIONS

The Company has an unsecured revolving credit facility with its consolidated subsidiary, Portsmouth Square, Inc. (“Portsmouth”), under which the Company may provide borrowings of up to $40,000,000. The facility bears interest at 9% per annum, may be prepaid without penalty, and had a contractual maturity date of July 31, 2027 as of June 30, 2026. Principal and accrued interest are due at maturity, with no scheduled principal or interest payments required prior to maturity.

During the years ended June 30, 2026 and 2025, the Company advanced $0 and $11,615,000, respectively, to Portsmouth under the facility. The outstanding principal balance was $38,108,000 as of both June 30, 2026 and 2025, with $1,892,000 of remaining borrowing capacity as of June 30, 2026. InterGroup recorded interest income of $3,437,000 and $3,570,000 for the years ended June 30, 2026 and 2025, respectively, before consolidation. In August 2026, the Company and Portsmouth amended the facility to extend the maturity date from July 31, 2027 to July 31, 2029.

Because Portsmouth is a consolidated subsidiary, the intercompany note receivable and payable and the related interest income and expense are eliminated in the Company’s consolidated financial statements.

Certain shared costs and expenses , primarily administrative expenses, rent and insurance, are allocated between InterGroup and Portsmouth based on management’s estimate of relative utilization. For the years ended June 30, 2026 and 2025, such allocations were approximately $0 and $144,000, respectively. These allocations are eliminated in consolidation.

NOTE 17 –COMMITMENTS AND CONTINGENCIES

Cash Management Agreement

In connection with the March 28, 2025 refinancing of the Hotel’s senior mortgage, Justice Operating Company, LLC (“Operating”) entered into a Cash Management Agreement with the senior mortgage lender and Wells Fargo Bank, N.A., as cash management bank. Under the agreement, Hotel receipts are deposited into lender-controlled accounts and applied in accordance with the priority and reserve requirements specified in the senior loan documents. The cash management arrangement remained in effect as of June 30, 2026. See Note 10 – Mortgage and Mezzanine Loans for additional information regarding the senior mortgage loan and the cash management release conditions.

Franchise Agreements

Operating is party to a franchise agreement with HLT Franchise Holding, LLC (“Hilton”) under which the Hotel operates as the Hilton San Francisco Financial District. The franchise agreement extends through January 31, 2030 and requires the Hotel to pay royalties, program fees and certain other charges based primarily on Hotel revenues and to comply with applicable Hilton brand standards.

Franchise-related fees were approximately $3,989,000 and $3,529,000 for the years ended June 30, 2026 and 2025, respectively, and are included in Hotel operating expenses. See Note 9 – Other Financing Transactions for information regarding the Hilton development incentive note.

Hotel Employees and Collective Bargaining Agreements

As of June 30, 2026, the Hotel had 187 employees, approximately 90% of whom were represented by one of three labor unions and were covered by collective bargaining agreements (“CBAs”). Aimbridge, as agent for Justice Operating Company, LLC (“Operating”), administers the applicable CBAs, and Operating funds the related payroll, employee benefits and other labor costs.

The CBA covering employees represented by Local 2 (Hotel and Restaurant Employees) expires on August 13, 2028. The CBA covering employees represented by Local 856 (International Brotherhood of Teamsters) expires on December 31, 2028. The CBA covering employees represented by Local 39 (Stationary Engineers) expires in July 2030.

Legal Matters

Portsmouth Square, Inc. (“Portsmouth”), through its subsidiary Justice Operating Company, LLC (“Operating”), owns the real property at 750 Kearny Street in San Francisco, on which the Hotel is located (the “Property”). In connection with City approvals in the early 1970s, pedestrian bridge was constructed spanning Kearny Street to the City’s Portsmouth Square Park and underground garage (the “Bridge”), pursuant in part to a Major Encroachment Permit (the “Permit”).

On May 24, 2022, the City purported to revoke the Permit and, on June 13, 2022, directed Portsmouth to submit a general bridge removal and site restoration plan (the “Plan”) at Portsmouth’s expense. Portsmouth disputes the legality of the purported revocation and the existence of any obligation to fund removal.

Without waiving any rights, Portsmouth engaged a project manager, structural engineer, and architect to advise on the Plan for Bridge removal and reconstruction of the Property’s Kearny Street frontage. Portsmouth and the City continued discussions regarding the removal process, restoration responsibilities and financial responsibility. As of June 30, 2026, no final settlement agreement had been executed.

NOTE 18—DISPOSITION OF REAL ESTATE

On February 24, 2025, the Company executed a listing agreement to market for sale a 12-unit multifamily property located in Los Angeles County, California. Active marketing commenced in April 2025. During the fourth quarter of fiscal 2025, management determined that the property met the criteria for classification as held for sale under ASC 360-10-45-9.

Accordingly, the Company classified the property and related assets as “Assets held for sale” as of June 30, 2025. Upon classification, the property was measured at the lower of its carrying amount or fair value less costs to sell. No impairment charge was recognized as the carrying amount did not exceed its estimated fair value less costs to sell.

The sale was completed in December 2025 for $4.85 million, and the Company recognized a gain on sale of $3,508,000 for the year ended June 30, 2026. The related mortgage loan, which had an outstanding principal balance of $1,834,000 at closing, was repaid in full in connection with the sale.

Assets held for sale totaled $1,029,000 at June 30, 2025.

NOTE 19 –SUBSEQUENT EVENTS

Portsmouth Square Pedestrian Bridge Removal

On August 9, 2026, the physical removal of the pedestrian bridge connecting the Hotel to Portsmouth Square was completed. The Hotel had temporarily suspended guest operations from July 31, 2026 through August 9, 2026 to facilitate the bridge demolition and resumed guest operations on August 10, 2026. Following removal of the bridge, the City and its contractor continued work associated with the project, including restoration of portions of the Hotel façade and surrounding areas affected by the demolition. Portsmouth, through its subsidiary Justice Operating Company, LLC, is separately responsible for the design and construction of permanent improvements to the Hotel’s Kearny Street entrance.

In July 2026, Portsmouth and the City reached a term sheet concerning the Bridge removal and related financial arrangements. The parties are negotiating a definitive settlement agreement. Under the term sheet, the City agreed to make certain payments to Portsmouth in connection with costs associated with the Hotel’s Kearny Street frontage, subject to specified repayment obligations commencing in 2029.

Extension of Related Party Credit Facility

In August 2026, InterGroup and its consolidated subsidiary, Portsmouth amended Portsmouth’s unsecured revolving credit facility with InterGroup to extend its maturity date from July 31, 2027 to July 31, 2029. All other material terms of the facility remained unchanged. As of June 30, 2026, Portsmouth had $38,108,000 outstanding under the $40,000,000 facility. See Note 16 – Related Party Transactions.