UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, ~~2019~~2020

¨[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to_________

Commission File Number 0000-~~6877~~06877

SANTA FE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

NEVADA		95-2452529
(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification No.)

12121 Wilshire Boulevard, Suite 610, Los Angeles, California 90025

(Address of principal executive offices) (Zip Code)

(310) 889-2500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.10 Par Value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

¨[ ] Yes x [X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

¨[ ] Yes x [X] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x[X] Yes [ ¨] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x[X] Yes [ ¨] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant'’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.

x[X] Yes [ ¨] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨[ ] Accelerated Filer ¨[ ] Non-Accelerated Filer x[ ] (Do not check if a smaller reporting company) Smaller reporting company x[X] Emerging growth company ¨[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨[ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):

¨[ ] Yes x [X] No

The aggregate market value of the Common Stock, no par value, held by non-affiliates computed by reference to the closing price on December 31, ~~2018~~2019 was approximately $6,~~545~~783,000.

The number of shares outstanding of registrant’s Common Stock, as of ~~August~~September 309, ~~2019~~2020 was 1,~~241~~339,~~810~~310.

Securities registered pursuant to section 12(b) of the Act: None.

DOCUMENTS INCORPORATED BY REFERENCE: None

TABLE OF CONTENTS

		Page	~~Page~~
	PART I
Item 1.	Business.	4	4
Item 1A.	Risk Factors.	8	8
Item 1B.	Unresolved Staff Comments.	13	12
Item 2.	Properties.	13	12
Item 3.	Legal Proceedings.	15	14
Item 4.	Mine Safety Disclosures.	15	14
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	16	15
Item 6.	Selected Financial Data.	16	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	22	20
Item 8.	Financial Statements and Supplementary Data.	22	20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	45	40
Item 9A.	Controls and Procedures.	45	40
Item 9B.	Other Information.	45	41
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	46	42
Item 11.	Executive Compensation.	48	44
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	50	46
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	51	47
Item 14.	Principal Accounting Fees and Services.	52	48
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.	53	49
Signatures		55	51

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains ~~certain “~~forward-looking statements” within the meaning of Section 27A of the ~~Private~~Securities Act of 1933, as amended (“Securities ~~Litigation~~Act”), ~~reform~~and Section 21E of the Securities Exchange Act of ~~1995~~1934, as amended (“Exchange Act”). Forward-looking statements ~~give~~include, but are not limited to, statements related to our ~~current~~ expectations orregarding ~~forecasts~~the performance of ~~future~~our ~~events.~~business, ~~You~~our ~~can~~financial ~~identify~~results, ~~these~~our ~~statements~~liquidity byand ~~the~~capital ~~fact~~resources, ~~that~~the ~~they~~impact doto ~~not~~our ~~relate~~business ~~strictly~~and financial condition, and measures being taken in response to ~~historical~~COVID-19, the effects of competition and the effects of future legislation or ~~current~~regulations ~~facts~~and other non-historical statements. ~~They~~Forward-looking ~~contain~~statements ~~words~~include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “~~anticipate~~outlook,” “believes,” “~~estimate~~expects,” “~~expect~~potential,” “continues,” “may,” “will,” “~~project~~should,” “~~intend~~could,” “~~plan~~seeks,” “~~believe~~projects,” “~~may~~predicts,” “~~could~~intends,” “~~might~~plans,” ~~and~~“estimates,” ~~other~~“anticipates” ~~words~~ or ~~phrases~~the ofnegative ~~similar~~version ~~meaning in connection with any discussion~~ of ~~future~~these ~~operating~~words or ~~financial~~other comparable ~~performance~~words. ~~From~~You ~~time~~should tonot ~~time~~rely weon ~~also provide~~ forward-looking statements insince ~~our~~they ~~Forms~~involve ~~10-Q~~known and ~~8-K,~~unknown ~~Annual Reports to Shareholders~~risks, ~~press~~ ~~releases~~uncertainties and other ~~materials we may release to the public. Forward looking statements reflect our current views about future~~factors ~~events~~which ~~and~~ are ~~subject to risks~~, ~~uncertainties, assumptions and changes~~ in ~~circumstances~~some ~~that~~cases, ~~may~~beyond ~~cause~~our ~~actual~~control ~~results~~and orwhich ~~outcomes to~~could ~~differ~~ materially ~~from~~affect ~~those~~our ~~expressed~~results inof ~~any forward-looking statement. Consequently~~operations, nofinancial ~~forward-looking statement can be guaranteed~~condition, ~~and~~cash ~~our~~flows, ~~actual~~performance or future ~~results~~achievements ~~may~~or ~~differ materially~~events.

~~Factors~~Currently, one of the most significant factors is the potential adverse effect of COVID-19, including possible resurgences, on our financial condition, results of operations, cash flows and performance, and on the global economy and financial markets. The extent to which COVID-19 impacts us and guests at our hotel will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its effect, additional closures that may ~~cause~~be ~~actual~~mandated ~~results~~or advisable whether due to ~~differ~~an ~~materially~~increased ~~from~~number of COVID-19 cases or otherwise, ~~current~~and ~~expectations~~the ~~include~~direct and indirect economic effects of the pandemic and containment measures, ~~but~~among ~~are~~others. ~~not~~Moreover, ~~limited~~investors are cautioned to: interpret many of the risks identified in the risk factors discussed in this 10-K and incorporated by reference from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and our Annual Report on Form 10-K for the year ended June 30, 2019 as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.

·Other factors ~~risks~~that ~~associated~~may ~~with~~cause ~~the lodging industry, including competition, increases in wages, labor relations, energy and fuel costs,~~ actual ~~and~~results ~~threatened~~to ~~pandemics,~~differ ~~actual~~materially ~~and~~from ~~threatened~~current ~~terrorist~~expectations ~~attacks~~include, ~~and~~but ~~downturns~~are innot ~~domestic~~limited ~~and international economic and market conditions, particularly in the San Francisco Bay area;~~to:

·● risks associated with the ~~real~~lodging ~~estate~~ industry, including ~~changes~~competition, increases in ~~real~~wages, ~~estate~~labor ~~and~~relations, ~~zoning~~energy ~~laws~~and orfuel ~~regulations~~costs, ~~increases~~actual inand ~~real~~threatened ~~property taxes~~pandemics, ~~rising~~actual ~~insurance~~and ~~premiums~~threatened terrorist attacks, ~~costs~~and ofdownturns ~~compliance~~in ~~with~~domestic ~~environmental~~and ~~laws~~international economic and ~~other~~market ~~governmental~~conditions, ~~regulations~~particularly in the San Francisco Bay area;

·● risks associated with the ~~availability~~real ~~and~~estate ~~terms~~industry, ofincluding ~~financing~~changes ~~and~~in ~~capital~~real estate and ~~the~~zoning ~~general~~laws ~~volatility~~or regulations, increases in real property taxes, rising insurance premiums, costs of ~~securities~~compliance ~~markets~~with environmental laws and other governmental regulations;

·● ~~changes~~the inavailability ~~the~~and ~~competitive~~terms ~~environment~~of infinancing and capital and the ~~hotel~~general ~~industry~~volatility of securities markets;

·● ~~economic~~changes ~~volatility~~in ~~and~~the ~~potential~~competitive ~~recessive~~environment ~~trends~~in the hotel industry;

·● ~~risks~~economic ~~related~~volatility toand ~~natural~~potential ~~disasters~~recessive trends;

·● ~~litigation;~~risks ~~and~~related to natural disasters;

·● ~~other~~litigation; ~~risk factors discussed below in this Report.~~and

We● ~~caution~~other ~~you~~risk ~~not~~factors todiscussed ~~place~~below ~~undue~~in ~~reliance~~this ~~on these forward-looking statements, which speak only as to the date hereof~~Report. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects on our Forms 10-K and 10-Q, and Current Reports on Form 8-K filed, as well as other filings, with the Securities and Exchange Commission.

All such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. You should not put undue reliance on any forward-looking statements and we urge investors to carefully review the disclosures we make concerning risks and uncertainties in Item 1A: “Risk Factors” in this Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and our Annual Report on Form 10-K for the year ended June 30, 2019, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, as well as risks, uncertainties and other factors discussed in this Annual Report on Form 10-K. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I

Item 1. Business.

GENERAL

Santa Fe Financial Corporation (“Santa Fe” or the “Company”) and may also be referred to as “we” “us” or “our” in this report) was incorporated under the name of Tri Financial Corporation in the State of Nevada on July 25, 1967 as a wholly owned subsidiary of Crateo, Inc., a public company. On October 31, 1969, Crateo issued a one-for-one stock dividend of all of its shares of Tri Financial to its common shareholders. On September 17, 1970, the name of the Corporation was changed to Santa Fe Financial Corporation.

As of June 30, ~~2019~~2020, approximately 8283.27% of the outstanding common stock of Santa Fe was owned by The InterGroup Corporation (“InterGroup”), a public company (NASDAQ: INTG). As of June 30, 2020, InterGroup also has the power to vote an approximately 3.7% interest in the common stock in Santa Fe owned by its Chairman and CEO, John V. Winfield, pursuant to a voting trust agreement entered into on June 30, 1998. Mr. Winfield, Chairman of the Board of both Santa Fe and InterGroup, is a control person of both entities. As of June 30, ~~2019~~2020, Santa Fe owned approximately 68.8% of the outstanding common stock of Portsmouth Square, Inc. (“Portsmouth”), a public company (OTC Market Inc.’s Pink: PRSI). InterGroup also directly owns approximately 13.47% of the common stock of Portsmouth.

The Company’s principal source of operating revenue has been, and continues to be, derived from the management of its 68.8% owned subsidiary, Portsmouth. Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors Limited Partnership (“Justice” or the “Partnership”), a California limited partnership. Portsmouth controls approximately 93.3% of the voting interest in Justice and is the sole general partner of Justice. The financial statements of Justice are consolidated with those of the Company.

Justice, through its subsidiaries Justice Operating Company, LLC (“Operating”) and Justice Mezzanine Company, LLC (“Mezzanine”), owns and operates a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage. ~~Kearny Street Parking LLC (“Parking”) is the operator of the garage.~~ Mezzanine is a wholly- owned subsidiary of the Partnership; Operating is a wholly- owned subsidiary of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is operated by the partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (~~Hilton). Justice had a ten-year management agreement with Prism Hospitality L.P. (~~“~~Prism~~Hilton”) tothrough ~~perform~~January ~~certain management functions for the Hotel. Prism’s management agreement was terminated upon its expiration date of February 2~~31, ~~2017~~2030. Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover date and automatically renews for successive one (1) year periods, not to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee payable to Interstate shall be one and seven-tenths (1.70%) of total Hotel revenue.

~~The~~Justice entered ~~Company~~into ~~also~~a ~~derives~~Hotel ~~rental~~management ~~income~~agreement ~~from~~(“HMA”) ~~two~~with ~~multi-family, residential~~Interstate ~~rental~~Management ~~properties~~Company, ~~located~~LLC in(“Interstate”) to manage the ~~Los~~Hotel, ~~Angeles~~along ~~area.~~with ~~The~~its ~~Company~~five-level ~~may~~parking ~~also~~garage, ~~look~~with ~~for~~an ~~new~~effective ~~real~~takeover ~~estate~~date ~~investment~~of ~~opportunities in~~February ~~hotels~~3, ~~apartments,~~2017. ~~office~~The ~~buildings~~term ~~and~~of the ~~shopping~~management ~~centers.~~agreement ~~The~~is ~~acquisition~~for an initial period of ~~any~~ten ~~new~~years ~~real~~commencing ~~estate~~on ~~investments~~the ~~will~~takeover ~~depend~~date onand automatically renews for successive ~~the~~one ~~Company’s~~(1) ~~ability~~year periods, to ~~find~~not ~~suitable~~exceed ~~investment~~five ~~opportunities~~years ~~and~~in the ~~availability~~aggregate, ofsubject ~~sufficient financing~~ to ~~acquire~~certain ~~such investments~~conditions. ToUnder ~~help~~the ~~fund~~terms ~~any~~of ~~such~~the ~~acquisition~~HMA, ~~the~~base management ~~Company~~fee ~~may~~payable ~~borrow~~to ~~funds~~Interstate toshall ~~leverage~~be ~~its~~one ~~investment~~and ~~capital.~~seven-tenths ~~The~~percent ~~amount~~(1.70%) of ~~any~~ ~~such~~total ~~debt~~Hotel ~~will~~revenue. ~~depend~~On onOctober a25, ~~number~~2019, Interstate ofmerged ~~factors~~with ~~including~~Aimbridge Hospitality, ~~but~~North ~~not~~America’s ~~limited~~largest ~~to,~~independent ~~the~~hotel ~~availability~~management offirm. ~~financing~~With ~~and~~ the ~~sufficiency~~completion of the ~~acquisition~~merger, ~~property’s~~the ~~projected~~newly ~~cash~~combined ~~flows~~company towill ~~support~~be positioned under the ~~operations~~Aimbridge ~~and~~Hospitality ~~debt~~name ~~service~~in the Americas.

The Company also derives rental income from ~~the~~two ~~investment~~multi-family, ofresidential ~~its~~rental ~~cash and~~properties ~~investment~~located ~~securities~~in ~~assets~~the Los Angeles area. The Company may ~~has~~also ~~invested~~look for new real estate investment opportunities in ~~income-producing~~hotels, ~~instruments~~apartments, ~~equity~~office buildings and ~~debt~~shopping ~~securities~~centers. ~~and~~The ~~will~~acquisition ~~consider~~of ~~other~~any ~~investments~~new ifreal ~~such~~estate investments ~~offer~~will ~~growth~~depend oron ~~profit~~the ~~potential.~~Company’s ~~See~~ability ~~Item~~to 7.find ~~Management’s~~suitable ~~Discussion~~investment opportunities and the ~~Analysis~~availability of ~~Financial~~sufficient ~~Condition~~financing ~~and~~to ~~Results~~acquire such investments. To help fund any such acquisition, the Company may borrow funds to leverage its investment capital. The amount of ~~Operations~~any ~~for~~such debt will depend on a ~~discussion~~number of factors including, but not limited to, the ~~Company~~availability of financing and the sufficiency of the acquisition property’s ~~marketable~~projected ~~securities~~cash ~~and~~flows ~~other~~to support the ~~investments~~operations and debt service.

~~HILTON~~The Company ~~HOTELS~~also ~~FRANCHISE~~derives ~~LICENSE~~income ~~AGREEMENT~~from the investment of its cash and investment securities assets. The Company has invested in income-producing instruments, equity and debt securities and will consider other investments if such investments offer growth or profit potential. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the Company’s marketable securities and other investments.

~~The Partnership entered into a Franchise License Agreement (the~~HILTON ~~“License~~HOTELS ~~Agreement”)~~FRANCHISE ~~with~~LICENSE the HLT Existing Franchise Holding LLC (“Hilton”) on December 10, 2004. The term of the License Agreement was for an initial period of fifteen years commencing on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement that, among other things, extended the License Agreement through 2030, and also provided the Partnership with certain key money cash incentives to be earned through 2030.AGREEMENT

4The Partnership entered into a Franchise License Agreement (the “License Agreement”) with the HLT Existing Franchise Holding LLC (“Hilton”) on December 10, 2004. The term of the License Agreement was for an initial period of fifteen years commencing on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, Operating and Hilton entered into an amended franchise agreement that, among other things, extended the License Agreement through 2030, and also provided the Partnership with certain key money cash incentives to be earned through 2030.

~~HOTEL MANAGEMENT COMPANY AGREEMENT~~4

~~On February 1, 2017, Justice entered into a Hotel management~~HOTEL ~~agreement~~MANAGEMENT ~~with~~COMPANY Interstate Management Company, LLC to manage the Hotel with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover date and automatically renews for successive one (1) year periods, not to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee payable to Interstate shall be one and seven-tenths (1.70%) of total Hotel revenue. For the fiscal years ended June 30, 2019 and 2018, Interstate management fees were $1,206,000 and $957,000, respectively, and are included in Hotel operating expenses in the consolidated statements of operations. As part of the Hotel management agreement, Interstate, through the Partnership’s wholly-owned subsidiary, Kearny Street Parking LLC, manages the parking garage in-house.AGREEMENT

~~CHINESE~~On February ~~CULTURE~~1, ~~FOUNDATION~~2017, ~~LEASE~~ Justice entered into a Hotel management agreement with Interstate Management Company, LLC to manage the Hotel with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of ten years commencing on the takeover date and automatically renews for successive one (1) year periods, not to exceed five years in the aggregate, subject to certain conditions. Under the terms on the HMA, base management fee payable to Interstate shall be one and seven-tenths (1.70%) of total Hotel revenue. For the fiscal years ended June 30, 2020 and 2019, Interstate management fees were $341,000 and $1,206,000, respectively, and are included in Hotel operating expenses in the consolidated statements of operations. As part of the Hotel management agreement, Interstate, through the Partnership’s wholly owned subsidiary, Kearny Street Parking LLC, manages the parking garage in-house.

~~On March 15, 2005, the Partnership entered into an amended lease~~CHINESE ~~with~~CULTURE ~~the~~FOUNDATION Chinese Culture Foundation of San Francisco (the “Foundation”) for the third-floor space of the Hotel commonly known as the Chinese Culture Center, which the Foundation had right to occupy pursuant to a 50-year nominal rent lease that began in 1967. LEASE

~~The~~On March ~~amended lease~~15, ~~among other things~~2005, ~~requires~~ the Partnership to ~~pay~~entered tointo ~~the~~an ~~Foundation a monthly event space fee in the amount of $5,000, adjusted annually based on the local Consumer Price Index. As of June 30, 2019, monthly event space fee is $6,200. The term of the~~ amended lease ~~expires on October 17, 2023,~~ with an ~~automatic extension for another 10-year term if~~ the ~~property~~Chinese ~~continues~~Culture toFoundation beof ~~operated~~San asFrancisco ~~a hotel. Subject to certain conditions as set forth in~~ (the ~~amended lease, the~~ “Foundation ~~is entitled to reserve~~ ”) for ~~a maximum of 75 days per calendar year for use of~~ the ~~event~~third-floor space. Inof the ~~event~~Hotel ~~that~~commonly ~~the~~known ~~Partnership~~as ~~needs~~ the ~~event~~Chinese ~~space~~Culture ~~during one of the dates previously reserved by the Foundation~~Center, ~~the~~ ~~Partnership~~which ~~shall pay~~ the Foundation ~~$4,000~~had ~~per~~right ~~day~~to ~~for using the event space. During the fiscal years ended June 30, 2019~~occupy ~~and~~pursuant ~~2018,~~to ~~the~~a ~~Partnership paid the Foundation $13,000 and $~~50~~,000,~~-year ~~respectively,~~nominal ~~for~~rent ~~using~~lease ~~the~~that ~~event~~began ~~space~~in ~~on previously reserved dates by the Foundation~~1967.

~~MARKETABLE~~The amended ~~SECURITIES~~lease, ~~INVESTMENT~~among ~~POLICIES~~other things, requires the Partnership to pay to the Foundation a monthly event space fee in the amount of $5,000, adjusted annually based on the local Consumer Price Index. As of June 30, 2020, monthly event space fee is $6,200. The term of the amended lease expires on October 17, 2023, with an automatic extension for another 10-year term if the property continues to be operated as a hotel. Subject to certain conditions as set forth in the amended lease, the Foundation is entitled to reserve for a maximum of 75 days per calendar year for use of the event space. In the event that the Partnership needs the event space during one of the dates previously reserved by the Foundation, the Partnership shall pay the Foundation $4,000 per day for using the event space. During the fiscal year ended June 30, 2020, the Partnership did not pay the Foundation any such fees. During the fiscal year ended June 30, 2019, the Partnership paid the Foundation $13,000 for using the event space on previously reserved dates by the Foundation.

~~In addition to its Hotel and real estate operations, the Company~~MARKETABLE ~~also~~SECURITIES ~~invests~~INVESTMENT from time to time in income producing instruments, corporate debt and equity securities, publicly traded investment funds, mortgage backed securities, securities issued by REITs and other companies which invest primarily in real estate.POLICIES

~~The Company’s securities investments are made under the~~In ~~supervision~~addition ofto aits ~~Securities~~Hotel ~~Investment Committee of the Board of Directors (the “Committee”). The Committee currently has three members~~ and isreal ~~chaired~~estate byoperations, the Company’s ~~Chairman~~also ofinvests ~~the~~from ~~Board~~time ~~and~~to ~~President,~~time ~~John~~in V.income ~~Winfield.~~producing ~~The Committee has~~instruments, ~~delegated~~corporate ~~authority~~debt ~~to manage the portfolio to the Company’s Chairman~~ and President together with such assistants and management committees he may engage. The Committee generally follows certain established investment guidelines for the Company’s investments. These guidelines presently include: (i) corporate equity securities, ~~should~~publicly betraded ~~listed~~investment onfunds, ~~the~~mortgage ~~New~~backed ~~York Stock Exchange (NYSE)~~securities, ~~NYSE MKT, NYSE Arca or the Nasdaq Stock Market (NASDAQ); (ii) the issuer of the listed~~ securities ~~should~~issued beby ~~in compliance with the listing~~REITs ~~standards of the applicable national securities exchange;~~ and ~~(iii)~~other ~~investment~~companies ~~in a particular issuer should not exceed 10% of the market value of the total portfolio. The investment guidelines do not require the Company to divest itself of investments,~~ which ~~initially~~invest ~~meet~~primarily ~~these guidelines but subsequently fail to meet one or more of the investment criteria. The Committee has~~ in ~~the~~ ~~past~~real ~~approved non-conforming investments and may in the future approve non-conforming investments~~estate. ~~The Committee may modify these guidelines from time to time.~~

The Company’s ~~may~~securities ~~also~~investments ~~invest,~~are ~~with~~made under the ~~approval~~supervision of an Executive Strategic Real Estate and Securities Investment Committee of the Board of Directors (the “Committee,”). The Committee currently has three members and is chaired by inthe ~~unlisted~~Company’s ~~securities~~Chairman of the Board and President, John V. Winfield. The Committee has delegated authority to manage the portfolio to the Company’s Chairman and President together with such asassistants ~~convertible~~and ~~notes,~~management ~~through~~committees ~~private~~he ~~placements~~may ~~including~~engage. The ~~private~~Committee ~~equity~~generally follows certain established investment ~~funds~~guidelines for the Company’s investments. ~~Those~~These guidelines ~~investments~~presently ininclude: ~~non-marketable~~(i) ~~securities~~corporate ~~are~~equity ~~carried~~securities atshould ~~cost~~be listed on the ~~Company’s~~New ~~balance~~York ~~sheet~~Stock asExchange ~~part~~(NYSE), NYSE MKT, NYSE Arca or the Nasdaq Stock Market (NASDAQ); (ii) the issuer of ~~other~~the ~~investments~~listed securities should be in compliance with the listing standards ~~and~~of ~~reviewed~~the ~~for~~applicable ~~impairment~~national onsecurities exchange; and (iii) investment in a ~~periodic~~particular ~~basis.~~issuer Asshould not exceed 10% of ~~June~~the ~~30,~~market value ~~2019~~of ~~and~~the ~~2018,~~total portfolio. The investment guidelines do not require the Company ~~had~~to ~~other~~divest ~~investments~~itself of ~~$351~~investments,~~000~~ which initially meet these guidelines but subsequently fail to meet one or more of the investment criteria. The Committee has in the past approved non-conforming investments and may in the future approve non-conforming investments. The Committee may modify these guidelines ~~$474,000,~~from ~~respectively~~time to time.

AsThe Company ~~part~~may ofalso ~~its investment strategies~~invest, with the ~~Company~~approval ~~may~~of ~~assume short~~the ~~positions~~Committee, in ~~marketable~~unlisted securities., ~~Short~~such ~~sales~~as ~~are~~convertible ~~used~~notes, bythrough ~~the~~private placements ~~Company~~including toprivate ~~potentially~~equity ~~offset~~investment ~~normal~~funds. ~~market~~Those ~~risks~~investments ~~undertaken~~ in non-marketable securities are carried at cost on the Company’s ~~course~~balance sheet as part of ~~its~~other ~~investing~~investments ~~activities~~and orreviewed tofor ~~provide~~impairment ~~additional~~on ~~return~~a ~~opportunities~~periodic basis. As of June 30, ~~2019~~ 2020 and ~~2018~~2019, the Company had ~~obligations~~other ~~for~~investments ~~securities sold (equities short)~~ of $~~625~~158,000 and $~~919~~351,000, respectively.

InAs part ~~addition~~of its investment strategies, the Company may ~~utilize~~assume ~~margin~~short ~~for~~positions ~~its~~in marketable ~~securities~~ ~~purchases through the use of standard margin agreements with national brokerage firms~~securities. ~~The~~Short ~~margin~~sales are used by the ~~Company~~ ~~may~~Company ~~fluctuate~~to ~~depending~~potentially onoffset normal market ~~conditions.~~risks ~~The~~undertaken ~~use~~in ofthe ~~leverage~~course ~~could~~of beits ~~viewed~~investing asactivities ~~risky~~or ~~and~~to ~~the~~provide ~~market~~additional return ~~values~~opportunities. As of ~~the~~June ~~portfolio may~~30, be2020 ~~subject~~and to2019, ~~large~~the ~~fluctuations.~~Company ~~Margin~~had ~~balances~~obligations ~~due~~for atsecurities ~~June~~sold ~~30,~~(equities ~~2019~~short) ~~and~~of ~~2018 were~~ $~~396,000~~0 and $1625,~~068,~~000, respectively.

5In addition, the Company may utilize margin for its marketable securities purchases through the use of standard margin agreements with national brokerage firms. The margin used by the Company may fluctuate depending on market conditions. The use of leverage could be viewed as risky and the market values of the portfolio may be subject to large fluctuations. Margin balances due at June 30, 2020 and 2019 were $0 and $396,000, respectively.

As Chairman of the Committee, the Company’s Chairman and President, John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of Portsmouth and InterGroup and oversees the investment activity of those companies. Depending on certain market conditions and various risk factors, the Chief Executive Officer, Portsmouth and InterGroup may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of these related parties because it places the personal resources of the Chief Executive Officer and the resources of Portsmouth and InterGroup, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.5

~~Further~~As Chairman ~~information~~of ~~with~~the ~~respect~~Committee, tothe Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in ~~marketable~~public ~~securities~~and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and ~~other~~Chairman ~~investments~~of the Board of Portsmouth and InterGroup and oversees the ~~Company~~investment isactivity of ~~set~~those ~~forth~~companies. inEffective ~~Management~~June ~~Discussion~~2016, ~~and~~Mr. ~~Analysis~~Winfield became the Managing Director of ~~Financial~~Justice. ~~Condition~~Depending on certain market conditions and ~~Results~~various ofrisk ~~Operations~~factors, ~~section~~the Chief Executive Officer, Portsmouth and ~~Notes~~InterGroup 5may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and 6the resources of Portsmouth and InterGroup at risk in substantially the ~~Notes~~same tomanner ~~Consolidated~~as ~~Financial~~the ~~Statements~~Company in connection with investment decisions made on behalf of the Company.

~~Seasonality~~Further information with respect to investment in marketable securities and other investments of the Company is set forth in Management Discussion and Analysis of Financial Condition and Results of Operations section and Notes 5 and 6 of the Notes to Consolidated Financial Statements.

Hotel’s operations historically have been seasonal. Like most hotels in the San Francisco area, the Hotel generally maintains high occupancy and room rates during the entire year except for the weeks starting Thanksgiving through the end of the calendar year due to the holiday season. These seasonal patterns can be expected to cause fluctuations in the quarterly revenues of the Hotel.SEASONALITY

~~Competition~~Historically, the Hotel’s operation have been seasonal under normal circumstances. Like most hotels in the San Francisco area, the Hotel generally maintained high occupancy and room rates during the entire year except for the weeks starting from Thanksgiving to the end of the calendar year due to the holiday season. These seasonal patterns can be expected to cause fluctuations in the quarterly revenues of the Hotel. However, the COVID-19 pandemic has altered this seasonal trend in 2020. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information regarding the effects of the COVID-19 pandemic on our results of operations.

The hotel industry is highly competitive. Competition is based on a number of factors, most notably convenience of location, brand affiliation, price, range of services and guest amenities or accommodations offered and quality of customer service. Competition is often specific to the individual market in which properties are located. The San Francisco market is a very competitive market with a high supply of guest rooms and meeting space in the area. During fiscal year 2019, we implemented advanced state of the art internet system which included a rewiring of the entire hotel with the best possible Ethernet cabling and fiber. Specifically, the complete overhaul of the infrastructure of the Internet in the guest rooms and meeting space will enable the Hotel to compete in this market. This investment is allowing the Hotel to go to market with measurable statistics that will help win the much-coveted technology company meetings. We installed 55” and 65” 4K smart televisions in all guest rooms and common areas during fiscal year 2019. In fiscal 2018, an architecture firm was contracted to design the new guest rooms which have recently been approved by Hilton and the model rooms are in the works. We plan to bring back 14 guest rooms on the 5th floor as part of the initial phase of this renovation project and the next phase will include additional rooms being added on the 26th and 27th floors. We anticipate our window washing equipment to be completed within the second quarter of fiscal year 2020.COMPETITION

~~Our~~The hotel ~~highest~~industry ~~priority~~ is ~~guest~~highly ~~satisfaction~~competitive. WeCompetition ~~believe~~is ~~that~~based on a number of factors, most notably convenience of location, brand ~~enhancing~~affiliation, ~~the~~price, ~~guest~~range ~~experience~~of ~~differentiates~~services ~~the~~and ~~Hotel~~guest ~~from~~amenities ~~our~~or ~~competition~~accommodations offered and quality of customer service. Competition is ~~critical~~often specific to the ~~Hotel’s~~individual ~~objective~~market ofin which properties are located. The San Francisco market is a very competitive market ~~building~~with ~~sustainable~~a high supply of guest ~~loyalty~~rooms and meeting space in the area. InDuring ~~order~~fiscal toyear ~~make~~2019, we implemented advanced state of the art Internet system which included a ~~large~~rewiring ~~impact~~of onthe ~~guest~~entire ~~experience~~hotel with the best possible Ethernet cabling and fiber. Specifically, the complete overhaul of the infrastructure of the Internet in the guest rooms and meeting space will enable the Hotel to compete in this market. This investment is allowing the Hotel to go to market with measurable statistics that will ~~continue~~help ~~training~~win ~~team~~the much-coveted ~~members~~technology oncompany ~~Hilton~~meetings ~~brand~~when ~~standards~~those are able to be held again. We installed 55” and 65” 4K smart televisions in all guest ~~satisfaction~~rooms and common areas during fiscal year 2019. During fiscal year 2020, ~~hiring~~we ~~and~~completed ~~retaining~~the ~~talents~~installation inof ~~key~~window ~~operations~~washing equipment, ~~and~~giving ~~enhancing~~us the ~~arrival~~ability to wash windows periodically. We also replaced mattresses in all guestrooms and upgraded all ~~experience~~computers in our business center and Hotel administrative offices during fiscal year 2020.

~~The Hotel’s location in the San Francisco Financial District~~Our ~~lends~~highest ~~itself~~priority tois ~~greater~~guest ~~opportunities~~satisfaction. ~~over~~We ~~its~~believe ~~competitors~~that ~~when~~enhancing itthe ~~comes~~guest toexperience ~~developing~~differentiates ~~relationships~~the ~~with~~Hotel ~~the~~from ~~Financial~~our ~~District~~competition ~~entities~~ and ~~the~~is ~~customers~~critical ~~who regularly do business in the downtown area. The ability~~ to ~~capitalize on~~ the ~~strong~~Hotel’s ~~midweek~~objective ~~demand~~ of ~~the~~building ~~individual~~sustainable ~~business~~guest ~~traveler~~loyalty. toIn ~~the~~order ~~Financial~~to ~~District~~make ~~has~~a ~~been~~large ~~the~~impact ~~focus~~on ~~during~~guest experience, the ~~timeframe of strong growth in the market. The~~ Hotel will continue totraining ~~focus~~team members on ~~self-contained~~Hilton ~~group~~brand ~~business~~standards ~~that~~and ~~contributes~~guest tosatisfaction, ~~the~~hiring ~~Food~~ and ~~Beverage operation~~retaining ~~and~~talents ~~make use of the properties meeting space capabilities. Closure of the Moscone Convention Center has limited banquet revenue contribution~~ in ~~fiscal~~key ~~year~~operations, ~~2019~~and ~~but~~enhancing ~~assisted in strong rate growth year over year. With~~ the ~~Moscone~~arrival ~~Convention Center returning to full capacity in calendar year 2019, we hope to see more growth in citywide room nights~~experience.

The Hotel’s islocation ~~also~~in ~~subject~~the San Francisco Financial District lends itself to ~~certain~~greater ~~operating~~opportunities ~~risks~~over ~~common~~its competitors when it comes to ~~all~~developing relationships with the Financial District entities and the customers who regularly do business in the downtown area. The ability to capitalize on the strong midweek demand of the individual business traveler to the Financial District has been the focus during the timeframe of strong growth in the market; however, that customer along with our group customers has significantly reduced occupancy beginning in February 2020 as COVID-19 ravaged the hotel industry,. ~~which~~The ~~could~~Hotel ~~adversely~~has ~~impact~~remained ~~performance~~open during the pandemic as many of our competitors have closed their doors and remained closed. ~~These~~The ~~risks~~key ~~include:~~to growing share during this time will be focusing on service and cleanliness standards to gain customer confidence to return.

~~· Competition for guests and meetings from other hotels including competition and pricing pressure from internet wholesalers and distributors;~~6

·The Hotel ~~increases~~is inalso ~~operating~~subject ~~costs,~~to ~~including~~certain ~~wages,~~operating ~~benefits,~~risks ~~insurance,~~common ~~property taxes and energy, due~~ to ~~inflation~~all ~~and~~of ~~other~~the ~~factors~~hotel industry, which ~~may~~could ~~not~~adversely beimpact ~~offset~~performance. These inrisks ~~the future by increased room rates;~~include:

·● ~~labor~~Competition ~~strikes,~~for ~~disruptions~~guests orand ~~lock~~meetings ~~outs~~from other hotels including competition and pricing pressure from internet wholesalers and distributors;

6● increases in operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation and other factors, which may not be offset in the future by increased room rates;

·● ~~dependence~~labor ~~on demand from business and leisure travelers~~strikes, ~~which~~disruptions ~~may~~or ~~fluctuate~~lock ~~and is seasonal~~outs;

·● ~~increases~~dependence inon ~~energy~~demand ~~costs,~~from ~~cost~~business ~~of fuel, airline fares~~ and ~~other~~leisure ~~expenses related to travel~~travelers, which may ~~negatively~~fluctuate ~~affect~~and ~~traveling~~is seasonal;

·● ~~terrorism,~~increases ~~terrorism~~in ~~alerts~~energy ~~and warnings~~costs, ~~wars~~cost ~~and~~of ~~other military actions~~fuel, ~~pandemics~~airline orfares and other ~~medical~~expenses ~~events~~related orto ~~warnings~~travel, which may ~~result~~negatively inaffect ~~decreases in business and leisure travel~~traveling;

·● ~~natural~~terrorism, ~~disasters;~~terrorism alerts and warnings, wars and other military actions, pandemics or other medical events or warnings which may result in decreases in business and leisure travel;

·● ~~adverse~~natural ~~effects~~disasters; ~~of downturns~~ and ~~recessionary conditions in international, national and/or local economies and market conditions.~~

~~Environmental~~● ~~Matters~~adverse effects of downturns and recessionary conditions in international, national and/or local economies and market conditions.

~~In connection with the ownership of the Hotel, the Company is~~ENVIRONMENTAL subject to various federal, state and local laws, ordinances and regulations relating to environmental protection. Under these laws, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on, under or in such property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances.MATTERS

~~Environmental~~In connection ~~consultants~~with ~~retained by~~ the ~~Partnership~~ownership orof ~~its lenders~~the ~~conducted~~Hotel, ~~updated~~the ~~Phase~~Company Iis ~~environmental~~subject ~~site~~to ~~assessments~~various infederal, ~~fiscal~~state ~~year~~and ~~ended~~local ~~June 30~~laws, ~~2014~~ordinances onand ~~the~~regulations relating ~~Hotel~~to ~~property~~environmental protection. ~~These Phase~~Under Ithese ~~assessments relied~~laws, ina ~~part,~~current onor ~~Phase~~previous Iowner ~~environmental~~or ~~assessments~~operator ~~prepared~~of inreal ~~connection~~estate ~~with~~may ~~the~~be ~~Partnership’s~~liable ~~first~~for ~~mortgage~~the ~~loan~~costs ~~obtained~~of inremoval ~~December~~or ~~2013.~~remediation ~~Phase~~of Icertain ~~assessments~~hazardous ~~are~~or ~~designed~~toxic tosubstances ~~evaluate~~on, ~~the~~under ~~potential~~or ~~for~~in ~~environmental~~such ~~contamination on~~property. ~~properties~~Such ~~based~~laws ~~generally~~often ~~upon~~impose liability ~~site~~without ~~inspections,~~regard ~~facility~~to ~~personnel~~whether ~~interviews,~~the ~~historical~~owner ~~information~~or ~~and~~operator ~~certain~~knew ~~publicly-available databases; however~~of, ~~Phase~~or Iwas ~~assessments~~responsible ~~will~~for, ~~not necessarily reveal~~ the ~~existence~~presence ~~or extent~~ of ~~all~~hazardous ~~environmental conditions, liabilities~~ or ~~compliance concerns at the properties~~toxic substances.

~~Although~~Environmental consultants retained by the ~~Phase~~Partnership Ior ~~assessments~~its ~~and~~lenders ~~other~~conducted updated Phase I environmental ~~reports we~~site ~~have~~assessments ~~reviewed~~in ~~disclose~~fiscal ~~certain~~year ended ~~conditions~~June 30, 2014 on ~~our~~the Hotel property. ~~and~~These ~~the~~Phase ~~use~~I ofassessments ~~hazardous~~relied, ~~substances~~ in ~~operation~~part, ~~and~~on ~~maintenance~~Phase ~~activities~~I environmental assessments prepared ~~that~~in ~~could~~connection ~~pose~~with athe ~~risk~~Partnership’s offirst ~~environmental~~mortgage ~~contamination~~loan orobtained ~~liability,~~in weDecember 2013. Phase I assessments are ~~not~~designed ~~aware~~to evaluate ofthe ~~any~~potential for environmental ~~liability~~contamination ~~that~~on weproperties ~~believe~~based generally upon site inspections, facility personnel ~~would~~interviews, ~~have~~historical ainformation ~~material~~and ~~adverse~~certain ~~effect~~publicly onavailable ~~our~~databases; ~~business~~however, ~~financial~~Phase ~~position,~~I ~~results~~assessments will not necessarily reveal the existence or extent of ~~operations~~all environmental conditions, liabilities or ~~cash~~compliance ~~flows~~concerns at the properties.

~~The Company believes that~~ Although the ~~Hotel~~Phase isI inassessments ~~compliance,~~and inother ~~all material~~environmental ~~respects,~~reports ~~with~~we ~~all~~have ~~federal,~~reviewed ~~state~~disclose ~~and~~certain ~~local~~conditions ~~environmental~~on ~~ordinances~~our property and ~~regulations~~the ~~regarding~~use of hazardous ~~or toxic~~ substances ~~and~~ ~~other~~in ~~environmental~~operation ~~matters,~~and ~~the~~maintenance ~~violation~~activities ofthat ~~which~~ could ~~have~~pose a ~~material~~risk ~~adverse~~of ~~effect~~environmental oncontamination ~~the~~or ~~Company.~~liability, we ~~The~~are ~~Company has~~ not ~~received~~ ~~written~~aware ~~notice from any governmental authority~~ of any ~~material~~environmental ~~noncompliance,~~ liability orthat ~~claim~~we ~~relating~~believe towould ~~hazardous or~~have ~~toxic~~a ~~substances~~material oradverse ~~other~~effect ~~environmental~~on ~~matters~~our inbusiness, ~~connection~~financial position, ~~with~~results ~~any~~ of ~~its~~operations ~~present~~or ~~properties~~cash flows.

~~Competition~~The Company –believes ~~Rental~~that ~~Properties~~the Hotel is in compliance, in all material respects, with all federal, state and local environmental ordinances and regulations regarding hazardous or toxic substances and other environmental matters, the violation of which could have a material adverse effect on the Company. The Company has not received written notice from any governmental authority of any material noncompliance, liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of its present properties.

~~The ownership, operation and leasing of multifamily rental properties~~Competition ~~are~~– ~~highly~~Rental competitive. The Company competes with domestic and foreign financial institutions, other REITs, life insurance companies, pension trusts, trust funds, partnerships and individual investors. In addition, The Company competes for tenants in markets primarily on the basis of property location, rent charged, services provided and the design and condition of improvements. The Company also competes with other quality apartment owned by public and private companies. The number of competitive multifamily properties in a particular market could adversely affect the Company’s ability to lease its multifamily properties, as well as the rents it is able to charge. In addition, other forms of residential properties, including single family housing and town homes, provide housing alternatives to potential residents of quality apartment communities or potential purchasers of for-sale condominium units. The Company competes for residents in its apartment communities based on resident service and amenity offerings and the desirability of the Company’s locations. Resident leases at the Company’s apartment communities are priced competitively based on market conditions, supply and demand characteristics, and the quality and resident service offerings of its communities.Properties

~~EMPLOYEES~~The ownership, operation and leasing of multifamily rental properties are highly competitive. The Company competes with domestic and foreign financial institutions, REITs, life insurance companies, pension trusts, trust funds, partnerships and individual investors. In addition, The Company competes for tenants in markets primarily on the basis of property location, rent charged, services provided and the design and condition of improvements. The Company also competes with other quality apartment owned by public and private companies. The number of competitive multifamily properties in a particular market could adversely affect the Company’s ability to lease its multifamily properties, as well as the rents it is able to charge. In addition, other forms of residential properties, including single family housing and town homes, provide housing alternatives to potential residents of quality apartment communities or potential purchasers of for-sale condominium units. The Company competes for residents in its apartment communities based on resident service and amenity offerings and the desirability of the Company’s locations. Resident leases at the Company’s apartment communities are priced competitively based on market conditions, supply and demand characteristics, and the quality and resident service offerings of its communities.

As of June 30, 2019, the Company had two full-time employees. The employees of the Company are not part of any collective bargaining agreement, and the Company believes that its employee relations are satisfactory.7

7EMPLOYEES

~~Effective~~As of ~~February~~June 330, ~~2017~~2020, the ~~Partnership~~Company had notwo full-time employees. On ~~February~~The ~~3, 2017, Interstate assumed all labor union agreements and retained~~ employees of ~~their choice to continue providing services to~~ the ~~Hotel.~~Company Asare ofnot ~~June~~part ~~30, 2019, approximately 85%~~ of ~~those~~any ~~employees were represented by one of four labor unions, and their terms of employment were determined under various~~ collective bargaining ~~agreements (“CBAs”) to which the~~ ~~Partnership was a party. During the fiscal year ended June 30~~agreement, ~~2019,~~and the ~~Partnership~~Company ~~renewed~~believes ~~the~~that ~~CBA~~its ~~for~~employee ~~Local~~relations 39are ~~(Stationary Engineers), and Local 665 (Parking Employees)~~satisfactory. ~~CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2018 and was renewed in August 2019. CBA for Local 856 (International Brotherhood of Teamsters) will expire on December 31, 2022.~~

~~Negotiation~~Effective February of3, ~~collective~~2017, ~~bargaining~~the ~~agreements~~Partnership had no employees. On February 3, ~~which~~ ~~includes~~2017, ~~not~~Interstate ~~just~~assumed ~~terms~~all labor union agreements and ~~conditions~~retained employees of ~~employment,~~their ~~but~~choice ~~scope~~to ~~and~~continue ~~coverage~~providing services to the Hotel. As of ~~employees~~June 30, is2020, aapproximately ~~regular~~87% ~~and~~of ~~expected~~those ~~course~~employees ofwere ~~business~~represented ~~operations~~by ~~for~~one ~~the~~of ~~Partnership~~three ~~and~~labor ~~Interstate.~~unions, ~~The~~and ~~Partnership~~their ~~expects~~terms ~~and~~of ~~anticipates~~employment ~~that~~were ~~the~~determined ~~terms~~under ofvarious ~~conditions~~collective bargaining ofagreements (“CBAs”) ~~will~~to ~~have~~which anthe ~~impact~~Partnership onwas ~~wage~~a ~~and~~party. ~~benefit~~During ~~costs,~~the ~~operating~~fiscal ~~expenses~~year ended June 30, 2020, the Partnership renewed the CBA for Local 2 (Hotel and ~~certain~~Restaurant ~~hotel~~Employees). ~~operations~~CBA ~~during~~for ~~the~~Local ~~life~~856 (International Brotherhood of ~~each~~Teamsters) will ~~CBA~~expire on December 31, ~~and~~2022. ~~incorporates~~CBA ~~these~~for ~~principles~~Local ~~into~~39 ~~its~~(Stationary ~~operating~~Engineers) ~~and~~will ~~budgetary~~expire ~~practices~~on July 31, 2024.

~~ADDITIONAL~~Negotiation of ~~INFORMATION~~collective bargaining agreements, which includes not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Partnership and Interstate. The Partnership expects and anticipates that the terms of conditions of the CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of the CBAs, and incorporates these principles into its operating and budgetary practices.

~~The Company files annual and quarterly reports on Forms 10-K~~ADDITIONAL and 10-Q, current reports on Form 8-K and other information with the Securities and Exchange Commission (“SEC” or the “Commission”). The public may read and copy any materials that we file with the Commission at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.INFORMATION

~~Other~~The Company files annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information ~~about~~with the Securities ~~Company~~and ~~can~~Exchange beCommission ~~found~~(“SEC” onor ~~our~~the ~~parent~~“Commission”). The public may read and copy any materials ~~company~~that we file with the Commission at the SEC’s ~~website~~Public ~~www~~Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 a.~~intgla~~m.~~com~~ to 3:00 p.m. You may obtain information on the operation of the Public Reference Room inby ~~this~~calling ~~document~~the toCommission ~~that~~at ~~website~~1-800-SEC-0330. ~~address~~The ~~does~~Commission ~~not~~also ~~constitute~~maintains ~~incorporation~~an Internet site at http://www.sec.gov bythat ~~reference~~contains ofreports, ~~the~~proxy and information ~~contained~~statements, onand other information regarding issuers that file electronically with the ~~website~~Commission.

~~Item~~Other information 1Aabout the Company can be found on our parent company’s website www.intgla.com. ~~Risk~~Reference ~~Factors~~in this document to that website address does not constitute incorporation by reference of the information contained on the website.

~~Adverse changes in the U~~Item 1A.S. ~~and~~Risk ~~global economies could negatively impact our financial performance~~Factors.

~~Due~~The responses toby afederal, ~~number of factors affecting consumers~~state, ~~the~~ ~~outlook for the lodging industry remains uncertain. These factors have resulted at times in the past~~ and ~~could~~local ~~continue~~civil authorities to ~~result~~ in the ~~future~~COVID-19 inpandemic ~~fewer~~has ~~customers~~had ~~visiting,~~a ormaterial ~~customers~~detrimental ~~spending~~impact ~~less,~~on ~~in San Francisco~~our business, asfinancial ~~compared~~results ~~to prior periods. Leisure travel~~ and ~~other leisure activities represent discretionary expenditures~~liquidity, and ~~participation in~~ such ~~activities~~impact ~~tends~~could toworsen ~~decline during~~and ~~economic~~last ~~downturns, during which consumers generally have less disposable income. As a result, in those times customer demand~~ for ~~the~~an ~~luxury~~unknown ~~amenities~~period ~~and leisure activities that we offer may decline. Furthermore, during periods~~ of ~~economic contraction, revenues may decrease while some of our costs remain fixed or even increase, resulting in decreased earnings~~time.

~~Weakened~~ The global ~~economic~~spread ~~conditions~~of ~~may~~the ~~adversely~~COVID-19 ~~affect~~pandemic is complex and rapidly-evolving, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses, cancellation of events, including sporting events, conferences and meetings, and quarantines and lock-downs. The shelter-in-place, physical distancing, quarantine measures, city closures and their consequences have dramatically reduced travel, conventions and demand for hotel rooms, which has and will continue to impact our business, ~~industry~~operations, and financial results. The extent to which the closures impacts our business, operations, and financial results, including the duration and magnitude of ~~operations~~such effects, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the closures; the negative impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; our ability to successfully navigate the impacts of the closures; governments actions, businesses and individuals take in response to the closures, including limiting or banning travel; and how quickly economies, travel activity, and demand for lodging recovers after the closures subsides.

Our overall performance depends in part on worldwide economic conditions which could adversely affect the tourism industry. According to current economic news reports, the United States and other key international economies may be subject to a recession, characterized by falling demand for a variety of goods and services, restricted credit, going concern threats to financial institutions, major multinational companies and medium and small businesses, poor liquidity, declining asset values, reduced corporate profitability, and volatility in credit, equity and foreign exchange markets. These conditions affect discretionary and leisure spending and could adversely affect our customers’ ability or willingness to travel to destinations for leisure and cutback on discretionary business travel, which could adversely affect our operating results. In addition, in a weakened economy, companies that have competing properties may reduce room rates and other prices which could also reduce our average revenues and harm our operating results.8

WeThe COVID-19 ~~operate~~closures ahave ~~single~~subjected ~~property~~our ~~located~~business, inoperations ~~San Francisco~~ and ~~rely~~ onfinancial ~~the~~condition ~~San~~to ~~Francisco market. Changes adversely impacting this market could have~~ a ~~material~~number ~~effect~~of onrisks, ~~our business~~including, ~~financial condition~~but ~~and~~not ~~results~~limited to, ofthose ~~operations.~~discussed below:

Our business has a limited base of operations and substantially all of our revenues are currently generated by the Hotel. Accordingly, we are subject to greater risks than a more diversified hotel or resort operator and the profitability of our operations is linked to local economic conditions in San Francisco. The combination of a decline in the local economy of San Francisco, reliance on a single location and the significant investment associated with it may cause our operating results to fluctuate significantly and may adversely affect us and materially affect our total profitability.

●	Risks Related to Revenue: The COVID-19 closures and other imposed restrictions have negatively impacted and will in the future negatively impact to an extent we are unable to predict, our revenue from the Hotel. Currently, the Hotel is not generating revenue sufficient to meet its operating expenses, which is adversely affecting our net income.

●	Risks Related to Operations: Because of the significant decline in the demand for hotel rooms, the Hotel has taken steps to reduce operating costs and improve efficiency, including furloughing a substantial number of its personnel and implementing reduced work weeks for other personnel. Such steps, and further changes we may make in the future to reduce costs, may negatively impact guest loyalty, or our ability to attract and retain associates, and our reputation and market share may suffer as a result. For example, if our furloughed personnel do not return to work with us when the COVID-19 closures and imposed restrictions are lifted, including because they find new jobs during the furlough, we may experience operational challenges that impact guest loyalty and our market share, which could limit our ability to grow revenue and could reduce our profits. Further, reputational damage from, and the financial impact of, reduced work weeks could lead associates to depart the company and could make it harder for us to recruit new associates in the future. We may also face demands or requests from labor unions that represent our associates, whether in the course of our periodic renegotiation of our collective bargaining agreements or otherwise, for additional compensation, healthcare benefits or other terms as a result of COVID-19 that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our COVID-19 mitigation plans.

8COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, could also precipitate or aggravate the other risk factors that we identify in this annual report, which in turn could materially adversely affect our business, financial condition, liquidity, and results of operations (including revenues and profitability). Further, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider presenting significant risks to our operations.

WeAdverse changes ~~face~~in ~~intense~~the ~~local~~U.S. and ~~increasingly~~global ~~national~~economies ~~competition which~~ could negatively impact our ~~operations~~financial ~~and adversely affect our business and results of operations~~performance.

WeDue to ~~operate~~a innumber ~~the~~of ~~highly-competitive~~factors ~~San~~affecting ~~Francisco~~consumers, ~~hotel~~the ~~industry. The~~outlook ~~Hotel~~for ~~competes~~the ~~with~~lodging ~~other~~industry ~~high-quality~~remains ~~Northern~~uncertain. ~~California~~These ~~hotels~~factors ~~and~~have ~~resorts.~~resulted at ~~Many~~times ofin ~~these~~the ~~competitors~~past ~~seek~~and tocould ~~attract~~continue ~~customers~~ to ~~their~~result ~~properties~~in bythe ~~providing~~future ~~food~~in ~~and~~fewer ~~beverage~~customers ~~outlets~~visiting, ~~retail~~or ~~stores~~customers ~~and~~spending ~~other related amenities~~less, in ~~addition to hotel accommodations.~~San ToFrancisco, ~~the~~as ~~extent~~compared ~~that we seek~~ to ~~enhance~~prior ~~our revenue base by offering our own various amenities, we compete with the service offerings provided by these competitors~~periods. ~~Many~~Leisure oftravel ~~the competing properties have themes~~ and ~~attractions~~other ~~which~~leisure ~~draw~~activities arepresent ~~significant~~discretionary ~~number~~expenditures, ofand ~~visitors~~participation ~~and~~in ~~directly~~such ~~compete~~activities ~~with~~tends ~~our~~to ~~operations.~~decline ~~Some~~during ofeconomic ~~these~~downturns, ~~properties~~during ~~are~~which ~~operated~~consumers bygenerally ~~subsidiaries or divisions of large public companies that may~~ have ~~greater~~less ~~name recognition and financial and marketing resources than we do and market to the same~~disposable ~~target demographic group as we do~~income. ~~Various~~As ~~competitors~~a ~~are~~result, ~~expanding~~in ~~and~~those ~~renovating~~times ~~their~~customer ~~existing~~demand ~~facilities.~~for ~~We believe that competition in~~ the ~~San~~luxury ~~Francisco hotel and resort industry is based on certain property-specific factors, including overall atmosphere, range of~~ amenities, ~~price, location, technology infrastructure, entertainment attractions, theme~~ and ~~size.~~leisure ~~Any~~activities ~~market perception~~ that we dooffer ~~not~~may ~~excel with respect to such property-specific factors could adversely affect our ability to compete effectively~~decline. IfFurthermore, weduring ~~are~~periods ~~unable~~of toeconomic ~~compete effectively~~contraction, werevenues ~~could~~may ~~lose~~decrease ~~market~~while ~~share,~~some ~~which~~of ~~could~~our ~~adversely~~costs ~~affect~~remain ~~our~~fixed ~~business~~or ~~and~~even ~~results~~increase, resulting ofin ~~operations~~decreased earnings.

~~The San Francisco hotel and resort industry is capital intensive;~~Weakened ~~financing~~global ~~our~~economic ~~renovations~~conditions ~~and~~may ~~future~~adversely ~~capital~~affect ~~improvements could reduce~~ our ~~cash~~industry, ~~flow~~business and ~~adversely~~results ~~affect~~of ~~our financial performance~~operations.

~~The~~Our overall ~~Hotel~~performance ~~has~~depends anin ~~ongoing~~part ~~need~~on ~~for~~worldwide ~~renovations~~economic conditions which could adversely affect the tourism industry. According to current economic news reports, the United States and other ~~capital improvements~~key international economies may be subject to ~~remain~~a ~~competitive~~recession, ~~including~~characterized by ~~replacement~~falling demand for a variety of goods and services, ~~from~~restricted ~~time~~credit, going concern threats to ~~time~~financial institutions, ofmajor multinational ~~furniture~~companies and medium and small businesses, ~~fixtures~~poor liquidity, declining asset values, reduced corporate profitability, and ~~equipment~~volatility in credit, equity and foreign exchange markets. WeThese ~~will~~conditions ~~also~~affect discretionary and leisure spending and ~~need~~could toadversely ~~make~~affect ~~capital~~our ~~expenditures~~customers’ ability or willingness to ~~comply~~travel ~~with~~to ~~applicable~~destinations ~~laws~~for leisure and ~~regulations~~cutback on discretionary business travel, which could adversely affect our operating results. In addition, in a weakened economy, companies that have competing properties may reduce room rates and other prices which could also reduce our average revenues and harm our operating results.

Renovations and other capital improvements of hotels require significant capital expenditures. In addition, renovations and capital improvements of hotels usually generate little or no cash flow until the project’s completion. We ~~may not be able to fund such projects solely from cash provided from our operating~~ ~~activities.~~operate ~~Consequently,~~a wesingle ~~will~~property ~~rely~~located ~~upon~~in ~~the~~San ~~availability~~Francisco ~~of debt or equity capital~~ and ~~reserve~~rely ~~funds to fund renovations and capital improvements and our ability to carry them out will be limited if we cannot obtain satisfactory debt or equity financing, which will depend~~ on, ~~among~~the ~~other~~San ~~things,~~Francisco market ~~conditions~~. NoChanges ~~assurances~~adversely ~~can~~impacting bethis ~~made that we will be able to obtain additional~~market ~~equity~~could orhave ~~debt~~a ~~financing~~material oreffect ~~that~~on weour ~~will~~business, befinancial ~~able~~condition toand ~~obtain~~results ~~such~~of ~~financing on favorable terms~~operations.

~~Renovations~~Our business has a limited base of operations and ~~other~~substantially ~~capital~~all ~~improvements~~of ~~may~~our ~~give~~revenues ~~rise~~are to currently generated by the ~~following~~Hotel. ~~additional~~Accordingly, we are subject to greater risks, ~~among~~than ~~others:~~a ~~construction~~more ~~cost~~diversified ~~overruns~~hotel ~~and~~or ~~delays;~~resort ~~increased~~operator ~~prices~~and the profitability of ~~materials~~our ~~due~~operations tois ~~tariffs;~~linked ~~temporary~~to ~~closures~~local ofeconomic ~~all~~conditions orin aSan ~~portion~~Francisco. The combination of a decline in the ~~Hotel~~local toeconomy ~~customers;~~of ~~disruption~~San inFrancisco, ~~service~~reliance on a single location and ~~room~~the ~~availability~~significant ~~causing~~investment ~~reduced~~associated ~~demand, occupancy~~with it may cause our operating results to fluctuate significantly and ~~rates;~~may adversely affect us and ~~possible~~materially ~~environmental~~affect ~~issues~~our total profitability.

AsWe face aintense ~~result,~~local ~~renovations~~ and ~~any~~increasingly ~~other~~national ~~future~~competition ~~capital~~which ~~improvement projects~~could ~~may~~impact ~~increase~~ our ~~expenses,~~operations ~~reduce our cash flows~~ and ~~our~~adversely ~~revenues.~~affect ~~If capital expenditures exceed~~ our ~~expectations,~~business ~~this~~and ~~excess~~results ~~would~~of ~~have an adverse effect on our available cash~~operations.

We operate ~~have~~in ~~substantial~~the ~~debt,~~highly competitive San Francisco hotel industry. The Hotel competes with other high-quality Northern California hotels and weresorts. ~~may~~Many ~~incur~~of ~~additional~~these ~~indebtedness~~competitors seek to attract customers to their properties by providing, ~~which~~ ~~may~~food ~~negatively~~and ~~affect~~beverage ~~our~~outlets, retail ~~business~~stores and ~~financial~~other ~~results~~related amenities, in addition to hotel accommodations. To the extent that we seek to enhance our revenue base by offering our own various amenities, we compete with the service offerings provided by these competitors.

We have substantial debt service obligations. Our substantial debt may negatively affect our business and operations in several ways, including: requiring us to use a substantial portion of our funds from operations to make required payments on principal and interest, which will reduce funds available for operations and capital expenditures, future business opportunities and other purposes; making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions; limiting our flexibility in planning for, or reacting to, changes in the business and the industry in which we operate; placing us at a competitive disadvantage compared to our competitors that have less debt; limiting our ability to borrow more money for operations, capital or to finance acquisitions in the future; and requiring us to dispose of assets, if needed, in order to make required payments of interest and principal.9

~~Our~~Many of ~~business~~the ~~model~~competing ~~involves~~properties ~~high~~have ~~fixed~~themes ~~costs,~~and ~~including~~attractions ~~property~~which draw a significant number of visitors and directly compete with ~~taxes~~our operations. Some of these properties are operated by subsidiaries or divisions of large public companies that may have greater name recognition and ~~insurance~~financial ~~costs,~~and ~~which~~marketing resources than we ~~may~~do beand ~~unable~~market to ~~adjust~~the insame atarget ~~timely~~demographic ~~manner~~group as we do. Various competitors are expanding and renovating their existing facilities. We believe that competition in ~~response~~the San Francisco hotel and resort industry is based on certain property-specific factors, including overall atmosphere, range of amenities, price, location, technology infrastructure, entertainment attractions, theme and size. Any market perception that we do not excel with respect to asuch ~~reduction~~property-specific infactors could adversely affect our ~~revenues~~ability to compete effectively. If we are unable to compete effectively, we could lose market share, which could adversely affect our business and results of operations.

The ~~costs associated with owning and operating the Hotel are~~ ~~significant.~~San ~~Some~~Francisco ofhotel ~~these costs (such as property taxes~~ and ~~insurance~~resort ~~costs)~~industry ~~are~~is ~~fixed,~~capital ~~meaning~~intensive; ~~that~~financing ~~such costs may not be altered in a timely manner in response to changes in demand for services. Failure to adjust~~ our ~~expenses~~renovations ~~may adversely affect our business~~ and ~~results~~future ofcapital ~~operations.~~improvements ~~Our real property taxes may increase as property tax rates change and as the values of properties are~~could ~~assessed~~reduce ~~and reassessed by tax authorities. Our real estate taxes do not depend on~~ our ~~revenues,~~cash flow and ~~generally~~adversely weaffect ~~could not reduce them other than by disposing of~~ our ~~real~~financial ~~estate assets~~performance.

~~Insurance~~The Hotel ~~premiums~~has ~~have~~an ~~increased~~ongoing ~~significantly~~need infor ~~recent~~renovations ~~years,~~ and ~~continued~~other ~~escalation~~capital ~~may~~improvements ~~result in our inability~~ to ~~obtain~~remain ~~adequate~~competitive, ~~insurance~~including atreplacement, ~~acceptable~~from ~~premium~~time to ~~rates.~~time, ~~A continuation~~ of ~~this~~ ~~trend~~furniture, ~~would~~fixtures ~~appreciably~~and ~~increase the operating expenses of the Hotel~~equipment. IfWe wewill doalso ~~not~~need ~~obtain adequate insurance,~~ to ~~the~~make ~~extent that~~capital ~~any~~expenditures ofto ~~the~~comply ~~events~~with ~~not~~applicable ~~covered~~laws ~~by an insurance policy materialize, our financial condition may be materially adversely affected~~and regulations.

9Renovations and other capital improvements of hotels require significant capital expenditures. In addition, renovations and capital improvements of hotels usually generate little or no cash flow until the project’s completion. We may not be able to fund such projects solely from cash provided from our operating activities. Consequently, we will rely upon the availability of debt or equity capital and reserve funds to fund renovations and capital improvements and our ability to carry them out will be limited if we cannot obtain satisfactory debt or equity financing, which will depend on, among other things, market conditions. No assurances can be made that we will be able to obtain additional equity or debt financing or that we will be able to obtain such financing on favorable terms.

InRenovations and ~~the~~other ~~future,~~capital ~~our~~improvements ~~property~~ may begive ~~subject~~rise to ~~increases~~the infollowing ~~real estate~~additional ~~and other tax rates~~risks, ~~utility~~among ~~costs,~~others: ~~operating~~construction ~~expenses,~~cost ~~insurance~~overruns ~~costs, repairs~~ and ~~maintenance and administrative expenses,~~delays; ~~which~~increased ~~could~~prices ~~reduce~~of ~~our~~materials ~~cash~~due ~~flow~~to ~~and~~tariffs; ~~adversely~~temporary ~~affect~~closures ~~our~~of ~~financial~~all ~~performance.~~or Ifa ~~our~~portion ~~revenues~~of ~~decline~~the ~~and~~Hotel weto ~~are~~customers; ~~unable~~disruption ~~to reduce~~in ~~our~~service ~~expenses~~and inroom aavailability ~~timely~~causing ~~manner~~reduced demand, ~~our~~occupancy ~~business~~ and ~~results~~rates; ofand ~~operations~~possible ~~could~~environmental ~~be adversely affected~~issues.

~~Risk~~As a ofresult, ~~declining~~renovations ~~market~~and ~~values~~any inother ~~marketable~~future ~~securities~~capital improvement projects may increase our expenses, reduce our cash flows and our revenues. If capital expenditures exceed our expectations, this excess would have an adverse effect on our available cash.

~~The Company invests from time to time in marketable securities.~~We Ashave asubstantial ~~result~~debt, ~~the~~and ~~Company~~we ismay ~~exposed~~incur toadditional ~~market~~indebtedness, ~~volatility~~which inmay ~~connection~~negatively ~~with~~affect ~~these~~our ~~investments.~~business ~~The Company's financial position~~ and financial ~~performance could be adversely affected by worsening market conditions or sluggish performance of such investments~~results.

~~Illiquidity~~We have ~~risk~~substantial debt service obligations. Our substantial debt may negatively affect our business and operations in ~~nonmarketable~~several ~~securities~~ways, including: requiring us to use a substantial portion of our funds from operations to make required payments on principal and interest, which will reduce funds available for operations and capital expenditures, future business opportunities and other purposes; making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions; limiting our flexibility in planning for, or reacting to, changes in the business and the industry in which we operate; placing us at a competitive disadvantage compared to our competitors that have less debt; limiting our ability to borrow more money for operations, capital or to finance acquisitions in the future; and requiring us to dispose of assets, if needed, in order to make required payments of interest and principal.

~~Nonmarketable securities are, by definition,~~Our ~~instruments~~business ~~that~~model ~~are~~involves ~~not~~high ~~readily~~fixed ~~salable~~costs, inincluding ~~the~~property ~~capital~~taxes ~~markets,~~ and ~~when~~insurance ~~sold are usually at a substantial discount. Thus~~costs, ~~the~~ ~~holder~~which iswe ~~limited~~may ~~to return on investment from any income producing feature of the instrument, as any sale of such an instrument would~~ be ~~subject~~unable to aadjust ~~substantial~~in ~~discount. Thus,~~ a timely ~~holder~~manner ~~may~~in ~~need~~response to ~~hold such instruments for long period of time and not be able to realize~~ a ~~return~~reduction ofin ~~their~~our ~~cash investment should there be a need to liquidate to obtain cash at any given time~~revenues.

~~Litigation~~The costs associated with owning and ~~legal~~operating ~~proceedings~~the ~~could~~Hotel ~~expose~~are ussignificant. Some of these costs (such as property taxes and insurance costs) are fixed, meaning that such costs may not be altered in a timely manner in response to ~~significant~~changes in demand for services. ~~liabilities~~Failure ~~and~~to ~~thus~~adjust ~~negatively~~our expenses may adversely affect our ~~financial~~business and results of operations. Our real property taxes may increase as property tax rates change and as the values of properties are assessed and reassessed by tax authorities. Our real estate taxes do not depend on our revenues, and generally we could not reduce them other than by disposing of our real estate assets.

WeInsurance premiums ~~are~~have aincreased ~~party~~significantly in recent years, ~~from~~and ~~time~~continued toescalation ~~time,~~may toresult ~~various~~in ~~litigation~~our ~~claims and~~inability ~~legal~~to ~~proceedings,~~obtain ~~government~~adequate insurance ~~and~~at ~~regulatory~~acceptable ~~inquiries~~premium ~~and/or~~rates. ~~proceedings,~~A ~~including,~~continuation ~~but~~of ~~not~~this ~~limited~~trend ~~to,~~would ~~intellectual~~appreciably ~~property, premises~~increase ~~liability~~the ~~and~~operating ~~breach~~expenses of ~~contract~~the ~~claims~~Hotel. If ~~Material~~we ~~legal~~do ~~proceedings~~not ~~are~~obtain ~~described~~adequate ~~more~~insurance, ~~fully~~to inthe ~~Note~~extent ~~17,~~that ~~Commitments~~any ~~and Contingencies,~~of tothe ~~our~~events ~~consolidated~~not ~~financial~~covered ~~statements,~~by ~~included~~an ininsurance ~~Item~~policy 8materialize, ofour financial ~~this~~condition ~~Annual~~may ~~Report~~be onmaterially ~~Form~~adversely ~~10-K~~affected.

~~Litigation~~In the isfuture, ~~inherently~~our ~~unpredictable,~~property ~~and~~may ~~defending~~be ~~these proceedings~~subject ~~can~~to ~~result~~increases in ~~significant~~real ~~ongoing~~estate ~~expenditures~~ and ~~the~~other ~~diversion~~tax ofrates, ~~our~~utility ~~management’s~~costs, ~~time~~operating ~~and~~expenses, ~~attention from~~insurance ~~the~~costs, ~~operation~~repairs ofand ~~our~~maintenance ~~business~~and administrative expenses, which could ~~have~~reduce ~~a negative effect on~~ our ~~business~~cash ~~operations.~~flow ~~Our~~and ~~failure~~adversely toaffect ~~successfully~~our ~~defend~~financial orperformance. ~~settle~~If ~~any~~our ~~litigation~~revenues ordecline ~~legal~~and ~~proceedings~~we ~~could~~are ~~result~~unable ~~in liabilities that,~~ to ~~the~~reduce ~~extent not covered by~~ our ~~insurance,~~expenses ~~could have~~in a ~~material~~timely ~~adverse~~manner, ~~effect~~our onbusiness ~~our~~and ~~financial~~results ~~condition,~~of operations ~~revenue~~could ~~and~~be ~~profitability~~adversely affected.

~~The threat of terrorism could adversely affect the number of customer visits to the Hotel.~~10

~~The threat~~ Risk of ~~terrorism~~declining ~~has~~market ~~caused,~~values ~~and may~~ in ~~the~~marketable ~~future cause, a significant decrease in customer visits to San Francisco due to disruptions in commercial and leisure travel patterns and concerns about travel safety~~securities. We cannot predict the extent to which disruptions in air or other forms of travel as a result of any further terrorist act, outbreak of hostilities or escalation of war would adversely affect our financial condition, results of operations or cash flows. The possibility of future attacks may hamper business and leisure travel patterns and, accordingly, the performance of our business and our operations.

WeThe Company ~~depend~~invests infrom ~~part,~~time onto ~~third~~time ~~party~~in ~~management~~marketable ~~companies~~securities. ~~for the~~As ~~future~~a ~~success~~result, ~~of our business and~~ the ~~loss~~Company ofis ~~one~~exposed orto ~~more~~market ofvolatility ~~their~~in ~~key~~connection with ~~personnel~~these ~~could~~investments. ~~have~~The anCompany’s ~~adverse~~financial ~~effect~~position onand ~~our~~financial ~~ability to~~performance ~~manage~~could ~~our~~be ~~business~~adversely ~~and~~affected ~~operate~~by ~~successfully~~worsening market ~~and~~conditions ~~competitively,~~ or ~~could~~sluggish beperformance ~~negatively~~of ~~perceived~~such ~~in the capital markets~~investments.

~~The Hotel is managed by Interstate. Their ability to manage~~Illiquidity ~~the~~risk ~~Hotel and to operate successfully and competitively is dependent,~~ in ~~part,~~nonmarketable upon the efforts and continued service of their managers. The departure of key personnel of current or future management companies could have an adverse effect on our business and our ability to operate successfully and competitively, and it could be difficult to find replacements for these key personnel, as competition for such personnel is intense.securities

~~Seasonality~~Nonmarketable securities are, by definition, instruments that are not readily salable in the capital markets, and ~~other~~when ~~related~~sold ~~factors~~are ~~such~~usually at a substantial discount. Thus, the holder is limited to return on investment from any income producing feature of the instrument, as ~~weather~~any ~~can~~sale of such an instrument would be subject to a substantial discount. Thus, a holder may need to hold such instruments for long period of time and not be ~~expected~~able to ~~cause~~realize ~~quarterly~~a ~~fluctuations~~return inof ~~revenue~~their cash investment should there be a need to liquidate to obtain cash at ~~the~~any ~~Hotel.~~given time.

~~The hotel~~ Litigation and ~~resort~~legal ~~industry~~proceedings ~~are~~could ~~seasonal~~expose inus ~~nature. This seasonality can tend~~ to ~~cause~~significant ~~quarterly~~liabilities ~~fluctuations~~and inthus ~~revenues~~negatively ataffect ~~the Hotel. Our quarterly earnings may also be adversely affected by other related factors outside~~ our ~~control,~~financial ~~including weather conditions and poor economic conditions~~results. ~~As a result, we may have to enter into short-term borrowings in certain quarters in order to offset these quarterly fluctuations in our revenues.~~

We are a party, from time to time, to various litigation claims and legal proceedings, government and regulatory inquiries and/or proceedings, including, but not limited to, intellectual property, premises liability and breach of contract claims. Material legal proceedings are described more fully in Note 17, Commitments and Contingencies, to our consolidated financial statements, included in Item 8 of this Annual Report on Form 10-K.

~~The~~Litigation is ~~hotel~~inherently ~~industry~~unpredictable, isand ~~heavily~~defending ~~regulated~~these proceedings can result in significant ongoing expenditures and the diversion of our management’s time and attention from the operation of our business, which could have a negative effect on our business operations. Our failure to ~~comply with~~successfully ~~extensive~~defend ~~regulatory~~or ~~requirements~~settle ~~may~~any litigation or legal proceedings could result in anliabilities that, to the extent not covered by our insurance, could have a material adverse effect on our ~~business.~~financial condition, revenue and profitability.

The ~~hotel industry is subject to extensive regulation and the~~ ~~Hotel~~threat ~~must maintain its licenses and pay taxes and fees to continue operations. Our property is subject to numerous laws, including those relating to the preparation and sale~~ of ~~food~~terrorism and beverages, including alcohol. We are also subject to laws governing our relationship with our employees in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and firing employees and work permits. Also, our ability to remodel, refurbish or add to our property may be dependent upon our obtaining necessary building permits from local authorities. The failure to obtain any of these permits could adversely affect ~~our ability to increase revenues and net income through capital improvements of our property. In addition, we are subject to~~ the ~~numerous~~number rules and regulations relating to state and federal taxation. Compliance with these rules and regulations requires significant management attention. Furthermore, compliance costs associated with such laws, regulations and licenses are significant. Any change in the laws, regulations or licenses applicable to our business or a violation of ~~any~~customer ~~current~~visits ~~or future laws or regulations applicable~~ to our business or gaming license could require us to make substantial expenditures or could otherwise negatively affect our gaming operations. Any failure to comply with all such rules and regulations could subject us to fines or audits by the ~~applicable taxation authority~~Hotel.

~~Violations~~The threat of ~~laws~~terrorism ~~could~~has ~~result~~caused, and may in, ~~among~~the ~~other~~future ~~things~~cause, ~~disciplinary~~a significant decrease in customer visits to San Francisco due to ~~action~~disruptions in commercial and leisure travel patterns and concerns about travel safety. IfWe wecannot ~~fail~~predict the extent to ~~comply~~which disruptions ~~with~~in ~~regulatory~~air ~~requirements~~or other forms of travel as a result of any further terrorist act, ~~this~~outbreak of hostilities or escalation of war would adversely affect our financial condition, results of operations or cash flows. The possibility of future attacks may hamper ~~result~~business inand anleisure ~~adverse~~travel ~~effect~~patterns onand, accordingly, the performance of our business and our operations.

~~Uninsured~~We depend in part, on third party management companies for the future success of our business and ~~underinsured~~the ~~losses~~loss ~~could~~of ~~adversely~~one ~~affect~~or more of their key personnel could have an adverse effect on our ~~financial~~ability ~~condition~~to manage our business and ~~results~~operate ofsuccessfully ~~operations~~and competitively, or could be negatively perceived in the capital markets.

~~There~~The Hotel ~~are~~is ~~certain~~managed ~~types~~by ofInterstate. ~~losses,~~Their ~~generally~~ability ofto amanage ~~catastrophic nature,~~the ~~such~~Hotel ~~as earthquakes~~ and ~~floods~~to oroperate ~~terrorist~~successfully ~~acts,~~and ~~which~~competitively ~~may~~is ~~be uninsurable or not economically insurable~~dependent, ~~or may be subject~~ toin ~~insurance coverage limitations~~part, ~~such~~upon asthe ~~large~~efforts ~~deductibles~~and orcontinued ~~co-payments.~~service Weof ~~will~~their ~~use~~managers. ~~our~~The ~~discretion~~departure ~~in determining amounts, coverage limits, deductibility provisions~~ of ~~insurance~~key ~~and~~personnel ~~the appropriateness~~ of ~~self-insuring,~~current ~~with~~or afuture ~~view to maintaining appropriate~~management ~~insurance~~companies ~~coverage~~could onhave ~~our~~an ~~investments~~adverse ateffect ~~a reasonable cost and~~ on ~~suitable~~our ~~terms.~~business ~~Uninsured~~ and ~~underinsured losses could harm~~ our ~~financial~~ability ~~condition and results of operations. We could incur liabilities resulting from loss or injury~~ to ~~the~~operate ~~Hotel~~successfully orand ~~to persons at the Hotel. Claims~~competitively, ~~whether~~and orit ~~not they have merit,~~ could be ~~harm~~difficult ~~the reputation of the Hotel or cause us~~ to ~~incur~~find ~~expenses to~~replacements ~~the~~for ~~extent~~these ofkey ~~insurance deductibles or losses in excess of policy limitations~~personnel, ~~which~~as ~~could~~competition ~~harm~~for ~~our~~such ~~results~~personnel ofis ~~operations~~intense.

~~In the event of a catastrophic loss, our insurance coverage~~Seasonality ~~may~~and not be sufficient to cover the full current market value or replacement cost of our lost investment. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in the Hotel, as well as the anticipated future revenue from the property. In that event, we might nevertheless remain obligated for any mortgage debt or other ~~financial obligations~~ related tofactors ~~the~~such ~~Hotel.~~as Inweather ~~the~~can ~~event of a significant loss, our deductible may~~ be ~~high~~expected ~~and we may be required~~ to ~~pay~~cause ~~for~~quarterly ~~all~~fluctuations ~~such repairs and, as a consequence, it could materially adversely affect our financial condition. Inflation, changes~~ in ~~building~~revenue ~~codes~~at ~~and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate~~ the Hotel ~~after it has been damaged or destroyed~~. ~~Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property.~~

~~It has generally become more difficult and expensive to obtain~~The ~~property~~hotel and ~~casualty~~resort ~~insurance,~~industry ~~including~~are ~~coverage~~seasonal ~~for~~in ~~terrorism~~nature. ~~When~~This ~~our~~seasonality ~~current~~can ~~insurance~~tend ~~policies~~to ~~expire,~~cause wequarterly ~~may~~fluctuations ~~encounter difficulty~~ in ~~obtaining~~revenues ~~or renewing property or casualty insurance on our property~~ at the ~~same levels of coverage and under similar~~ ~~terms~~Hotel. ~~Such~~Our ~~insurance~~quarterly earnings may also be ~~more~~adversely ~~limited~~affected ~~and~~by ~~for~~other ~~some~~related ~~catastrophic~~factors ~~risks~~outside ~~(for~~our ~~example~~control, ~~earthquake,~~including ~~flood~~weather conditions and ~~terrorism)~~poor ~~may~~economic ~~not be generally available at current levels~~conditions. ~~Even~~As ifa ~~we are able to renew our policies or to obtain new policies at levels and with limitations consistent with our current policies~~result, we ~~cannot~~may behave ~~sure that we will be able~~ to ~~obtain~~enter ~~such~~into ~~insurance~~short-term atborrowings ~~premium~~in ~~rates that are commercially reasonable. If we were unable to obtain adequate insurance on the Hotel for~~ certain ~~risks,~~quarters ~~it could cause us to be~~ in ~~default~~order ~~under specific covenants on certain of our indebtedness or other contractual commitments that require us~~ to ~~maintain~~ ~~adequate insurance on the Hotel to protect against the risk of loss. If this were to occur, or if we were unable to obtain~~offset ~~adequate~~these ~~insurance~~quarterly ~~and~~fluctuations ~~the~~in ~~Hotel experienced damage which would otherwise have been covered by insurance, it could materially adversely affect~~ our ~~financial condition and the operations of the Hotel~~revenues.

InThe hotel ~~addition,~~industry ~~insurance~~is ~~coverage~~heavily ~~for~~regulated ~~the Hotel~~ and ~~for~~failure ~~casualty losses~~to ~~does~~comply ~~not~~with ~~customarily~~extensive ~~cover~~regulatory ~~damages~~requirements ~~that~~may ~~are characterized as punitive or similar damages. As a~~ result, ~~any claims or legal proceedings, or settlement of any such claims or legal proceedings that result~~ in ~~damages~~an ~~that~~adverse ~~are characterized as punitive or~~effect ~~similar~~on ~~damages may not be covered by~~ our ~~insurance~~business. ~~If these types of damages are substantial, our financial resources may be adversely affected.~~

~~You~~The hotel industry is subject to extensive regulation and the Hotel must maintain its licenses and pay taxes and fees to continue operations. Our property is subject to numerous laws, including those relating to the preparation and sale of food and beverages, including alcohol. We are also subject to laws governing our relationship with our employees in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and firing employees and work permits. Also, our ability to remodel, refurbish or add to our property may ~~lose~~be ~~all~~dependent upon our obtaining necessary building permits from local authorities. The failure to obtain any of these permits could adversely affect our ability to increase revenues and net income through capital improvements of our property. In addition, we are subject to the numerous rules and regulations relating to state and federal taxation. Compliance with these rules and regulations requires significant management attention. Furthermore, compliance costs associated with such laws, regulations and licenses are significant. Any change in the laws, regulations or ~~part~~licenses applicable to our business or a violation of ~~your~~any ~~investment~~current or future laws or regulations applicable to our business or gaming license could require us to make substantial expenditures or could otherwise negatively affect our gaming operations. Any failure to comply with all such rules and regulations could subject us to fines or audits by the applicable taxation authority.

~~There~~Violations of islaws nocould ~~assurance~~result ~~that~~in, ~~the~~among ~~Company’s~~other ~~initiatives~~things, ~~to improve~~disciplinary ~~its~~action. ~~profitability~~If orwe ~~liquidity~~fail ~~and~~to ~~financial~~comply ~~position~~with ~~will~~regulatory ~~be successful. Accordingly~~requirements, ~~there~~this ~~is substantial risk that an~~may ~~investment~~result in ~~the~~an ~~Company~~adverse ~~will~~effect ~~decline~~on inour ~~value~~business.

~~The price of the Company’s common stock may fluctuate~~Uninsured ~~significantly,~~and ~~which~~underinsured losses could ~~negatively~~adversely affect ~~the~~our ~~Company~~financial condition and ~~holders~~results of ~~its common stock~~operations.

~~The~~There are ~~market~~certain ~~price~~types of ~~the~~losses, ~~Company’s~~generally ~~common~~of ~~stock~~a catastrophic nature, such as earthquakes and floods or terrorist acts, which may ~~fluctuate~~be ~~significantly~~uninsurable ~~from~~or ~~time~~not toeconomically ~~time~~insurable, asor amay ~~result~~be ofsubject ~~many~~to ~~factors~~insurance coverage limitations, ~~including:~~such ~~investors’~~as ~~perceptions~~large ofdeductibles ~~the~~or ~~Company~~co-payments. We ~~and~~will ~~its~~use ~~prospects; investors’~~our ~~perceptions~~discretion ofin ~~the~~determining ~~Company’s~~amounts, ~~and/or~~coverage ~~the~~limits, ~~industry’s~~deductibility ~~risk~~provisions of insurance and ~~return~~the ~~characteristics~~appropriateness of ~~relative~~self-insuring, towith ~~other investment~~a ~~alternatives;~~view ~~difficulties~~to ~~between~~maintaining ~~actual~~appropriate ~~financial~~insurance ~~and~~coverage ~~operating~~on ~~results~~our ~~and~~investments ~~those~~at ~~expected~~a byreasonable ~~investors~~cost and ~~analysts;~~on suitable ~~changes~~terms. inUninsured ~~our~~and ~~capital~~underinsured ~~structure;~~losses ~~trading~~could ~~volume~~harm ~~fluctuations;~~our ~~actual~~financial orcondition ~~anticipated~~and ~~fluctuations~~results inof ~~quarterly~~operations. ~~financial~~We ~~and~~could ~~operational~~incur liabilities ~~results;~~resulting ~~volatility~~from inloss or injury to the ~~equity~~Hotel ~~securities~~or ~~market;~~to ~~and~~persons ~~sales~~at the Hotel. Claims, whether or ~~anticipated~~not ~~sales~~they have merit, ofcould ~~large~~harm ~~blocks~~the reputation of the ~~Company’s~~Hotel ~~common~~or cause us to incur expenses to the extent of insurance deductibles or losses in excess of policy limitations, ~~stock~~which could harm our results of operations.

~~The~~In the ~~concentrated~~event ~~beneficial~~of ~~ownership~~a catastrophic loss, our insurance coverage may not be sufficient to cover the full current market value or replacement cost of our ~~common~~lost ~~stock~~investment. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion ~~and~~of the ~~ability~~capital itwe ~~affords~~have invested in the Hotel, as well as the anticipated future revenue from the property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to ~~control~~the Hotel. In the event of a significant loss, our ~~business~~deductible may ~~limit~~be orhigh, ~~eliminate~~and we may be required to pay for all such repairs and, as a consequence, it could materially adversely affect our financial condition. Inflation, changes in building codes and ordinances, environmental considerations and other ~~shareholders'~~factors ~~ability~~might also keep us from using insurance proceeds to ~~influence~~replace ~~corporate~~or ~~affairs~~renovate the Hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property.

~~InterGroup~~It has ~~owns~~generally become more ~~than~~difficult ~~80%~~and ofexpensive ~~the~~to ~~Company’s~~obtain ~~outstanding common~~property ~~stock.~~and ~~Because~~casualty ofinsurance, ~~this~~including ~~concentrated~~coverage ~~stock~~for ~~ownership,~~terrorism. When ~~the~~our ~~Company’s~~current ~~largest~~insurance ~~shareholders~~policies ~~will~~expire, bewe may encounter difficulty in aobtaining ~~position~~or torenewing ~~significantly~~property or casualty insurance ~~influence~~on ~~the~~our ~~election~~property ofat the ~~Company’s~~same ~~board~~levels of ~~directors~~coverage and ~~all~~under ~~other~~similar ~~decisions~~terms. onSuch ~~all~~insurance ~~matters~~may ~~requiring~~be ~~shareholder~~more ~~approval.~~limited and for some catastrophic Asrisks a(for ~~result~~example, ~~the~~earthquake, ~~ability~~flood ofand ~~other~~terrorism) ~~shareholders~~may tonot ~~determine~~be ~~the~~generally ~~management~~available ~~and~~at ~~policies~~current oflevels. ~~the~~Even ~~Company~~if iswe ~~significantly~~are ~~limited.~~able to ~~The~~renew ~~interests~~our ofpolicies ~~these~~or ~~shareholders~~to ~~may~~obtain ~~differ~~new ~~from~~policies ~~the~~at ~~interests~~levels ofand ~~other~~with ~~shareholders~~limitations consistent with ~~respect~~our tocurrent ~~the~~policies, ~~issuance~~we ofcannot ~~shares,~~be ~~business~~sure ~~transactions~~that ~~with~~we orwill ~~sales~~be able to ~~other~~obtain ~~companies,~~such ~~selection~~insurance ofat ~~officers~~premium ~~and~~rates ~~directors~~that ~~and~~are ~~other~~commercially ~~business decisions~~reasonable. ~~This~~If we were unable to obtain ~~level~~adequate ofinsurance ~~control~~on ~~may~~the ~~also~~Hotel ~~have~~for ancertain ~~adverse~~risks, ~~impact~~it oncould ~~the~~cause ~~market~~us ~~value~~to ofbe ~~our~~in ~~shares~~default ~~because~~under ~~our~~specific ~~largest~~covenants ~~shareholders~~on ~~may~~certain ~~institute~~of our indebtedness or ~~undertake~~other ~~transactions,~~contractual ~~policies~~commitments orthat ~~programs~~require ~~that~~us ~~may~~to ~~result~~maintain inadequate ~~losses~~insurance on the Hotel to protect against the risk of loss. If this were to occur, ~~may~~or ~~not~~if ~~take~~we ~~any~~were ~~steps~~unable to ~~increase~~obtain ~~our~~adequate ~~visibility~~insurance in and the ~~financial~~Hotel ~~community~~experienced ~~and/or~~damage ~~may~~which would ~~sell~~otherwise ~~sufficient~~have ~~numbers~~been ofcovered ~~shares~~by toinsurance, ~~significantly~~it ~~decrease~~could materially adversely affect our ~~price~~financial ~~per~~condition ~~share~~and the operations of the Hotel.

~~Item~~In addition, 1Binsurance coverage for the Hotel and for casualty losses does not customarily cover damages that are characterized as punitive or similar damages. ~~Unresolved~~As ~~Staff~~a ~~Comments~~result, any claims or legal proceedings, or settlement of any such claims or legal proceedings that result in damages that are characterized as punitive or similar damages may not be covered by our insurance. If these types of damages are substantial, our financial resources may be adversely affected.

~~None~~You may lose all or part of your investment.

~~Item~~There is 2no assurance that the Company’s initiatives to improve its profitability or liquidity and financial position will be successful. ~~Properties~~Accordingly, there is substantial risk that an investment in the Company will decline in value.

~~SAN~~The price ~~FRANCISCO~~of ~~HOTEL~~the ~~PROPERTY~~Company’s common stock may fluctuate significantly, which could negatively affect the Company and holders of its common stock.

The market ~~Hotel~~price isof ~~owned by~~ the ~~Partnership through its wholly-owned subsidiary, Justice Operating~~ Company,’s ~~LLC,~~common astock ~~Delaware~~may ~~limited~~fluctuate ~~liability~~significantly ~~company~~from ~~(“Operating”).~~time ~~The~~to ~~Hotel~~time isas ~~centrally located~~a inresult ~~the~~of ~~Financial~~many ~~District in San Francisco~~factors, ~~one~~including: investors’ ~~block~~perceptions ~~from~~of the ~~Transamerica~~Company ~~Pyramid. The Embarcadero Center is within walking distance~~ and ~~North~~its ~~Beach~~prospects; isinvestors’ ~~two~~perceptions ~~blocks~~of ~~away. Chinatown is directly across~~ the ~~bridge~~Company’s ~~that~~and/or ~~runs from~~ the ~~Hotel to Portsmouth~~ ~~Square~~industry’s ~~Park.~~risk ~~The~~and ~~Hotel~~return ischaracteristics arelative ~~31-story~~to ~~(including~~other ~~parking~~investment ~~garage),~~alternatives; ~~steel~~difficulties ~~and~~between ~~concrete,~~actual ~~A-frame building, built in 1970. The Hotel~~financial ~~has~~and ~~544~~operating ~~well-appointed~~results ~~guest rooms~~ and ~~luxury~~those ~~suites~~expected ~~situated~~by oninvestors ~~22 floors. The third floor houses the Chinese Culture Center~~ and ~~grand~~analysts; ~~ballroom. The~~changes ~~Hotel~~in ~~has~~our ~~approximately~~capital ~~22,000~~structure; ~~square~~trading ~~feet~~volume ~~of meeting room space, including the grand ballroom. Other~~fluctuations; ~~features~~actual ofor ~~the~~anticipated ~~Hotel~~fluctuations ~~include~~in aquarterly ~~5-level~~financial ~~underground parking garage~~ and ~~pedestrian~~operational ~~bridge~~results; ~~across~~volatility ~~Kearny~~in ~~Street~~the ~~connecting~~equity ~~the~~securities ~~Hotel~~market; and ~~the Chinese Culture Center with Portsmouth Square Park in Chinatown. The bridge~~sales, ~~built~~or ~~and~~anticipated ~~owned by the Partnership~~sales, is ~~included~~of inlarge ~~the~~blocks ~~lease~~of to the ~~Chinese~~Company’s ~~Culture~~common ~~Center~~stock.

~~The Partnership expects to expend at least 4% of gross annual Hotel revenues each year for capital improvements. In the opinion of management, the Hotel is adequately covered by insurance.~~12

~~HOTEL~~The concentrated ~~FINANCINGS~~beneficial ownership of our common stock and the ability it affords to control our business may limit or eliminate other shareholders’ ability to influence corporate affairs.

OnInterGroup owns ~~December~~more ~~18,~~than ~~2013:~~80% ~~(i)~~of ~~Operating~~the ~~entered~~Company’s ~~into~~outstanding acommon ~~loan~~stock. ~~agreement~~Because of this concentrated stock ownership, the Company’s ~~(“Mortgage~~largest ~~Loan~~shareholders ~~Agreement”)~~will ~~with~~be ~~Bank~~in ofa ~~America~~position ~~(“Mortgage~~to ~~Lender”);~~significantly ~~and~~influence ~~(ii)~~the ~~Justice~~election ~~Mezzanine~~of the Company,’s board of directors and aall ~~Delaware~~other ~~limited~~decisions ~~liability~~on ~~company~~all ~~(“Mezzanine”),~~matters ~~entered~~requiring ~~into~~shareholder approval. As a ~~mezzanine~~result, ~~loan~~the ~~agreement~~ability ~~(“Mezzanine~~of ~~Loan~~other shareholders to determine ~~Agreement”~~the management and, ~~together~~policies ~~with~~of the ~~Mortgage~~Company ~~Loan~~is ~~Agreement,~~significantly ~~the~~limited. ~~“Loan~~The ~~Agreements”)~~interests ~~with~~of ~~ISBI~~these ~~San~~shareholders ~~Francisco~~may ~~Mezz~~differ from the interests ~~Lender~~of ~~LLC~~other ~~(“Mezzanine~~shareholders ~~Lender”~~with ~~and~~respect to the issuance of shares, ~~together~~business transactions with ~~Mortgage~~or ~~Lender~~sales to other companies, ~~the~~selection of ~~“Lenders”)~~officers and directors and other business decisions. ~~The~~This ~~Partnership~~level isof control may also have an adverse impact on the ~~sole~~ ~~member~~market value of ~~Mezzanine~~our shares because our largest shareholders may institute or undertake transactions, ~~and~~policies ~~Mezzanine~~or isprograms that may result in losses, may not take any steps to increase our visibility in the ~~sole~~financial ~~member~~community and/or may sell sufficient numbers of ~~Operating~~shares to significantly decrease our price per share.

~~The Loan Agreements provide for a $97,000,000 Mortgage Loan~~Item ~~and a $20,000,000 Mezzanine Loan~~1B. ~~The~~Unresolved ~~proceeds~~Staff ~~of the Loan Agreements were used to fund the redemption of limited partnership interests and the pay-off of the prior mortgage~~Comments.

~~The Mortgage Loan is secured by the Partnership’s principal asset, the Hotel~~None. The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024. The term of the loan is ten years with interest only due in the first three years and principal and interest payments to be made during the remaining seven years of the loan based on a thirty-year amortization schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance and capital improvement reserves. As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by the Company in favor of Mortgage Lender.

12Item 2. Properties.

~~The Mezzanine Loan is secured by the Operating membership interest~~SAN ~~held~~FRANCISCO byHOTEL Mezzanine and is subordinated to the Mortgage Loan. The Mezzanine Loan bears interest at 9.75% per annum and matures on January 1, 2024. Interest only payments are due monthly. As additional security for the Mezzanine Loan, there is a limited guaranty executed by the Company in favor of Mezzanine Lender (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”).PROPERTY

The Hotel ~~Guaranties~~is ~~are~~owned ~~limited~~by tothe ~~what~~Partnership ~~are~~through ~~commonly~~its ~~referred~~wholly ~~to as~~owned ~~“bad boy” acts~~subsidiary, ~~including:~~Operating. ~~(i)~~The ~~fraud~~Hotel oris ~~intentional~~centrally ~~misrepresentations;~~located ~~(ii)~~in ~~gross~~the ~~negligence or willful misconduct;~~Financial ~~(iii)~~District ~~misapplication~~in orSan ~~misappropriation of rents~~Francisco, ~~security~~one ~~deposits,~~block ~~insurance~~from orthe ~~condemnation~~Transamerica ~~proceeds; and (iv) failure to pay taxes or insurance~~Pyramid. The ~~Guaranties~~Embarcadero ~~are~~Center ~~full~~is ~~recourse~~within ~~guaranties~~walking ~~under~~distance ~~identified~~and ~~circumstances,~~North Beach ~~including~~is ~~failure~~two toblocks ~~maintain~~away. ~~“single purpose”~~Chinatown ~~status which~~ is adirectly ~~factor~~across inthe abridge ~~consolidation~~that ofruns ~~Operating~~from orthe ~~Mezzanine~~Hotel into aPortsmouth ~~bankruptcy~~Square ofPark. ~~another~~The ~~person, transfer~~Hotel oris ~~encumbrance~~a of31-story ~~the~~(including ~~Property~~parking ingarage), ~~violation~~steel ofand ~~the~~concrete, ~~applicable~~A-frame ~~loan documents~~building, ~~Operating~~built orin ~~Mezzanine~~1970. ~~incurring~~The ~~debts~~Hotel ~~that~~has ~~are~~544 ~~not~~well-appointed ~~permitted,~~guest rooms and ~~the~~luxury ~~Property~~suites ~~becoming~~situated ~~subject~~on to22 afloors. ~~bankruptcy~~The ~~proceeding.~~third ~~Pursuant~~floor tohouses the ~~Guaranties,~~Chinese ~~the~~Culture ~~Partnership~~Center is(the ~~required~~“CCC”), toits ~~maintain~~administrative aoffice, ~~certain~~and ~~minimum~~a ~~net~~grand ~~worth and liquidity~~ballroom. ~~Effective~~The asHotel ofhas ~~May~~approximately 1222,000 ~~2017,~~square ~~InterGroup~~feet ~~agreed~~of tomeeting ~~become~~room anspace, ~~additional~~including ~~guarantor under~~ the ~~limited~~grand ~~guaranty~~ballroom. ~~and~~Other anfeatures ~~additional~~of ~~indemnitor under~~ the ~~environmental~~Hotel ~~indemnity~~include ~~for~~a ~~Justice~~5-level ~~Investors~~underground ~~limited partnership’s~~parking ~~$97,000,000~~garage ~~mortgage loan~~ and ~~the~~pedestrian ~~$20,000,000~~bridge ~~mezzanine~~across ~~loan.~~Kearny Street ~~Pursuant~~connecting to the ~~agreement,~~Hotel ~~InterGroup~~and isthe ~~required to~~CCC ~~maintain~~with aPortsmouth ~~certain~~Square ~~net~~Park ~~worth~~in ~~and liquidity~~Chinatown. AsThe ofbridge, ~~June~~built ~~30,~~and ~~2019,~~owned ~~InterGroup~~by the Partnership, is included in ~~compliance~~the ~~with~~lease ~~both~~to ~~requirements~~the CCC.

~~Each~~The Partnership ofexpects ~~the~~to ~~Loan~~set ~~Agreements~~aside ~~contains~~at ~~customary~~least ~~representations and~~4% ~~warranties, events~~ of ~~default,~~gross ~~reporting~~annual ~~requirements,~~Hotel ~~affirmative~~revenues ~~covenants~~each ~~and~~year ~~negative~~or ~~covenants,~~a ~~which~~minimum ~~impose restrictions on, among other things, organizational changes~~ of ~~the respective borrower~~$2, ~~operations of the Property~~000,000 ~~agreements~~as ~~with~~required ~~affiliates~~by ~~and~~its ~~third~~senior ~~parties.~~lender ~~Each of the Loan Agreements also provides~~ for ~~mandatory~~capital ~~prepayments~~improvements. ~~under~~In ~~certain~~the ~~circumstances~~opinion ~~(including~~of ~~casualty or condemnation events) and voluntary prepayments~~management, ~~subject~~the toHotel ~~satisfaction~~is ofadequately ~~prescribed~~covered ~~conditions~~by ~~set forth in the Loan Agreements~~insurance.

~~On July 2, 2014, the Partnership obtained from InterGroup an~~HOTEL unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of two years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The proceeds of the loan were applied to the July 2014 payments to Justice Holdings Company, LLC (“Holdings”) in connection with the redemption of limited partnership interests. The loan was extended to December 31, 2019. As of June 30, 2019, the balance of the loan was $3,000,000. FINANCINGS

InOn December ~~April 2017~~18, ~~Portsmouth~~2013: ~~obtained~~(i) ~~from~~Justice ~~InterGroup~~Operating anCompany, ~~unsecured short-term~~LLC, ~~loan~~a inDelaware ~~the~~limited ~~principal~~liability ~~amount~~company ~~of $1~~(“Operating”),~~000,000~~ atentered into 5%a ~~per~~loan ~~year~~agreement ~~fixed~~(“Mortgage ~~interest,~~Loan Agreement”) with aBank ~~term~~ of ~~five~~America ~~months~~(“Mortgage Lender”); and ~~maturing~~(ii) ~~September~~Justice 6Mezzanine Company, ~~2017.~~a ~~Accrued~~Delaware ~~interest~~limited ~~and~~liability ~~monthly~~company ~~principal~~(“Mezzanine”), ~~installments~~entered ininto ~~the~~a ~~amount~~mezzanine ofloan ~~$200,000~~agreement ~~were~~(“Mezzanine Loan ~~due~~Agreement” and ~~payable commencing on May 1~~, ~~2017~~ ~~and~~together ~~continuing~~with on the ~~first~~Mortgage ~~day~~Loan ~~of each calendar month thereafter~~Agreement, ~~until five months after~~ the ~~date~~“Loan ofAgreements”) ~~the~~with ~~loan~~ISBI atSan ~~which time~~Francisco ~~any~~Mezz ~~unpaid~~Lender ~~balance~~LLC of(“Mezzanine ~~principal~~Lender” and, ~~interest~~together onwith ~~the~~Mortgage ~~note~~Lender, ~~was~~the ~~due and payable~~“Lenders”). The ~~loan~~Partnership is ~~was~~the ~~extended~~sole tomember ~~September~~of 15Mezzanine, ~~2017~~ and ~~paid off~~Mezzanine onis ~~September~~the ~~13,~~sole ~~2017~~member of Operating.

OnThe Loan ~~July~~Agreements ~~31,~~provide ~~2019,~~for ~~Mezzanine~~a ~~refinanced~~$97,000,000 ~~the~~Mortgage ~~Mezzanine~~ Loan ~~by entering~~and ~~into~~ a ~~new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of~~ $20,000,000. ~~The prior~~ Mezzanine Loan ~~was paid off~~. ~~Interest~~The ~~rate~~proceeds onof the ~~new~~Loan ~~mezzanine~~Agreements were ~~loan~~used isto ~~7.25%~~fund ~~and~~ the ~~loan~~redemption ~~matures~~of ~~on January~~limited 1,partnership ~~2024.~~interests ~~Interest~~and ~~only~~the ~~payments~~pay-off ~~are~~of ~~due~~the ~~monthly.~~prior ~~See Note 18 – Subsequent Events~~mortgage.

~~INVESTMENT~~The Mortgage INLoan ~~REAL~~is ~~ESATE~~secured by the Partnership’s principal asset, the Hotel. The Mortgage Loan bears an interest rate of 5.275% per annum and matures in January 2024. The term of the loan is ten years with interest only due in the first three years and principal and interest payments to be made during the remaining seven years of the loan based on a thirty-year amortization schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance and capital improvement reserves. As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender.

The Mezzanine ~~property~~Loan ~~owned~~is ~~and~~secured ~~consolidated~~ by the ~~Company's~~Operating ~~55.4%~~membership ~~subsidiary, InterGroup Woodland Village, Inc. (“Woodland Village”), is a 27-unit apartment complex located Los Angeles, California. The Company's equity~~ interest inheld ~~Woodland~~by ~~Village~~Mezzanine ~~was~~and ~~acquired on September 29, 1999 at a cost of $4,075,000. For the year ended June 30, 2019, real estate property taxes were approximately $66,000. Depreciation~~ is ~~recorded~~subordinated onto the ~~straight-line~~Mortgage ~~method based upon an estimated useful life of 40 years~~Loan. ~~In November 2010, Woodland Village refinanced its $1,641,000 adjustable rate mortgage~~The ~~note~~Mezzanine ~~payable~~Loan onhad ~~its~~an ~~27-unit~~interest ~~apartment building for a new 10-year fixed~~ rate ~~mortgage in the amount~~ of ~~$3,260,000~~9. ~~The interest rate on the new loan is fixed at 4.85~~75% per annum, ~~with monthly principal~~ and ~~interest~~a ~~payments~~maturity ~~based~~date onof aJanuary ~~30-year~~1, ~~amortization schedule~~2024. ~~The~~Interest ~~note~~only ~~matures~~payments inwere ~~December 2020~~due monthly. ~~With~~On ~~the~~July ~~proceeds~~31, ~~Woodland Village loaned $831~~2019,~~000~~ toMezzanine ~~Santa~~refinanced ~~Fe and $669,000 to InterGroup under~~ the ~~same~~Mezzanine ~~terms.~~Loan ~~The~~by ~~intercompany~~entering ~~loan~~into ~~balance~~a ofnew ~~$676,000~~mezzanine ~~to Santa Fe was eliminated in consolidation. The~~ loan ~~balance~~agreement of(“New ~~$584,000~~Mezzanine toLoan ~~InterGroup~~Agreement”) iswith ~~included~~Cred inReit ~~other~~Holdco ~~assets,~~LLC ~~net~~ in the ~~consolidated~~amount ~~balance sheet. As~~ of ~~June 30, 2018, the outstanding mortgage balance was~~ $220,~~843,~~000~~. In July 2018~~, ~~InterGroup obtained a revolving $5,~~000~~,000 line of credit (“RLOC”) from CIBC Bank USA (“CIBC”)~~. The ~~RLOC~~prior ~~carries~~Mezzanine aLoan ~~variable~~was ~~interest~~paid ~~rate of 30-day LIBOR plus 3%~~off. Interest israte ~~paid~~ on athe ~~monthly basis.~~new ~~The~~mezzanine ~~RLOC~~loan ~~and~~is ~~all~~7.25% ~~accrued~~ and ~~unpaid~~the ~~interest~~loan ~~are~~matures ~~due~~on inJanuary ~~July~~1, ~~2019~~2024. OnInterest ~~July~~only ~~31,~~payments ~~2018,~~are ~~$2,969,000~~due ~~was drawn from the RLOC~~monthly. toAs ~~pay off the mortgage and~~ a ~~new~~result ~~mortgage~~of ~~note~~the ~~payable~~refinance, ~~was~~Justice ~~established~~has atgenerated ~~Woodland Village due to InterGroup for the amount drawn. The~~ $2500,~~969,~~000 ~~mortgage~~in ~~due~~annual tointerest ~~InterGroup~~expense ~~carries~~savings. ~~same~~As ~~terms~~additional assecurity ~~InterGroup’s~~for ~~RLOC and is included in~~ the ~~mortgage notes payable~~ –new ~~real~~mezzanine ~~estate in the consolidated balance sheet as of June 30~~loan, ~~2019.~~there Inis ~~July 2019, InterGroup obtained~~ a ~~modification~~limited ~~from CIBC~~guaranty ~~which~~executed ~~increased its $5,000,000 revolving line of credit~~ by ~~$3,000,000~~the Partnership and ~~extended~~Portsmouth ~~the~~in ~~maturity~~favor ~~date~~of ~~from~~Cred ~~July~~Reit ~~24,~~Holdco ~~2019~~LLC to(the ~~July~~“Mezzanine ~~23,~~Guaranty” ~~2020. The $2~~and,~~969,000~~ ~~mortgage~~together ~~due~~with tothe ~~InterGroup~~Mortgage ~~was also extended from July 24~~Guaranty, ~~2019~~the ~~to July 23, 2020~~“Guaranties”).

The Guaranties ~~second~~are ~~Los~~limited ~~Angeles~~to ~~property~~what are commonly referred to as “bad boy” acts, ~~which~~including: is(i) ~~wholly~~fraud ~~owned~~or byintentional ~~the~~misrepresentations; ~~Company~~(ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, issecurity adeposits, ~~two-story~~insurance ~~apartment~~or condemnation ~~building~~proceeds; ~~with~~and 2(iv) ~~units~~failure to pay taxes or insurance. The ~~property~~Guaranties ~~was~~are ~~acquired~~full onrecourse ~~February~~guaranties 1under identified circumstances, ~~2002~~including atfailure anto ~~initial~~maintain ~~cost~~“single purpose” status which is a factor in a consolidation of ~~$785,000.~~Operating ~~For~~or ~~the~~Mezzanine ~~year~~in ~~ended~~a ~~June~~bankruptcy 30of another person, ~~2019~~transfer or encumbrance of the Property in violation of the applicable loan documents, Operating ~~real~~or ~~estate~~Mezzanine ~~property~~incurring ~~taxes~~debts ~~were~~that ~~approximately~~are ~~$12~~not permitted,~~000~~ and the Property becoming subject to a bankruptcy proceeding. ~~Depreciation~~Pursuant to the Guaranties, the Partnership is ~~recorded~~required onto ~~the~~maintain ~~straight-line~~a certain minimum net worth and liquidity. Effective as of May 12, ~~method~~2017, ~~based~~InterGroup ~~upon~~agreed to become an ~~estimated~~additional ~~useful~~guarantor ~~life~~under ofthe 40limited ~~years.~~guaranty ~~The~~and ~~outstanding~~an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage ~~balance~~loan ~~was~~and ~~approximately~~the $~~347~~20,000,000 atmezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2020, InterGroup is in ~~2019~~compliance with both requirements. However, due to the Hotel’s current low occupancy and its negative impact on the ~~maturity~~Hotel’s cash ~~date~~flow, Justice Operating Company, LLC is not meeting certain of its loan covenants such as the ~~mortgage~~Debt isService ~~September~~Coverage ~~2042~~Ratio (“DSCR”) which would trigger the creation of a lock-box and iscash ~~collateralized~~sweep by the ~~property~~Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to replace its hotel management company. The ~~interest~~DSCR for ~~rate~~Operating has been below 1.00 for the last two quarters during fiscal year 2020 while it is ~~fixed~~required to maintain a DSCR of at 3least 1.~~75%~~10 to 1.00 for two consecutive quarters. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR. Justice has not missed any of its debt service payments and does not anticipate missing any debt obligations even during these uncertain times for at least the next twelve months and beyond.

~~Both~~Each of the Loan Agreements contains customary representations and warranties, events of default, reporting requirements, affirmative covenants and negative covenants, which impose restrictions on, among other things, organizational changes of the ~~properties~~respective ~~are~~borrower, operations ~~managed~~of ~~in-house~~the byProperty, agreements with affiliates and third parties. Each of the ~~Company~~Loan Agreements also provides for mandatory prepayments under certain circumstances (including casualty or condemnation events) and voluntary prepayments, subject to satisfaction of prescribed conditions set forth in the Loan Agreements.

~~Woodland~~On July ~~Village~~2, ~~and~~2014, ~~Acanto~~the ~~lease~~Partnership ~~units~~obtained from InterGroup an unsecured loan in the ~~apartment~~principal ~~buildings on~~amount aof ~~short-term~~$4,250,000 ~~basis~~at 12% per year fixed interest, with noa ~~lease~~term ~~extending~~of ~~beyond~~two ~~one~~years, ~~year. For~~payable ~~the~~interest ~~year~~only ~~ended~~each ~~June~~month. ~~30,~~InterGroup ~~2019,~~received ~~the~~a ~~economic~~3% ~~occupancy (gross~~loan ~~potential~~fee. ~~less~~The ~~rent~~loan ~~below~~may ~~market,~~be prepaid ~~vacancy~~at ~~loss,~~any ~~bad~~time ~~debt,~~without ~~discounts~~penalty. ~~and~~The ~~concessions~~proceeds ~~divided~~of bythe ~~gross~~loan ~~potential~~were ~~rent)~~applied ~~for Woodland~~to ~~Village~~the ~~and~~July ~~Acanto~~2014 ~~was~~payments ~~35%~~to ~~and~~Justice ~~87%~~Holdings Company, LLC ~~respectively. The~~(“Holdings”) ~~physical~~in ~~occupancy~~connection ~~(gross~~with ~~potential~~the ~~rent~~redemption ~~less~~of ~~vacancy~~limited ~~loss divided~~partnership byinterests. ~~gross~~The ~~potential~~loan ~~rent)~~was ~~for~~extended ~~the~~to ~~year~~July 1, ~~ended~~2021. As of June 30, ~~2019~~2020, ~~for~~the ~~Woodland~~balance ~~Village~~of ~~and~~the ~~Acanto~~loan was ~~51% and 89%~~$3, ~~respectively~~000,000.

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration. Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the ~~opinion~~requirements of ~~management~~the CARES Act, ~~both~~Justice ~~rental~~has ~~properties~~used ~~are~~proceeds from ~~adequately~~the SBA Loan primarily for payroll costs. As of June 30, 2020, Justice had used $3,568,000 in qualified expenses and had ~~covered~~a balance of $1,151,000 available for future qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by ~~insurance~~the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until October 2020, and the repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. Justice anticipates applying for loan forgiveness shortly. All unforgiven portion of the principal and accrued interest will be due at maturity.

~~On August 29, 2007, the Board of Directors authorized an investment~~INVESTMENT ofIN ~~$973,000~~REAL for Portsmouth to acquire a 50% equity interest in InterGroup Uluniu, Inc., a Hawaii corporation (“Uluniu”) in a related party transaction. Uluniu was a 100% owned subsidiary of The InterGroup Corporation (“InterGroup”). Uluniu owns an approximately two-acre parcel of unimproved land located in Kihei, Maui, Hawaii which is held for development. The Company’s investment in Uluniu represents an amount equal to the costs paid by InterGroup for the acquisition and carrying costs of the property. The fairness of the financial terms of the transaction were reviewed and approved by the independent director of the Company.ESATE

~~Uluniu~~The Company ~~has~~owns ~~engaged~~a 27-unit apartment complex located in Santa Monica, California through its wholly owned subsidiary Woodland Village, LLC (“Woodland Village”). The Company acquired the ~~services~~property in September 1999 at a cost of ~~certain~~$4,075,000. The Company’s ~~professionals~~initial to55.4% ~~develop~~equity interest in Woodland Village was acquired on December 31, 1997 at a cost of $859,000. For the year ended June 30, 2020, real estate property taxes were approximately $70,000. ~~After~~Depreciation is recorded on the ~~completion~~straight-line method based upon an estimated useful life of ~~this~~40 ~~predevelopment~~years. ~~phase~~In November 2010, ~~Uluniu~~Woodland ~~will~~Village ~~determine~~refinanced ~~whether~~its it$1,641,000 adjustable rate mortgage note payable on its 27-unit apartment building for a new 10-year fixed rate mortgage in the amount of $3,260,000. The interest rate on the new loan is ~~more~~fixed at 4.85% per annum, with monthly principal and interest payments based on a 30-year amortization ~~advantageous~~schedule. The loan had a maturity date in December 2020. With the proceeds, Woodland Village loaned $831,000 to ~~sell~~Santa Fe and $669,000 to InterGroup under the ~~entitled~~same ~~property~~terms. orSince Woodland Village became a wholly owned subsidiary of the Company in February 2020, the intercompany loan of $831,000 to ~~commence~~Santa Fe was eliminated effective February 5, 2020. The $669,000 note receivable to InterGroup including accrued interests of $294,000 and $275,000 as of June 30, 2020 and 2019, respectively, are included in other assets, net in the consolidated balance sheets. As of June 30, 2018, the outstanding mortgage balance was $2,843,000. In July 2018, InterGroup obtained a revolving $5,000,000 line of credit (“RLOC”) from CIBC Bank USA (“CIBC”). The RLOC carries a variable interest rate of 30-day LIBOR plus 3%. Interest is paid on a monthly basis. The RLOC and all accrued and unpaid interest were due in July 2019. On July 31, 2018, $2,969,000 was drawn from the RLOC to pay off the mortgage and a new mortgage note payable was established at Woodland Village due to InterGroup for the amount drawn. The $2,969,000 mortgage due to InterGroup carries same terms as InterGroup’s RLOC and is included in the mortgage notes payable – real estate in the consolidated balance sheets as of June 30, 2020 and 2019. In July 2019, InterGroup obtained a modification from CIBC which increased its $5,000,000 revolving line of credit by $3,000,000 and extended the maturity date from July 24, 2019 to July 23, 2020. The $2,969,000 mortgage due to InterGroup was also extended from July 24, 2019 to July 23, 2020. In July 2020, InterGroup entered into a second modification agreement with ~~construction~~CIBC which extended the maturity date of its $8,000,000 RLOC to July 21, 2021. The $2,969,000 mortgage due to InterGroup was also extended to July 21, 2021.

~~Item 3. Legal Proceedings.~~14

InOn August ~~April~~28, ~~2014~~2020, the ~~Partnership~~Company ~~commenced an~~sold ~~arbitration~~the ~~action~~27-unit ~~against~~apartment ~~Glaser~~complex ~~Weil~~located ~~Fink~~in ~~Howard~~Santa ~~Avchen & Shapiro~~Monica, ~~LLP~~California ~~(formerly~~for ~~known~~$15,650,000 asand ~~Glaser~~realized a ~~Weil~~gain ~~Fink~~on ~~Jacobs~~the ~~Howard Avchen~~sale &of ~~Shapiro,~~approximately ~~LLP)~~$12, ~~Brett J. Cohen~~026, ~~Gary N~~000. ~~Jacobs,~~Santa ~~Janet~~Fe S.will ~~McCloud,~~manage ~~Paul~~its B.federal ~~Salvaty,~~ and ~~Joseph~~state K.income ~~Fletcher~~tax ~~III (collectively~~liability, ~~the~~ ~~“Respondents”)~~and ~~in connection with the redemption transaction. The arbitration alleged legal malpractice against~~anticipates the ~~Respondents~~utilization ~~and sought declaratory relief regarding provisions~~ of ~~the~~its ~~option~~available ~~agreement~~net inoperating ~~the~~losses ~~redemption transaction~~ and ~~regarding the~~capital ~~engagement~~loss ~~letter~~carryforwards. ~~with~~Santa ~~Respondents.~~Fe ~~Prior~~received tonet ~~arbitration~~proceeds ~~proceedings~~of $12,163,000 after ~~the~~selling ~~parties~~costs ~~agreed~~and inrepayment ~~principle~~of toInterGroup’s ~~settle~~RLOC ~~the~~of ~~matter~~$2, ~~and~~985,000 ~~entered~~as ~~into~~InterGroup ahad ~~settlement~~drawn ~~agreement~~on ~~and~~its ~~mutual~~RLOC ~~general release~~ in ~~April~~July 2018. ~~The Respondents agreed~~ to pay ~~$8,300,000~~off to the ~~Partnership,~~ ~~which~~previous ~~was~~Fannie ~~received~~Mae inmortgage ~~May~~on ~~2018. For~~ the ~~fiscal~~property. ~~year ended June 30~~Furthermore, ~~2018,~~pursuant ~~$5,575,000~~to ~~was~~the ~~recorded~~Contribution asAgreement abetween ~~recovery~~Santa ofFe ~~legal~~and ~~settlement~~InterGroup, ~~cost~~Santa ~~and~~Fe paid InterGroup $2662,~~725,~~000 ~~was~~from ~~recorded~~the assale. aSanta ~~reduction~~Fe ofwill ~~legal~~not ~~expense~~seek a replacement property.

The Company isalso ~~subject~~owns toa ~~legal~~2-unit ~~proceedings~~apartment complex located in West Los Angeles, California through its wholly owned subsidiary 614 Acanto ~~claims~~Properties, ~~and~~Inc. ~~litigation~~(“Acanto”). ~~arising~~The inproperty ~~the~~was ~~ordinary~~acquired ~~course~~on February 1, 2002 at an initial cost of ~~business~~$785,000. ~~The~~For ~~Company~~the year ~~defends~~ended ~~itself~~June ~~vigorously~~30, ~~against~~2020, ~~any~~real ~~such~~estate ~~claims~~property taxes were approximately $12,000. Depreciation is recorded on the straight-line ~~Management~~method, ~~does~~based ~~not~~upon ~~believe~~an ~~that~~estimated useful life of 40 years. The outstanding mortgage balance was approximately $337,000 at June 30, 2020 and the ~~impact~~maturity date of ~~such~~the ~~matters~~mortgage ~~will~~is ~~have~~September a2042 ~~material~~and ~~effect~~is oncollateralized by the ~~financial~~property. ~~conditions~~The orinterest ~~result~~rate ofis fixed ~~operations~~at ~~when resolved~~3. 75%.

~~Item~~Both of 4.the ~~Mine~~properties ~~Safety~~are ~~Disclosures~~managed in-house by the Company.

~~Not~~Woodland Village ~~Applicable~~and Acanto lease units in the apartment buildings on a short-term basis, with no lease extending beyond one year. For the year ended June 30, 2020, the economic occupancy (gross potential less rent below market, vacancy loss, bad debt, discounts and concessions divided by gross potential rent) for Woodland Village and Acanto was 32% and 100%, respectively. The physical occupancy (gross potential rent less vacancy loss divided by gross potential rent) for the year ended June 30, 2020 for Woodland Village and Acanto was 47% and 100%, respectively. Both properties are subject to California rent control laws.

14In the opinion of management, both rental properties are adequately covered by insurance.

~~PART~~On August II29, 2007, the Board of Directors authorized an investment of $973,000 for Portsmouth to acquire a 50% equity interest in InterGroup Uluniu, Inc., a Hawaii corporation (“Uluniu”) in a related party transaction. Uluniu was a 100% owned subsidiary of The InterGroup Corporation (“InterGroup”). Uluniu owns an approximately two-acre parcel of unimproved land located in Kihei, Maui, Hawaii which is held for development. The Company’s investment in Uluniu represents an amount equal to the costs paid by InterGroup for the acquisition and carrying costs of the property. The fairness of the financial terms of the transaction were reviewed and approved by the independent director of the Company.

Item 5 3. ~~Market~~Legal ~~for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~Proceedings.

~~Market~~The Company ~~Information~~may be subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company will defend itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on the financial conditions or result of operations when resolved.

~~Santa Fe’s common stock is traded on OTC Market, Inc.’s~~Item ~~Pink tier under the symbol SFEF~~4. ~~The~~Mine ~~following~~Safety ~~table sets forth the range of the high and low bid quotations as reported by OTC Market, Inc~~Disclosures. for Santa Fe’s common stock for each full quarterly period for the years ended June 30, 2019 and 2018. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions.

Fiscal 2019	High		Low
First Quarter (7/ 1 to 9/30)	$	37.00	$	34.45
Second Quarter (10/1 to 12/31)	$	38.00	$	37.00
Third Quarter (1/1 to 3/31)	$	38.00	$	35.00
Fourth Quarter (4/1 to 6/30)	$	35.50	$	34.50

Not Applicable.

Fiscal 2018	High		Low
First Quarter (7/ 1 to 9/30)	$	34.05	$	30.50
Second Quarter (10/1 to 12/31)	$	34.00	$	31.01
Third Quarter (1/1 to 3/31)	$	35.50	$	32.50
Fourth Quarter (4/1 to 6/30)	$	36.00	$	34.45

~~As of June 30, 2019, the number of holders of record of the~~PART Company’s Common Stock was approximately 121. Such number of owners was determined from the Company’s shareholders records and does not include beneficial owners of the Company’s Common Stock whose shares are held in the names of various brokers, clearing agencies or other nominees.II

~~Dividends~~Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

~~On February 1, 2000, the Board of Directors of the Company determined~~Market that it did not foresee the Company paying any cash dividends on its Common Stock in the immediate future. Instead, it is the intent of the Company to deploy its capital in a manner to increase its operating and investment activities.Information

~~SECURITIES~~Santa Fe’s ~~AUTHORIZED~~common ~~FOR~~stock ~~ISSUANCE~~is ~~UNDER~~traded ~~EQUITY~~on ~~COMPENSATION~~OTC Market, Inc.’s Pink tier under the symbol SFEF. The following table sets forth ~~PLANS~~the range of the high and low bid quotations as reported by OTC Market, Inc. for Santa Fe’s common stock for each full quarterly period for the years ended June 30, 2020 and 2019. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions.

Santa Fe has no securities authorized for issuance under equity compensation plans.

Fiscal 2020	High		Low

First Quarter (7/ 1 to 9/30)	$	37.80	$	33.70
Second Quarter (10/1 to 12/31)	$	40.80	$	39.80
Third Quarter (1/1 to 3/31)	$	40.20	$	28.00
Fourth Quarter (4/1 to 6/30)	$	38.00	$	29.20

PURCHASES OF EQUITY SECURITIES

Fiscal 2019	High		Low

First Quarter (7/ 1 to 9/30)	$	37.00	$	34.45
Second Quarter (10/1 to 12/31)	$	38.00	$	37.00
Third Quarter (1/1 to 3/31)	$	38.00	$	35.00
Fourth Quarter (4/1 to 6/30)	$	35.50	$	34.50

~~Santa~~As of FeJune ~~did~~30, ~~not~~2020, ~~repurchase~~the ~~any~~number of ~~its~~holders ~~own~~of ~~securities~~record ~~during~~ of the ~~fourth~~Company’s ~~quarter~~Common Stock was approximately 119. Such number of ~~its~~owners was ~~fiscal~~determined ~~year~~from ~~ending~~the ~~June~~Company’s ~~30,~~shareholders ~~2019~~records and does not ~~have~~include ~~any~~beneficial ~~publicly~~owners ~~announced~~of ~~repurchase~~the ~~program~~Company’s Common Stock whose shares are held in the names of various brokers, clearing agencies or other nominees.

~~Item 6. Selected Financial Data.~~Dividends

~~Not~~On February ~~required~~1, ~~for~~2000, ~~smaller~~the ~~reporting~~Board ~~companies~~of Directors of the Company determined that it did not foresee the Company paying any cash dividends on its Common Stock in the immediate future. However, the Board may consider paying dividend when deemed appropriate in the future.

~~Item~~SECURITIES AUTHORIZED 7.FOR ~~Management’s~~ISSUANCE ~~Discussion~~UNDER ~~and~~EQUITY ~~Analysis~~COMPENSATION ~~of Financial Condition and Results of Operations.~~PLANS

~~RESULTS~~Santa Fe OFhas ~~OPERATIONS~~no securities authorized for issuance under equity compensation plans.

~~The Company's principal sources of revenue continue to be derived~~PURCHASES ~~from~~OF ~~the~~EQUITY ~~investment~~SECURITIES of its 68.8% owned subsidiary, Portsmouth, in the Justice Investors limited partnership (“Justice” or the “Partnership”), rental income from its investments in multi-family real estate properties and income received from investment of its cash and securities assets.”). Justice owns a 544-room hotel property located at 750 Kearny Street, San Francisco, California 94108, known as the “Hilton San Francisco Financial District” (the “Hotel” or the “Property”) and related facilities, including a five-level underground parking garage. The financial statements of Justice have been consolidated with those of the Company.

15Santa Fe did not repurchase any of its own securities during the fourth quarter of its fiscal year ending June 30, 2020 and does not have any publicly announced repurchase program.

~~The Hotel is operated by the Partnership as a full-service Hilton~~Item ~~brand hotel pursuant to a License Agreement with Hilton~~6. ~~The~~Selected ~~Partnership~~Financial ~~entered into the License Agreement on December 10, 2004~~Data. The term of the License Agreement was for an initial period of 15 years commencing on the reopening date, upon completion of a major renovation, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, the Partnership and Hilton entered into an amended franchise agreement which extended the License Agreement through 2030, modified the monthly royalty rate, extended geographic protection to the Partnership and also provided the Partnership certain key money cash incentives to be earned through 2030. The key money cash incentive of $4,750,000 was received on July 1, 2015.

~~On February 1, 2017, Justice entered into a Hotel management~~Not ~~agreement~~required ~~(“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is~~ for ansmaller ~~initial~~reporting ~~period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions~~companies. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement.

InItem 7. ~~addition~~Management’s toDiscussion ~~the~~and ~~operations~~Analysis of ~~the~~Financial ~~Hotel,~~Condition ~~the Company also generates income from the ownership~~ and ~~management~~Results of ~~real estate~~Operations. On December 31, 1997, the Company acquired a controlling 55.4% interest in InterGroup Woodland Village, Inc. ("Woodland Village") from InterGroup. Woodland Village's major asset is a 27-unit apartment complex located in Los Angeles, California. The Company also owns a two-unit apartment building in Los Angeles, California.

~~Fiscal~~NEGATIVE EFFECTS ~~Year~~OF ~~Ended~~CIVIL ~~June~~AUTHORITY ~~30,~~ACTIONS ~~2019~~ON ~~Compared to~~OUR ~~Fiscal~~BUSINESS ~~Year Ended June 30, 2018~~

~~The~~On February ~~Company~~25, ~~had~~2020, the City of San Francisco issued the proclamation by the Mayor declaring the existence of a ~~net~~local ~~income~~emergency. The negative effects of ~~$4,264,000~~the ~~for~~civil authority actions related to the ~~year~~novel ~~ended~~strain of coronavirus (“COVID-19”) on our ~~June~~business 30have been significant. In March 2020, ~~2019~~the ~~compared~~World toHealth Organization declared COVID-19 a ~~net~~global ~~income~~pandemic. ofThis $3contagious virus,~~418~~ which has continued to spread,~~000~~ ~~for~~has adversely affected workforces, customers, economies and financial markets globally. It has also disrupted the ~~year~~normal ~~ended~~operations ~~June~~of 30many businesses, ~~2018~~including ours. ~~The~~To ~~increase~~mitigate inthe ~~net~~harm ~~income~~from isthe ~~primarily~~pandemic, on March ~~attributable~~16, to2020, ~~decrease~~the City and County of San Francisco, along with a group of five other Bay Area counties and the City of Berkeley, issued parallel health officer orders imposing shelter in ~~provision~~place limitations across the Bay Area, requiring everyone to stay safe at home except for ~~income~~certain ~~taxes~~essential needs. Since February 2020, several unfavorable events and ~~increase~~civil inauthority ~~revenue~~actions have unfolded causing demand for our hotel rooms to suffer including cancellations of all citywide conventions, ~~offset~~reduction byof ~~increased~~flights ~~costs~~in and out ~~expenses~~of the Bay Area and decline in both leisure and business travel.

~~Hotel Operations~~16

~~The~~In response ~~Company~~to ~~had~~the ~~net~~decrease ~~income~~in ~~from~~demand, we have since furloughed all managers at the Hotel ~~operations~~except for members of ~~$4,978,000~~the executive team ~~for~~and continue to limit hourly staff to a minimum. By the ~~year~~end ~~ended~~of ~~June~~March 302020, ~~2019~~we ~~compared~~had totemporarily ~~net~~closed ~~income~~all of ~~$12~~our food and beverage outlets,~~359~~ valet parking,~~000~~ ~~for~~concierge ~~the~~and ~~year~~bell ~~ended~~services, ~~June~~fitness 30center, ~~2018~~as well as the executive lounge facility. We continue to implement social distancing standards and cleaning processes designed by Interstate and Hilton to keep employees and guests safe. The ~~decrease~~full inimpact ~~net~~and ~~income~~duration of the COVID-19 outbreak continues to evolve as of the date of this Annual Report. The pandemic effectively ~~was~~eliminated ~~primarily~~our ~~attributable~~ability to generate any profits, due to the $8drastic decline in both leisure and business travel. As a result,~~300~~ management believes the ongoing length and severity of the economic downturn caused by the pandemic will have a material adverse impact on our future business,~~000~~ ~~settlement~~financial ~~proceeds~~condition, ~~received~~liquidity ~~related~~and tofinancial results. We are also assessing the ~~Glaser~~potential ~~matter~~impact ~~which~~on ~~was~~the ~~credited~~impairment analysis of our long-lived assets and the realization of our deferred tax assets. As of the date of this annual report, the effects of the pandemic continue to ~~operating~~affect our economy, business and leisure travel, and our needs to continue to curtail certain revenue ~~expenses~~generating activities at the Hotel, and ~~restructuring~~until ~~costs~~there inare ~~fiscal~~vaccines ~~year~~or ~~2018~~other methodologies to effectively combat this pandemic, we expect that the effects will have a material adverse effect on our business.

As a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration (“SBA”). The ~~following~~CARES ~~table~~Act includes, ~~sets~~among ~~forth~~other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also established a ~~more~~Paycheck ~~detailed~~Protection ~~presentation~~Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the CARES Act. Justice received proceeds of ~~Hotel~~$4,719,000 ~~operations~~from ~~for~~the SBA Loan. In accordance with the ~~years~~requirements ~~ended~~of the CARES Act, Justice has used proceeds from the SBA Loan primarily for payroll costs. As of June 30, 2020, ~~2019~~Justice had used $3,568,000 in qualified expenses such as payroll expenses, mortgage interests, utilities, etc., and ~~2018~~had a balance of $1,151,000 available for future qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until October 2020, and the repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. Justice anticipates applying for loan forgiveness shortly. All unforgiven portion of the principal and accrued interest will be due at maturity.

For the year ended June 30,	2019			2018
Hotel revenues:
Hotel rooms	$	51,243,000		$	46,475,000
Food and beverage		5,353,000			7,222,000
Garage		2,875,000			3,011,000
Other operating departments		410,000			391,000
Total hotel revenues		59,881,000			57,099,000
Operating expenses, excluding non-recurring charges, interest, depreciation and amortization		(44,466,000	)		(40,103,000	)
Operating income before non-recurring charges, interest, depreciation and amortization		15,415,000			16,996,000
Recovery of legal settlement costs		-			5,775,000
Income before interest, depreciation and amortization		15,415,000			22,771,000
Loss on disposal of assets		(398,000	)		-
Interest expense – mortgage		(7,634,000	)		(7,806,000	)
Depreciation and amortization expense		(2,405,000	)		(2,606,000	)
Net income from Hotel operations	$	4,978,000		$	12,359,000

RESULTS OF OPERATIONS

~~For~~The Company’s ~~the~~principal ~~year~~source ~~ended~~of ~~June~~revenue ~~30,~~continues ~~2019,~~to ~~the~~be ~~Hotel~~derived ~~generated~~from ~~operating income~~the investment of ~~$15,415,000~~its ~~before~~68.8% ~~non-recurring~~owned ~~charges~~subsidiary, ~~interest~~Portsmouth, in ~~depreciation,~~the ~~and~~Justice ~~amortization~~Investors onLimited ~~total~~Partnership ~~operating~~(“Justice” ~~revenues~~or ofthe ~~$59,881,000 compared~~“Partnership”) toinclusive ~~operating income~~ of ~~$16~~hotel room revenue,~~996,000~~ ~~before~~food ~~non-recurring~~and ~~charges,~~beverage ~~interest~~revenue, ~~depreciation~~garage revenue, and ~~amortization~~revenue onfrom ~~total~~other operating ~~revenues~~ ~~of $57,099,000 for the year ended June 30, 2018~~departments. ~~Room~~The ~~revenues~~Company ~~increased~~also bygenerates ~~$4,768,000 for the year ended June 30, 2019~~income ~~compared~~from toits ~~the~~investments ~~year~~in ~~ended~~multifamily ~~June~~real ~~30,~~estate ~~2018~~properties ~~primarily~~and asfrom ainvestment ~~result~~ of ~~increased~~its ~~occupancy~~cash ~~due~~and tosecurities ~~changes~~assets. ofJustice ~~our sales strategy along~~owns ~~with~~the ~~maximizing midweek rate by limiting group business over peak days. The~~ Hotel ~~focused on sellout efficiency specifically on shoulder days~~ and ~~months.~~related ~~Food and beverage revenue decreased by $1~~facilities,~~869,000~~ ~~for~~including ~~the~~a ~~year~~five-level ~~ended~~underground ~~June~~parking ~~30,~~garage. ~~2019~~The ~~compared~~financial tostatements ~~the year ended June 30, 2018 primarily due to the strategy~~ of ~~capturing~~Justice ~~higher rated transient rooms midweek and limiting group discounted~~have ~~business~~been ~~offered~~consolidated ~~which~~with ~~reduced~~those ~~the number~~ of ~~banquet~~the ~~events~~Company.

16The Hotel is operated by the Partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement (the “License Agreement”) with Hilton. The Partnership entered into the License Agreement on December 10, 2004. The term of the License Agreement was for an initial period of 15 years commencing on the opening date, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 26, 2015, the Partnership and Hilton entered into an amended franchise agreement which extended the License Agreement through 2030, modified the monthly royalty rate, extended geographic protection to the Partnership and also provided the Partnership certain key money cash incentives to be earned through 2030. The key money cash incentives were received on July 1, 2015. As of June 30, 2020 and 2019, the balance of the note was $3,008,000 and $3,325,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets.

~~Operating~~On February ~~expenses~~1, ~~increased~~2017, byJustice $4entered into a Hotel management agreement (“HMA”) with Interstate Management Company,~~363~~ LLC (“Interstate”) to manage the Hotel and related facilities with an effective takeover date of February 3,~~000~~ 2017. The term of HMA is for an initial period of ten years commencing on the ~~year~~takeover ~~ended~~date and automatically renews for an additional year ~~June~~not ~~30,~~to ~~2019~~exceed five years in aggregate subject to ~~$44,466,000~~certain ~~compared~~conditions. The HMA also provides for Interstate to advance a key money incentive fee to the ~~year~~Hotel ~~ended~~for ~~June~~capital ~~30,~~improvements ~~2018~~in the amount of $402,~~103~~000,000 ~~primarily~~under ~~due~~certain toterms ~~the~~and ~~receipt~~conditions ofdescribed ~~settlement~~in ~~proceeds~~a ~~related~~separate tokey ~~the~~money ~~Glaser~~agreement. ~~matter~~As inof ~~fiscal~~June ~~year~~30, ~~2018.~~2020 ~~Settlement~~and ~~proceeds~~2019, balance of the key money including accrued interests are $81,~~300~~009,000 and ~~were~~$2,049,000, ~~received~~respectively, ~~during~~and ~~fiscal~~are ~~year~~included ~~ended~~ in restricted cash in the consolidated balance sheets. As of June 30, ~~2018~~2020 and 2019, balance of ~~which~~the unamortized portion of the key money are $21,~~725~~646,000 ~~was~~and ~~credited~~$1,896,000, torespectively, ~~legal~~and ~~expense.~~are ~~Rooms~~included ~~department~~in ~~operating~~the related ~~expenses~~party ~~also~~notes ~~increased~~payable in ~~fiscal year~~the consolidated balance sheets. On October 25, 2019, byInterstate $1merged with Aimbridge Hospitality,~~198~~ North America’s largest independent hotel management firm. With the completion of the merger,~~000~~ ~~primarily~~the ~~due~~newly tocombined ~~increased~~company will ~~group~~be ~~commissions~~positioned ~~and~~under ~~labor~~the ~~costs~~Aimbridge asHospitality ~~occupancy~~name ~~increased~~in the Americas.

~~The following table sets forth the average daily room rate, average occupancy percentage and room revenue per available room (“RevPAR”) of the Hotel for the year ended June 30, 2019 and 2018.~~17

For the Year Ended June 30,	Average Daily Rate		Average Occupancy %			RevPAR
2019	$	268		96	%	$	257
2018	$	250		94	%	$	235

In addition to the operations of the Hotel, the Company also generates income from the ownership and management of real estate. On December 31, 1997, the Company acquired a controlling 55.4% interest in Intergroup Woodland Village, Inc. (“Woodland Village”) from InterGroup at a cost of $859,000. Woodland Village’s major asset is a 27-unit apartment complex located in Santa Monica, California. On February 5, 2020, the Company acquired the additional 44.6% interest in Woodland Village from InterGroup by issuing 97,500 shares of its common stock to InterGroup. As a result of the transaction, Woodland Village became a wholly owned subsidiary of the Company. The transaction is being made pursuant to a Contribution Agreement (the “Contribution Agreement”) between the Company and InterGroup, dated February 5, 2020. The Contribution Agreement also contains a provision for a potential subsequent earn out to InterGroup pursuant to terms set forth therein. The Company also owns a 2-unit apartment building in West Los Angeles, California.

~~The Hotel was able to grow occupancy while increasing rate resulting~~Fiscal inYear aEnded 9%June ~~RevPAR growth~~30, ~~far~~2020 ~~exceeding~~Compared ~~market~~to ~~performance.~~Fiscal ~~The~~Year ~~Hotel~~Ended ~~successfully~~June ~~grew~~30, ~~midweek rate while slightly increasing occupancy in a market that is seeing occupancy declines.~~ 2019

~~We believe that enhancing the Hotel’s technology is critical~~The toCompany ~~remain~~had ~~competitive~~a innet ~~the~~loss ~~market~~of ~~place and to that end~~$4,191,000 wefor ~~are currently working with all Hilton approved vendors to upgrade all technical aspects of~~ the Hotel. Implementation of state-of-the-art systems such as the new internet system from Cisco and 4K smart televisions that are in every room and common areas will set us apart from our competitors. We have made ten additional rooms available by eliminating the Justice administrative office from the Hotel and relocating the accounting department to administrative space and eliminated the unprofitable Wellness Center that was added by previous management. We anticipate that the additional ten rooms will be placed into service within the fiscal year ~~ending~~ended June 30, 2020 ascompared design delays pushed the project into our next fiscal year. Additionally, the fitness center which is occupying the equivalent of five rooms and the executive lounge which is occupying the equivalent of three rooms, will be relocated to a ~~different~~net ~~area~~income ~~within the Hotel. The eight equivalent rooms will be placed back into service. Part~~ of ~~this renovation will be funded by the Hotel’s furniture, fixture and equipment reserve account with our lender as well as the~~ $24,~~000~~264,000 ~~key~~for ~~money~~the ~~incentive~~year ~~provided~~ended June by30, ~~Interstate~~2019. ~~Lastly,~~The wechange ~~anticipate~~is ~~the completion~~primarily ofattributable ~~the~~to ~~installation of a complete exterior building maintenance system by~~ the ~~end~~decrease ofin ~~our~~Hotel ~~quarter ending December 31, 2019 which will enable periodic window washing~~revenue.

~~Real Estate~~ Hotel Operations

The Company had net loss from ~~real~~Hotel ~~estate~~ operations of $~~234~~4,108,000 for the year ended June 30, ~~2019~~2020 compared to net ~~loss~~income of $504,978,000 for the year ended June 30, ~~2018~~2019. The ~~increase~~change inwas ~~net loss is~~ primarily ~~due~~attributable to ~~increased~~the ~~interest~~$17,042,000 ~~expense.~~decrease ~~Real~~in ~~estate~~Hotel ~~operating~~revenue, ~~expenses~~offset ~~increased~~ by the $257,133,000 ~~for~~decrease ~~the~~in ~~same~~operating ~~comparable fiscal years as the result of higher legal~~ expenses. ~~Management continues to review and analyze the Company’s real estate operations to improve occupancy and rental rates, reduce expenses and improve efficiencies.~~

~~Investment~~The following ~~Transactions~~table sets forth a more detailed presentation of Hotel operations for the years ended June 30, 2020 and 2019.

The Company had a net loss on marketable securities of $575,000 for the year ended June 30, 2019 compared to a net loss on marketable securities of $1,072,000 for the year ended June 30, 2018. For the year ended June 30, 2019, the Company had an unrealized loss of $187,000 related to the Company’s investment in the common stock of Comstock Mining Inc. (“Comstock” - NYSE MKT: LODE). For the year ended June 30, 2018, the Company had an unrealized loss of $1,729,000 related to the Company’s investment in the common stock of Comstock. As of June 30, 2019 and 2018, such investments represent approximately 19% and 16%, respectively, of the Company’s investment portfolio. For the year ended June 30, 2019, the Company had a net realized loss of $75,000 and a net unrealized loss of $500,000. For the year ended June 30, 2018, the Company had a net realized gain of $314,000 and a net unrealized loss of $1,386,000. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

For the year ended June 30,	2020			2019
Hotel revenues:
Hotel rooms	$	36,465,000		$	51,243,000
Food and beverage		3,529,000			5,353,000
Garage		2,368,000			2,875,000
Other operating departments		477,000			410,000
Total hotel revenues		42,839,000			59,881,000
Operating expenses excluding depreciation and amortization		(37,333,000	)		(44,466,000	)
Operating income before interest, depreciation and amortization		5,506,000			15,415,000
Loss on disposal of assets		-			(398,000	)
Interest expense - mortgage		(7,326,000	)		(7,634,000	)
Depreciation and amortization expense		(2,288,000	)		(2,405,000	)
Net (loss) income from Hotel operations	$	(4,108,000	)	$	4,978,000

17For the year ended June 30, 2020, the Hotel generated operating income of $5,506,000 before non-recurring charges, interest, depreciation, and amortization on total operating revenues of $42,839,000 compared to operating income of $15,415,000 before non-recurring charges, interest, depreciation, and amortization on total operating revenues of $59,881,000 for the year ended June 30, 2019. Room revenues decreased by $14,778,000 for the year ended June 30, 2020 compared to the year ended June 30, 2019, food and beverage revenue decreased by $1,824,000, and revenue from garage decreased by $507,000. The year over year decline in all areas are result of the business interruption attributable to a variety of responses by federal, state, and local civil authority to the COVID-19 outbreak in March 2020 which continues to affect us. Revenue from other operating departments increased year over year mainly due to increase in cancellation revenue. The following table sets forth the monthly average occupancy percentage of the Hotel for the fiscal years ended June 30, 2020 and 2019.

During the years ended June 30, 2019 and 2018, the Company performed an impairment analysis of its other investments and determined that its investments had other than temporary impairment and recorded impairment losses of $61,000 and $124,000, respectively.

Month	July			August			September			October			November			December			January			February			March			April			May			June			Fiscal Year
Year	2019			2019			2019			2019			2019			2019			2020			2020			2020			2020			2020			2020			2019 - 2020
Average Occupancy %		98	%		99	%		98	%		97	%		99	%		98	%		96	%		96	%		35	%		10	%		27	%		34	%		74	%

Year	2018			2018			2018			2018			2018			2018			2019			2019			2019			2019			2019			2019			Fiscal Year 2018 - 2019
Average Occupancy %		98	%		98	%		97	%		97	%		95	%		98	%		94	%		97	%		94	%		96	%		96	%		98	%		96	%

The Company and its subsidiary, Portsmouth, compute and file income tax returns and prepare discrete income tax provisions for financial reporting. The income tax benefit (expense) during the years ended June 30, 2019 and 2018 includes the income tax effect on Portsmouth’s pretax income which includes its share in net income of the Hotel.18

~~MARKETABLE~~Operating expenses ~~SECURITIES~~decreased ~~AND~~by ~~OTHER~~$7,133,000 ~~INVESTMENTS~~for the year ended June 30, 2020 to $37,333,000 compared to the year ended June 30, 2019 of $44,466,000 primarily due to decrease in salaries and wages, rooms commission, credit card fees, management fees, and franchise fees.

AsThe following oftable ~~June~~sets ~~30,~~forth ~~2019 and 2018,~~ the ~~Company~~average ~~had~~daily ~~investments~~room ~~in marketable~~rate, ~~equity~~average ~~securities~~occupancy ofpercentage ~~$2,679,000~~ and ~~$4,439,000,~~room ~~respectively.~~revenue ~~The~~per ~~following~~available ~~table~~room ~~shows~~(“RevPAR”) of the ~~composition~~Hotel offor the ~~Company’s marketable~~year ~~securities~~ended ~~portfolio~~June by30, ~~selected~~2020 ~~industry~~and ~~groups:~~2019.

			% of Total
For the Year Ended June 30,	Average Daily Rate		Average Occupancy %			RevPAR
As of June 30, 2019			Investment
2020	$	248		74	%	$	183
Industry Group	Fair Value		Securities
2019	$	268		96	%	$	257
REITs and real estate companies	$	816,000		30.5	%
Consumer cyclical		636,000		23.7	%
Basic materials		537,000		20.0	%
Financial services		331,000		12.4	%
Other		359,000		13.4	%
	$	2,679,000		100.0	%

			% of Total
As of June 30, 2018			Investment
Industry Group	Fair Value		Securities
REITs and real estate companies	$	1,484,000		33.4	%
Healthcare		838,000		18.9	%
Basic materials		698,000		15.7	%
Technology		639,000		14.4	%
Other		780,000		17.6	%
	$	4,439,000		100.0	%

The Hotel’s revenues decreased by 28% year over year. Average daily rate decreased by $20, average occupancy dropped 22%, and RevPAR decreased by $74 for the twelve months ended June 30, 2020 compared to the twelve months ended June 30, 2019.

AsIn order ofto ~~June~~provide ~~30,~~our ~~2019~~guests with best in class technology experience, we completed the ~~Company~~upgrade of our new internet system from Cisco, and installed new 55” smart 4K televisions and Hilton’s ~~investment~~stay ~~portfolio~~connected internet streaming products. We also isreplaced ~~diversified~~mattresses ~~with~~in 13all ~~different~~guestrooms ~~equity~~during ~~positions~~the fiscal year ended June 30, 2020. The ~~Company~~COVID-19 ~~holds~~pandemic ~~five~~and ~~equity~~design ~~securities~~delays ~~that~~have pushed ~~comprised~~back ~~more~~the ~~than~~plans ~~10%~~for the conversion of the Justice offices, Fitness Center and Executive Lounge; projects that would add ~~equity~~19 ~~value~~guest ofrooms ~~the~~into ~~portfolio~~our inventory. The ~~largest~~long-term ~~security~~value ~~position~~of ~~represents~~these ~~19%~~rooms is in utilizing them as guest rooms, and we will work to implement a new timeline as business returns. Part of this renovation will be funded by the ~~portfolio~~Hotel’s furniture, fixture and equipment ~~consists~~reserve ofaccount with our lender as well as the ~~common~~key ~~stock~~money ofincentive provided by Interstate. Lastly, the Hotel completed ~~Comstock~~the installation of a complete exterior building maintenance system which iswill ~~included~~enable periodic window washing, replaced and upgraded all computers in the ~~basic~~business ~~materials~~center ~~industry~~and ~~group~~administrative offices.

~~The following table shows the net gain or loss on the Company’s~~Real ~~marketable~~Estate ~~securities and the associated margin interest and trading expenses for the respective years.~~Operations

For the years ended June 30,	2019			2018
Net loss on marketable securities	$	(575,000	)	$	(1,072,000	)
Net unrealized loss on other investments		-			(21,000	)
Impairment loss on other investments		(61,000	)		(124,000	)
Dividend and interest income		198,000			61,000
Margin interest expense		(139,000	)		(163,000	)
Trading expenses		(197,000	)		(182,000	)
	$	(774,000	)	$	(1,501,000	)

The Company had net loss from real estate operations of $64,000 for the year ended June 30, 2020 compared to net loss of $234,000 for the year ended June 30, 2019. The decrease in net loss is primarily due to decrease in interest expense. Real estate operating expenses decreased by $46,000 for the same comparable fiscal years primarily due to savings in insurance and legal expenses. Management continues to review and analyze the Company’s real estate operations to improve occupancy and rental rates, reduce expenses and improve efficiencies.

18Investment Transactions

~~FINANCIAL~~The Company ~~CONDITION~~had ~~AND~~a ~~LIQUIDITY~~net loss on marketable securities of $548,000 for the year ended June 30, 2020 compared to a net loss on marketable securities of $575,000 for the year ended June 30, 2019. For the year ended June 30, 2020, the Company had no unrealized gains or losses related to the Company’s investment in the common stock of Comstock Mining Inc. (“Comstock” - NYSE MKT: LODE). For the year ended June 30, 2019, the Company had an unrealized loss of $187,000 related to the Company’s investment in the common stock of Comstock. As of June 30, 2020 and 2019, such investments represent approximately 59% and 19%, respectively, of the Company’s investment portfolio. For the year ended June 30, 2020, the Company had a net realized loss of $268,000 and a net unrealized loss of $280,000. For the year ended June 30, 2019, the Company had a net realized loss of $75,000 and a net unrealized loss of $500,000. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value. For a more detailed description of the composition of the Company’s marketable securities see the Marketable Securities section below.

~~The~~During the ~~Company’s~~years ~~cash~~ended ~~flows~~June ~~are~~30, ~~primarily~~2020 ~~generated~~and ~~from its~~2019, ~~Hotel~~the ~~operations~~Company ~~and~~performed ~~general~~an ~~partner~~impairment ~~management~~analysis ~~fees~~of ~~from~~its ~~Justice~~other ~~Investors.~~investments ~~The~~and ~~Company~~determined ~~also~~that its ~~receives~~investments ~~cash~~had ~~generated~~other ~~from the~~than ~~investment~~temporary ofimpairment ~~its~~and ~~cash~~recorded ~~and~~impairment ~~marketable~~losses ~~securities~~of $136,000 and ~~other~~$61,000, ~~investments~~respectively.

~~To fund the redemption of limited partnership interests~~The Company and toits ~~repay the prior mortgage~~subsidiary, ~~Justice obtained a $97~~Portsmouth,~~000,000~~ ~~mortgage~~compute ~~loan~~ and afile ~~$20,000,000~~income ~~mezzanine~~tax ~~loan~~returns ~~in December of 2013. The mortgage loan is secured by the Partnership’s principal asset, the Hotel. The mortgage loan bears an interest rate of 5.275% per annum~~ and ~~matures~~prepare indiscrete ~~January~~income ~~2024.~~tax Asprovisions ~~additional security~~ for ~~the mortgage loan, there is a limited~~financial ~~guaranty executed by the Company in favor of mortgage lender~~reporting. The ~~mezzanine~~income ~~loan~~tax isbenefit ~~secured~~during by the ~~Operating~~years ~~membership interest~~ended ~~held~~June ~~by Mezzanine and is subordinated to the Mortgage Loan. The mezzanine loan bears interest at 9.75% per annum and matures in January 2024. As additional security for the mezzanine loan~~30, ~~there~~2020 ~~is a limited guaranty executed by the Company in favor of mezzanine lender. Effective as of May 12, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty~~ and an2019 ~~additional~~includes ~~indemnitor under~~ the ~~environmental~~income ~~indemnity~~tax ~~for~~effect ~~Justice~~on ~~Investors limited partnership~~Portsmouth’s ~~$97,000,000 mortgage loan and the $20,000,000 mezzanine loan. On July 31, 2019, Mezzanine refinanced the~~ ~~Mezzanine~~pretax ~~Loan~~(loss) byincome ~~entering~~which ~~into~~includes aits ~~new~~share ~~mezzanine~~in ~~loan~~net ~~agreement~~ (~~“New Mezzanine Loan Agreement”~~loss) ~~with~~income ~~Cred Reit Holdco LLC in the amount~~ of ~~$20,000,000. The prior Mezzanine Loan was paid off. Interest rate on~~ the ~~new mezzanine loan is 7~~Hotel.~~25% and the loan matures on January 1, 2024. Interest only payments are due monthly. See Note 18 – Subsequent Events.~~

On July 2, 2014, the Partnership obtained from InterGroup (a related party) an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of two years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The proceeds of the loan were applied to the July 2014 payments to Justice Holdings Company, LLC (“Holdings”) in connection with the redemption of limited partnership interests. The loan has a balance of $3,000,000 as of June 30, 2019 and was extended to December 31, 2019. During the fiscal year ended June 30, 2018, the Partnership made principal paydown of $1,250,000.19

~~In April 2017, Portsmouth obtained from InterGroup an unsecured~~MARKETABLE ~~short-term~~SECURITIES ~~loan~~AND inOTHER the principal amount of $1,000,000 at 5% per year fixed interest, with a term of five months and maturing September 6, 2017. Accrued interest and monthly principal installments in the amount of $200,000 were due and payable commencing on May 1, 2017 and continuing on the first day of each calendar month thereafter, until five months after the date of the loan at which time any unpaid balance of principal and interest on the note was due and payable. The loan was extended to September 15, 2017 and paid off on September 13, 2017.INVESTMENTS

~~The~~As of ~~Company~~June ~~has~~30, ~~invested~~2020 inand ~~short-term~~2019, ~~income-producing~~the ~~instruments and~~Company had investments in marketable equity ~~and~~securities ~~debt~~of ~~securities~~$870,000 ~~when~~and ~~deemed~~$2,679,000, ~~appropriate~~respectively. The ~~Company's~~following ~~marketable~~table ~~securities~~shows ~~are~~the ~~classified~~composition asof ~~trading~~the ~~with~~Company’s ~~unrealized gains~~marketable ~~and~~securities ~~losses~~portfolio ~~recorded~~by ~~through~~selected ~~the~~industry ~~consolidated statements of operations.~~groups:

Management believes that its cash, marketable securities, and the cash flows generated from those assets and from the partnership management fees, will be adequate to meet the Company’s current and future obligations. Additionally, management believes there is significant appreciated value in the Hotel property to support additional borrowings, if necessary.

As of June 30, 2020			Investment
Industry Group	Fair Value		Securities

Basic materials	$	575,000		66.1	%
REITs and real estate companies		253,000		29.1	%
Energy		39,000		4.5	%
Industrials		3,000		0.3	%
	$	870,000		100.0	%

MATERIAL CONTRACTUAL OBLIGATIONS

			% of Total
As of June 30, 2019			Investment
Industry Group	Fair Value		Securities

REITs and real estate companies	$	816,000		30.5	%
Consumer cyclical		636,000		23.7	%
Basic materials		537,000		20.0	%
Financial services		331,000		12.4	%
Other		359,000		13.4	%
	$	2,679,000		100.0	%

As of June 30, 2020, the Company’s investment portfolio is diversified with six different equity positions. The ~~following~~Company ~~table~~holds two ~~provides~~equity asecurities ~~summary~~that comprised more than 10% of the ~~Company’s~~equity value of the portfolio. The largest security position represents ~~material~~59% ~~financial~~of ~~obligations~~the portfolio and consists of the common stock of Comstock which ~~also~~is ~~includes~~included ~~interest~~in the basic materials industry group.

	Total		Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter
Mortgage notes payable	$	117,061,000	$	4,431,000	$	1,557,000	$	1,642,000	$	1,732,000	$	107,404,000	$	295,000
Related party and other notes payable		9,707,000		3,980,000		1,006,000		1,022,000		744,000		567,000		2,388,000
Interest		28,843,000		6,767,000		6,407,000		6,295,000		6,184,000		3,078,000		112,000
Total	$	155,611,000	$	15,178,000	$	8,970,000	$	8,959,000	$	8,660,000	$	111,049,000	$	2,795,000

The following table shows the net gain or loss on the Company’s marketable securities and the associated margin interest and trading expenses for the respective years.

OFF-BALANCE SHEET ARRANGEMENTS

For the years ended June 30,	2020			2019
Net loss on marketable securities	$	(548,000	)	$	(575,000	)
Impairment loss on other investments		(136,000	)		(61,000	)
Dividend and interest income		164,000			198,000
Margin interest expense		(69,000	)		(139,000	)
Trading expenses		(159,000	)		(197,000	)
	$	(748,000	)	$	(774,000	)

~~The Company has no material off balance~~FINANCIAL ~~sheet~~CONDITION ~~arrangements.~~AND LIQUIDITY

Historically, our cash flows have been primarily generated from our Hotel operations. However, the responses by federal, state, and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our liquidity. For the fiscal year ended June 30, 2020, our net cash flow used in operations was $5,420,000. For the fiscal year ended June 30, 2019, our net cash flow provided by operations was $9,165,000. We have taken several steps to preserve capital and increase liquidity at our Hotel, including implementing strict cost management measures to eliminate non-essential expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.

~~IMPACT OF INFLATION~~20

~~Hotel~~As of ~~room~~June ~~rates~~30, ~~are~~2020, ~~typically~~we ~~impacted~~had bycash, ~~supply~~cash equivalents, and ~~demand factors,~~restricted ~~not~~cash ~~inflation~~of $16,399,000 ~~since~~which ~~rental~~included $10,666,000 of arestricted ~~hotel~~cash held ~~room~~by isour ~~usually~~Hotel ~~for~~senior alender ~~limited~~Wells ~~number~~Fargo ofBank, ~~nights~~N.A. ~~Room~~(“Lender”). ~~rates~~Of ~~can~~the be$10,666,000 ~~and~~restricted ~~usually are~~cash, ~~adjusted~~$7,486,000 was toheld ~~account~~ for ~~inflationary~~furniture, ~~cost~~fixtures ~~increases.~~and ~~Since~~equipment ~~Interstate~~(“FF&E”) ~~has~~reserves ~~the power~~ and ~~ability~~$2,432,000 ~~under~~was ~~the~~held ~~terms~~for ofa ~~its~~possible ~~management~~future ~~agreement~~property toimprovement ~~adjust~~plan ~~hotel~~(“PIP”) ~~room~~requested ~~rates~~by onour anfranchisor, ~~ongoing~~Hilton. ~~basis~~However, ~~there~~Hilton ~~should~~has beconfirmed ~~minimal~~that ~~impact~~it will onnot ~~partnership~~require ~~revenues~~a ~~due~~PIP tofor ~~inflation.~~our ~~Partnership~~Hotel ~~revenues~~until ~~are~~relicensing ~~also~~which ~~subject~~shall tooccur ~~interest~~at ~~rate~~the ~~risks~~earlier of (i) January 2030, which ~~may~~is besix ~~influenced~~years after bythe ~~inflation.~~maturity ~~For~~date ~~the~~of ~~two~~our ~~most~~current ~~recent~~senior ~~fiscal~~and ~~years~~mezzanine loans, or (ii) upon the ~~impact~~sale of ~~inflation~~our Hotel. Therefore, on August 19, 2020, Lender released PIP deposits in the ~~Company's~~amount ~~income~~of is$2,379,000 ~~not~~to ~~viewed~~the byHotel. ~~management~~The funds were utilized to fund operating expenses, including asfranchise ~~material~~and management fees and other expenses.

~~CRITICAL~~On April ~~ACCOUNTING~~9, ~~POLICIES~~2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, Justice has used the proceeds from the SBA Loan primarily for payroll costs. As of June 30, 2020, Justice had used $3,568,000 in qualified expenses and had a balance of $1,151,000 available for future qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until October 2020, and the repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. Justice anticipates applying for loan forgiveness shortly. All unforgiven portion of the principal and accrued interest will be due at maturity.

~~Critical~~In order ~~accounting~~to ~~policies~~increase ~~are~~its ~~those~~liquidity positions, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on April ~~that~~30, ~~are~~2020, ~~most~~generating ~~significant~~net toproceeds ~~the~~of ~~portrayal~~$6,814,000. In June 2020, InterGroup refinanced one of ~~our~~its ~~financial~~California ~~position~~properties and ~~results~~generated net proceeds of ~~operations~~$1,144,000. InterGroup is currently evaluating other refinancing opportunities and ~~require~~it ~~judgments~~could byrefinance ~~management~~additional inmultifamily ~~order~~properties toshould ~~make~~the ~~estimates~~need ~~about~~arise; ~~the~~however, ~~effect~~InterGroup ofdoes ~~matters~~not ~~that~~deem ~~are~~it ~~inherently~~necessary ~~uncertain.~~at ~~The~~this ~~preparation~~time. ofInterGroup ~~these~~has ~~financial~~an ~~statements~~uncollateralized ~~requires~~$8,000,000 usrevolving toline ~~make~~of ~~estimates~~credit ~~and~~from ~~judgments~~CIBC ~~that~~Bank ~~affect~~USA ~~the~~(“CIBC”) ~~reported~~of ~~amounts~~which in$5,000,000 ~~our~~was ~~consolidated~~available ~~financial~~to ~~statements.~~be Wedrawn ~~evaluate~~down ~~our~~as ~~estimates~~of onJune an30, ~~ongoing~~2020; ~~basis~~however, ~~including~~the ~~those~~outstanding ~~related~~balance toon the ~~consolidation~~revolving line of ~~our~~credit ~~subsidiaries~~was paid down fully on August 28, 2020, making the entire $8,000,000 available to ~~our~~be ~~revenues~~drawn down should additional liquidity be necessary. On August 28, ~~allowances~~2020, Santa Fe ~~for~~sold ~~bad~~its ~~debts,~~27-unit ~~accruals~~apartment complex located in Santa Monica, ~~asset~~California ~~impairments~~for $15,650,000 ~~other~~and ~~investments~~realized a gain on the sale of approximately $12,026,000. ~~income~~Santa ~~taxes~~Fe will manage its federal and ~~commitments~~state income tax liability, and ~~contingencies.~~anticipates Wethe ~~base~~utilization ~~our~~of ~~estimates~~its available onnet ~~historical~~operating ~~experience~~losses and oncapital ~~various~~loss ~~other~~carryforwards. ~~assumptions~~Santa ~~that~~Fe wereceived ~~believe~~net toproceeds beof ~~reasonable~~$12,163,000 ~~under~~after ~~the~~selling ~~circumstances,~~costs ~~the~~and ~~results~~repayment of ~~which~~InterGroup’s ~~form~~RLOC ~~the~~of ~~basis~~$2,985,000 ~~for~~as ~~making~~InterGroup ~~judgments~~had ~~about~~drawn on its RLOC in July 2018 to pay off the ~~carrying~~previous ~~values~~Fannie ofMae ~~assets~~mortgage on ~~and~~the ~~liabilities~~property. ~~The~~Furthermore, ~~actual~~pursuant ~~results~~to ~~may~~the ~~differ from~~Contribution ~~these~~Agreement ~~estimates~~between orSanta ~~our~~Fe ~~estimates~~and ~~may~~InterGroup, beSanta ~~affected~~Fe bypaid ~~different~~InterGroup $662,000 ~~assumptions~~from orthe ~~conditions~~sale. Santa Fe will not seek a replacement property.

~~Item~~As the 7Asole general partner of Justice that controls approximately 93.3% ~~Quantitative~~of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be met by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of directors, to borrow from InterGroup and/or ~~Qualitative~~Santa ~~Disclosures~~Fe ~~about~~to ~~Market~~meet ~~Risk~~any capital calls and its other obligations during the next twelve months and beyond. On August 28, 2020, the Board of InterGroup and Santa Fe have passed resolutions, respectively, to provide funding to Portsmouth if necessary. The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain conditions in order to raise additional capital.

~~Not~~Our known ~~required~~short-term liquidity requirements primarily consist of funds necessary to pay for ~~smaller~~operating ~~reporting~~and ~~companies~~other expenditures, including management and franchise fees, corporate expenses, payroll and related costs, taxes, interest and principal payments on our outstanding indebtedness, and repairs and maintenance of the Hotel.

~~Item~~Our long-term 8liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel. ~~Financial~~We ~~Statements~~will continue to finance our business activities primarily with existing cash, including from the activities described above, and ~~Supplementary~~cash ~~Data~~generated from our operations. After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments, for at least twelve months from the date of issuance of these financial statements, even if current levels of low occupancy were to persist. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs. We believe that our cash on hand, along with other potential aforementioned sources of liquidity that management may be able to obtain, will be sufficient to fund our working capital needs, as well as our capital lease and debt obligations for at least the next twelve months and beyond. However, there can be no guarantee that management will be successful with its plan.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	PAGE
Report of Independent Registered Public Accounting Firm	21
Consolidated Balance Sheets - June 30, 2019 and 2018	22
Consolidated Statements of Operations - For years ended June 30, 2019 and 2018	23
Consolidated Statements of Shareholders’ Deficit - For years ended June 30, 2019 and 2018	24
Consolidated Statements of Cash Flows - For years ended June 30, 2019 and 2018	25
Notes to the Consolidated Financial Statements	26

20MATERIAL CONTRACTUAL OBLIGATIONS

~~Report~~The following table provides a summary of ~~Independent~~the ~~Registered~~Company’s ~~Public Accounting~~material ~~Firm~~financial obligations which also includes interest.

To the Shareholders and the Board of Directors of

			Year		Year		Year		Year		Year
	Total		2021		2022		2023		2024		2025		Thereafter
Mortgage notes payable	$	115,598,000	$	1,557,000	$	4,611,000	$	1,732,000	$	107,403,000	$	11,000	$	284,000
Related party and other notes payable		13,471,000		1,016,000		8,752,000		750,000		567,000		567,000		1,819,000
Interest		22,949,000		6,871,000		6,308,000		6,192,000		3,465,000		11,000		102,000
Total	$	152,018,000	$	9,444,000	$	19,671,000	$	8,674,000	$	111,435,000	$	589,000	$	2,205,000

~~Santa~~OFF-BALANCE SHEET ~~Fe Financial Corporation~~ARRANGEMENTS

~~Opinion~~The Company onhas ~~the~~no ~~Financial~~material ~~Statements~~off balance sheet arrangements.

~~We have audited the accompanying consolidated balance sheets~~IMPACT ofOF Santa Fe Financial Corporation and its subsidiaries (the “Company”) as of June 30, 2019 and 2018, the related consolidated statements of operations, shareholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2019 and 2018, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.INFLATION

~~Changes~~Hotel room inrates ~~Accounting~~are ~~Principle~~typically impacted by supply and demand factors, not inflation, since rental of a hotel room is usually for a limited number of nights. Room rates can be, and usually are, adjusted to account for inflationary cost increases. Since Interstate has the power and ability under the terms of its management agreement to adjust hotel room rates on an ongoing basis, there should be minimal impact on partnership revenues due to inflation. Partnership revenues are also subject to interest rate risks, which may be influenced by inflation. For the two most recent fiscal years, the impact of inflation on the Company’s income is not viewed by management as material.

~~As discussed in Note 2 to the consolidated financial statements,~~CRITICAL ~~effective~~ACCOUNTING ~~July 1, 2018 the Company changed its method of accounting for revenue recognition due to the adoption of Accounting Standards Codification Topic No. 606.~~POLICIES

~~The~~Critical accounting ~~Company~~policies ~~adopted~~are ~~ASU~~those ~~2016-18,~~that ~~Restricted~~are ~~Cash,~~most ~~effective~~significant to the portrayal of our financial position and results of operations and ~~July~~require 1,judgments ~~2018~~by management in order to make estimates about the effect of matters that are inherently uncertain. The ~~adoption~~ preparation of ~~ASU~~these ~~2016-18~~financial ~~impacted~~statements requires us to make estimates and judgments that affect the ~~presentation~~reported ofamounts ~~cash~~in ~~flows~~our ~~with~~consolidated financial ~~inclusion~~statements. We evaluate our estimates on an ongoing basis, including those related to the consolidation of ~~restricted~~our ~~cash~~subsidiaries, to ~~flows~~our revenues, allowances for ~~each~~bad debts, accruals, asset impairments, other investments, income taxes and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the ~~presented~~basis ~~periods~~for making judgments about the carrying values of assets and liabilities. The actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.

~~Basis~~Item 7A. ~~for~~Quantitative ~~Opinion~~and Qualitative Disclosures about Market Risk.

~~These consolidated financial statements are the responsibility~~Not of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required tofor besmaller ~~independent~~reporting ~~with respect to the Company in accordance with the U~~companies.~~S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.~~

~~We conducted our audits in accordance with the standards of~~Item ~~the PCAOB~~8. ~~Those~~Financial ~~standards~~Statements ~~require that we plan~~ and ~~perform~~Supplementary the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.Data

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	PAGE

Report of Independent Registered Public Accounting Firm	23

Consolidated Balance Sheets - June 30, 2020 and 2019	24

Consolidated Statements of Operations - For years ended June 30, 2020 and 2019	25

Consolidated Statements of Shareholders’ Deficit - For years ended June 30, 2020 and 2019	26

Consolidated Statements of Cash Flows - For years ended June 30, 2020 and 2019	27

Notes to the Consolidated Financial Statements	28

~~/s/ Moss Adams LLP~~22

~~Irvine,~~Report of ~~California~~Independent Registered Public Accounting Firm

~~August~~To the ~~30,~~Shareholders ~~2019~~and the Board of Directors

WeSanta Fe ~~have~~Financial ~~served as the Company’s auditor since 2017.~~Corporation

21Opinion on the Financial Statements

~~SANTA~~We have FEaudited ~~FINANCIAL~~the ~~CORPORATION~~accompanying consolidated balance sheets of Santa Fe Financial Corporation and its subsidiaries (the “Company”) as of June 30, 2020 and 2019, and the related consolidated statements of operations, shareholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2020 and 2019, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

~~CONSOLIDATED~~Basis for ~~BALANCE SHEETS~~Opinion

As of June 30,	2019			2018
ASSETS
Investment in Hotel, net	$	36,336,000		$	37,359,000
Investment in real estate, net		4,866,000			4,961,000
Investment in marketable securities		2,679,000			4,439,000
Other investments, net		351,000			474,000
Cash and cash equivalents		9,800,000			7,647,000
Restricted cash		11,027,000			7,119,000
Accounts receivable - Hotel, net		848,000			1,799,000
Other assets, net		1,643,000			1,546,000
Deferred tax assets		6,402,000			5,159,000
Total assets	$	73,952,000		$	70,503,000
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities:
Accounts payable and other liabilities	$	16,765,000		$	15,017,000
Due to securities broker		396,000			1,068,000
Obligations for securities sold		625,000			919,000
Related party and other notes payable		8,221,000			8,641,000
Capital leases		1,486,000			1,355,000
Mortgage notes payable - real estate		3,315,000			3,188,000
Mortgage notes payable - Hotel		113,087,000			114,372,000
Total liabilities		143,895,000			144,560,000
Commitments and contingencies (Note 17)
Shareholders' deficit:
Common stock - par value $.10 per share;
Authorized - 2,000,000;
Issued 1,339,638 and outstanding 1,241,810 as of June 30, 2019 and 2018		134,000			134,000
Additional paid-in capital		8,808,000			8,808,000
Accumulated deficit		(54,183,000	)		(57,442,000	)
Treasury stock, at cost, 97,828 shares as of June 30, 2019 and 2018		(951,000	)		(951,000	)
Total Santa Fe shareholders' deficit		(46,192,000	)		(49,451,000	)
Noncontrolling interest		(23,751,000	)		(24,606,000	)
Total shareholders' deficit		(69,943,000	)		(74,057,000	)
Total liabilities and shareholders' deficit	$	73,952,000		$	70,503,000

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

~~The~~We conducted ~~accompanying~~our ~~notes~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an ~~integral~~audit of its internal control over financial reporting. As part of ~~these~~our ~~consolidated~~audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial ~~statements~~reporting. Accordingly, we express no such opinion.

22Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~SANTA~~/s/ Moss FEAdams ~~FINANCIAL CORPORATION~~LLP

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~Irvine, California

For the years ended June 30,	2019			2018
Revenues:
Hotel	$	59,881,000		$	57,099,000
Real estate		324,000			335,000
Total revenues		60,205,000			57,434,000
Costs and operating expenses:
Hotel operating expenses		(44,466,000	)		(40,103,000	)
Recovery of legal settlement costs		-			5,775,000
Real estate operating expenses		(218,000	)		(193,000	)
Depreciation and amortization expense		(2,515,000	)		(2,711,000	)
General and administrative expense		(1,115,000	)		(1,404,000	)
Total costs and operating expenses		(48,314,000	)		(38,636,000	)
Income from operations		11,891,000			18,798,000
Other income (expense):
Interest expense - mortgage		(7,864,000	)		(7,893,000	)
Loss on disposal of assets		(398,000	)		-
Net loss on marketable securities		(575,000	)		(1,072,000	)
Net unrealized loss on other investments		-			(21,000	)
Impairment loss on other investments		(61,000	)		(124,000	)
Dividend and interest income		198,000			61,000
Trading and margin interest expense		(336,000	)		(345,000	)
Net other expense		(9,036,000	)		(9,394,000	)
Income before income taxes		2,855,000			9,404,000
Income tax benefit (expense)		1,409,000			(5,986,000	)
Net income		4,264,000			3,418,000
Less: Net income attributable to the noncontrolling interest		(1,005,000	)		(1,922,000	)
Net income attributable to Santa Fe	$	3,259,000		$	1,496,000
Basic and diluted income per share attributable to Santa Fe	$	2.62		$	1.20
Weighted average number of common shares outstanding		1,241,810			1,241,810

September 9, 2020

~~The~~We have ~~accompanying~~served ~~notes~~as ~~are~~the anCompany’s ~~integral~~auditor ~~part~~since ~~of these consolidated financial statements~~2017.

SANTA FE FINANCIAL CORPORATION

CONSOLIDATED ~~STATEMENTS OF SHAREHOLDERS'~~ ~~DEFICIT~~BALANCE SHEETS

															Total
As of June 30,	2020			2019
							Additional								Santa Fe						Total
ASSETS
	Common Stock						Paid-in		Accumulated			Treasury			Shareholders'			Noncontrolling			Shareholders'
Investment in Hotel, net	$	35,369,000		$	36,336,000
	Shares			Amount			Capital		Deficit			Stock			Deficit			Interest			Deficit
Investment in real estate, net		4,759,000			4,866,000
Balance at July 1, 2017		1,339,638			134,000			8,808,000		(58,938,000	)		(951,000	)		(50,947,000	)		(26,528,000	)		(77,475,000	)
Investment in marketable securities		870,000			2,679,000
Net income		-			-			-		1,496,000			-			1,496,000			1,922,000			3,418,000
Other investments, net		158,000			351,000
Balance at June 30, 2018		1,339,638		$	134,000		$	8,808,000	$	(57,442,000	)	$	(951,000	)	$	(49,451,000	)	$	(24,606,000	)	$	(74,057,000	)
Cash and cash equivalents		4,724,000			9,800,000
Net income		-			-			-		3,259,000			-			3,259,000			1,005,000			4,264,000
Restricted cash		11,675,000			11,027,000
Investment in Justice		-			-			-		-			-			-			(150,000	)		(150,000	)
Accounts receivable - Hotel, net		251,000			848,000
Balance at June 30, 2019		1,339,638		$	134,000		$	8,808,000	$	(54,183,000	)	$	(951,000	)	$	(46,192,000	)	$	(23,751,000	)	$	(69,943,000	)
Other assets, net		1,967,000			1,643,000
Deferred tax assets		8,483,000			6,402,000
Total assets	$	68,256,000		$	73,952,000
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Liabilities:
Accounts payable and other liabilities - Justice	$	7,588,000		$	11,298,000
Accounts payable and other liabilities		432,000			362,000
Accounts payable to related party		6,197,000			5,105,000
Due to securities broker		—			396,000
Obligations for securities sold		—			625,000
Related party notes payable		7,604,000			8,221,000
Other note payable		4,719,000			—
Finance leases		1,098,000			1,486,000
Mortgage notes payable - real estate		3,306,000			3,315,000
Mortgage notes payable - Hotel		111,446,000			113,087,000
Total liabilities		142,390,000			143,895,000
Commitments and contingencies (Note 17)
Shareholders’ deficit:
Common stock - par value $.10 per share; Authorized - 2,000,000; Issued 1,437,138 and 1,339,638; outstanding 1,339,310 and 1,241,810 as of June 30, 2020 and 2019, respectively		144,000			134,000
Additional paid-in capital		7,895,000			8,808,000
Accumulated deficit		(55,243,000	)		(54,183,000	)
Treasury stock, at cost, 97,828 shares as of June 30, 2020 and 2019		(951,000	)		(951,000	)
Total Santa Fe shareholders’ deficit		(48,155,000	)		(46,192,000	)
Noncontrolling interest		(25,979,000	)		(23,751,000	)
Total shareholders’ deficit		(74,134,000	)		(69,943,000	)
Total liabilities and shareholders’ deficit	$	68,256,000		$	73,952,000

The accompanying notes are an integral part of these consolidated financial statements.

SANTA FE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~OPERATIONS

For the years ended June 30,	~~2019~~2020			~~2018~~2019
Cash flows from operating activities:
Revenues:
Net Income	$	4,264,000		$	3,418,000
Hotel	$	42,839,000		$	59,881,000
Adjustments to reconcile net income to net cash provided by operating activities:
Real estate		317,000			324,000
Net unrealized loss on marketable securities		500,000			1,386,000
Total revenues		43,156,000			60,205,000
Unrealized loss on other investments		-			21,000
Costs and operating expenses:
Deferred tax asset		(1,243,000	)		5,768,000
Hotel operating expenses		(37,333,000	)		(44,466,000	)
Impairment loss on other investments		61,000			124,000
Real estate operating expenses		(172,000	)		(218,000	)
Loss on disposal of assets		398,000			-
Depreciation and amortization expense		(2,398,000	)		(2,515,000	)
Depreciation and amortization		2,289,000			2,433,000
General and administrative expense		(1,364,000	)		(1,115,000	)
Changes in assets and liabilities:
Total costs and operating expenses		(41,267,000	)		(48,314,000	)
Investment in marketable securities		1,260,000			49,000
Income from operations		1,889,000			11,891,000
Accounts receivable - hotel, net		951,000			(363,000	)
Other income (expense):
Other assets, net		(97,000	)		137,000
Interest expense - mortgage		(7,425,000	)		(7,864,000	)
Accounts payable and other liabilities		1,748,000			(2,385,000	)
Loss on disposal of assets		-			(398,000	)
Due to securities broker		(672,000	)		63,000
Net loss on marketable securities		(548,000	)		(388,000	)
Obligations for securities sold		(294,000	)		(352,000	)
Net loss on marketable securities - Comstock		-			(187,000	)
Net cash provided by operating activities		9,165,000			10,299,000
Impairment loss on other investments		(136,000	)		(61,000	)
Cash flows from investing activities:
Dividend and interest income		164,000			198,000
Hotel and real estate investments		(1,413,000	)		(270,000	)
Trading and margin interest expense		(228,000	)		(336,000	)
Proceeds from other investments		62,000			77,000
Net other expense		(8,173,000	)		(9,036,000	)
Investment in Justice		(150,000	)		-
(Loss) Income before income taxes		(6,284,000	)		2,855,000
Net cash used in investing activities		(1,501,000	)		(193,000	)
Income tax benefit		2,093,000			1,409,000
Cash flows from financing activities:
Net (loss) income		(4,191,000	)		4,264,000
Net payments of mortgage and other notes payable		(1,603,000	)		(2,610,000	)
Less: Net loss (income) attributable to the noncontrolling interest		1,225,000			(1,005,000	)
Net cash used in financing activities		(1,603,000	)		(2,610,000	)
Net (loss) income attributable to Santa Fe	$	(2,966,000	)	$	3,259,000
Net increase in cash, cash equivalents and restricted cash:		6,061,000			7,496,000
Basic and diluted (loss) income per share attributable to Santa Fe	$	(2.32	)	$	2.62
Cash, cash equivalents and restricted cash at the beginning of the year		14,766,000			7,270,000
Weighted average number of common shares outstanding		1,280,970			1,241,810
Cash, cash equivalents and restricted cash at the end of the year	$	20,827,000		$	14,766,000
Supplemental information:
Income tax payment	$	(50,000	)	$	(28,000	)
Interest paid	$	(7,963,000	)	$	(8,056,000	)
Non-cash transactions:
Additions to Hotel equipment through capital lease	$	382,000		$	1,364,000

The accompanying notes are an integral part of these consolidated financial statements.

SANTA FE FINANCIAL CORPORATION

~~NOTES TO THE~~ CONSOLIDATED STATEMENTS ~~FINANCIAL~~OF ~~STATEMENTS~~SHAREHOLDERS’ DEFICIT

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

														Total
					Additional									Santa Fe						Total
	Common Stock				Paid-in			Accumulated			Treasury			Shareholders’			Noncontrolling			Shareholders’
	Shares		Amount		Capital			Deficit			Stock			Deficit			Interest			Deficit

Balance at July 1, 2018		1,339,638	$	134,000	$	8,808,000		$	(57,442,000	)	$	(951,000	)	$	(49,451,000	)	$	(24,606,000	)	$	(74,057,000	)

Net income		-		-		-			3,259,000			-			3,259,000			1,005,000			4,264,000

Investment in Justice		-		-		-			-			-			-			(150,000	)		(150,000	)

Balance at June 30, 2019		1,339,638		134,000		8,808,000			(54,183,000	)		(951,000	)		(46,192,000	)		(23,751,000	)		(69,943,000	)

Net loss		-		-		-			(2,966,000	)		-			(2,966,000	)		(1,225,000	)		(4,191,000	)

Investment in Woodland		97,500		10,000		(913,000	)		1,906,000			-			1,003,000			(1,003,000	)		-

Balance at June 30, 2020		1,437,138	$	144,000	$	7,895,000		$	(55,243,000	)	$	(951,000	)	$	(48,155,000	)	$	(25,979,000	)	$	(74,134,000	)

~~Description~~The accompanying notes are an integral part of ~~Business~~these consolidated financial statements.

Santa Fe Financial Corporation, a Nevada corporation, (“Santa Fe” or the “Company”) owns approximately 68.8% of the outstanding common shares of Portsmouth Square, Inc. (“Portsmouth”), a public company. Santa Fe is an 82.2%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company. InterGroup also directly owns approximately 13.4% of the common stock of Portsmouth, a public company. Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors, a California limited partnership (“Justice” or the “Partnership”). Portsmouth has a 93.3% limited partnership interest in Justice and is the sole general partner.26

~~Justice, through its subsidiaries Justice Operating Company,~~SANTA ~~LLC~~FE ~~(“Operating”)~~FINANCIAL and Justice Mezzanine Company, LLC (“Mezzanine”), owns a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-level underground parking garage. Kearny Street Parking LLC (“Parking”) is the operator of the garage. Mezzanine is a wholly-owned subsidiary of the Partnership; Operating is a wholly-owned subsidiary of Mezzanine. Mezzanine is the borrower under certain mezzanine indebtedness of Justice, and in December 2013, the Partnership conveyed ownership of the Hotel to Operating. The Hotel is operated by the partnership as a full-service Hilton brand hotel pursuant to a Franchise License Agreement with HLT Franchise Holding LLC (Hilton). Justice had a ten-year management agreement with Prism Hospitality L.P. (“Prism”) to perform certain management functions for the Hotel. Prism’s management agreement was terminated upon its expiration date of February 3, 2017. Effective December 1, 2013, GMP Management, Inc. (“GMP”), a company owned by a Justice limited partner and a related party, also provided management services for the Partnership pursuant to a management services agreement, with a three-year term, subject to the Partnership’s right to terminate earlier for cause. In June 2016, GMP resigned. On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the form of a self-exhausting, interest free note payable in the amount of $2,000,000 in a separate key money agreement. The $2,000,000 is included in restricted cash balances in the consolidated balance sheets as of June 30, 2019 and 2018. As of June 30, 2019 and 2018, unamortized portion of the key money was $1,896,000 and $2,000,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets.CORPORATION

~~In addition to the operations of the Hotel, the Company also~~CONSOLIDATED ~~generates~~STATEMENTS ~~revenue~~OF ~~from~~CASH the ownership and management of real estate. On December 31, 1997, the Company acquired a controlling 55.4% interest in InterGroup Woodland Village, Inc. ("Woodland Village") from InterGroup. Woodland Village's major asset is a 27-unit apartment complex located in Los Angeles, California. The Company also owns a two-unit apartment building in Los Angeles, California.FLOWS

Principles of Consolidation

For the years ended June 30,	2020			2019
Cash flows from operating activities:
Net (Loss) Income	$	(4,191,000	)	$	4,264,000
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net unrealized loss on marketable securities		279,000			500,000
Deferred tax asset		(2,081,000	)		(1,243,000	)
Impairment loss on other investments		136,000			61,000
Loss on disposal of assets		-			398,000
Depreciation and amortization		2,203,000			2,289,000
Changes in assets and liabilities:
Investment in marketable securities		1,530,000			1,260,000
Accounts receivable - hotel, net		597,000			951,000
Other assets, net		(324,000	)		(97,000	)
Accounts payable and other liabilities - Justice		(3,710,000	)		1,352,000
Accounts payable and other liabilities		70,000			(291,000	)
Accounts payable related party		1,092,000			687,000
Due to securities broker		(396,000	)		(672,000	)
Obligations for securities sold		(625,000	)		(294,000	)
Net cash (used in) provided by operating activities		(5,420,000	)		9,165,000

Cash flows from investing activities:
Payments for hotel furniture, equipment and building improvements		(1,290,000	)		(1,399,000	)
Investment in real estate		(4,000	)		(14,000	)
Proceeds from other investments		57,000			62,000
Investment in Justice		-			(150,000	)
Net cash used in investing activities		(1,237,000	)		(1,501,000	)

Cash flows from financing activities:
Proceeds from other notes payable		4,719,000			-
Payments of mortgage and finance leases, net		(1,881,000	)		(1,408,000	)
Issuance cost from refinance of long-term debt		(479,000	)		(155,000	)
Issuance cost from refinance of related party loan		(130,000	)		(40,000	)
Net cash provided by (used in) financing activities		2,229,000			(1,603,000	)

Net (decrease) increase in cash, cash equivalents and restricted cash:		(4,428,000	)		6,061,000
Cash, cash equivalents and restricted cash at the beginning of the year		20,827,000			14,766,000
Cash, cash equivalents and restricted cash at the end of the year	$	16,399,000		$	20,827,000

Supplemental information:
Income tax payment	$	(2,000	)	$	(50,000	)
Interest paid	$	(7,460,000	)	$	(7,963,000	)

Non-cash transactions:
Additions to Hotel equipment through finance leases	$	30,000		$	382,000

The accompanying ~~consolidated~~notes ~~financial~~are ~~statements~~an ~~include~~integral ~~the~~part ~~accounts~~ of ~~the~~ ~~Company,~~these ~~Portsmouth~~consolidated ~~and~~financial ~~Woodland Village~~statements. ~~All significant inter-company transactions and balances have been eliminated.~~

~~Investment in Hotel, net~~27

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

~~Repairs and maintenance are charged to expense as incurred.~~NOTES ~~Costs~~TO ofTHE ~~significant~~CONSOLIDATED ~~renewals~~FINANCIAL and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. 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 (expenses).STATEMENTS

~~The Company reviews property and equipment for impairment whenever~~NOTE ~~events~~1 or– ~~changes~~BUSINESS inAND ~~circumstances~~SIGNIFICANT ~~indicate~~ACCOUNTING that the carrying amount of an asset may not be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Partnership will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the property. No impairment losses were recorded for the years ended June 30, 2019 and 2018.POLICIES

26Description of Business

~~Investment~~Santa Fe Financial Corporation, a Nevada corporation, (“Santa Fe” or the “Company”) owns approximately 68.8% of the outstanding common shares of Portsmouth Square, Inc. (“Portsmouth”), a public company (OTC Market Inc.’s Pink: PRSI). Santa Fe is an 83.7%-owned subsidiary of The InterGroup Corporation (“InterGroup”), a public company (NASDAQ Capital Market: INTG). As of June 30, 2020, InterGroup also has the power to vote an approximately 3.7% interest in ~~Real~~the common ~~Estate~~stock in Santa Fe owned by its Chairman and CEO, ~~net~~John V. Winfield, pursuant to a voting trust agreement entered into on June 30, 1998. Mr. Winfield, Chairman of the Board of both Santa Fe and InterGroup, is a control person of both entities. InterGroup also directly owns approximately 13.7% of the common stock of Portsmouth. Portsmouth’s primary business is conducted through its general and limited partnership interest in Justice Investors, a California limited partnership (“Justice” or the “Partnership”). Portsmouth has a 93.3% limited partnership interest in Justice and is the sole general partner. Justice was formed in 1967 to acquire real property in San Francisco, California. As of June 30, 2020, the Partnership has approximately 23 voting limited partners.

~~Rental~~Justice, through ~~properties~~its ~~are~~subsidiaries ~~stated~~Justice atOperating ~~cost~~Company, ~~less~~LLC ~~accumulated~~(“Operating”) ~~depreciation.~~and Justice Mezzanine Company, LLC (“Mezzanine”) ~~Depreciation~~owns ofand ~~rental~~operates a 544-room hotel property islocated ~~provided~~at on750 Kearny Street, San Francisco California, known as the ~~straight~~Hilton San Francisco Financial District (the “Hotel”) and related facilities including a five-~~line~~level ~~method~~underground ~~based~~parking ~~upon~~garage. ~~estimated~~Mezzanine is ~~useful~~a ~~lives~~wholly owned subsidiary of 5the toPartnership; 40Operating ~~years~~is ~~for~~a wholly owned subsidiary of Mezzanine. Mezzanine is the borrower ~~buildings~~under ~~and~~certain ~~improvements~~mezzanine indebtedness of Justice, and 5in toDecember 102013, ~~years~~the ~~for~~Partnership ~~equipment~~conveyed ownership of the Hotel to Operating. The ~~Expenditures~~Hotel ~~for~~is ~~repairs~~operated ~~and~~by ~~maintenance~~the ~~are~~partnership ~~charged~~as a full-service Hilton brand hotel pursuant to ~~expense~~a asFranchise License Agreement with HLT ~~incurred~~Franchise ~~and~~Holding ~~major~~LLC ~~improvements~~(“Hilton”) ~~are~~through ~~capitalized~~January 31, 2030.

~~The~~Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, ~~also~~LLC ~~reviews~~(“Interstate”) to manage the Hotel, along with its ~~rental~~five-level ~~property~~parking ~~assets~~garage, ~~for~~with ~~impairment~~an effective takeover date of February 3, 2017. The term of Nothe ~~impairment~~management ~~losses~~agreement is for an initial period of ten years commencing on the ~~investment~~takeover date and automatically renews for successive one (1) year periods, to not exceed five years in ~~real~~the ~~estate~~aggregate, ~~have~~subject ~~been~~to ~~recorded~~certain conditions. Under the terms of the HMA, base management fee payable to Interstate shall be one and seven-tenths percent (1.70%) of total Hotel revenue. The HMA also provides for Interstate to advance a key money incentive fee to the ~~years~~Hotel ~~ended~~for capital improvements in the form of a self-exhausting, interest free note payable in the amount of $2,000,000 in a separate key money agreement. As of June 30, 2020 and 2019, balance of the key money including accrued interests are $1,009,000 and ~~2018~~$2,049,000, respectively, and are included in restricted cash in the consolidated balance sheets. As of June 30, 2020 and 2019, balance of the unamortized portion of the key money are $1,646,000 and $1,896,000, respectively, and are included in the related party notes payable in the consolidated balance sheets. On October 25, 2019, Interstate merged with Aimbridge Hospitality, North America’s largest independent hotel management firm. With the completion of the merger, the newly combined company will be positioned under the Aimbridge Hospitality name in the Americas.

~~Investment~~In addition to the operations of the Hotel, the Company also generates revenue from the ownership and management of real estate. On December 31, 1997, the Company acquired a controlling 55.4% interest in ~~Marketable~~Intergroup ~~Securities~~Woodland Village, Inc. (“Woodland Village”) from InterGroup for $859,000. Woodland Village’s major asset is a 27- unit apartment complex located in Santa Monica, California. Santa Fe also owns a two-unit apartment building in West Los Angeles, California.

~~Marketable~~On February ~~securities~~5, ~~are~~2020, ~~stated~~Santa atFe ~~fair~~entered ~~value~~into asa ~~determined by~~Contribution Agreement (the ~~most~~“Contribution ~~recently~~Agreement”) ~~traded~~with ~~price~~InterGroup, ofpursuant to ~~each~~which ~~security~~InterGroup atreceived ~~the~~97,500 ~~balance~~shares ~~sheet~~of ~~date~~common stock, par value $0.10 ~~Marketable~~per ~~securities~~share, ~~are~~of ~~classified~~Santa asFe, ~~trading~~in ~~securities~~exchange for InterGroup’s ~~with~~contribution ~~all~~to ~~unrealized~~Santa ~~gains~~Fe ~~and~~of ~~losses~~4,460 onshares of common stock (the ~~Company's~~“Common ~~investment~~Stock”) ~~portfolio~~of ~~recorded~~Woodland ~~through~~Village Inc. (the ~~consolidated~~“Transaction”). As ~~statements~~a result of ~~operations~~the contribution, Woodland Village became a wholly owned subsidiary of Santa Fe.

~~Other~~On February ~~Investments~~5, ~~net~~2020, after review by an independent director of the Company, and by the unanimous vote of all directors of the Company (with Mr. Winfield abstaining), the Board approved the entry into the Contribution Agreement and the consummation of the Transaction. The Company’s Board approved the Transaction after the receipt of a fairness opinion from a third-party independent firm. The Board was first made aware of the Transaction in early January 2020, received information to review on or about January 17, 2020 and was given multiple opportunities to discuss the materials with management before the February 5, 2020 Board meeting. The Contribution Agreement also contains a provision for a potential subsequent earn out to InterGroup pursuant to terms set forth therein.

Other investments include non-marketable securities (carried at cost, net of any impairments loss) and non–marketable warrants (carried at fair value). The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. For the years ended June 30, 2019 and 2018, the Company recorded impairment losses related to other investments of $61,000 and $124,000, respectively. As of June 30, 2019 and 2018, the allowance for impairment losses was $3,894,000 and $3,833,000, respectively.28

~~Cash~~Principles of ~~and Cash Equivalents~~Consolidation

~~Cash~~The consolidated ~~equivalents~~financial ~~consist~~statements ofinclude ~~highly~~the ~~liquid~~accounts ~~investments with an original maturity~~ of ~~three~~the ~~months~~Company ~~or less when purchased~~ and ~~are carried at cost, which approximates fair value~~Portsmouth. AsAll ofsignificant ~~June~~inter-company ~~30,~~transactions ~~2019~~ and ~~2018,~~balances ~~the Company does not~~ have ~~any~~been ~~cash equivalents~~eliminated.

~~Restricted~~Investment in ~~Cash~~Hotel, net

~~Restricted~~Property and ~~cash~~equipment isare ~~comprised~~stated ofat ~~amounts held~~cost. byBuilding ~~lenders~~improvements ~~for~~are ~~payment~~depreciated ofon ~~real~~a ~~estate~~straight-line ~~taxes,~~basis ~~insurance,~~over ~~replacement~~their ~~and~~useful ~~capital~~lives ~~addition~~ranging from ~~reserves~~3 to 39 years. ItFurniture, ~~also~~fixtures, ~~includes~~and ~~key~~equipment ~~money received~~are ~~from~~depreciated ~~Interstate~~on ~~that~~a isstraight-line ~~restricted~~basis ~~for~~over ~~capital~~their ~~improvements~~useful ~~for~~lives ~~the~~ranging from ~~Hotel~~3 to 7 years.

~~Accounts~~Repairs and ~~Receivable~~maintenance -are ~~Hotel,~~charged ~~net~~to expense as incurred. Costs of significant renewals and improvements are capitalized and depreciated over the shorter of its remaining estimated useful life or life of the asset. 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 (expenses).

~~Accounts~~The Company ~~receivable~~reviews ~~from~~property ~~Hotel~~and ~~customers~~equipment ~~are~~for ~~carried~~impairment atwhenever ~~cost~~events or changes in circumstances indicate that the carrying amount ~~less~~of an ~~allowance~~asset ~~for~~may ~~doubtful~~not ~~accounts~~be recoverable in accordance with generally accepted accounting principles (“GAAP”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Partnership will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. If impairment is ~~based~~recognized, onthe ~~management’s~~reduced ~~assessment~~carrying amount of the ~~collectability~~asset ofwill ~~accounts~~be ~~receivable~~accounted for as its new cost. For a depreciable asset, the new cost will be depreciated over the asset’s remaining useful life. Generally, fair values are estimated using discounted cash flow, replacement cost or market comparison analyses. The ~~Partnership~~process ~~extends~~of ~~unsecured~~evaluating ~~credit~~for impairment requires estimates as to ~~its~~future ~~customers~~events ~~but~~and ~~mitigates~~conditions, ~~the~~which ~~associated~~are ~~credit~~subject ~~risk~~to byvarying ~~performing~~market ~~ongoing~~and ~~credit~~economic factors. Therefore, it ~~evaluations~~is reasonably possible that a change in estimate resulting from judgments as to future events could occur which would affect the recorded amounts of ~~its~~the ~~customers~~property. No impairment losses were recorded for the years ended June 30, 2020 and 2019.

~~Other~~Investment in ~~Assets~~Real Estate, net

~~Other~~Rental properties ~~assets~~are ~~include~~stated ~~prepaid~~at ~~insurance,~~cost ~~accounts~~less ~~receivable,~~accumulated depreciation. Depreciation of rental property is provided on the straight-line ~~franchise~~method ~~fees,~~based ~~and~~upon ~~other~~estimated ~~miscellaneous~~useful ~~assets.~~lives ~~Franchise~~of ~~fees~~5 ~~are~~to ~~stated~~40 atyears ~~cost~~for buildings and ~~amortized~~improvements ~~over~~and ~~the~~5 ~~life~~to of10 ~~the~~years ~~agreement~~for equipment. Expenditures ~~(15~~for ~~years)~~repairs and maintenance are charged to expense as incurred and major improvements are capitalized.

~~Income~~The Company ~~Taxes~~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, 2020 and 2019.

~~Deferred income taxes are calculated under the liability method.~~Investment ~~Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes~~ in ~~deferred~~Marketable income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely.Securities

27Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date. Marketable securities are classified as trading securities with all unrealized gains and losses on the Company’s investment portfolio recorded through the consolidated statements of operations.

~~On December 22, 2017, the U.S. government enacted comprehensive~~Other ~~tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing corporate income tax by~~Investments, among other things, lowering corporate income tax rates. As the Company has a June 30 fiscal year-end, the lower corporate income tax rate was phased in, resulting in a statutory federal rate of approximately 28% for our fiscal year ending June 30, 2018, and 21% for subsequent fiscal years. The decrease in corporate tax rate reduced the Company’s deferred tax asset to the lower federal base rate of 21%. As a result, a provisional net ~~charge of $2,723,000 was included in the income tax expense for the year ended June 30, 2018.~~

~~Assets~~Other investments include non-marketable securities (carried at cost, net of any impairments loss) and ~~liabilities~~non–marketable warrants (carried at fair value). The Company has no significant influence or control over the entities that issue these investments. These investments are ~~established~~reviewed on a periodic basis for ~~uncertain~~other-than-temporary ~~tax~~impairment. ~~positions taken~~The orCompany ~~positions~~reviews ~~expected~~several factors to bedetermine whether ~~taken~~a inloss ~~income~~is ~~tax~~other-than-temporary. ~~returns~~These ~~when~~factors ~~such~~include ~~positions~~but are ~~judged~~not limited to: ~~not~~(i) ~~meet~~the length of time an investment is in an unrealized loss position, (ii) the ~~“more-likely-~~extent to which fair value is less than~~-not”~~ cost, (iii) the financial condition and near ~~threshold~~term ~~based~~prospects onof the ~~technical~~issuer ~~merits~~and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. For the ~~positions~~years ended June 30, 2020 and 2019, the Company recorded impairment losses related to other investments of $136,000 and $61,000, respectively. As of June 30, 2020 and 2019, the allowance for impairment losses was $3,872,000 and $3,894,000, respectively.

~~Due~~Cash and toCash ~~Securities Broker~~Equivalents

~~Various~~Cash equivalents ~~securities~~consist ~~brokers~~of ~~have~~highly ~~advanced~~liquid ~~funds~~investments towith ~~the~~an ~~Company for~~original ~~the~~maturity ~~purchase~~ of ~~marketable~~three ~~securities~~months ~~under~~or ~~standard~~less ~~margin~~when ~~agreements~~purchased and are carried at cost, which approximates fair value. ~~These~~As ~~advanced~~of ~~funds~~June ~~are~~30, ~~recorded~~2020 asand a2019, ~~liability~~the Company does not have any cash equivalents.

~~Obligations for Securities Sold~~29

~~Obligation for securities sold represents the fair market value~~Restricted of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations.Cash

~~Accounts~~Restricted cash ~~Payable~~is comprised of amounts held by lenders for payment of real estate taxes, insurance, replacement and ~~Other~~capital ~~Liabilities~~addition reserves. It also includes key money received from Interstate that is restricted for capital improvements for the Hotel.

Accounts ~~payable and other liabilities include trade payables,~~ ~~advance~~Receivable ~~customer~~- ~~deposits~~Hotel, ~~accrued wages, accrued real estate taxes, and other liabilities.~~net

~~Fair~~Accounts receivable ~~Value~~from Hotel customers are carried at cost less an allowance for doubtful accounts that is based on management’s assessment of ~~Financial~~the ~~Instruments~~collectability of accounts receivable. As of June 30, 2020 and 2019, the allowance for doubtful accounts was $25,000 and $4,000, respectively. The Partnership extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers. The Partnership extends unsecured credit to its customers but mitigates the associated credit risk by performing ongoing credit evaluations of its customers.

~~Fair value is defined as the price that would be received to~~Other ~~sell an asset or paid to transfer a liability (i.e.~~Assets, the “exit price”) in an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows:net

~~Level~~Other assets ~~1–inputs~~include toprepaid ~~the~~insurance, ~~valuation~~accounts ~~methodology~~receivable, franchise fees, and other miscellaneous assets. Franchise fees are stated ~~quoted~~at ~~prices~~cost ~~(unadjusted)~~and ~~for~~amortized ~~identical~~over ~~assets~~the orlife ~~liabilities~~of inthe ~~active~~agreement ~~markets~~(15 years).

~~Level 2–inputs to the valuation methodology include~~Income quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.Taxes

~~Level~~Deferred income ~~3–inputs~~taxes toare calculated under the ~~valuation~~liability ~~methodology~~method. Deferred income tax assets and liabilities are based on differences between ~~unobservable~~the financial statement and ~~significant~~tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the ~~fair~~period ~~value~~of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely.

~~Treasury~~We have ~~Stock~~considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The effect of tax law changes is required to be recognized either in the interim period in which the legislation is enacted or reflected in the computation of the annual effective tax rate, depending on the nature of the change. As of June 30, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no material effect on the fiscal year tax provision. We will continue to evaluate the income tax provisions of the CARES Act and monitor the tax law changes that could have income tax accounting and disclosure implications.

~~The~~Assets and ~~Company~~liabilities ~~records~~are ~~the~~established ~~acquisition~~for ofuncertain ~~treasury~~tax ~~stock~~positions ~~under~~taken or positions expected to be taken in income tax returns when such positions are judged to not meet the ~~cost~~“more-likely-than-not” ~~method~~threshold based on the technical merits of the positions.

~~Revenue~~Due to ~~Recognition~~Securities Broker

~~On July 1, 2018, we adopted ASC 606, Revenue from Contracts~~Various ~~with~~securities ~~Customers,~~brokers ~~using~~have ~~the~~advanced ~~modified~~funds ~~retrospective approach~~ to ~~all~~the ~~contracts~~Company ~~resulting~~for ~~in no cumulative adjustment to accumulated deficit. The adoption of this standard did not impact~~ the ~~timing~~purchase of ~~our~~marketable ~~revenue~~securities ~~recognition~~under ~~based~~standard onmargin ~~the short-term,~~agreements. ~~day-to-day~~These ~~nature~~advanced offunds ~~our~~are ~~operations.~~recorded ~~See~~as ~~Note~~a ~~2 – Revenue~~liability.

28Obligations for Securities Sold

~~Advertising~~Obligation for ~~Costs~~securities sold represents the fair market value of shares sold with the promise to deliver that security at some future date and the fair market value of shares underlying the written call options with the obligation to deliver that security when and if the option is exercised. The obligation may be satisfied with current holdings of the same security or by subsequent purchases of that security. Unrealized gains and losses from changes in the obligation are included in the statement of operations.

~~Advertising costs are expensed as incurred and are included~~Accounts inPayable ~~Hotel operating expenses in the consolidated statements of operations. Advertising costs were $282,000~~ and ~~$302,000~~Other ~~for the years ended June 30, 2019 and 2018, respectively.~~Liabilities

~~Basic~~Accounts payable and ~~Diluted~~other ~~Loss~~liabilities ~~per~~include ~~Share~~trade payables, advance customer deposits, accrued wages, accrued real estate taxes, and other liabilities.

~~Basic loss per share is calculated based upon the weighted average number of common shares outstanding during each fiscal year. As of June~~ 30~~, 2019 and 2018, the Company did not have any potentially dilutive securities outstanding.~~

~~Use~~Fair Value of ~~Estimates~~Financial Instruments

~~The~~Fair value ~~preparation~~is ofdefined ~~financial~~as ~~statements~~the inprice ~~conformity~~that ~~with~~would ~~accounting principles~~be ~~generally~~received ~~accepted~~to insell ~~the~~an ~~United~~asset ~~States~~or ofpaid ~~America~~to transfer a liability (Ui.Se., ~~GAAP~~the “exit price”) in ~~requires~~an orderly transaction between market participants at the measurement date. Accounting standards for fair value measurement establishes a hierarchy for inputs used in measuring fair value that maximizes the use of ~~estimates~~observable inputs and ~~assumptions~~minimizes ~~regarding~~the ~~certain~~use ~~types~~ of ~~assets,~~unobservable ~~liabilities,~~inputs ~~revenues,~~by ~~and~~requiring ~~expenses.~~that ~~Such~~the ~~estimates~~most ~~primarily~~observable ~~relate~~inputs tobe ~~the~~used ~~recording~~when ofavailable. ~~allowance~~Observable ~~for~~inputs are inputs that ~~doubtful~~market ~~accounts~~participants ~~and~~would ~~allowance~~use ~~for~~in ~~impairment~~pricing ~~losses~~the ~~which~~asset ~~are~~or liability developed based on ~~management’s~~market ~~assessment~~data obtained from sources independent of the ~~collectability~~Company. ~~of accounts~~Unobservable ~~receivable~~inputs ~~and~~are inputs that reflect the ~~fair~~Company’s ~~market~~assumptions ~~value~~about ofthe ~~nonmarketable~~assumptions ~~securities,~~market ~~respectively,~~participants would asuse ofin pricing the ~~end~~asset ofor liability developed based on the ~~fiscal~~best ~~year~~information available in the circumstances. ~~Actual~~The hierarchy ~~results~~is ~~may~~broken ~~differ~~down ~~from~~into ~~those~~three ~~estimates.~~levels based on the observability of inputs as follows:

~~Debt~~Level 1–inputs ~~Issuance~~to ~~Costs~~the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

~~Debt~~Level 2–inputs ~~issuance costs related~~ to ~~a recognized debt liability are presented in~~ the ~~consolidated~~valuation ~~balance~~methodology ~~sheets~~include asquoted aprices ~~direct~~for ~~deduction~~similar ~~from~~assets ~~the~~and ~~carrying~~liabilities ~~amount~~in ofactive ~~the~~markets, ~~debt liability~~ and ~~are amortized~~ ~~over~~inputs ~~the~~that ~~life~~are ofobservable for the ~~debt.~~assets ~~Loan~~or ~~amortization~~liability, ~~costs~~either ~~are~~directly ~~included~~or inindirectly, ~~interest~~for ~~expense~~substantially in the ~~consolidated~~full ~~statement~~term of ~~operations~~the financial instruments.

~~Recent~~Level 3–inputs ~~Accounting~~to ~~Pronouncements~~the valuation methodology are unobservable and significant to the fair value.

~~In May 2014, the FASB issued Accounting~~Treasury Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We applied the modified retrospective transition method to all contracts upon the adoption of ASU 2014-09 effective July 1, 2018. We provided the additional required disclosures, but the cumulative adjustment from our comparative periods was zero in our consolidated financial statements. See Note 2 - Revenue.Stock

In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-18, Restricted Cash. ASU 2016-18 requires companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Additionally, ASU 2016-18 requires a disclosure of a reconciliation between the statement of financial position and the statement of cash flows when the balance sheet includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. ASU 2016-18 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. The Company ~~adopted~~records ~~ASU 2016-18 effective July 1, 2018. The adoption of ASU 2016-18 impacted~~ the ~~presentation of~~acquisition ~~cash flows with inclusion~~ of ~~restricted~~treasury ~~cash~~stock ~~flows~~under ~~for each of~~ the ~~presented~~cost ~~periods~~method.

~~In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic~~Revenue 842) (ASU 2016-02), which supersedes existing guidance on accounting for leases in Leases (Topic 840) and generally requires all leases, including operating leases, to be recognized in the statement of financial position as right-of-use assets and lease liabilities by lessees. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach and are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. We adopted ASU 2016-02 on July 1, 2019. The Company is currently reviewing the effect of ASU No. 2016-02.Recognition

On July ~~June 16~~1, ~~2016~~2018, ~~the~~we ~~FASB~~adopted ~~issued~~ASC ~~ASU 2016-13~~606, ~~“Financial Instruments~~Revenue -from ~~Credit~~Contracts ~~Losses~~with ~~(Topic~~Customers, ~~326):~~using ~~Measurement~~the ofmodified ~~Credit~~retrospective ~~Losses~~approach onto ~~Financial~~all contracts ~~Instruments.”~~resulting ~~This~~in ~~ASU~~no ~~modifies~~cumulative ~~the~~adjustment ~~impairment model~~ to ~~utilize~~accumulated andeficit. ~~expected~~The ~~loss~~adoption ~~methodology in place~~ of ~~the~~this ~~currently~~standard ~~used~~did ~~incurred~~not ~~loss~~impact ~~methodology,~~the ~~which~~timing of ~~will~~our ~~result~~revenue ~~in the timelier~~ recognition ofbased ~~losses.~~on ~~ASU~~the ~~No.~~short-term, ~~2016~~day-13to-day ~~will~~nature ~~be effective for us as~~ of ~~January~~our ~~1, 2020~~operations. ~~The~~See ~~Company~~Note is3 ~~currently~~– ~~reviewing the effect of ASU No~~Revenue. ~~2016-13.~~

29Advertising Costs

~~NOTE~~Advertising costs 2are -expensed ~~REVENUE~~as incurred and are included in Hotel operating expenses in the consolidated statements of operations. Advertising costs were $176,000 and $282,000 for the years ended June 30, 2020 and 2019, respectively.

~~Our revenue from real estate is primarily rental income from~~Basic ~~residential property leases which is recorded when due from residents~~ and isDiluted ~~recognized~~(Loss) ~~monthly~~Income asper ~~earned. The following table present our Hotel revenue disaggregated by revenue streams.~~Share

For the year ended June 30,	2019		2018
Hotel revenues:
Hotel rooms	$	51,243,000	$	46,475,000
Food and beverage		5,353,000		7,222,000
Garage		2,875,000		3,011,000
Other operating departments		410,000		391,000
Total Hotel revenue	$	59,881,000	$	57,099,000

Basic (loss) income per share is calculated based upon the weighted average number of common shares outstanding during each fiscal year. As of June 30, 2020 and 2019, the Company did not have any potentially dilutive securities outstanding.

~~Performance~~Use of ~~obligations~~Estimates

WeThe preparation ~~identified~~of financial statements in conformity with accounting principles generally accepted in the ~~following~~United ~~performance~~States ~~obligations~~of ~~for~~America (U.S. ~~which~~GAAP) requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. ~~revenue~~Such isestimates ~~recognized~~primarily asrelate to the ~~respective~~recording ~~performance~~of ~~obligations~~allowance ~~are~~for ~~satisfied,~~doubtful accounts and allowance for impairment losses which are ~~results~~based inon ~~recognizing~~management’s assessment of the ~~amount~~collectability weof ~~expect~~accounts receivable and the fair market value of nonmarketable tosecurities, berespectively, ~~entitled~~as toof ~~for~~the ~~providing~~end of the ~~goods~~fiscal oryear. ~~services:~~Actual results may differ from those estimates.

•Debt Issuance ~~Cancelable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs.~~Costs

•Debt issuance ~~Noncancelable~~costs ~~room~~related ~~reservations~~to ~~and~~a ~~banquet~~recognized ordebt ~~conference~~liability ~~reservations~~are ~~represent~~presented in the consolidated balance sheets as a ~~series~~direct ofdeduction ~~distinct~~from the ~~goods~~carrying oramount ~~services~~of ~~provided~~the ~~over~~debt ~~time~~liability and ~~satisfied~~are asamortized ~~each~~over ~~distinct~~the ~~good~~life orof ~~service~~the isdebt. ~~provided,~~Loan ~~which~~amortization iscosts ~~reflected~~are byincluded ~~the~~in interest ~~duration~~expense ofin the ~~room~~consolidated ~~reservation~~statement of operations.

•Recent Accounting Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.Pronouncements

•In February ~~Components~~2016, ofthe ~~package~~Financial ~~reservations~~Accounting Standards Board (FASB) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities another option for transition, allowing entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Effective July 1, 2019, we adopted ASU 2016-02 using the modified retrospective approach provided by ASU 2018-11. We elected certain practical expedients permitted under the transition guidance, including the election to carryforward historical lease classification. We also elected the short-term lease practical expedient, which ~~each~~allowed ~~component~~us ~~could~~to benot ~~sold~~recognize ~~separately~~leases with a term of less than twelve months on our consolidated balance sheets. In addition, we elected the lease and non-lease components practical expedient, which allowed us to ~~other~~calculate ~~hotel~~the ~~guests~~present ~~are~~value of ~~considered~~the ~~separate~~fixed ~~performance~~payments ~~obligations~~without performing an allocation of lease and non-lease components. We did not record any operating lease right-of-use (“ROU”) assets and operating lease liabilities upon adoption of the new standard as the aggregate value of the ROU assets and operating lease liabilities are ~~satisfied~~immaterial relative to our total assets and liabilities as ~~set~~of ~~forth~~June ~~above~~30, 2020 and 2019. The standard did not have an impact on our other finance leases, statements of operations or cash flows. See Note 4 and Note 10 for balances of finance lease ROU assets and liabilities, respectively.

Hotel revenue primarily consists of hotel room rentals, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking). Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component.31

WeOn June do16, ~~not~~2016, ~~disclose~~ the ~~value~~FASB ofissued ~~unsatisfied~~ASU ~~performance~~2016-13, ~~obligations for~~“Financial ~~contracts~~Instruments ~~with~~- anCredit ~~expected~~Losses ~~length~~(Topic 326): Measurement of ~~one~~Credit Losses ~~year~~on orFinancial ~~less~~Instruments.” ~~Due~~This toASU modifies the ~~nature~~impairment ofmodel ~~our~~to ~~business,~~utilize ~~our~~an ~~revenue~~expected isloss ~~not~~methodology ~~significantly~~in ~~impacted~~place ~~by refunds. Cash payments received in advance~~ of ~~guests~~the ~~staying~~currently atused ~~our~~incurred ~~hotel~~loss ~~are~~methodology, ~~refunded~~which towill ~~hotel~~result ~~guests~~in if the ~~guest cancels~~timelier ~~within~~recognition ~~the~~of ~~specified~~losses. ~~time~~ASU ~~period, before any services are rendered~~No. ~~Refunds~~2016-13 will ~~related~~be toeffective ~~service~~for ~~are~~us ~~generally recognized~~ as anof ~~adjustment~~January to1, ~~the~~2023. ~~transaction~~The ~~price~~Company atis ~~the~~currently ~~time~~reviewing the ~~hotel~~effect ~~stay~~of ~~occurs~~ASU orNo. ~~services are rendered~~2016-13.

~~Contract~~NOTE 2 ~~assets~~– ~~and liabilities~~LIQUIDITY

WeHistorically, our docash ~~not~~flows have ~~any~~been ~~material~~primarily ~~contract~~generated ~~assets~~from asour ~~of June 30,~~Hotel ~~2019 and~~operations. ~~2018~~However, ~~other~~the ~~than trade~~responses ~~and~~by ~~other~~federal, ~~receivables~~state, ~~net~~ and local civil authorities to the COVID-19 pandemic has had a material detrimental impact on our ~~consolidated~~liquidity. ~~balance~~For ~~sheets.~~the ~~Our~~fiscal ~~receivables~~year ended June 30, ~~are~~2020, ~~primarily~~our net cash flow used in operations was $5,420,000. For the ~~result~~fiscal ofyear ~~contracts~~ended ~~with~~June ~~customers~~30, ~~which~~2019, ~~are~~our ~~reduced~~net cash flow provided by anoperations ~~allowance~~was ~~for~~$9,165,000. ~~doubtful~~We ~~accounts~~have ~~that~~taken ~~reflects~~several steps to preserve capital and increase liquidity at our Hotel, including implementing ~~estimate~~strict ofcost ~~amounts~~management ~~that~~measures ~~will~~to ~~not~~eliminate benon-essential ~~collected~~expenses, postponing capital expenditures, renegotiating certain reoccurring expenses, and temporarily closing certain hotel services and outlets.

WeAs of ~~record~~June ~~contract~~30, ~~liabilities~~2020, ~~when~~we had cash, ~~payments~~cash ~~are~~equivalents, ~~received or~~and ~~due~~restricted incash ~~advance~~ of ~~guests~~$16,399,000 ~~staying~~which atincluded ~~our hotel~~$10,666,000 ~~which~~of ~~are~~restricted ~~presented~~cash held ~~within accounts~~by ~~payable~~our ~~and~~Hotel ~~other~~senior ~~liabilities on our~~lender ~~consolidated~~Wells ~~balance~~Fargo ~~sheets~~Bank, N.A. ~~Contract~~(“Lender”). ~~liabilities~~Of ~~increased~~the to $110,~~215~~666,000 as ofrestricted ~~June 30~~cash, ~~2019~~$7,486,000 was ~~from~~ held for furniture, fixtures and equipment (“FF&E”) reserves and $~~571~~2,432,000 as was held for a possible future ~~of June 30~~property improvement plan (“PIP”) requested by our franchisor, ~~2018~~Hilton. ~~The~~However, ~~increase~~Hilton has confirmed that it will not require a PIP for our Hotel until relicensing which shall occur at the ~~fiscal~~ ~~year~~earlier ~~ended~~of ~~June~~(i) 30January 2030, ~~2019 was~~which ~~primarily~~is ~~driven~~six byyears ~~deposits received~~after ~~from~~the ~~upcoming~~maturity ~~groups~~date of our current senior and mezzanine loans, ~~offset~~or by(ii) ~~$563~~upon the sale of our Hotel. Therefore,~~000~~ ~~revenue~~on ~~recognized~~August ~~that~~19, ~~was~~2020, Lender ~~included~~released PIP deposits in the ~~advanced~~amount ~~deposits~~of ~~balance~~$2,379,000 asto ~~of June 30~~the Hotel. The funds were utilized to fund operating expenses, ~~2018~~including franchise and management fees and other expenses.

On April 9, 2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted CARES Act administered by the U.S. Small Business Administration. Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, Justice has used the proceeds from the SBA Loan primarily for payroll costs. As of June 30, 2020, Justice had used $3,568,000 in qualified expenses and had a balance of $1,151,000 available for future qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are deferred until October 2020, and the repayment obligations under the loan may be forgiven if the funds are used for payroll and other qualified expenses. Justice anticipates applying for loan forgiveness shortly. All unforgiven portion of the principal and accrued interest will be due at maturity.

~~Contract~~In order to increase its liquidity positions, InterGroup refinanced its 151-unit apartment complex in Parsippany, New Jersey on April 30, 2020, generating net proceeds of $6,814,000. In June 2020, InterGroup refinanced one of its California properties and generated net proceeds of $1,144,000. InterGroup is currently evaluating other refinancing opportunities and it could refinance additional multifamily properties should the need arise; however, InterGroup does not deem it necessary at this time. InterGroup has an uncollateralized $8,000,000 revolving line of credit from CIBC Bank USA (“CIBC”) of which $5,000,000 was available to be drawn down as of June 30, 2020; however, the outstanding balance on the revolving line of credit was paid down fully on August 28, 2020, making the entire $8,000,000 available to be drawn down should additional liquidity be necessary. On August 28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,026,000. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000 as InterGroup had drawn on its RLOC in July 2018 to pay off the previous Fannie Mae mortgage on the property. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale. Santa Fe will not seek a replacement property.

WeAs the ~~consider~~sole ~~sales~~general ~~commissions~~partner ~~earned~~of Justice that controls approximately 93.3% of the voting interest in the Partnership, Portsmouth has the ability to amend the partnership agreement to allow for capital calls to the limited partners of Justice if needed. The majority of any capital calls will be ~~incremental~~met ~~costs~~by Portsmouth. Portsmouth will have financing availability, upon the authorization of the respective board of ~~obtaining~~directors, ato ~~contract~~borrow ~~with~~from ~~our~~InterGroup ~~customers~~and/or Santa Fe to meet any capital calls and its other obligations during the next twelve months and beyond. AsOn aAugust ~~practical~~28, ~~expedient~~2020, wethe ~~expense~~Board ~~these~~of ~~costs~~InterGroup asand ~~incurred~~Santa asFe ~~our~~have ~~contracts~~passed ~~with~~resolutions, respectively, to provide ~~customers~~funding ~~are~~to ~~less~~Portsmouth ~~than~~if ~~one~~necessary. ~~year~~The Partnership is also allowed to seek additional loans and sell partnership interests. Upon the consent of the general partner and a super majority in interest, the Partnership may sell additional classes or series of units of the Partnership under certain conditions in order to raise additional capital.

~~NOTE 3 - JUSTICE INVESTORS~~32

~~Justice Investors Limited Partnership, a California limited~~Our ~~partnership~~known ~~(“Justice”~~short-term orliquidity ~~the~~requirements ~~“Partnership”),~~primarily ~~was~~consist ~~formed~~of infunds ~~1967~~necessary to ~~acquire~~pay ~~real~~for ~~property~~operating inand ~~San~~other ~~Francisco~~expenditures, including ~~California,~~management ~~for the development~~ and ~~lease~~franchise offees, ~~the~~corporate ~~Hotel~~expenses, payroll and related ~~facilities.~~costs, ~~The~~taxes, ~~Partnership~~interest ~~has~~and ~~one~~principal ~~general~~payments ~~partner,~~on ~~Portsmouth~~our outstanding ~~Square~~indebtedness, ~~Inc.,~~and arepairs ~~California corporation (“Portsmouth”)~~ and ~~approximately~~maintenance 23of ~~voting~~the ~~limited partners, including Portsmouth~~Hotel.

~~Management~~Our long-term ~~believes~~liquidity ~~that~~requirements ~~the~~primarily ~~revenues~~consist of funds necessary to pay for scheduled debt maturities and capital improvements of the Hotel. We will continue to finance our business activities primarily with existing cash, ~~flows~~including ~~expected~~from the activities todescribed beabove, and cash generated from ~~the~~our operations. After considering our approach to liquidity and accessing our available sources of ~~the~~cash, ~~Hotel~~we believe that our cash position, ~~garage~~after ~~and~~giving ~~leases~~effect to the transactions discussed above, will be ~~sufficient~~ adequate to meet ~~all~~anticipated ofrequirements ~~the~~for ~~Partnership’s~~operating ~~current~~and other expenditures, including corporate expenses, payroll and related benefits, taxes and ~~future~~compliance ~~obligations~~costs and other commitments, for at least twelve months from the date of issuance of these financial ~~requirements~~statements, even if current levels of low occupancy were to persist. ~~Management~~The ~~also~~objectives ~~believes~~of ~~that~~our ~~there~~cash ismanagement ~~significant~~policy ~~appreciated~~are ~~value~~to inmaintain existing leverage levels and the availability of liquidity, while minimizing operational costs. We believe that our cash on hand, along ~~Hotel~~with ~~property~~other inpotential ~~excess~~aforementioned sources of ~~the~~liquidity ~~net~~that ~~book~~management ~~value~~may be able to ~~support~~obtain, ~~additional~~will ~~borrowings~~be sufficient to fund our working capital needs, ifas ~~necessary~~well as our capital lease and debt obligations for at least the next twelve months and beyond. However, there can be no guarantee that management will be successful with its plan.

NOTE 3 4- ~~– INVESTMENT IN HOTEL, NET~~REVENUE

~~Investment~~Our revenue infrom ~~Hotel~~real ~~consisted~~estate ofis ~~the~~primarily ~~following~~rental income from residential property leases which is recorded when due from residents and is recognized monthly as ~~of:~~earned. The following table present our Hotel revenue disaggregated by revenue streams.

			Accumulated			Net Book
For the year ended June 30,	2020		2019
June 30, 2019	Cost		Depreciation			Value
Hotel revenues:
Land	$	1,896,000	$	-		$	1,896,000
Hotel rooms	$	36,465,000	$	51,243,000
Furniture and equipment		31,106,000		(26,876,000	)		4,230,000
Food and beverage		3,529,000		5,353,000
Building and improvements		59,341,000		(29,131,000	)		30,210,000
Garage		2,368,000		2,875,000
	$	92,343,000	$	(56,007,000	)	$	36,336,000
Other operating departments		477,000		410,000
Total Hotel revenue	$	42,839,000	$	59,881,000

			Accumulated			Net Book
June 30, 2018	Cost		Depreciation			Value
Land	$	1,896,000	$	-		$	1,896,000
Furniture and equipment		29,350,000		(25,877,000	)		3,473,000
Building and improvements		59,798,000		(27,808,000	)		31,990,000
	$	91,044,000	$	(53,685,000	)	$	37,359,000

Performance obligations

~~NOTE~~We identified 5the –following ~~INVESTMENT~~performance INobligations ~~REAL~~for ~~ESTATE~~which revenue is recognized as the respective performance obligations are satisfied, ~~NET~~which results in recognizing the amount we expect to be entitled to for providing the goods or services:

~~The~~● ~~Company~~Cancelable ~~owns~~room ~~and~~reservations ~~operates~~or aancillary ~~27-unit~~services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs. ● Noncancelable room reservations and banquet or conference reservations represent a ~~2-unit~~series ~~multi-family apartment~~of ~~complex~~distinct ~~located~~goods inor ~~Los~~services ~~Angeles,~~provided ~~California~~over time and ~~owns~~satisfied ~~land~~as ~~held~~each ~~for~~distinct ~~development~~good ~~located~~or inservice ~~Maui~~is provided, ~~Hawaii~~which is reflected by the duration of the room reservation. As● Other ancillary goods and services are purchased independently of ~~June~~the ~~30 2019,~~room reservation at standalone selling prices and ~~2018~~are considered separate performance obligations, ~~investment~~which inare ~~real~~satisfied ~~estate~~when ~~included~~the related good or service is provided to the ~~following:~~hotel guest. ● Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above.

	2019			2018
Land	$	2,430,000		$	2,430,000
Buildings, improvements and equipment		2,922,000			2,912,000
Accumulated depreciation		(1,463,000	)		(1,354,000	)
		3,889,000			3,988,000
Land held for development		977,000			973,000
Investment in real estate, net	$	4,866,000		$	4,961,000

~~Depreciation~~We do ~~expense~~not ~~for~~disclose the ~~years~~value ~~ended~~of unsatisfied performance obligations for contracts with an expected length of one year or less. Due ~~June~~to 30the nature of our business, ~~2019~~our ~~and~~revenue ~~2018~~is ~~was~~not ~~$109,000~~significantly ~~and~~impacted ~~$105~~by refunds. Cash payments received in advance of guests staying at our hotel are refunded to hotel guests if the guest cancels within the specified time period,~~000,~~ ~~respectively~~before any services are rendered. Refunds related to service are generally recognized as an adjustment to the transaction price at the time the hotel stay occurs or services are rendered.

3133

~~In August 2007, Portsmouth agreed to acquire 50% interest in~~Contract ~~InterGroup~~assets ~~Uluniu, Inc., a Hawaiian corporation~~ and a 100% owned subsidiary of InterGroup, for $973,000, which represents an amount equal to the costs paid by InterGroup for the acquisition and carrying costs of approximately two acres of unimproved land held for development located in Maui, Hawaii. As a related party transaction, the fairness of the financial terms of the transaction were reviewed and approved by the independent director of Portsmouth.liabilities

~~NOTE~~We do 6not -have ~~INVESTMENT~~any INmaterial ~~MARKETABLE~~contract ~~SECURITIES~~assets as of June 30, 2020 and 2019, other than trade and other receivables, net on our consolidated balance sheets. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

~~The~~We record ~~Company’s~~contract ~~investment in~~liabilities ~~marketable~~when ~~securities~~cash ~~consists~~payments ~~primarily~~are ofreceived ~~corporate~~or ~~equities.~~due ~~The~~in ~~Company~~advance ~~has~~of ~~also~~guests ~~periodically~~staying ~~invested~~at inour ~~corporate~~hotel, ~~bonds~~which are presented within accounts payable and ~~income~~other ~~producing~~liabilities ~~securities~~on our consolidated balance sheets. Contract liabilities decreased to $375,000 ~~which~~as of ~~may~~June ~~include~~30, ~~interests~~2020 infrom ~~real~~$1,215,000 ~~estate~~as ~~based~~of ~~companies~~June ~~and~~30, ~~REITs~~2019. The decrease for the twelve months ended June 30, ~~where~~2020 ~~financial~~was ~~benefit~~primarily driven ~~could~~by ~~insure~~$840,000 torevenue ~~its~~recognized ~~shareholders~~that ~~through~~was ~~income~~included ~~and/or~~in ~~capital~~the ~~gain~~advanced deposits balance as of June 30, 2019.

~~As of June 30, 2019 and~~Contract 2018, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:costs

			Gross		Gross			Net			Fair
Investment	Cost		Unrealized Gain		Unrealized Loss			Unrealized Loss			Value
As of June 30, 2019
Corporate Equities	$	10,922,000	$	449,000	$	(8,692,000	)	$	(8,243,000	)	$	2,679,000
As of June 30, 2018
Corporate Equities	$	12,187,000	$	721,000	$	(8,469,000	)	$	(7,748,000	)	$	4,439,000

We consider sales commissions earned to be incremental costs of obtaining a contract with our customers. As a practical expedient, we expense these costs as incurred as our contracts with customers are less than one year.

AsNOTE 4 of– ~~June~~INVESTMENT ~~30,~~IN ~~2019 and 2018~~HOTEL, ~~approximately 19% and 16% of the investment marketable securities balance above is comprised of the common stock of Comstock Mining Inc (“Comstock”).~~NET

~~As of June 30, 2019 and 2018, the Company had $8,617,000 and~~Investment ~~$8,433,000,~~in ~~respectively,~~Hotel ofconsisted ~~unrealized losses related to securities held for over one year;~~ of ~~which~~the ~~$8,556,000~~following ~~and~~as ~~$8,369,000 are related to its investment in Comstock, respectively.~~of:

Net gain (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the years ended June 30, 2019 and 2018, respectively.

			Accumulated			Net Book
June 30, 2020	Cost		Depreciation			Value

Land	$	1,896,000	$	-		$	1,896,000
Finance lease ROU assets		1,775,000		(291,000	)		1,484,000
Furniture and equipment		30,528,000		(27,498,000	)		3,030,000
Building and improvements		59,467,000		(30,508,000	)		28,959,000
Investment in Hotel, net	$	93,666,000	$	(58,297,000	)	$	35,369,000

For the year ended June 30,	2019			2018
				Accumulated			Net Book
Realized (loss) gain on marketable securities	$	(75,000	)	$	314,000
June 30, 2019	Cost			Depreciation			Value
Unrealized loss on marketable securities related to Comstock		(187,000	)		(1,729,000	)
Land	$	1,896,000		$	-		$	1,124,000
Unrealized (loss) gain on marketable securities		(313,000	)		343,000
Finance lease ROU assets		521,000			(35,000	)		486,000
Net loss on marketable securities	$	(575,000	)	$	(1,072,000	)
Furniture and equipment		30,585,000			(26,841,000	)		3,744,000
Building and improvements		59,341,000			(29,131,000	)		30,210,000
Investment in Hotel, net	$	92,343,000		$	(56,007,000	)	$	36,336,000

NOTE 5 7 – ~~OTHER~~INVESTMENT ~~INVESTMENTS~~IN REAL ESTATE, NET

The Company ~~may~~owns ~~also~~and ~~invest,~~operates ~~with~~a ~~the~~27-unit ~~approval~~multi-family ofapartment ~~the~~complex ~~Securities Investment~~in ~~Committee~~Santa ~~and other Company guidelines~~Monica, inCalifornia ~~private investment equity funds~~ and ~~other~~a ~~unlisted~~2-unit ~~securities,~~multi-family ~~such~~apartment complex asin ~~convertible notes~~West ~~through~~Los ~~private~~Angeles, ~~placements~~California. ~~Those~~The ~~investments~~Company inalso ~~non-marketable~~owns ~~securities~~land ~~are~~held ~~carried~~for atdevelopment ~~cost~~located onin ~~the~~Maui, ~~Company’s~~Hawaii. ~~consolidated balance~~As ~~sheet~~of asJune ~~part~~30, 2020 ofand ~~other investments~~2019, ~~net~~investment ofin ~~other~~real ~~than~~estate ~~temporary~~included ~~impairment~~the ~~losses.~~following:

Other investments, net consist of the following:

	2020			2019
Land	$	2,430,000		$	2,430,000
Buildings, improvements and equipment		2,922,000			2,922,000
Accumulated depreciation		(1,573,000	)		(1,463,000	)
		3,779,000			3,889,000
Land held for development		980,000			977,000
Investment in real estate, net	$	4,759,000		$	4,866,000

Type	June 30, 2019		June 30, 2018
Private equity hedge fund, at cost	$	233,000	$	344,000
Other investments		118,000		130,000
	$	351,000	$	474,000

~~NOTE~~Depreciation expense 8for -the ~~FAIR~~years ~~VALUE~~ended ~~MEASUREMENTS~~June 30, 2020 and 2019 was $110,000 and $109,000, respectively.

~~The~~In August ~~carrying~~2007, ~~values~~Portsmouth ofagreed ~~the~~to ~~Company’s~~acquire ~~financial~~50% ~~instruments not~~interest ~~required~~in toInterGroup beUluniu, ~~carried~~Inc., ata ~~fair~~Hawaiian ~~value~~corporation onand a ~~recurring~~100% ~~basis~~owned ~~approximate~~subsidiary of ~~fair~~InterGroup, ~~value~~for ~~due~~$973,000, towhich ~~their~~represents ~~short~~an ~~maturities~~amount ~~(i.e.,~~equal ~~accounts receivable,~~to ~~other~~the ~~assets,~~costs ~~accounts~~paid ~~payable~~by InterGroup for the acquisition and ~~other~~carrying costs ~~liabilities,~~of ~~due~~approximately totwo ~~securities~~acres ~~broker~~of ~~and~~unimproved ~~obligations~~land held for ~~securities~~development ~~sold) or~~located in Maui, Hawaii. As a related party transaction, the ~~nature~~fairness ~~and~~of the financial terms of the ~~obligation~~transaction ~~(i.e.,~~were ~~other~~reviewed ~~notes~~and ~~payable~~approved ~~and~~by ~~mortgage~~the ~~notes~~independent ~~payable)~~director of Portsmouth.

32NOTE 6 - INVESTMENT IN MARKETABLE SECURITIES

The Company’s ~~assets~~investment ~~measured~~in atmarketable ~~fair~~securities ~~value~~consists onprimarily aof ~~recurring~~corporate ~~basis~~equities. ~~are~~The asCompany has also invested in ~~follows:~~income producing securities, which may include interests in real estate-based companies and REITs, where financial benefit could insure to its shareholders through income and/or capital gain.

As of June 30, 2019
	Level 1
Assets:
Investment in marketable securities:
REITs and real estate companies	$	816,000
Consumer cyclical		636,000
Basic materials		537,000
Other		690,000
	$	2,679,000

As of June 30, 2020 and 2019, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:

As of June 30, 2018
			Gross		Gross			Net
	Level 1
Investment	Cost		Unrealized Gain		Unrealized Loss			Unrealized Loss			Fair Value
Assets:
As of June 30, 2020
Investment in marketable securities:
Corporate Equities	$	5,788,000	$	108,000	$	(5,026,000	)	$	(4,918,000	)	$	870,000
REITs and real estate companies	$	1,484,000
As of June 30, 2019
Healthcare		838,000
Corporate Equities	$	10,922,000	$	449,000	$	(8,692,000	)	$	(8,243,000	)	$	2,679,000
Basic materials		698,000
Other		1,419,000
	$	4,439,000

~~The fair values~~ As of ~~investments~~June in30, ~~marketable~~2020 ~~securities~~and ~~are determined~~2019, byapproximately ~~the~~59% ~~most~~and ~~recently~~19% ~~traded price~~ of ~~each~~the ~~security~~investment atmarketable ~~the~~securities balance ~~sheet~~above ~~date.~~is ~~The~~comprised ~~fair value~~ of the common ~~warrants~~stock ~~was~~of ~~determined based~~Comstock ~~upon~~Mining aInc. ~~Black-Scholes~~(“Comstock” ~~option~~– ~~valuation~~NYSE ~~model~~AMERICAN: LODE), respectively.

~~Financial~~As of ~~assets~~June ~~that~~30, ~~are~~2020 ~~measured~~and at2019, ~~fair~~the ~~value~~Company onhad a$5,015,000 ~~non-recurring basis~~ and ~~are~~$8,617,000, ~~not~~respectively, ~~included~~of inunrealized ~~the~~losses ~~tables~~related ~~above~~to ~~include~~securities held ~~“Other~~for ~~investments,~~over ~~net~~one inyear; ~~non-marketable~~of ~~securities~~which $4,”928,000 ~~that were initially measured at cost~~ and ~~have~~$8,556,000 ~~been~~are ~~written~~related ~~down~~ to ~~fair~~its ~~value~~investment asin aComstock, ~~result~~respectively. ofFor ~~impairment or adjusted to record~~ the ~~fair~~fiscal ~~value~~year ofended ~~new~~June ~~instruments~~30, ~~received (i.e.~~2020, ~~preferred~~the ~~shares)~~decrease in ~~exchange~~unrealized ~~for~~losses ~~old~~is ~~instruments~~a ~~(i.e.,~~result ~~debt~~of ~~instruments).~~reclassing ~~The~~$3,628,000 ~~following table~~of ~~shows~~net ~~the~~unrealized ~~fair~~gain ~~value~~related to ~~hierarchy~~Comstock ~~for~~that ~~these~~was ~~assets~~included ~~measured~~in atthe ~~fair~~cost ~~value~~basis onas aof ~~non-recurring~~June ~~basis~~30, ~~as follows:~~2019.

					Net loss for the year
Assets	Level 3		June 30, 2019		ended June 30, 2019
Other non-marketable investments	$	351,000	$	351,000	$	(61,000	)

Net gain (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the breakdown of the two components for the years ended June 30, 2020 and 2019, respectively.

							Net loss for the year
For the year ended June 30,	2020			2019
Assets	Level 3			June 30, 2018			ended June 30, 2018
Realized loss on marketable securities	$	(268,000	)	$	(75,000	)
Other non-marketable investments	$	474,000		$	474,000		$	(145,000	)
Unrealized loss on marketable securities related to Comstock		-			(187,000	)
Unrealized loss on marketable securities		(280,000	)		(313,000	)
Net loss on marketable securities	$	(548,000	)	$	(575,000	)

~~For fiscal year ended June 30, 2019 and 2018, we received distribution~~NOTE ~~from~~7 ~~other~~– ~~non-marketable~~OTHER ~~investments of $61~~INVESTMENTS,~~000~~ ~~and $69,000, respectively.~~NET

~~Other investments in non-marketable securities are carried at cost net of any impairment loss.~~ The Company ~~has~~may noalso ~~significant~~invest, ~~influence~~with orthe ~~control~~approval ~~over~~of the ~~entities~~Executive ~~that~~Strategic ~~issue~~Real ~~these~~Estate ~~investments. These~~and ~~investments~~Securities ~~are~~Investment ~~reviewed~~Committee onand ~~a periodic basis for~~ other~~-than-temporary impairment. When determining the fair value of these~~ ~~investments~~Company ~~on a non-recurring basis~~guidelines, ~~the~~in ~~Company~~private ~~uses~~investment ~~valuation~~equity ~~techniques~~funds ~~such as the market approach~~ and ~~the~~other ~~unobservable~~unlisted ~~inputs include~~securities, ~~factors~~ such as ~~conversion ratios and the stock price of the underlying~~ convertible ~~instruments.~~notes ~~The~~through ~~Company reviews several~~private ~~factors~~placements. toThose ~~determine~~investments ~~whether~~in ~~a loss is other~~non-~~than-temporary.~~marketable ~~These~~securities ~~factors include but~~ are ~~not~~carried ~~limited~~at ~~to:~~cost ~~(i)~~on the ~~length~~Company’s ofconsolidated ~~time an~~balance ~~investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition~~sheet ~~and~~as ~~near~~part ~~term prospects~~ of ~~the~~other ~~issuer~~investments, ~~and~~net ~~(iv) our ability to hold the investment for a period~~ of ~~time~~other ~~sufficient~~than totemporary ~~allow~~impairment ~~for any anticipated recovery in fair value~~losses.

33Other investments, net consist of the following:

NOTE 9 – OTHER ASSETS, NET

Type	June 30, 2020		June 30, 2019
Private equity hedge fund, at cost	$	97,000	$	233,000
Other investments		61,000		118,000
	$	158,000	$	351,000

~~Other assets consist of the following as of June 30:~~35

	2019		2018
Inventory - Hotel	$	61,000	$	59,000
Prepaid expenses		587,000		409,000
Note receivable - related party		584,000		594,000
Miscellaneous assets, net		411,000		484,000
Total other assets	$	1,643,000	$	1,546,000

NOTE 8 - FAIR VALUE MEASUREMENTS

~~NOTE~~The carrying 10values –of ~~RELATED~~the ~~PARTY~~Company’s ~~AND~~financial ~~OTHER~~instruments not required to be carried at fair value on a recurring basis approximate ~~FINANCING~~fair ~~TRANSACTIONS~~value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, due to securities broker and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).

~~On July 2, 2014, the~~The ~~Partnership~~assets ~~obtained~~measured ~~from InterGroup (a related party) an unsecured loan in the principal amount of $4,250,000~~ at ~~12%~~fair ~~per~~value ~~year fixed~~on ~~interest, with~~ a ~~term~~recurring ofbasis 2are years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to December 31, 2019. The balance of this loan was $3,000,000 as ~~of June 30, 2019 and 2018, and are included in the related party and other note payable in the consolidated balance sheets.~~follows:

Also included in the balance of the related party note payable at June 30, 2019 and 2018 is the obligation to Hilton (Franchisor) in the form of a self-exhausting, interest free development incentive note which will be reduced approximately $316,000 annually through 2030 by Hilton if the Partnership is still a Franchisee with Hilton. As of June 30, 2019 and 2018, the balance of the note was $3,325,000 and $3,642,000, respectively.

As of June 30, 2020
	Level 1
Assets:
Investment in marketable securities:
Basic materials	$	575,000
REITs and real estate companies		253,000
Energy		39,000
Industrials		3,000
	$	870,000

On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution is a self-exhausting, interest free note and shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second (2nd) anniversary of the takeover date. The $2,000,000 is included in restricted cash balances in the consolidated balance sheets as of June 30, 2019 and 2018. As of June 30, 2019 and 2018, unamortized portion of the key money was $1,896,000 and $2,000,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets.

As of June 30, 2019
	Level 1
Assets:
Investment in marketable securities:
REITs and real estate companies	$	816,000
Consumer cyclical		636,000
Basic materials		537,000
Other		690,000
	$	2,679,000

AsThe fair values of ~~June~~investments ~~30,~~in ~~2019,~~marketable ~~the~~securities ~~Company~~are ~~had~~determined ~~capital~~by ~~lease~~the ~~obligations outstanding~~most ofrecently ~~$1,486,000.~~traded ~~These~~price ~~capital~~of ~~leases~~each ~~expire~~security ~~in various years through 2023~~ at ~~rates~~the ~~ranging~~balance sheet ~~from 5~~date.~~77%~~ toThe ~~6.25%~~fair ~~per~~value ~~annum. Minimum~~of ~~future~~the ~~lease~~warrants ~~payments~~was ~~for~~determined ~~assets~~based ~~under~~upon ~~capital~~a ~~leases~~Black-Scholes asoption ofvaluation ~~June 30, 2019 are as follows:~~model.

For the year ending June 30,
2020	$	493,000
2021		492,000
2022		482,000
2023		182,000
Total minimum lease payments		1,649,000
Less interest on capital lease		(163,000	)
Present value of future minimum lease payments	$	1,486,000

Financial assets that are measured at fair value on a non-recurring basis and are not included in the tables above include “Other investments, net in non-marketable securities,” that were initially measured at cost and have been written down to fair value as a result of impairment or adjusted to record the fair value of new instruments received (i.e., preferred shares) in exchange for old instruments (i.e., debt instruments). The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:

Future minimum principal payments for all related party and other financing transactions are as follows:

					Net loss for the year
Assets	Level 3		June 30, 2020		ended June 30, 2020

Other non-marketable investments	$	158,000	$	158,000	$	(136,000	)

For the year ending June 30,
					Net loss for the year
2020	$	3,980,000
Assets	Level 3		June 30, 2019		ended June 30, 2019
2021		1,006,000
Other non-marketable investments	$	351,000	$	351,000	$	(61,000	)
2022		1,022,000
2023		744,000
2024		567,000
Thereafter		2,388,000
	$	9,707,000

34For fiscal year ended June 30, 2020 and 2019, we received distribution from other non-marketable investments of $58,000 and $61,000, respectively.

~~NOTE~~Other investments 11in –non-marketable ~~MORTGAGE~~securities ~~NOTES~~are ~~PAYABLE~~carried at cost net of any impairment loss. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. When determining the fair value of these investments on a non-recurring basis, the Company uses valuation techniques such as the market approach and the unobservable inputs include factors such as conversion ratios and the stock price of the underlying convertible instruments. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

On December 18, 2013: (i) Justice Operating Company, LLC, a Delaware limited liability company (“Operating”), entered into a loan agreement (“Mortgage Loan Agreement”) with Bank of America (“Mortgage Lender”); and (ii) Justice Mezzanine Company, a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, together with the Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Partnership is the sole member of Mezzanine, and Mezzanine is the sole member of Operating.36

~~The~~NOTE 9 ~~Loan~~– ~~Agreements~~OTHER ~~provide for a $97~~ASSETS,~~000,000~~ ~~Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used to fund the redemption of limited partnership interests and the pay-off of the prior mortgage.~~NET

~~The Mortgage Loan is secured by the Partnership’s principal~~Other ~~asset,~~assets ~~the~~consist ~~Hilton San Francisco-Financial District (the “Property”). The Mortgage Loan bears an interest rate~~ of ~~5.275% per annum and matures in January 2024. The term of~~ the ~~loan~~following isas ~~10 years with interest only due in the first three years and principal and interest on the remaining seven years~~ of ~~the~~June loan based on a thirty-year amortization schedule. The Mortgage Loan also requires payments for impounds related to property tax, insurance and capital improvement reserves. As additional security for the Mortgage Loan, there is a limited guaranty (“Mortgage Guaranty”) executed by the Company in favor of Mortgage Lender.30:

The Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The Mezzanine Loan bears interest at 9.75% per annum and matures on January 1, 2024. Interest only, payments are due monthly. As additional security for the Mezzanine Loan, there is a limited guaranty executed by the Company in favor of Mezzanine Lender (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”).

	2020		2019
Inventory - Hotel	$	37,000	$	61,000
Prepaid expenses		546,000		587,000
Note receivable - related party		963,000		584,000
Miscellaneous assets, net		421,000		411,000
Total other assets	$	1,967,000	$	1,643,000

~~The Guaranties are limited to what are commonly referred to~~NOTE as10 ~~“bad~~– ~~boy”~~RELATED ~~acts,~~PARTY ~~including:~~AND ~~(i)~~OTHER ~~fraud~~FINANCING or intentional misrepresentations; (ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance or condemnation proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy of another person, transfer or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership is required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2019, management believes that InterGroup is in compliance with both requirements.TRANSACTIONS

~~Each~~The following ofsummarizes the ~~Loan~~balances ~~Agreements contains customary representations and warranties, events~~ of ~~default,~~related ~~reporting~~party ~~requirements, affirmative covenants~~ and ~~negative covenants, which impose restrictions on, among~~ other ~~things,~~notes ~~organizational~~payable ~~changes~~as of ~~the~~June ~~respective borrower~~30, ~~operations~~2020 ~~of the Property, agreements with affiliates~~ and ~~third parties. Each of the Loan Agreements also provides for mandatory prepayments under certain circumstances (including casualty or condemnation events) and voluntary prepayments~~2019, ~~subject to satisfaction of prescribed conditions set forth in the Loan Agreements~~respectively.

On July 31, 2019, Mezzanine refinanced the Mezzanine Loan by entering into a new mezzanine loan agreement (“New Mezzanine Loan Agreement”) with Cred Reit Holdco LLC in the amount of $20,000,000. The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan is 7.25% and the loan matures on January 1, 2024. Interest only payments are due monthly.

As of June 30,	2020		2019
Note payable - InterGroup	$	3,000,000	$	3,000,000
Note payable - Hilton		3,008,000		3,325,000
Note payable - Interstate		1,646,000		1,896,000
SBA Loan - Justice		4,719,000		-
Total related party and other notes payable	$	12,373,000	$	8,221,000

35On July 2, 2014, the Partnership obtained from InterGroup an unsecured loan in the principal amount of $4,250,000 at 12% per year fixed interest, with a term of 2 years, payable interest only each month. InterGroup received a 3% loan fee. The loan may be prepaid at any time without penalty. The loan was extended to July 1, 2021.

AsNote payable ofto ~~June~~Hilton 30(Franchisor) is a self-exhausting, ~~2019~~interest ~~and~~free ~~2018~~development incentive note which is reduced by approximately $316,000 ~~the~~annually ~~Company~~through ~~had~~2030 by Hilton if the ~~following mortgages:~~Partnership is still a Franchisee with Hilton.

June 30, 2019			June 30, 2018			Interest Rate	Origination Date	Maturity Date
$	93,746,000		$	95,018,000		Fixed 5.28%	December 18, 2013	January 1, 2024
	20,000,000			20,000,000		Fixed 9.75% (Fixed 7.25% effective August 1st, 2019)	December 18, 2013	January 1, 2024
	113,746,000			115,018,000		Mortgage notes payable - Hotel
	(659,000	)		(646,000	)	Net debt issuance costs
$	113,087,000		$	114,372,000		Total mortgage notes payable - Hotel
$	2,969,000		$	-		Variable (30-day LIBOR plus 3%)	July 31, 2018	July 24, 2019 (extended to July 23, 2020 in July 2019)
	-		$	2,844,000		Fixed 4.85%	November 4, 2010	December 1, 2020
	346,000			356,000		Fixed 3.75%	September 1, 2012	September 1, 2042
	3,315,000			3,200,000		Mortgage notes payable - real estate
	-			(12,000	)	Net debt issuance costs
$	3,315,000		$	3,188,000		Total mortgage notes payable - real estate

On February 1, 2017, Justice entered into an HMA with Interstate to manage the Hotel with an effective takeover date of February 3, 2017. The term of the management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second (2^nd) anniversary of the takeover date. As of June 30, 2020 and 2019, balance of the key money including accrued interests are $1,009,000 and $2,049,000, respectively, and are included in restricted cash in the consolidated balance sheets. Unamortized portion of the key money is included in the related party notes payable in the consolidated balance sheets.

~~Future~~On April ~~minimum~~9, ~~payments~~2020, Justice entered into a loan agreement (“SBA Loan”) with CIBC Bank USA under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration. Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with the requirements of the CARES Act, Justice has used proceeds from the SBA Loan primarily for ~~all~~payroll ~~mortgage~~costs. ~~notes~~As ~~payable~~of June 30, 2020, Justice had used $3,568,000 in qualified expenses and had a balance of $1,151,000 available for future qualified expenses. The SBA Loan is scheduled to mature on April 9, 2022 with a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. All payments of principal and interest are asdeferred until October 2020, and the repayment obligations under ~~follows:~~the loan may be forgiven if the funds are used for payroll and other qualified expenses. Justice anticipates applying for loan forgiveness shortly. All unforgiven portion of the principal and accrued interest will be due at maturity.

For the year ending June 30,
2020	$	4,431,000
2021		1,557,000
2022		1,642,000
2023		1,732,000
2024		107,404,000
Thereafter		295,000
	$	117,061,000

As of June 30, 2020, the Company had finance lease obligations outstanding of $1,098,000. These finance leases expire in various years through 2023 at rates ranging from 4.62% to 6.25% per annum.

~~NOTE 12 – MANAGEMENT AGREEMENTS~~37

~~On February 1, 2017, Justice entered into~~Minimum afuture ~~Hotel~~lease ~~management~~payments ~~agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is~~ for anassets initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under ~~certain~~finance ~~terms~~leases and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second (2nd) anniversary of the takeover date. The $2,000,000 is included in restricted cash balances in the consolidated balance sheets as of June 30, ~~2019~~ ~~and~~2020 ~~2018. As of June 30, 2019 and 2018, unamortized portion of the key money was $1,896,000 and $2,000,000, respectively, and~~ are ~~included~~as in related party and other notes payable in the consolidated balance sheets. During the years ended June 30, 2019 and 2018, Interstate management fees were $1,206,000 and $957,000, respectively, and are included in Hotel operating expenses in the consolidated statements of operations.follows:

NOTE 13 – CONCENTRATION OF CREDIT RISK

For the year ending June 30,
2021	$	503,000
2022		492,000
2023		188,000
Total minimum lease payments		1,183,000
Less interest on finance lease		(85,000	)
Present value of future minimum lease payments	$	1,098,000

AsFuture minimum ofprincipal ~~June~~payments ~~30,~~for ~~2019 and 2018,~~ all ~~accounts receivables are~~ related to ~~Hotel~~party ~~customers. The Hotel had one account that accounted for 32%, or $272,000 of accounts receivable at June 30, 2019,~~ and ~~two~~ ~~customers~~other ~~that~~financing ~~accounted~~transactions ~~for~~are ~~32%,~~as ~~or $572,000 of accounts receivable at June 30, 2018.~~follows:

The Partnership maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality. At times, such cash and cash equivalents holdings may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) or other federally insured limits.

For the year ending June 30,
2021	$	1,016,000
2022		8,752,000
2023		750,000
2024		567,000
2025		567,000
Thereafter		1,819,000
	$	13,471,000

~~NOTE~~As of 14June -30, ~~INCOME~~2020 ~~TAXES~~and 2019, the Company had accounts payable to related party of $6,197,000 and $5,465,000, respectively. These are amounts due to InterGroup and represent certain shared costs and expenses, primarily general and administrative expenses, rent, insurance and other expenses that are allocated among the Company, Portsmouth and InterGroup.

~~The~~In July ~~Company~~2018, InterGroup obtained a revolving $5,000,000 line of credit (“RLOC”) from CIBC Bank USA (“CIBC”). On July 31, 2018, $2,969,000 was drawn from the RLOC to pay off the mortgage note payable at Intergroup Woodland Village Inc. (“Woodland Village”) and ~~Portsmouth~~a ~~file~~new ~~separate~~mortgage ~~tax~~note ~~returns~~payable was established at Woodland Village due to InterGroup for ~~both~~the ~~federal~~amount drawn. Woodland Village holds a three-story apartment complex in Santa Monica, California and ~~state~~is ~~purposes~~a subsidiary of the Company. The RLOC carries a variable interest rate of 30-day LIBOR plus 3%. Interest is paid on a monthly basis. The ~~provision~~RLOC ~~for~~and ~~income~~all ~~tax~~accrued and ~~benefit~~unpaid ~~(expense)~~interest ~~consists~~were due in July 2019. In July 2019, InterGroup obtained a modification from CIBC which increased the RLOC by $3,000,000 and extended the maturity date from July 24, 2019 to July 23, 2020. The $2,969,000 mortgage due to InterGroup carries same terms as InterGroup’s RLOC and is included in the mortgage notes payable – real estate in the condensed consolidated balance sheets as of June 30, 2020 and 2019. In July 2020, both the ~~following:~~RLOC and the $2,969,000 mortgage due to InterGroup were extended to July 2021.

For the years ended June 30,	2019		2018
Federal
Current tax benefit (expense)	$	122,000	$	(167,000	)
Deferred tax benefit (expense)		1,168,000		(4,976,000	)
		1,290,000		(5,143,000	)
State
Current tax benefit (expense)		44,000		(51,000	)
Deferred tax benefit (expense)		75,000		(792,000	)
		119,000		(843,000	)
Total income tax benefit (expense)	$	1,409,000	$	(5,986,000	)

On February 5, 2020, the Company acquired 44.6% additional interest in Woodland Village from InterGroup by issuing 97,500 shares of its common stock to InterGroup. As a result of the transaction, Woodland Village became a wholly owned subsidiary of the Company. The transaction is being made pursuant to a Contribution Agreement (the “Contribution Agreement”) between the Company and InterGroup, dated February 5, 2020. The Contribution Agreement also contains a provision for a potential subsequent earn out to InterGroup pursuant to terms set forth therein.

36The Company’s Board of Directors is currently comprised of directors John V. Winfield, William J. Nance, and Robert Dika. Messrs. Winfield and Nance also serve as directors of InterGroup and Portsmouth. Four of the five Portsmouth directors serve as directors of InterGroup. Mr. Winfield also serves as Managing Director of Justice.

OnAs Chairman ~~December~~of ~~22,~~the ~~2017~~Executive Strategic Real Estate and Securities Investment Committee, the ~~U.S.~~Company’s ~~government~~President ~~enacted~~and ~~comprehensive~~Chief Executive ~~tax~~Officer ~~legislation~~(CEO), ~~commonly~~John ~~referred~~V. toWinfield, asdirects the ~~Tax~~investment ~~Cuts~~activity ~~and~~of ~~Jobs~~the ~~Act~~Company ~~(the~~in ~~“Tax~~public ~~Act”).~~and ~~The~~private ~~Tax~~markets ~~Act~~pursuant ~~significantly~~to ~~revises~~authority ~~the~~granted ~~future~~by ~~ongoing~~the ~~corporate~~Board ~~income~~of ~~tax~~Directors. ~~by,~~Mr. ~~among~~Winfield ~~other~~also ~~things,~~serves ~~lowering~~as ~~corporate~~Chief ~~income~~Executive ~~tax~~Officer ~~rates.~~and AsChairman of the ~~Company~~Board ~~has~~of ~~a June~~Portsmouth 30and ~~fiscal~~InterGroup ~~year-end,~~and oversees the ~~lower~~investment ~~corporate~~activity ~~income~~of ~~tax~~those ~~rate~~companies. ~~was~~Effective ~~phased~~June in2016, ~~resulting~~Mr. inWinfield abecame ~~statutory~~the ~~federal~~Managing Director ~~rate~~ of ~~approximately~~Justice. ~~28% for~~Depending ~~our~~on ~~fiscal~~certain ~~year~~market ~~ending~~conditions ~~June~~and 30various risk factors, ~~2018~~the Chief Executive Officer, Portsmouth and ~~21%~~InterGroup ~~for~~may, ~~subsequent~~at ~~fiscal~~times, ~~years.~~invest ~~The~~in ~~decrease~~the same companies in ~~corporate~~which ~~tax~~the ~~rate~~Company ~~reduced~~invests. Such investments align the ~~Company’s~~interests ~~deferred~~of ~~tax~~the ~~asset~~Company towith the ~~lower~~interests ~~federal~~of ~~base~~related ~~rate~~parties ofbecause ~~21%.~~it Asplaces athe ~~result,~~personal aresources ~~provisional~~of ~~net~~the ~~charge~~Chief Executive Officer and the resources of ~~$2,723,000~~Portsmouth ~~was~~and ~~included~~InterGroup at risk in substantially the ~~income~~ ~~tax~~same ~~expense~~manner ~~for~~as the ~~year~~Company ~~ended~~in ~~June~~connection ~~30,~~with ~~2018~~investment decisions made on behalf of the Company.

~~A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:~~38

For the years ended June 30,	2019			2018
Statutory federal tax rate		21.0	%		27.6	%
State income taxes, net of federal tax benefit		7.4	%		6.4	%
Valuation allowance		-85.0	%		3.8	%
Change in federal tax rate		-	%		31.7	%
Other		1.1	%		0.1	%
		-55.5	%		69.6	%

NOTE 11 – MORTGAGE NOTES PAYABLE

~~The~~On December ~~components~~18, of2013: ~~the~~(i) Justice Operating Company’s, ~~deferred~~LLC, ~~tax~~a ~~assets~~Delaware ~~and~~limited liability company (“Operating”), entered into a loan agreement (~~liabilities~~“Mortgage Loan Agreement”) aswith Bank of ~~June~~America 30(“Mortgage Lender”); and (ii) Justice Mezzanine Company, ~~2019~~a Delaware limited liability company (“Mezzanine”), entered into a mezzanine loan agreement (“Mezzanine Loan Agreement” and, ~~2018~~together ~~are~~with asthe ~~follows:~~Mortgage Loan Agreement, the “Loan Agreements”) with ISBI San Francisco Mezz Lender LLC (“Mezzanine Lender” and, together with Mortgage Lender, the “Lenders”). The Partnership is the sole member of Mezzanine, and Mezzanine is the sole member of Operating.

	2019			2018
Deferred tax assets
Net operating loss carryforward	$	6,809,000		$	7,462,000
Investment reserve		1,295,000			1,276,000
Capital loss carryforward		714,000			685,000
Tax Credits		605,000			733,000
Unrealized gains on marketable securities		797,000			648,000
Charitable Contributions		104,000			55,000
Accrued vacation		13,000			10,000
Interest expense		162,000			-
Valuation allowance		(524,000	)		(2,610,000	)
		9,975,000			8,259,000
Deferred tax liabilities
Basis difference in Justice		(2,636,000	)		(2,166,000	)
Depreciation and amortization		(616,000	)		(625,000	)
State taxes		(321,000	)		(309,000	)
		(3,573,000	)		(3,100,000	)
Net deferred tax assets	$	6,402,000		$	5,159,000

The Loan Agreements provide for a $97,000,000 Mortgage Loan and a $20,000,000 Mezzanine Loan. The proceeds of the Loan Agreements were used to fund the redemption of limited partnership interests and the pay-off of the prior mortgage.

~~Management~~The Mortgage ~~considers~~Loan ~~new~~is ~~evidence,~~secured ~~both~~by ~~positive~~the ~~and~~Partnership’s ~~negative~~principal asset, ~~that~~ ~~could~~the ~~affect~~Hotel. ~~its~~The ~~view~~Mortgage ofLoan ~~the~~bears ~~future~~an ~~realization~~interest rate of ~~deferred~~5.275% per ~~tax~~annum ~~assets.~~and Asmatures ofin ~~June~~January ~~30,~~2024. ~~2019,~~The ~~because~~term of ~~tax~~the ~~planning~~loan tois ~~generate taxable~~ten ~~income~~years with interest only due in the ~~future,~~first ~~management~~three ~~has~~years ~~determined~~and ~~that~~principal and ~~there~~interest ispayments ~~sufficient~~to ~~positive~~be ~~evidence~~made toduring ~~conclude~~the ~~that~~remaining aseven ~~significant portion~~years of ~~its~~the ~~deferred~~loan ~~tax~~based ~~assets~~on ~~are~~a ~~realizable~~thirty-year amortization schedule. AsThe Mortgage aLoan ~~result,~~also ~~the~~requires ~~valuation~~payments ~~allowance~~for ~~decreased~~impounds byrelated $2to property tax,~~086,000~~ insurance and ~~$778,000,~~capital ~~respectively,~~improvement reserves. As additional ~~during~~security for the ~~fiscal~~Mortgage ~~years~~Loan, ~~ended~~there ~~June~~is ~~30,~~a ~~2019~~limited ~~and~~guaranty ~~2018~~(“Mortgage Guaranty”) executed by Portsmouth in favor of the Mortgage Lender.

AsThe Mezzanine Loan is secured by the Operating membership interest held by Mezzanine and is subordinated to the Mortgage Loan. The Mezzanine Loan had an interest rate of ~~June~~9.75% 30per annum and a maturity date of January 1, 2024. Interest only payments were due monthly. On July 31, 2019, Mezzanine refinanced the ~~Company~~Mezzanine ~~had~~Loan ~~federal~~by ~~and~~entering ~~state~~into ~~operating~~a new mezzanine loan agreement (“New ~~loss~~Mezzanine ~~carryforwards~~Loan Agreement”) with Cred Reit Holdco LLC in the amount of $2520,~~446~~000,000. The prior Mezzanine Loan was paid off. Interest rate on the new mezzanine loan is 7.25% and ~~$16~~the loan matures on January 1,~~583,000,~~ ~~respectively~~2024. ~~These~~Interest ~~carryforwards~~only ~~expire~~payments are due monthly. As additional security for the new mezzanine loan, there is a limited guaranty executed by the Partnership and Portsmouth in ~~varying~~favor of ~~amounts~~Cred ~~through~~Reit ~~2037~~Holdco LLC (the “Mezzanine Guaranty” and, together with the Mortgage Guaranty, the “Guaranties”).

37The Guaranties are limited to what are commonly referred to as “bad boy” acts, including: (i) fraud or intentional misrepresentations; (ii) gross negligence or willful misconduct; (iii) misapplication or misappropriation of rents, security deposits, insurance or condemnation proceeds; and (iv) failure to pay taxes or insurance. The Guaranties are full recourse guaranties under identified circumstances, including failure to maintain “single purpose” status which is a factor in a consolidation of Operating or Mezzanine in a bankruptcy of another person, transfer or encumbrance of the Property in violation of the applicable loan documents, Operating or Mezzanine incurring debts that are not permitted, and the Property becoming subject to a bankruptcy proceeding. Pursuant to the Guaranties, the Partnership is required to maintain a certain minimum net worth and liquidity. Effective as of May 12, 2017, InterGroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for Justice Investors limited partnership’s $97,000,000 mortgage loan and the $20,000,000 mezzanine loan. Pursuant to the agreement, InterGroup is required to maintain a certain net worth and liquidity. As of June 30, 2020, InterGroup is in compliance with both requirements. However, due to the Hotel’s current low occupancy and its negative impact on the Hotel’s cash flow, Justice Operating Company, LLC is not meeting certain of its loan covenants such as the Debt Service Coverage Ratio (“DSCR”) which would trigger the creation of a lock-box and cash sweep by the Lender for all cash collected by the Hotel, and under certain terms, would allow the Lender to request Operating to replace its hotel management company. The DSCR for Operating has been below 1.00 for the last two quarters during fiscal year 2020 while it is required to maintain a DSCR of at least 1.10 to 1.00 for two consecutive quarters. However, such lockbox has been created and utilized from the loan inception and will be in place up to loan maturity regardless of the DSCR.

~~Assets~~Each of ~~and~~the ~~liabilities~~Loan ~~are~~Agreements ~~established~~contains ~~for~~customary ~~uncertain~~representations ~~tax~~and ~~positions taken~~warranties, orevents ~~positions~~of ~~expected~~default, toreporting berequirements, ~~taken~~affirmative covenants inand ~~income~~negative ~~tax~~covenants, ~~returns~~which ~~when~~impose ~~such~~restrictions ~~positions~~on, ~~are~~among ~~judged~~other tothings, ~~not~~organizational ~~meet~~changes of the ~~“more-likely-than-not”~~respective borrower, ~~threshold~~operations ~~based~~of on the ~~technical~~Property, ~~merits~~agreements ofwith ~~the~~affiliates ~~positions~~and third parties. AsEach of ~~June~~the ~~30,~~Loan ~~2019,~~Agreements italso ~~has~~provides ~~been~~for ~~determined~~mandatory prepayments ~~there~~under ~~are~~certain nocircumstances ~~uncertain~~(including ~~tax positions~~casualty ~~likely~~or condemnation events) and voluntary prepayments, subject to ~~impact~~satisfaction of prescribed conditions set forth in the ~~Company~~Loan Agreements.

~~The Partnership 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, were applicable.~~39

As of June 30, 2020 and 2019, ~~tax years beginning in fiscal 2013 remain open to examination by~~ the ~~major~~Company ~~tax~~had ~~jurisdictions, and are subject to~~ the ~~statute~~following ~~of limitations.~~mortgages:

NOTE 15 – SEGMENT INFORMATION

June 30, 2020			June 30, 2019			Interest Rate	Origination Date	Maturity Date
$	92,292,000		$	93,746,000		Fixed 5.28%	December 18, 2013	January 1, 2024
	20,000,000			20,000,000		Fixed 9.75% (Fixed 7.25% effective August 1st, 2019)	December 18, 2013	January 1, 2024
	112,292,000			113,746,000		Mortgage notes payable - Hotel
	(896,000	)		(659,000	)	Net debt issuance costs
$	111,396,000		$	113,087,000		Total mortgage notes payable - Hotel

$	2,969,000		$	2,969,000		Variable (30-day LIBOR plus 3%)	July 31, 2018	July 24, 2021
	337,000			346,000		Fixed 3.75%	September 1, 2012	September 1, 2042
	3,306,000			3,315,000		Total mortgage notes payable - real estate

~~The Company operates in three reportable segments, the operation~~Future ofminimum ~~the~~payments ~~Hotel~~for ~~(“Hotel~~all ~~Operations”),~~mortgage ~~its~~notes ~~multi-family~~payable ~~residential~~are ~~properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments (“Investment Transactions”). These three operating segments,~~ as ~~presented in the financial statements, reflect how management internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this same information.~~follows:

Information below represents reporting segments for the year ended June 30, 2019 and 2018, respectively. Segment income from Hotel operations consists of the operation of the Hotel and operation of the garage. Segment loss from real estate operations consists of the operation of the rental properties. Segment loss from investments consists of net investment loss, dividend and interest income and investment related expenses.

For the year ending June 30,
2021	$	1,557,000
2022		4,611,000
2023		1,732,000
2024		107,403,000
2025		11,000
Thereafter		284,000
	$	115,598,000

As of and for the year	Hotel			Real Estate			Investment
ended June 30, 2019	Operations			Operations			Transactions			Other			Total
Revenues	$	59,881,000		$	324,000		$	-		$	-		$	60,205,000
Segment operating expenses		(44,466,000	)		(218,000	)		-			(1,115,000	)		(45,799,000	)
Segment income (loss)		15,415,000			106,000			-			(1,115,000	)		14,406,000
Interest expense - mortgage		(7,634,000	)		(230,000	)		-			-			(7,864,000	)
Loss on disposal of assets		(398,000	)		-			-			-			(398,000	)
Depreciation and amortization expense		(2,405,000	)		(110,000	)		-			-			(2,515,000	)
Loss from investments		-			-			(774,000	)		-			(774,000	)
Income tax benefit		-			-			-			1,409,000			1,409,000
Net income (loss)	$	4,978,000		$	(234,000	)	$	(774,000	)	$	294,000		$	4,264,000
Total assets	$	58,648,000		$	4,866,000		$	3,030,000		$	7,408,000		$	73,952,000

NOTE 12 – MANAGEMENT AGREEMENTS

As of and for the year	Hotel			Real Estate			Investment
ended June 30, 2018	Operations			Operations			Transactions			Other			Total
Revenues	$	57,099,000		$	335,000		$	-		$	-		$	57,434,000
Segment operating expenses		(40,103,000	)		(193,000	)		-			(1,404,000	)		(41,700,000	)
Segment income (loss)		16,996,000			142,000			-			(1,404,000	)		15,734,000
Recovery of legal settlement costs		5,775,000			-			-			-			5,775,000
Interest expense - mortgage		(7,806,000	)		(87,000	)		-			-			(7,893,000	)
Depreciation and amortization expense		(2,606,000	)		(105,000	)		-			-			(2,711,000	)
Loss from investments		-			-			(1,501,000	)		-			(1,501,000	)
Income tax expense		-			-			-			(5,986,000	)		(5,986,000	)
Net income (loss)	$	12,359,000		$	(50,000	)	$	(1,501,000	)	$	(7,390,000	)	$	3,418,000
Total assets	$	54,417,000		$	4,961,000		$	4,913,000		$	6,212,000		$	70,503,000

On February 1, 2017, Justice entered into a Hotel management agreement (“HMA”) with Interstate Management Company, LLC (“Interstate”) to manage the Hotel with an effective takeover date of February 3, 2017. The term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions. The HMA also provides for Interstate to advance a key money incentive fee to the Hotel for capital improvements in the amount of $2,000,000 under certain terms and conditions described in a separate key money agreement. The key money contribution shall be amortized in equal monthly amounts over an eight (8) year period commencing on the second (2^nd) anniversary of the takeover date. The key money is included in restricted cash balances in the consolidated balance sheets. As of June 30, 2020 and 2019, balance of the key money including accrued interests are $1,009,000 and $2,049,000, respectively. As of June 30, 2020 and 2019, unamortized portion of the key money was $1,646,000 and $1,896,000, respectively, and are included in related party and other notes payable in the consolidated balance sheets. During the years ended June 30, 2020 and 2019, Interstate management fees were $341,000 and $1,206,000, respectively, and are included in Hotel operating expenses in the consolidated statements of operations.

NOTE 13 16– -CONCENTRATION ~~RELATED~~OF ~~PARTY~~CREDIT ~~TRANSACTIONS~~RISK

As of ~~discussed~~June in30, ~~Note~~2020 ~~10 – Related Party~~ and ~~Other Financing Transactions~~2019, onall ~~July~~accounts 2,receivables ~~2014,~~are ~~the~~related ~~Partnership~~to ~~obtained~~Hotel ~~from~~customers. ~~the~~The ~~InterGroup~~Hotel ~~Corporation~~had antwo ~~unsecured~~customers ~~loan~~that inaccounted for ~~the~~95%, ~~principal~~or ~~amount of~~ $4239,~~250,~~000. ~~The balance~~ of ~~this~~accounts ~~loan~~receivable ~~was~~at ~~$3,000,000 as of~~ June 30, ~~2019 and 2018~~2020, and ~~are~~one ~~included~~customer inthat ~~the~~accounted ~~related~~for ~~party~~32%, ~~and other~~or ~~notes~~$272,000 ~~payable~~of inaccounts receivable ~~the~~at ~~consolidated~~June ~~balance sheets. The loan matures on December 31~~30, 2019.

38The Company maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality. At times, such cash and cash equivalents holdings may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) or other federally insured limits.

In connection with the redemption of limited partnership interests of Justice, Justice Operating Company, LLC agreed to pay a total of $1,550,000 in fees to certain officers and directors of the Company for services rendered in connection with the redemption of partnership interests, refinancing of Justice’s properties and reorganization of Justice. This agreement was superseded by a letter dated December 11, 2013 from Justice, in which Justice assumed the payment obligations of Justice Operating Company, LLC. As of June 30, 2018, $200,000 of these fees remained payable and were paid off as of June 30, 2019. 40

~~Certain shared costs and expenses, primarily administrative~~NOTE ~~expenses,~~14 ~~rent~~- ~~and~~INCOME insurance are allocated among the Company and InterGroup based on management's estimate of the pro rata utilization of resources. For the years ended June 30, 2019 and 2018, these expenses were approximately $144,000 for each respective year.TAXES

~~Five~~The Company ofand ~~the~~ Portsmouth ~~directors~~file ~~serve~~separate astax ~~directors~~returns offor ~~InterGroup. Three~~both offederal ~~those~~and ~~directors~~state ~~also serve as directors of Santa Fe~~purposes. The ~~three~~provision ~~Santa~~for Feincome ~~directors~~tax ~~also~~benefit ~~serve as directors~~ consists of ~~InterGroup.~~the following:

As Chairman of the Securities Investment Committee, the Company’s President and Chief Executive Officer (CEO), John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of the Portsmouth and InterGroup and oversees the investment activity of those companies. Depending on certain market conditions and various risk factors, the Chief Executive Officer, Portsmouth and InterGroup may, at times, invest in the same companies in which the Company invests. Such investments align the interests of the Company with the interests of related parties because it places the personal resources of the Chief Executive Officer and the resources of the Portsmouth and InterGroup, at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

For the years ended June 30,	2020			2019
Federal
Current tax benefit	$	15,000		$	122,000
Deferred tax benefit		1,419,000			1,168,000
		1,434,000			1,290,000
State
Current tax (expense) benefit		(3,000	)		44,000
Deferred tax benefit		662,000			75,000
		659,000			119,000

Total income tax benefit	$	2,093,000		$	1,409,000

~~NOTE~~A reconciliation 17of –the ~~COMMITMENTS~~statutory ~~AND~~federal ~~CONTINGENCIES~~income tax rate to the effective tax rate is as follows:

Franchise Agreements

For the years ended June 30,	2020			2019
Statutory federal tax rate		21.0	%		21.0	%
State income taxes, net of federal tax benefit		8.8	%		7.4	%
Disallowed interest		8.4	%		0.0	%
Valuation allowance		0.8	%		-85.0	%
Other		-4.1	%		1.1	%
		34.9	%		-55.5	%

The ~~Partnership entered into a Franchise License Agreement (the~~ ~~“License~~components ~~Agreement”)~~of ~~with~~ the ~~HLT~~Company’s ~~Existing~~deferred ~~Franchise~~tax ~~Holding~~assets ~~LLC~~and (~~“Hilton”~~liabilities) onas ~~November 24, 2004. The term~~ of the License agreement was for an initial period of 15 years commencing on the date the Hotel began operating as a Hilton hotel, with an option to extend the License Agreement for another five years, subject to certain conditions. On June 2630, ~~2015,~~2020 ~~Operating~~ and ~~Hilton~~2019 ~~entered~~are ~~into~~as ~~an amended franchise agreement which amongst other things extended the License Agreement through 2030, and also provided the Partnership certain key money cash incentives to be earned through 2030.~~follows:

Since the opening of the Hotel in January 2006, the Partnership has incurred monthly royalties, program fees and information technology recapture charges equal to a percentage of the Hotel’s gross room revenue. Fees for such services during fiscal year 2019 and 2018 totaled approximately $4.1 million and $3.8 million, respectively.

	2020			2019
Deferred tax assets
Net operating loss carryforward	$	8,712,000		$	6,809,000
Investment reserve		1,156,000			1,295,000
Capital loss carryforward		305,000			714,000
Tax Credits		563,000			605,000
Unrealized gains on marketable securities		1,468,000			797,000
Charitable Contributions		33,000			104,000
Accrued vacation		10,000			13,000
Interest expense		1,498,000			162,000
Valuation allowance		(497,000	)		(524,000	)
		13,248,000			9,975,000
Deferred tax liabilities
Basis difference in Justice		(3,699,000	)		(2,636,000	)
Depreciation and amortization		(603,000	)		(616,000	)
State taxes		(463,000	)		(321,000	)
		(4,765,000	)		(3,573,000	)
Net deferred tax assets	$	8,483,000		$	6,402,000

~~Hotel~~Management considers ~~Employees~~new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of June 30, 2019, because of tax planning to generate taxable income in the future, management has determined that there is sufficient positive evidence to conclude that a significant portion of its deferred tax assets are realizable. As a result, the valuation allowance decreased by $2,086,000 during the fiscal years ended June 30, 2019.

Effective February 3, 2017, the Partnership had no employees. On February 3, 2017, Interstate assumed all labor union agreements and retained employees of their choice to continue providing services to the Hotel. As of June 30, 2019, approximately 85% of those employees were represented by one of four labor unions, and their terms of employment were determined under a collective bargaining agreement (“CBA”) to which the Partnership was a party. During the fiscal year ended June 30, 2019, the Partnership renewed the CBA for Local 39 (Stationary Engineers), and Local 665 (Parking Employees). CBA for Local 2 (Hotel and Restaurant Employees) expired on August 13, 2018 and was renewed in August 2019. CBA for Local 856 (International Brotherhood of Teamsters) will expire on December 31, 2022.41

~~Negotiation~~ As of ~~collective~~June ~~bargaining agreements~~30, ~~which includes not just terms and conditions of employment~~2020, ~~but scope and coverage of employees, is a regular and expected course of business operations for~~ the ~~Partnership~~Company ~~and~~had ~~Interstate.~~federal ~~The Partnership expects~~ and ~~anticipates~~state ~~that~~operating ~~the~~loss ~~terms~~carryforwards of ~~conditions of CBAs will have an impact on wage and benefit costs~~$30, ~~operating expenses~~486,000 and ~~certain hotel operations during the life of each CBA~~$26,139,000, ~~and incorporates~~respectively. ~~these~~These ~~principles~~carryforwards ~~into~~expire ~~its~~in ~~operating~~varying ~~and~~amounts ~~budgetary~~through ~~practices~~2038.

39Assets 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. As of June 30, 2020, it has been determined there are no uncertain tax positions likely to impact the Company.

~~Legal~~The Company ~~Matters~~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.

~~In April 2014, the Partnership commenced~~As anof ~~arbitration~~June ~~action against Glaser Weil Fink Howard Avchen & Shapiro~~30, ~~LLP (formerly known as Glaser Weil Fink Jacobs Howard Avchen & Shapiro~~2020, ~~LLP),~~tax ~~Brett~~years J.beginning ~~Cohen, Gary N. Jacobs, Janet S. McCloud, Paul B. Salvaty, and Joseph K. Fletcher III (collectively, the “Respondents”)~~ in ~~connection~~fiscal ~~with~~years ~~the~~2015 ~~redemption transaction. The arbitration alleged legal malpractice against the Respondents~~ and ~~also~~2016 ~~sought~~remain ~~declaratory~~open ~~relief regarding provisions of the option agreement in the redemption transaction and regarding the engagement letter with Respondents. Prior~~ to ~~arbitration~~examination ~~proceedings,~~by the ~~parties~~major ~~agreed~~tax ~~in principle to settle the matter~~jurisdictions, and ~~entered~~are ~~into~~subject ~~a settlement agreement and mutual general release in April 2018. The Respondents agreed~~ to ~~pay~~the ~~$8,300,000, which~~statute ~~was received in May~~ of ~~2018~~limitations. ~~$5,575,000 was recorded as a recovery of legal settlement cost and $2,725,000 was recorded as a reduction of legal expense for the fiscal year ended June 30, 2018.~~

~~The Company is subject to legal proceedings, claims, and litigation~~NOTE ~~arising~~15 in– ~~the~~SEGMENT ordinary course of business. The Company defends itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on the financial conditions or result of operations when resolved.INFORMATION

~~NOTE~~The Company 18operates –in ~~SUBSEQUENT~~three ~~EVENTS~~reportable segments, the operation of the Hotel (“Hotel Operations”), its multi-family residential properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments (“Investment Transactions”). These three operating segments, as presented in the financial statements, reflect how management internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this same information.

OnInformation below ~~July~~represents ~~31,~~reporting ~~2019,~~segments ~~Mezzanine~~for ~~refinanced~~ the ~~Mezzanine~~year ~~Loan~~ended ~~by entering~~June ~~into~~30, a2020 ~~new~~and ~~mezzanine~~2019, ~~loan~~respectively. ~~agreement~~Segment ~~(“New~~income ~~Mezzanine~~from ~~Loan~~Hotel ~~Agreement”)~~operations consists ~~with~~of ~~Cred~~the ~~Reit~~operation ~~Holdco~~of ~~LLC~~the inHotel ~~the~~and ~~amount~~ operation of ~~$20,000,000~~the garage. ~~The~~Segment ~~prior~~loss ~~Mezzanine~~from ~~Loan~~real ~~was~~estate ~~paid~~operations ~~off.~~consists ~~Interest~~of ~~rate~~the onoperation of the ~~new~~rental ~~mezzanine~~properties. ~~loan~~Segment isloss ~~7.25%~~from ~~and~~investments ~~the~~consists ~~loan~~of ~~matures~~net ~~on January~~investment 1loss, ~~2024.~~dividend ~~Interest~~and ~~only~~interest ~~payments~~income ~~are~~and ~~due~~investment related ~~monthly~~expenses.

In July 2019, InterGroup obtained a modification from CIBC Bank USA (“CIBC”) which increased its $5,000,000 revolving line of credit (“RLOC”) by $3,000,000 and extended the maturity date from July 24, 2019 to July 23, 2020. The $2,969,000 mortgage due to InterGroup was also extended from July 24, 2019 to July 23, 2020.

As of and for the year	Hotel			Real Estate			Investment
ended June 30, 2020	Operations			Operations			Transactions			Other			Total
Revenues	$	42,839,000		$	317,000		$	-		$	-		$	43,156,000
Segment operating expenses		(37,333,000	)		(172,000	)		-			(1,364,000	)		(38,869,000	)
Segment income (loss)		5,506,000			145,000			-			(1,364,000	)		4,287,000
Interest expense - mortgage		(7,326,000	)		(99,000	)		-			-			(7,425,000	)
Depreciation and amortization expense		(2,288,000	)		(110,000	)		-			-			(2,398,000	)
Loss from investments		-			-			(748,000	)		-			(748,000	)
Income tax benefit											2,093,000			2,093,000
Net (loss) income	$	(4,108,000	)	$	(64,000	)	$	(748,000	)	$	729,000		$	(4,191,000	)
Total assets	$	52,604,000		$	4,759,000		$	1,028,000		$	9,865,000		$	68,256,000

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

As of and for the year	Hotel			Real Estate			Investment
ended June 30, 2019	Operations			Operations			Transactions			Other			Total
Revenues	$	59,881,000		$	324,000		$	-		$	-		$	60,205,000
Segment operating expenses		(44,466,000	)		(218,000	)		-			(1,115,000	)		(45,799,000	)
Segment income (loss)		15,415,000			106,000			-			(1,115,000	)		14,406,000
Interest expense - mortgage		(7,634,000	)		(230,000	)		-			-			(7,864,000	)
Loss on disposal of assets		(398,000	)		-			-			-			(398,000	)
Depreciation and amortization expense		(2,405,000	)		(110,000	)		-			-			(2,515,000	)
Loss from investments		-			-			(774,000	)		-			(774,000	)
Income tax benefit		-			-			-			1,409,000			1,409,000
Net income (loss)	$	4,978,000		$	(234,000	)	$	(774,000	)	$	294,000		$	4,264,000
Total assets	$	58,648,000		$	4,866,000		$	3,030,000		$	7,408,000		$	73,952,000

~~None.~~42

~~Item~~NOTE 16 ~~9A.~~- ~~Controls~~RELATED ~~and~~PARTY ~~Procedures.~~TRANSACTIONS

~~EVALUATION~~As discussed OFin ~~DISCLOSURE~~Note ~~CONTROLS~~10 ~~AND~~– ~~PROCEDURES~~Related Party and Other Financing Transactions, on July 2, 2014, the Partnership obtained from the InterGroup Corporation an unsecured loan in the principal amount of $4,250,000. The balance of this loan was $3,000,000 as of June 30, 2020 and 2019, and are included in the related party and other notes payable in the consolidated balance sheets. The loan was extended to July 1, 2021.

~~The~~In connection ~~Company’s management,~~ with the ~~participation~~redemption of ~~the Company’s~~limited ~~Chief~~partnership ~~Executive~~interests ~~Officer~~of ~~and~~Justice, ~~Principal~~Justice ~~Financial~~Operating ~~Officer~~Company, ~~has~~LLC ~~evaluated~~agreed ~~the~~to ~~effectiveness~~pay ofa ~~the Company’s~~total ~~disclosure~~of ~~controls~~$1,550,000 ~~and~~in ~~procedures~~fees ~~(as~~to ~~defined~~certain inofficers ~~Rules~~and ~~13a-15(e)~~directors orof ~~15d-15(e) under~~ the ~~Exchange~~Company ~~Act)~~for asservices ofrendered ~~the~~in ~~end~~connection ofwith the ~~fiscal~~redemption ~~period~~of ~~covered~~partnership byinterests, ~~this~~refinancing ~~Annual~~of ~~Report~~Justice’s onproperties ~~Form~~and ~~10-K.~~reorganization ~~Based~~of ~~upon~~Justice. ~~such~~This ~~evaluation,~~agreement ~~management~~was ~~has~~superseded by ~~concluded~~a ~~that~~letter ~~the~~dated ~~disclosure~~December ~~controls and~~11, ~~procedures~~2013 ~~are~~from ~~effective~~Justice, in ~~ensuring~~which ~~that~~Justice ~~information~~assumed ~~required~~the topayment beobligations ~~disclosed~~of inJustice ~~this~~Operating ~~filing is accumulated and communicated~~Company, toLLC. ~~management~~As ~~and~~of isJune ~~recorded~~30, ~~processed~~2018, ~~summarized~~$200,000 ~~and~~of ~~reported~~these ~~within~~fees ~~the~~remained ~~time~~payable ~~periods~~and ~~specified~~were inpaid ~~the~~off ~~Securities~~as ~~and~~of ~~Exchange Commission~~June ~~rules~~30, ~~and forms~~2019.

~~MANAGEMENT~~On February 5, 2020, Santa Fe entered into a Contribution Agreement (the “Contribution Agreement”) with InterGroup, pursuant to which InterGroup received 97,500 shares of common stock, par value $0.10 per share, of Santa Fe, in exchange for InterGroup’Ss contribution ~~REPORT~~to ONSanta ~~INTERNAL~~Fe ~~CONTROL~~of ~~OVER~~4,460 ~~FINANCIAL~~shares of common stock (the “Common Stock”) of Woodland Village Inc. (the “Transaction”). ~~REPORTING~~As a result of the contribution, Woodland Village became a wholly owned subsidiary of Santa Fe. Before the issuance of the stock referenced in the preceding sentence, InterGroup had the power to vote 86.3% of the voting shares of Santa Fe, which includes the power to vote an approximately 3.7% interest in the common stock in Santa Fe owned by the Company’s Chairman and CEO, John V. Winfield, pursuant to a voting trust agreement entered into on June 30, 1998. As of June 30, 2020, InterGroup has the power to vote 87.4% of the issued and outstanding common stock of Santa Fe, which includes the power to vote an approximately 3.7% interest in the common stock in Santa Fe under the aforementioned voting trust agreement. Mr. Winfield, Chairman of the Board of both InterGroup and Santa Fe, is a control person of both entities.

~~Management~~On February is5, ~~responsible~~2020, ~~for~~after ~~establishing~~review ~~and~~by ~~maintaining~~an ~~internal control~~independent ~~over~~director ~~financial~~of ~~reporting~~the Company, asand ~~such~~by ~~term~~the isunanimous ~~defined~~vote inof ~~Rules~~all ~~13a-15(f)~~directors ~~and~~of ~~15d-15~~the Company (fwith Mr. Winfield abstaining), ofthe Board approved the ~~Exchange~~entry ~~Act.~~into ~~The~~the ~~internal~~Contribution ~~control~~Agreement and the consummation of the Transaction. ~~over~~The ~~financial~~Company’s ~~reporting~~Board isapproved athe ~~process,~~Transaction ~~under~~after the ~~supervision~~receipt of ~~our~~a ~~Chief~~fairness ~~Executive~~opinion ~~Officer~~from ~~and~~a ~~Principal~~third-party ~~Financial~~independent ~~Officer, designed~~firm. toThe ~~provide~~Board ~~reasonable~~was ~~assurance~~first ~~regarding~~made aware of the ~~reliability~~Transaction ofin ~~financial~~early ~~reporting~~January 2020, received information to review on or about January 17, 2020 and was given multiple opportunities to discuss the ~~preparation~~materials ofwith ~~our~~management ~~financial~~before ~~statements~~the February 5, 2020 Board meeting. ~~for~~The ~~external~~Contribution ~~purposes~~Agreement inalso ~~accordance~~contains ~~with~~a ~~accounting~~provision ~~principles~~for ~~generally~~a ~~accepted~~potential insubsequent ~~the~~earn ~~United~~out ~~States~~to ofInterGroup ~~America~~pursuant to terms set forth therein.

~~The~~Certain shared ~~internal~~costs ~~control~~and ~~over~~expenses, ~~financial~~primarily ~~reporting~~administrative ~~include~~expenses, ~~those~~rent and insurance are allocated among the Company, Portsmouth and ~~policies~~InterGroup based on management’s estimate of the pro rata utilization of resources. For the years ended June 30, 2020 and 2019, ~~procedures~~these ~~that:~~ expenses were approximately $144,000 for each respective year.

•Four of ~~pertain to~~ the ~~maintenance~~Portsmouth ofdirectors ~~records~~serve ~~that,~~as indirectors ~~reasonable detail,~~of ~~accurately~~InterGroup. ~~and~~Two ~~fairly~~of ~~reflect~~those ~~our~~directors ~~transactions~~also ~~and~~serve ~~dispositions~~as directors of ~~our~~Santa ~~assets;~~Fe and InterGroup.

•As Chairman ~~provide~~of ~~reasonable~~the ~~assurance~~Executive ~~that~~Strategic ~~our~~Real ~~transactions~~Estate ~~are~~and Securities Investment Committee, the Company’s President and Chief Executive ~~recorded~~Officer as(CEO), ~~necessary~~John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to ~~permit~~authority granted ~~preparation~~by the Board of ~~our~~Directors. ~~financial~~Mr. ~~statements~~Winfield inalso ~~accordance~~serves ~~with~~as ~~accounting~~Chief ~~principles~~Executive ~~generally~~Officer ~~accepted~~and Chairman of the Board of Portsmouth inand InterGroup and oversees the ~~United~~investment ~~States~~activity of ~~America~~those companies. Effective June 2016, Mr. Winfield became the Managing Director of Justice. Depending on certain market conditions and ~~that~~various ~~our~~risk ~~receipts~~factors, the Chief Executive Officer, Portsmouth and ~~expenditures~~InterGroup ~~are~~may, ~~being~~at ~~made~~times, ~~only~~invest in ~~accordance~~the same companies in which the Company invests. Such investments align the interests of the Company with ~~authorizations~~the interests of ~~our~~ ~~management~~related parties because it places the personal resources of the Chief Executive Officer and the ~~our~~resources ~~directors;~~of Portsmouth and InterGroup at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company.

~~• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.~~43

~~Management, including our Chief Executive Officer and Principal~~NOTE ~~Financial~~17 ~~Officer,~~– ~~conducted~~COMMITMENTS anAND evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its evaluation, management concluded that there was material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.CONTINGENCIES

40Cash Management Agreement

~~The~~As part ~~material~~of ~~weakness~~the Hotel refinancing effective December 18, 2013, Operating entered into a Cash Management Agreement with Bank of America, N.A. (“Lender”) and Wells Fargo Bank, N.A. (“Cash Management Bank”) whereby all cash received by Operating is ~~related~~to be deposited into a business checking account controlled by the Cash Management Bank up to the ~~Company’s~~loan ~~preparation~~maturity date. Additionally, other terms of ~~its~~the ~~tax~~Cash ~~provision~~Management Agreement provide that effective February 2019 or upon a Property Improvement Plan (“PIP”) requirement by Hilton (“Franchisor”) deemed the “Cash Sweep Period” during which all excess cash generated by Operating beyond the monthly budgeted expenses and debt services including principal and interest, insurance reserves, real estate taxes reserve, furniture fixtures and equipment (“FF&E”) reserves, for the senior and mezzanine loans, will be held by the Cash Management Bank for future hotel improvements as required by the date or a PIP. Currently, any and all funds are being controlled by the Cash Management Bank according to the Cash Management Agreement.

~~During the fourth quarter of fiscal 2017, we identified a material~~Franchise weakness in internal controls over financial reporting related to our accounting for deferred income taxes and income tax expense. Specifically, we did not design and maintain effective controls to identify items within the deferred tax balances that could be materially incorrect. We did not provide appropriate oversight of our third-party tax CPA firm preparer. This material weakness did not have, but could have resulted in various material adjustments to deferred tax accounts for fiscal 2017 and 2016. We are undergoing ongoing evaluation and improvements in our internal control over financial reporting. Regarding our identified material weakness, we have performed the following remediation efforts:Agreements

InThe Partnership ~~order~~entered tointo ~~mitigate~~a Franchise License Agreement (the ~~material~~“License ~~weakness~~Agreement”) towith the ~~fullest~~HLT ~~extent~~Existing Franchise Holding ~~possible~~LLC (“Hilton”) on December 10, ~~management~~2004. ~~hired~~The aterm ~~new~~of ~~tax~~the ~~CPA~~License ~~specialist~~agreement towas ~~review~~for ~~and~~an doinitial aperiod ~~detailed~~of ~~analysis~~15 ~~which~~years ~~was~~commencing on ~~completed~~the ~~for~~date the ~~year~~Hotel ~~ended June~~began ~~30,~~operating ~~2017. The~~as ~~Company~~a ~~has~~Hilton ~~also~~hotel, ~~assigned~~with toan ~~its~~option ~~audit~~to ~~committee~~extend ~~oversight~~the ~~responsibilities~~License ~~with~~Agreement ~~regard~~for toanother ~~this~~five ~~analysis.~~ years, ~~The~~subject ~~preparation~~to ofcertain ~~the~~conditions. ~~Company’s~~On ~~deferred~~June ~~tax~~26, ~~assets~~2015, Operating and ~~liabilities~~Hilton ~~will~~entered beinto ~~reviewed~~an ~~annually~~amended byfranchise ~~tax~~agreement ~~experts~~which asamongst other ~~well~~things as extended the ~~Principal~~License ~~Financial~~Agreement ~~Officer~~through 2030, and also provided the ~~Chief~~Partnership ~~Executive~~certain ~~Officer~~key money cash incentives to be earned through 2030.

AsSince the opening of ~~June~~the ~~30,~~Hotel ~~2018, these controls were not operating effectively~~ as ~~noted by~~ a ~~computational~~full ~~error~~brand Hilton in ~~estimating~~January 2006, the ~~transition~~Partnership ~~impact~~has ofincurred ~~the~~monthly ~~Tax~~royalties, ~~Act~~program onfees and ~~our~~information ~~deferred~~technology ~~tax~~recapture ~~balances.~~charges Asequal ofto ~~June~~a ~~30, 2019,~~percentage ~~management~~of ~~concludes that~~ the ~~material~~Hotel’s ~~weakness~~gross ~~has~~room ~~been~~revenue. ~~remediated~~Fees byfor ~~its~~such ~~active~~services during ~~engagement~~fiscal inyear ~~the~~2020 ~~provision preparation process~~ and ~~will~~2019 ~~continue~~totaled toapproximately ~~enhance~~$3.0 ~~its~~million ~~controls~~and ~~over~~$4.1 ~~the~~million, ~~preparation of its tax provision~~respectively.

~~This annual report does not include an attestation report of~~Hotel our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm, pursuant to provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that permit us to provide only management’s report in this Annual Report on Form 10-K.Employees

~~This~~Effective February ~~report~~3, ~~shall~~2017, ~~not~~the bePartnership ~~deemed~~had tono beemployees. ~~filed~~On ~~for~~February ~~purposes~~3, ~~of Section~~2017, 18Interstate assumed all labor union agreements and retained employees of ~~the~~their ~~Exchange~~choice ~~Act,~~to orcontinue ~~otherwise~~providing ~~subject~~services to the ~~liabilities~~Hotel. As of ~~that~~June ~~section~~30, ~~and~~2020, isapproximately ~~not~~87% ~~incorporated~~of bythose ~~reference into~~employees ~~any~~were ~~filing~~represented by one of ~~the~~three ~~Company~~labor unions, ~~whether~~and ~~made~~their ~~before~~terms orof ~~after~~employment were determined under various collective bargaining agreements (“CBAs”) to which the ~~date~~Partnership ~~hereof~~was a party. During the fiscal year ended June 30, ~~regardless~~2020, ofthe ~~any~~Partnership renewed ~~general~~the ~~incorporation~~CBA ~~language~~for inLocal ~~such~~2 (Hotel and Restaurant Employees). CBA for Local 856 (International Brotherhood of Teamsters) will ~~filing~~expire on December 31, 2022. CBA for Local 39 (Stationary Engineers) will expire on July 31, 2024.

~~CHANGES~~Negotiation of INcollective ~~INTERNAL~~bargaining ~~CONTROL~~agreements, ~~OVER~~which ~~FINANCIAL~~includes ~~REPORTING~~not just terms and conditions of employment, but scope and coverage of employees, is a regular and expected course of business operations for the Partnership and Interstate. The Partnership expects and anticipates that the terms of conditions of CBAs will have an impact on wage and benefit costs, operating expenses, and certain hotel operations during the life of each CBA, and incorporates these principles into its operating and budgetary practices.

~~As stated in our report on internal control over financial reporting,~~Legal ~~the material weakness related to tax provision preparation has been remediated in fiscal year 2019.~~Matters

~~Item~~The Company 9Bmay be subject to legal proceedings, claims, and litigation arising in the ordinary course of business. ~~Other~~The ~~Information~~Company will defend itself vigorously against any such claims. Management does not believe that the impact of such matters will have a material effect on the financial conditions or result of operations when resolved.

~~None.~~NOTE 18 – SUBSEQUENT EVENTS

41On August 19, 2020, Operating entered into a consent agreement whereby the Lender agreed to release certain PIP deposits held in escrow for the benefit of Operating but restricted to be utilized specifically for a future PIP. Since Franchisor will not require a PIP until the expiration of the franchise agreement in January 2030 or upon the sale of the Hotel, on August 19, 2020, Operating received PIP deposits in the amount of $2,379,000 held by Lender. The funds were utilized to fund operating expenses, including franchise and management fees and other expenses.

~~PART~~On August ~~III~~28, 2020, Santa Fe sold its 27-unit apartment complex located in Santa Monica, California for $15,650,000 and realized a gain on the sale of approximately $12,026,000. Santa Fe will manage its federal and state income tax liability, and anticipates the utilization of its available net operating losses and capital loss carryforwards. Santa Fe received net proceeds of $12,163,000 after selling costs and repayment of InterGroup’s RLOC of $2,985,000. Furthermore, pursuant to the Contribution Agreement between Santa Fe and InterGroup, Santa Fe paid InterGroup $662,000 from the sale. Santa Fe will not seek a replacement property.

~~Item 10. Directors, Executive Officers and Corporate Governance.~~44

~~The~~Item 9. ~~following~~Changes ~~table~~in ~~sets~~and ~~forth~~Disagreements ~~certain information~~ with ~~respect to~~Accountants ~~the~~on ~~Directors~~Accounting and ~~Executive~~Financial ~~Officers of the Company as of June 30, 2019:~~Disclosure.

Name	Position with the Company	Age	Term to Expire
John V. Winfield	Chairman of the Board; President	72	Fiscal 2020 Annual Meeting
	and Chief Executive Officer (1)
John C. Love	Director (1)(2)	79	Fiscal 2020 Annual Meeting
William J. Nance	Director (1)(2)	75	Fiscal 2020 Annual Meeting
Executive Officer:
Danfeng Xu	Treasurer, Controller (Principal Financial Officer), and Secretary	32	N/A

None.

~~(1)~~Item 9A. ~~Member~~Controls ofand ~~Securities Investment Committee~~Procedures.

~~(2)~~EVALUATION OF ~~Member~~DISCLOSURE ofCONTROLS ~~Audit~~AND ~~Committee~~PROCEDURES

~~Business~~The Company’s ~~Experience:~~management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the fiscal period covered by this Annual Report on Form 10-K. Based upon such evaluation, management has concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

~~The principal occupation and business experience during the~~MANAGEMENT’S ~~last~~REPORT ~~five~~ON ~~years~~INTERNAL ~~for~~CONTROL ~~each~~OVER ofFINANCIAL ~~the~~REPORTING ~~Directors and Executive Officers of the Company are as follows:~~

~~John V. Winfield — Mr. Winfield was first elected~~Management tois ~~the~~responsible ~~Board~~for inestablishing ~~May of 1995~~ and ~~currently~~maintaining ~~serves~~internal ascontrol ~~the~~over ~~Company's~~financial ~~Chairman of the Board~~reporting, ~~President and Chief Executive Officer, having been appointed~~ as such interm ~~April 1996. Mr. Winfield~~ is ~~also~~defined ~~the~~in ~~Chairman~~Rules ~~of the Board, President~~ 13a-15(f) and ~~Chief~~15d-15(f) ~~Executive Officer~~ of the ~~Company's~~Exchange ~~subsidiary,~~Act. ~~Portsmouth,~~The ~~having~~internal ~~held~~control ~~those~~over ~~positions~~financial ~~since~~reporting ~~May~~is ofa ~~1996.~~process, ~~Mr.~~under ~~Winfield~~the issupervision ~~Chairman~~ of ~~the~~our ~~Board,~~Chief ~~President~~Executive Officer and ~~Chief~~Principal ~~Executive~~Financial Officer ~~of InterGroup~~, ~~and~~designed ~~has~~to ~~held~~provide ~~those~~reasonable ~~positions~~assurance ~~since~~regarding ~~1987.~~the ~~Mr.~~reliability ~~Winfield’s~~of ~~extensive experience~~financial asreporting ~~an entrepreneur~~ and ~~investor,~~the aspreparation ~~well~~of asour ~~his~~financial ~~managerial~~statements ~~and~~for ~~leadership~~external ~~experience~~purposes ~~from~~in ~~serving~~accordance aswith aaccounting ~~chief~~principles ~~executive officer~~generally ~~and~~accepted ~~director~~in ~~of public companies, led to~~ the ~~Board’s~~United ~~conclusion~~States ~~that he should serve as a director~~ of ~~the Company~~America.

~~John C. Love — Mr. Love was appointed a Director~~The ofinternal the Company on March 5, 1998. Mr. Love is an international hospitality and tourism consultant. He is a retired partner in the national CPA and consulting firm of Pannell Kerr Forster and, for the last 30 years, a lecturer in hospitality industry management control ~~systems~~over and competition & strategy at Golden Gate University and San Francisco State University. He is Chairman Emeritus of the Board of Trustees of Golden Gate University and the Executive Secretary of the Hotel and Restaurant Foundation. Mr. Love is also a Director of Portsmouth, having first been appointed in March 1998 and a Director of InterGroup, having first been appointed in January 1998. Mr. Love’s extensive experience as a CPA and in the hospitality industry, including teaching at the university level for the last 30 years in management control systems, and his knowledge and understanding of finance and financial reporting~~, led~~ toinclude ~~the~~those ~~Board’s~~policies ~~conclusion~~and ~~that~~procedures ~~he should serve as a director of the Company.~~that:

42● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;

~~William~~● ~~J. Nance — Mr. Nance was first elected~~provide toreasonable ~~the~~assurance ~~Board~~that inour ~~May~~transactions ofare ~~1996.~~recorded ~~Mr.~~as ~~Nance~~necessary isto ~~also~~permit apreparation ~~director~~ of ~~Portsmouth.~~our ~~Mr.~~financial ~~Nance~~statements ~~is the President and CEO of Century Plaza Printers, Inc., a company he founded~~ in ~~1979. He has also served as a consultant in the acquisition and disposition of multi-family and commercial~~accordance ~~real~~with ~~estate.~~accounting ~~Mr.~~principles ~~Nance~~generally isaccepted ~~a Certified Public Accountant and, from 1970 to 1976, was employed by Kenneth Leventhal & Company where he was a Senior Accountant specializing~~ in the ~~area~~United ofStates ~~REITS and restructuring~~ of ~~real estate companies~~America, ~~mergers~~ and ~~acquisitions, and~~that ~~all~~our ~~phases~~receipts ~~of real estate development~~ and ~~financing.~~expenditures ~~Mr.~~are ~~Nance is also Director of InterGroup, and has held such position since~~being ~~1984.~~made ~~Mr.~~only ~~Nance~~in ~~also~~accordance ~~serves~~with asauthorizations ~~a director~~ of ~~Comstock~~our ~~Mining, Inc. Mr. Nance’s extensive experience as a CPA and in numerous phases of the real estate industry, his business and~~ management ~~experience gained in running his own businesses, his service as a director~~ and ~~audit~~our ~~committee~~directors; ~~member for other public companies~~ and ~~his knowledge and understanding of finance and financial reporting, led to the Board’s conclusion that he should serve as a director of the Company.~~

~~Danfeng Xu – Ms. Xu was appointed as Treasurer~~● ~~and~~provide ~~Controller~~reasonable ofassurance ~~the~~regarding ~~Company~~prevention onor ~~October~~timely ~~16,~~detection ~~2017. Ms. Xu also serves as Treasurer and Controller~~ of ~~InterGroup~~unauthorized ~~and Portsmouth~~acquisition, ~~having~~ ~~been appointed to those positions on October 16~~use, ~~2017.~~or Ondisposition ~~June 1, 2019, she was appointed Secretary~~ of ~~the Company, InterGroup~~our ~~and~~assets ~~Portsmouth.~~that ~~Prior~~could tohave ~~joining~~a ~~the~~material ~~Company,~~effect ~~she~~on ~~had served as Controller and worked in other positions at~~ the ~~Hotel~~financial ~~from July 2010 to February 2017~~statements. She obtained her Bachelor of Science degree in Business Administration, Accounting and Finance from The Ohio State University and her Master of Professional Accounting, with a concentration in Audit and Assurance from University of Washington.

~~Family~~Management, including ~~Relationships:~~our ~~There~~Chief ~~are~~Executive noOfficer ~~family~~and ~~relationships among~~Principal ~~directors~~Financial Officer, ~~executive~~conducted ~~officers,~~an orevaluation ~~persons~~of ~~nominated~~the oreffectiveness ~~chosen~~of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its evaluation under that framework, management concluded that the Company’s internal tocontrol ~~become~~over ~~directors~~financial orreporting ~~executive~~was ~~officers~~effective as of June 30, 2020.

~~Involvement~~This annual inreport ~~Certain~~does ~~Legal~~not ~~Proceedings:~~include Noan ~~director~~attestation report of our independent registered public accounting firm regarding internal control orover ~~executive~~financial ~~officer,~~reporting. orManagement’s ~~person~~report ~~nominated~~was ornot ~~chosen~~subject to ~~become~~attestation aby ~~director~~our orindependent ~~executive~~registered ~~officer~~public accounting firm, ~~was~~pursuant ~~involved~~to inprovisions ~~any~~of ~~legal~~the ~~proceeding~~Dodd-Frank Wall Street Reform and Consumer Protection Act that permit us to provide only management’s ~~requiring~~report ~~disclosure~~in this Annual Report on Form 10-K.

~~Compliance~~CHANGES IN ~~with~~INTERNAL ~~Section~~CONTROL ~~16(a)~~OVER ofFINANCIAL ~~the~~REPORTING ~~Securities Exchange Act of 1934~~

~~Section~~There have ~~16(a)~~been ofno ~~the~~changes ~~Securities~~in ~~Exchange Act of 1934 requires~~ the Company’s ~~officers~~internal ~~and~~control ~~directors,~~over ~~and~~financial ~~each~~reporting ~~beneficial~~during ~~owner of more than ten percent of~~ the ~~Common~~fiscal ~~Stock~~year ofcovered ~~the~~by ~~Company,~~this Annual toReport ~~file~~on ~~reports~~Form of10-K ~~ownership~~that ~~and~~have ~~changes~~materially ~~in ownership with the Securities and Exchange Commission. Officers~~affected, ~~directors~~or ~~and greater than ten-percent shareholders~~ are ~~required~~reasonably bylikely ~~SEC regulations~~ to ~~furnish~~materially affect, the Company’s ~~with~~internal control ~~copies~~over offinancial ~~all Section 16(a) forms they file~~reporting.

~~Based solely on its review of the copies of Forms 3 and 4 and~~Item ~~amendments~~9B. ~~thereto~~Other furnished to the Company during its most recent fiscal year, or written representations from certain reporting persons that no Forms 5 were required for those persons, the Company believes that during fiscal 2019 all filing requirements applicable to its officers, directors, and greater than ten-percent beneficial owners were complied withInformation.

~~Code of Ethics~~None.

The Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as well as its Board of Directors. A copy of the Code of Ethics is filed as Exhibit 14 to this Report. A copy is also posted on the Santa Fe page of its parent company’s website at www.intgla.com. The Company will provide to any person without charge, upon request, a copy of its Code of Ethics by sending such request to: Santa Fe Financial Corporation, Attn: Treasurer, 12121 Wilshire Boulevard, Suite 610, Los Angeles, CA, 90025. The Company will promptly disclose any amendments or waivers to its Code of Ethics on Form 8-K.45

~~BOARD AND COMMITTEE INFORMATION~~PART III

~~Santa Fe is an unlisted company and a Smaller Reporting Company~~Item ~~under the rules and regulations of the Securities and Exchange Commission (“SEC”)~~10. ~~With~~Directors, ~~the~~Executive ~~exception~~Officers ~~of the Company’s President~~ and ~~CEO,~~Corporate ~~John V~~Governance. ~~Winfield, all of Santa Fe’s Board of Directors consists of “independent” directors as independence is defined by the applicable rules of the SEC and NASDAQ.~~

43The following table sets forth certain information with respect to the Directors and Executive Officers of the Company as of June 30, 2020:

Procedures for Recommendations of Nominees to Board of Directors

Name	Position with the Company	Age	Term to Expire

John V. Winfield	Chairman of the Board; President	73	Fiscal 2021 Annual Meeting
	and Chief Executive Officer ⁽¹⁾

Robert Dika	Director ^(1)(2)(3)(4)	45	Fiscal 2021 Annual Meeting

William J. Nance	Director ^(2)(3)(4)	76	Fiscal 2021 Annual Meeting

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