The InterGroup Corporation

What they do

InterGroup was formed in 1985 as successor to Mutual Real Estate Investment Trust and has been publicly held since 1966. Its principal revenue sources are hotel operations at the 544-room (558-room per the latest 10-Q) Hilton San Francisco Financial District, rental income from sixteen apartment complexes, one commercial property, and three single-family houses concentrated in Texas and Southern California, and income from cash and marketable securities. Portsmouth's Justice Investors Limited Partnership was dissolved effective December 23, 2021, and the hotel's financial statements are consolidated with the Company's.

Revenue drivers

• Hotel operations — The Hilton San Francisco Financial District generated total hotel revenues of $46.4M in fiscal 2025 (rooms $39.6M, food and beverage $2.9M, garage $3.2M, other $0.6M) versus $41.8M in fiscal 2024, making it the largest reported revenue line.
• Multifamily and commercial rentals — Rental income comes from sixteen apartment complexes, one commercial property, and three single-family houses located throughout the U.S. but concentrated in Texas and Southern California; the filing cites these only qualitatively without a dollar breakdown.
• Investment income — Income from cash, marketable securities, and other investments supplements operations; the Company reported losses from marketable securities transactions of $2.502M in fiscal 2025 versus $1.633M in fiscal 2024.
• Parking garage — A five-level underground parking garage is part of the hotel property; garage revenue was $3.214M in fiscal 2025 versus $2.988M in fiscal 2024.

Recent performance

For the quarter ended March 31, 2026, the Company reported net income of $595,000 versus a net loss of $750,000 in the prior-year quarter, with net income attributable to InterGroup of $457,000. Total hotel revenues rose to $16,497,000 from $12,210,000, and income from operations increased to $4,260,000 from $2,350,000. Hotel operations produced net income of $1,706,000 versus $583,000, helped by ADR of $306 versus $241 and occupancy of 94% versus 89%. Fiscal 2025 full-year revenue was $64.4M with a net loss of $5.3M and diluted EPS of $-2.47, compared with a $9.8M net loss and $-4.40 EPS in fiscal 2024. As of March 31, 2026, total liabilities were $217.5M against total assets of $103.5M, producing shareholder equity of negative $84.7M.

Strategy

Management says it monitors the San Francisco lodging market and adjusts pricing, sales, marketing, and capital allocation accordingly, and it continues to operate the hotel under a Hilton franchise agreement running through January 31, 2030. The Company states it acquires real estate and other investments using cash, securities, or debt subject to Board approval, and it invests in income-producing instruments and equity and debt securities. Renovated administrative office space was returned to service as 14 additional hotel keys, contributing to higher room availability in the March 2026 quarter. Management asserts that real estate carried at historical cost may understate intrinsic value given long holding periods and relatively modest mortgage balances, while noting it has not obtained portfolio-wide third-party appraisals.

Risks

• San Francisco market concentration — The Company's largest revenue source is a single hotel in San Francisco, exposing consolidated results and cash flows to that region's business travel, convention, tourism, and public safety trends.
• Guest demand cyclicality — The 10-K states leisure travel is discretionary and tends to decline during downturns, while some hotel costs remain fixed, which can compress earnings.
• Competitive rate pressure — The filing warns that competing properties may reduce room rates and other prices in a weakened economy, which could lower the Company's average revenues.
• Interest expense and leverage — Interest expense rose to $13,556,000 in fiscal 2025 from $12,007,000 in fiscal 2024, primarily on higher costs tied to hotel operations, against total liabilities of $217.5M at March 31, 2026.

Outlook

Management says the San Francisco market continues to show signs of recovery, with strong growth in the business travel segment raising midweek rates, and it cites the Super Bowl hosted in the March 2026 quarter as supporting February demand and RevPAR. The 10-Q also cautions that recovery in business travel, competitive dynamics, municipal perception issues, and macroeconomic trends could affect leisure demand, and states management will continue to monitor conditions and adjust operations and capital allocation. In fiscal 2025 the hotel loss narrowed to $4,166,000 from $7,154,000, aided by a $1.416 million gain on extinguishment of debt from the March 2025 refinancing.