FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Company may from time to time make forward-looking statements and projections concerning future expectations. When used in this discussion, the words "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "may," "could," "might" and similar expressions, are intended to identify forward-looking statements.


Such statements are subject to certain risks and uncertainties. These risks and
uncertainties include, but are not limited to, the following: national and
worldwide economic conditions, including the impact of recessionary conditions
on tourism, travel and the lodging industry; the impact of terrorism and war on
the national and international economies, including tourism, securities markets,
energy and fuel costs; natural disasters; general economic conditions and
competition in the hotel industry in the San Francisco area; seasonality, labor
relations and labor disruptions; actual and threatened pandemics such as swine
flu or the outbreak of COVID-19 or similar outbreaks; partnership distributions;
the ability to obtain financing at favorable interest rates and terms;
securities markets, regulatory factors, litigation and other factors discussed
below in this Report and in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2021. These risks and uncertainties could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as to the date hereof. The Company undertakes no obligation to publicly
release the results of any revisions to those forward-looking statements, which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

NEGATIVE EFFECTS OF CIVIL AUTHORITY ACTIONS ON OUR BUSINESS


On February 25, 2020, the City of San Francisco issued the proclamation by the
Mayor declaring the existence of a local emergency. The negative effects of the
civil authority actions related to the novel strain of coronavirus ("COVID-19")
on our business have been significant. In March 2020, the World Health
Organization declared COVID-19 a global pandemic. This contagious virus, which
has continued to spread, has adversely affected workforces, customers, economies
and financial markets globally. It has also disrupted the normal operations of
many businesses, including ours. To mitigate the harm from the pandemic, on
March 16, 2020, 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 place limitations across the Bay Area, requiring
everyone to stay safe at home except for certain essential needs. Since February
2020, several unfavorable events and civil authority actions have unfolded
causing demand for our hotel rooms to suffer including cancellations of all
citywide conventions, reduction of flights in and out of the Bay Area and
decline in both leisure and business travel.



In December 2020, due to the surge in COVID-19 cases and hospitalizations, the
Health Officer of the City and County of San Francisco suspended or restricted
certain activities. Health Order C19-07q (the "Order") incorporates suspensions,
reductions in capacity limits, and other restrictions contained in the Regional
Stay At Home Order issued by the California Department of Public Health on
December 3, 2020. Effective December 17, 2020, the Bay Area Region, including
San Francisco, was required to comply with the State's December 3, 2020 Regional
Stay-at-Home Order. The Order strongly discouraged anyone in the County from
travelling for leisure, recreation, business, or other purposes that could be
postponed until after the surge. With limited exceptions, this Order imposed a
mandatory quarantine on anyone traveling, moving, or returning to the County
from anywhere outside the Bay Area. Effective January 20, 2021, Health Order
C19- 07r revised and replaced the previous Order; it continued to temporarily
prohibit certain businesses and activities from resuming but allowed certain
other businesses, activities, travel, and governmental functions to occur
subject to specified health and safety restrictions, limitations, and conditions
to limit the transmission of COVID-19.



-22-







On March 24, 2021, the City and County of San Francisco announced it moved into
the orange tier which removed the suggested Shelter in Place for guests
travelling to San Francisco. This was a very positive step for the hotel
community. This tier opened activities in the city including expanded restaurant
capacities, museums, and attractions. For the hotel it allowed for guests to
gather in public spaces and for outlets and amenities to open at limited
capacities including fitness centers. It did not change the very stringent
cleaning and sanitation requirements set forth by the Health Officer of the City
and County of San Francisco which proved to be a costly measure to maintain.
Effective May 6, 2021, the City and County of San Francisco moved into the
yellow tier guidelines. We continue to closely monitor the very fluid changes
that the Center for Disease Control, San Francisco Department of Health and
other authorities implement with regards to the COVID-19 pandemic.



On August 20, 2021, San Francisco announced vaccination requirements for indoor
activities. This order requires restaurants, theaters, and entertainment venues
where food or drink is served inside, as well as gyms, recreation facilities,
yoga studios, dance studios and other fitness establishments, clubs involving
elevated breathing to show proof of vaccination.



On January 11, 2022, a new Health Order has been issued. The primary change to
the Order is to comply with changes the State made lowering the threshold for
mega events to 500 attendees indoor and 5,000 attendees outdoor beginning
January 15, 2022. On March 17, 2022, the State of California announced that
beginning on April 1, 2022, it will no longer require that people attending
Indoor Mega-Event (i.e., events with 1,000 or more attendees) provide proof of
vaccination or negative testing to gain entry. Instead, the State strongly
recommend that venues hosting Indoor Mega-Events continue to impose that
requirement.



The San Francisco hospitality market has seen the two largest citywide events go
virtual with DreamForce in September 2021 and JP Morgan Healthcare Conference in
January 2022. RSA Conference originally scheduled for February 2022 was moved to
June 2022 and Google Cloud Next was cancelled for 2022. As of the date of this
report, the market is seeing slow and steady improvement month over month. Rates
in the market grew roughly 20% from February 2022 to March 2022 as demand is
steadily increasing, particularly midweek where it has been the softest. Demand
generators are returning to the market with the largest being Game Developers
Conference in March 2022. Although it was approximately half of the pre-COVID
attendance, it lifted the market to the best RevPAR we have seen since March
2020. April 2022 continues the trend with midweek rates rising and another
strong performance from the RIMS citywide. San Francisco has two more citywide
conferences in May 2022 and the momentum continues into the summer. The
cancellations and pushing back of these major events have stopped, providing
cautious optimism about the market's ability to recover in 2022 and beyond.



In response to the decrease in demand, we have since furloughed most managers at
the Hotel except for members of the executive team and continue to limit hourly
staff to a minimum. By the end of March 2020, we had temporarily closed all our
food and beverage outlets, valet parking, concierge and bell services, fitness
center, as well as the executive lounge facility. We continue to implement
social distancing standards and cleaning processes designed by Aimbridge and
Hilton to keep employees and guests safe. The full impact and duration of the
COVID-19 outbreak continues to evolve as of the date of this Annual Report. The
pandemic effectively eliminated our ability to generate any profits, due to the
drastic decline in both leisure and business travel. As a result, 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, financial
condition, liquidity and financial results. We are also assessing the potential
impact on the impairment analysis of our long-lived assets and the realization
of our deferred tax assets. As of the date of this report, the effects of the
pandemic continue to affect our economy, business and leisure travel, and our
needs to continue to curtail certain revenue generating activities at the Hotel.
We expect that the effects will continue to have a material adverse effect on
our business until the pandemic ends.



-23-







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 CARES Act includes, among 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 Paycheck Protection 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 -
Justice") with CIBC Bank USA under the CARES Act. Justice received proceeds of
$4,719,000 from the SBA Loan - Justice. In accordance with the requirements of
the CARES Act, Justice has used all proceeds from the SBA Loan for payroll costs
and other qualified expenses. The SBA Loan - Justice was scheduled to mature on
April 9, 2022 and had a 1.00% interest rate and was subject to the terms and
conditions applicable to loans administered by the U.S. Small Business
Administration under the CARES Act. On April 27, 2020, InterGroup entered into a
loan agreement ("SBA Loan - InterGroup") with CIBC Bank USA under the CARES Act
and received loan proceeds in the amount of $453,000. As of June 30, 2021,
InterGroup used all the $453,000 loan proceeds in qualified payroll expenses.
The SBA Loan - InterGroup was scheduled to mature on April 27, 2022 and had a
1.00% interest rate. Both the SBA Loan - Justice and SBA Loan - InterGroup
(collectively the "SBA Loans") were forgiven in full by the SBA as of June

30,
2021.




On February 3, 2021, Justice entered into a second loan agreement ("Second SBA
Loan") with CIBC Bank USA administered by the SBA. Justice received proceeds of
$2,000,000 from the Second SBA Loan. As of June 30, 2021, Justice used all
proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA
Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and
was subject to the terms and conditions applicable to loans administered by the
U.S. Small Business Administration under the CARES Act. On November 19, 2021,
the Second SBA Loan was forgiven in full and $2,000,000 was recorded as gain on
debt extinguishment on the condensed consolidated statement of operations for
the nine months ended March 31, 2022.



RESULTS OF OPERATIONS



As of March 31, 2022, the Company owns approximately 75% of the common shares of
Portsmouth Square, Inc. Historically, the Company's principal source of revenue
is derived from the investment of its subsidiary, Portsmouth, in the Justice
Investors Limited Partnership ("Justice" or the "Partnership") inclusive of
hotel room revenue, food and beverage revenue, garage revenue, and revenue from
other operating departments. Justice owned the Hotel and related facilities,
including a five-level underground parking garage up to its dissolution on
December 23, 2021 when Portsmouth replaced Justice as the owner of the Hotel.
The financial statements of Justice had been consolidated with those of the
Company. However, the impact of the COVID-19 pandemic is highly uncertain and
management expects that the ongoing length and severity of the economic downturn
will have a material adverse impact on our business, financial condition,
liquidity and financial results.



The Hotel is 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, Operating and Hilton entered into an
amended franchise agreement which extended the License Agreement through 2030,
modified the monthly royalty rate, extended geographic protection to Operating
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.



Aimbridge Hospitality ("Aimbridge") manages the Hotel under certain Hotel
management agreement ("HMA") with Operating. The term of the management
agreement is for an initial period of ten years commencing on the February 3,
2017 date and automatically renews for successive one (1) year periods, to not
exceed five years in the aggregate, subject to certain conditions. Under the
terms on the HMA, base management fee payable to Aimbridge shall be one and
seven-tenths percent (1.70%) of total Hotel revenue.



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



The Company acquires its investments in real estate and other investments
utilizing cash, securities, or debt, subject to approval or guidelines of the
Board of Directors. The Company also invests in income-producing instruments,
equity, and debt securities from time to time and will consider other
investments if such investments offer growth or profit potential.



-24-

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021


The Company had a net loss of $873,000 for the three months ended March 31, 2022
compared to a net income of $1,399,000 for the three months ended March 31,
2021. The change is primarily attributable to $906,000 gain on marketable
securities in the three months ended March 31, 2022 as compared to $5,638,000
gain on marketable securities for the three months ended March 31, 2021.



Hotel Operations

The Company had net loss from Hotel operations of $2,112,000 for the three months ended March 31, 2022 compared to net loss of $3,259,000 for the three months ended March 31, 2021. The change is primarily attributable to the increase in Hotel revenue.

The following table sets forth a more detailed presentation of Hotel operations for the three months ended March 31, 2022 and 2021.


For the three months ended March 31,                    2022
2021
Hotel revenues:
Hotel rooms                                        $    5,505,000     $    2,368,000
Food and beverage                                         372,000             17,000
Garage                                                    677,000            479,000
Other operating departments                                78,000             38,000
Total hotel revenues                                    6,632,000          2,902,000
Operating expenses excluding depreciation and
amortization                                           (6,544,000 )       (3,990,000 )
Operating loss before interest, depreciation and
amortization                                               88,000         (1,088,000 )
Interest expense - mortgage                            (1,624,000 )       (1,642,000 )
Depreciation and amortization expense                    (576,000 )         (529,000 )
Net loss from Hotel operations                     $   (2,112,000 )   $   (3,259,000 )




For the three months ended March 31, 2022, the Hotel had operating income of
$88,000 before interest expense, depreciation, and amortization on total
operating revenues of $6,632,000 compared to operating loss of $1,088,000 before
interest expense, depreciation, and amortization on total operating revenues of
$2,902,000 for the three months ended March 31, 2021. For the three months ended
March 31, 2022, room revenues increased by $3,137,000, food and beverage revenue
increased by $355,000, and garage revenue increased by $198,000, compared to the
three months ended March 31, 2021. The year over year increase in all the
revenue sources are the result of the recovery from the business interruption
attributable to a variety of responses by federal, state, and local civil
authority to the COVID-19 outbreak since March 2020. Total operating expenses
increased by $2,554,000 due to increase in salaries and wages, union health
insurance, repairs and maintenance, credit card fees, management fees, and
franchise fees.



The following table sets forth the average daily room rate, average occupancy
percentage and revenue per occupied room ("RevPAR", calculated by multiplying
the hotel's average daily room rate by its occupancy percentage) of the Hotel
for the three months ended March 31, 2022 and 2021.



 Three Months       Average           Average
Ended March 31,    Daily Rate       Occupancy %       RevPAR

     2022         $        149                74 %   $    110
     2021         $        103                47 %   $     48




The Hotel's revenues increased by 128% this quarter as compared to the previous
comparable quarter. Average daily rate increased by $46, average occupancy
increased by 27%, and RevPAR increased by $62 for the three months ended March
31, 2022 compared to the three months ended March 31, 2021.



Real Estate Operations




Net income from real estate operations for the three months ended March 31, 2022
decreased by $2,000 to $383,000 compared to $385,000 for the three months ended
March 31, 2021 due to increase in mortgage interest expense. Revenue from real
estate operations increased by $361,000 year over year due to increase in market
rent and reduction in bad debt. All the Company's properties are managed
in-house. Management continues to review and analyze the Company's real estate
operations to improve occupancy and rental rates and to reduce expenses and

improve efficiencies.



-25-






Investment Transactions



The Company had a net gain on marketable securities of $906,000 for the three
months ended March 31, 2022 compared to a net gain on marketable securities of
$5,638,000 for the three months ended March 31, 2021. For the three months ended
March 31, 2022, the Company had a net realized gain of $127,000 and a net
unrealized gain of $779,000. For the three months ended March 31, 2021, the
Company had a net realized gain of $267,000 and a net unrealized gain of
$5,371,000. 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.

Nine months ended March 31, 2022 compared to nine months ended March 31, 2021


The Company had net loss of $6,022,000 for the nine months ended March 31, 2022
compared to net income of $5,155,000 for the nine months ended March 31, 2021.
The change is primarily attributable to the $12,043,000 gain from sale of real
estate in August 2020 and $3,613,000 loss on marketable securities in the nine
months ended March 31, 2022.



Hotel Operations



The Company had net loss from Hotel operations of $4,179,000 for the nine months
ended March 31, 2022 compared to net loss of $11,420,000 for the nine months
ended March 31, 2021. The change is primarily attributable to the increase

in
Hotel revenue.

The following table sets forth a more detailed presentation of Hotel operations for the nine months ended March 31, 2022 and 2021.


For the nine months ended March 31,                     2022
2021
Hotel revenues:
Hotel rooms                                        $   16,285,000     $    7,842,000
Food and beverage                                         934,000            130,000
Garage                                                  2,352,000          1,373,000
Other operating departments                               214,000             91,000
Total hotel revenues                                   19,785,000          9,436,000
Operating expenses excluding depreciation and
amortization                                          (19,356,000 )      (14,156,000 )
Operating income (loss) before interest,
depreciation and amortization                             429,000         (4,720,000 )
Gain on extinguishment of debt                          2,000,000

-


Interest expense - mortgage                            (4,939,000 )       (5,010,000 )
Depreciation and amortization expense                  (1,669,000 )       (1,690,000 )
Net loss from Hotel operations                     $   (4,179,000 )   $  (11,420,000 )
For the nine months ended March 31, 2022, the Hotel had operating income of
$429,000 before interest expense, depreciation, and amortization on total
operating revenues of $19,785,000 compared to operating loss of $4,720,000
before interest expense, depreciation, and amortization on total operating
revenues of $9,436,000 for the nine months ended March 31, 2021. For the nine
months ended March 31, 2022, room revenues increased by $8,443,000, food and
beverage revenue increased by $804,000, and garage revenue increased by
$979,000, compared to the nine months ended March 31, 2021. The year over year
increase in all the revenue sources are the result of the recovery from the
business interruption attributable to a variety of responses by federal, state,
and local civil authority to the COVID-19 outbreak since March 2020. Total
operating expenses increased by $5,200,000 due to increase in salaries and
wages, frequent stay program costs, union health insurance, repairs and
maintenance, credit card fees, management fees, travel agent commission, and
franchise fees.



-26-






The following table sets forth the average daily room rate, average occupancy
percentage and RevPAR of the Hotel for the nine months ended March 31, 2022

and
2021.



  Nine Months       Average           Average
Ended March 31,    Daily Rate       Occupancy %       RevPAR

     2022         $        143                76 %   $    108
     2021         $        106                49 %   $     52
The Hotel's revenues increased by 109% for the nine months ended March 31, 2022
as compared to the nine months ended March 31, 2021. Average daily rate
increased by $37, average occupancy increased by 27%, and RevPAR increased by
$56 for the nine months ended March 31, 2022 compared to the nine months ended
March 31, 2021.



Real Estate Operations




Net income from real estate operations for the nine months ended March 31, 2022
decreased by $11,798,000 compared to the nine months ended March 31, 2021 due to
the $12,043,000 gain from sale of real estate in August 2020. Revenue from real
estate operations increased by $1,305,000 year over year due to reduction in
vacancy and bad debt. All the Company's properties are managed in-house.
Management continues to review and analyze the Company's real estate operations
to improve occupancy and rental rates and to reduce expenses and improve
efficiencies.



Investment Transactions



The Company had a net loss on marketable securities of $3,613,000 for the nine
months ended March 31, 2022 compared to a net gain on marketable securities of
$8,937,000 for the nine months ended March 31, 2021. For the nine months ended
March 31, 2022, the Company had a net realized loss of $874,000 and a net
unrealized loss of $2,739,000. For the nine months ended March 31, 2022, Company
had a net realized loss of $2,581,000 from its investment in Comstock. For the
nine months ended March 31, 2021, the Company had a net realized loss of
$667,000 and a net unrealized gain of $9,604,000. 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.



-27-






MARKETABLE SECURITIES



The following table shows the composition of the Company's marketable securities
portfolio as of March 31, 2022 and June 30, 2021 by selected industry groups.



                                                    % of Total
     As of March 31, 2022                           Investment
        Industry Group             Fair Value       Securities

Financial services                $  9,874,000             38.7 %
Communication services               5,166,000             20.2 %
REITs and real estate companies      4,510,000             17.7 %
Energy                               1,974,000              7.7 %
Industrials                          1,180,000              4.6 %
Technology                           1,155,000              4.5 %
Basic material                         842,000              3.3 %
Consumer cyclical                      438,000              1.7 %
Healthcare                             202,000              0.8 %
Utilities                              200,000              0.8 %
                                  $ 25,541,000            100.0 %




                                                    % of Total
      As of June 30, 2021                           Investment
        Industry Group             Fair Value       Securities

REITs and real estate companies   $ 11,624,000             32.5 %
Energy                               6,374,000             17.8 %
Communication services               4,872,000             13.6 %
Financial services                   3,873,000             10.8 %
Industrials                          3,746,000             10.5 %
Basic material                       1,797,000              5.0 %
Consumer cyclical                    1,702,000              4.8 %
Healthcare                             981,000              2.7 %
Technology                             442,000              1.2 %
Other                                  381,000              1.1 %
                                  $ 35,792,000            100.0 %




As of March 31, 2022, the Company's investment portfolio is diversified with 63
different equity positions. The Company held two equity securities that are more
than 10% of the equity value of the portfolio. The largest security position
represents 29% of the portfolio and consists of the common stock of Berkshire
Hathaway Inc. (NYSE: BRKA) which is included in the financial services industry
group. The second largest security position represents 20% of the portfolio and
consists of the preferred stock of Paramount Global (NASDAQ: PARAP) which is
included in the communication services industry group.



As of June 30, 2021, the Company's investment portfolio is diversified with 83
different equity positions. The Company holds two equity securities that
comprised more than 10% of the equity value of the portfolio. The two largest
security positions represent 12% and 11% of the portfolio and consists of the
common stock of DigitalBridge Group, Inc. (NASDAQ: DBRG) and Viacom CBS, Inc.
(NASDAQ: VIACP), which are included in the REITs and real estate companies and
communication services industry group, respectively.



-28-

The following table shows the net (loss) gain on the Company's marketable securities and the associated margin interest and trading expenses for the respective periods:





For the three months ended March 31,              2022           2021

Net gain on marketable securities              $  906,000     $   768,000
Net gain on marketable securities - Comstock            -       4,870,000
Impairment loss on other investments                    -         (30,000 )
Dividend and interest income                      158,000         158,000
Margin interest expense                          (212,000 )      (238,000 )
Trading and management expenses                  (127,000 )      (124,000 )
 Net gain from investment transactions         $  725,000     $ 5,404,000




For the nine months ended March 31,                       2022

2021



Net (loss) gain on marketable securities              $ (1,032,000 )   $

8,886,000

Net (loss) gain on marketable securities - Comstock (2,581,000 ) 51,000 Impairment loss on other investments

                       (41,000 )      (119,000 )
Dividend and interest income                               807,000         363,000
Margin interest expense                                   (638,000 )      (519,000 )
Trading and management expenses                           (415,000 )

(399,000 )

Net (loss) gain from investment transactions $ (3,900,000 ) $ 8,263,000

FINANCIAL CONDITION AND LIQUIDITY

The Company had cash and cash equivalents of $6,548,000 and $6,808,000 as of March 31, 2022 and June 30, 2021, respectively. The Company had marketable securities, net of margin due to securities brokers, of $21,564,000 and $21,456,000 as of March 31, 2022 and June 30, 2021, respectively. These marketable securities are short-term investments and liquid in nature.





On December 16, 2020, Justice and InterGroup entered into a loan modification
agreement which increased Justice's borrowing from InterGroup as needed up to
$10,000,000. Upon the dissolution of Justice in December 2021, Portsmouth
assumed Justice's note payable to InterGroup in the amount of $11,350,000. On
December 2021, Portsmouth and InterGroup entered into a loan modification
agreement which increased Portsmouth's borrowing from InterGroup as needed up to
$16,000,000. During the nine months ending March 31, 2022, InterGroup advanced
$7,550,000 to the Hotel, bringing the total amount due to InterGroup to
$14,200,000 at March 31, 2022.



In June 2020, we refinanced one of our California properties and generated net
proceeds of $1,144,000. During the fiscal year ended June 30, 2021, we completed
refinancing on six of our California properties and generated net proceeds of
$6,762,000. During the nine months ending March 31, 2022, we refinanced five of
our properties' existing mortgages and obtained a mortgage note payable on one
of our California properties, generating net proceeds totaling $16,099,000 as a
result. We are currently evaluating other refinancing opportunities and we could
refinance additional multifamily properties should the need arise, or should
management consider the interest rate environment favorable. The Company has an
uncollateralized $5,000,000 revolving line of credit from CIBC Bank USA ("CIBC")
and the entire $5,000,000 is available to be drawn down as of March 31, 2022
should additional liquidity be necessary.



On April 9, 2020, Justice entered into a loan agreement ("SBA Loan") with CIBC
Bank USA under the Coronavirus Aid, Relief, and Economic Security Act ("CARES
Act") administered by the U.S. Small Business Administration (the "SBA").
Justice received proceeds of $4,719,000 from the SBA Loan. In accordance with
the requirements of the CARES Act, Justice used the proceeds from the SBA Loan
for payroll costs and other qualified expenses. The SBA Loan was scheduled to
mature on April 9, 2022 with a 1.00% interest rate and was subject to the terms
and conditions applicable to loans administered by the U.S. Small Business
Administration under the CARES Act. On June 10, 2021, the SBA Loan was forgiven
in full.



-29-






On April 27, 2020, InterGroup entered into a loan agreement ("SBA Loan -
InterGroup") with CIBC Bank USA under the CARES Act and received loan proceeds
in the amount of $453,000. InterGroup used all of the $453,000 loan proceeds in
qualified payroll expenses. The SBA Loan - InterGroup was scheduled to mature on
April 27, 2022 and had a 1.00% interest rate. On March 17, 2021, SBA Loan -
InterGroup was forgiven in full.



On February 3, 2021, Justice entered into a second loan agreement ("Second SBA
Loan") with CIBC Bank USA administered by the SBA. Justice received proceeds of
$2,000,000 from the Second SBA Loan. As of June 30, 2021, Justice used all
proceeds from the Second SBA Loan primarily for payroll costs. The Second SBA
Loan was scheduled to mature on February 3, 2026, had a 1.00% interest rate, and
was subject to the terms and conditions applicable to loans administered by the
U.S. Small Business Administration under the CARES Act. On November 19, 2021,
the Second SBA Loan was forgiven in full and $2,000,000 was recorded as gain on
debt extinguishment on the condensed consolidated statement of operations for
the nine months ended March 31, 2022.



Our known short-term liquidity requirements primarily consist of funds necessary
to pay for operating and 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.



Our long-term liquidity requirements primarily consist of funds necessary to pay
for scheduled debt maturities and capital improvements of the Hotel and our real
estate properties. We will continue to finance our business activities primarily
with existing cash, including from the activities described above, and cash
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.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

MATERIAL CONTRACTUAL OBLIGATIONS

The following table provides a summary as of March 31, 2022, the Company's material financial obligations which also includes interest payments.





                                                               3 Months            Year              Year              Year             Year
                                               Total             2022              2023              2024              2025             2026           Thereafter

Mortgage and subordinated notes payable $ 195,528,000 $ 841,000

$ 12,960,000 $ 108,321,000 $ 3,866,000 $ 1,066,000 $ 68,474,000 Related party notes payable

                    3,662,000          142,000           567,000            567,000          567,000          567,000         1,252,000
Interest                                      32,710,000        2,678,000         8,723,000          5,376,000        2,241,000        2,126,000        11,566,000
Total                                      $ 231,900,000      $ 3,661,000      $ 22,250,000      $ 114,264,000      $ 6,674,000      $ 3,759,000      $ 81,292,000




IMPACT OF INFLATION



Hotel room rates are 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 Aimbridge has the power and ability 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.

The Company's residential rental properties provide income from short-term operating leases and no lease extends beyond one year. Rental increases are expected to offset anticipated increased property operating expenses.





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CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES





Critical accounting policies are those that are most significant to the
presentation of our financial position and results of operations and require
judgments by management in order to make estimates about the effect of matters
that are inherently uncertain. The preparation of these condensed financial
statements requires us to make estimates and judgments that affect the reported
amounts in our consolidated financial statements. We evaluate our estimates on
an on-going basis, including those related to the consolidation of our
subsidiaries, to our revenues, allowances for 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 basis 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. There have been no
material changes to the Company's critical accounting policies during the nine
months ended March 31, 2022. Please refer to the Company's Annual Report on Form
10-K for the year ended June 30, 2021 for a summary of the critical accounting
policies.

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