Intergroup Corp. (INTG, Financial) filed Annual Report for the period ended 2009-06-30.
Intergroup Corp. was organized to buy develop operate rehabilitate and dispose of real property of various types and descriptions and to engage in such other business and investment activities as would benefit the company and its shareholders. The company was founded upon and remains committed to social responsibility. Such social responsibility was originally defined as providing decent and affordable housing to people without regard to race. Intergroup Corp. has a market cap of $23.54 million; its shares were traded at around $10.64 with and P/S ratio of 0.47. Intergroup Corp. had an annual average earning growth of 24% over the past 5 years.
of Santa Fe Financial Corporation ("Santa Fe"), a public company (OTCBB: SFEF).
Santa Fe's revenue is primarily generated through its 68.8% owned subsidiary,
Portsmouth Square, Inc. ("Portsmouth"), a public company (OTCBB: PRSI).
InterGroup also directly owns approximately 11.7% of Portsmouth. Portsmouth
has a 50.0% limited partnership interest in Justice Investors, a California
limited partnership ("Justice" or the "Partnership") and serves as one of two
the general partners. The other general partner, Evon Corporation ("Evon"),
served as the managing general partner of Justice until December 1, 2008. As
discussed below, the Limited Partnership Agreement was amended, effective
December 1, 2008, to provide for a change in the respective roles of the
general partners. Pursuant to that amendment, Portsmouth became the Managing
General Partner of Justice while Evon assumed the role of Co-General Partner of
Justice. The financial statements of Justice are consolidated with those of the
Company. See Note 2 to the Consolidated Financial Statements.
On December 1, 2008, Portsmouth and Evon, as the two general partners of
Justice, entered into a 2008 Amendment to the Limited Partnership Agreement
(the "Amendment") that provides for a change in the respective roles of the
general partners. Pursuant to the Amendment, Portsmouth assumed the role of
Managing General Partner and Evon continued on as the Co-General Partner of
Justice. The Amendment was ratified by approximately 98% of the limited
partnership interests. The Amendment also provides that future amendments to
the Limited Partnership Agreement may be made only upon the consent of the
general partners and at least seventy five percent (75%) of the interests if
the limited partners. Consent of at least 75% of the interests of the limited
partners will also be required to remove a general partner pursuant to the
Amendment.
Concurrent with the Amendment to the Limited Partnership Agreement, a new
General Partner Compensation Agreement (the "Compensation Agreement") was
entered into on December 1, 2008, among Justice, Portsmouth and Evon to
terminate and supersede all prior compensation agreement for the general
partners. Pursuant to the Compensation Agreement, the general partners of
Justice will be entitled to receive an amount equal to 1.5% of the gross annual
revenues of the Partnership (as defined), less $75,000 to be used as a
contribution toward the cost of Justice engaging an asset manager. In no event
shall the annual compensation be less than a minimum base of approximately
$285,000, with eighty percent (80%) of that amount being allocated to
Portsmouth for its services as managing general partner and twenty percent
(20%) allocated to Evon as the co-general partner. Compensation earned by the
general partners in each calendar year in excess of the minimum base, will be
payable in equal fifty percent (50%) shares to Portsmouth and Evon.
Pursuant to the Franchise Agreement, the Partnership pays monthly royalty fees
for the first two years of three percent (3%) of the Hotel's gross room
revenue, as defined, for the preceding calendar month; the third year will be
four percent (4%) of the Hotel's gross room revenue; and the fourth year until
the end of the term will be five percent (5%) of the Hotel's gross room
revenue. Justice also pays a monthly program fee of four percent (4%) of the
Hotel's gross room revenue. The amount of the monthly program fee is subject to
change; however, the increase cannot exceed one percent (1%) of the Hotel gross
room revenue in any calendar year, and the cumulative increases in the monthly
fees will not exceed five percent (5%) of gross room revenue. The Partnership
also pays a monthly information technology recapture charge of 0.75% of the
Hotel's gross revenue. In this difficult environment, Hilton agreed to reduce
its information technology fees to 0.50% for the 2009 calendar year.
In February 2007, the Partnership entered into a management agreement with
Prism Hospitality ("Prism") to manage and operate the Hotel as its agent,
effective February 10, 2007. Prism is an experienced Hilton approved operator
of upscale and luxury hotels throughout the Americas. The agreement is
effective for a term of ten years, unless the agreement is extended as provided
in the agreement, and the Partnership has the right to terminate the agreement
upon ninety days written notice without further obligation. Under the
management agreement, the Partnership is to pay base management fees of 2.5% of
gross operating revenues for the fiscal year. However, 0.75% of the stated
management fee is due only if the partially adjusted net operating income for
the subject fiscal year exceeds the amount of a minimum Partnership's return
($7 million) for that fiscal year. Prism is also entitled to an incentive
management fee if certain milestones are accomplished. No incentive fees were
earned during the years ended June 30, 2009 and 2008. In support of the
Partnership's efforts to reduce costs in this difficult economic environment ,
Prism agreed to reduce its management fees by fifty percent from January 1,
2009 through December 31, 2009 after which the original fee arrangement will
remain in effect. Management fees paid to Prism during the years ended June 30,
2009 and 2008 were $398,000 and $571,000, respectively.
The prior compensation agreement provided that the general partners will
receive annual base compensation of 1.5% of gross revenues, with a minimum
annual base compensation of $262,000, adjusted for inflation. From the minimum
annual base compensation, 80% was paid to Evon for its services as the managing
general partner and 20% was paid to Portsmouth as the other general partner.
Base annual compensation in excess of the minimum was payable in equal amounts
to Evon and Portsmouth. The maximum base annual compensation that could be
earned by the general partners was 1.5% of $40,000,000 of gross revenues. The
prior compensation agreement also provided for incentive compensation to the
general partners in a sum equal to 5.0% of the annual net operating income of
Justice, that is in excess of $7,000,000, payable in equal amounts to Evon and
Portsmouth.
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Intergroup Corp. was organized to buy develop operate rehabilitate and dispose of real property of various types and descriptions and to engage in such other business and investment activities as would benefit the company and its shareholders. The company was founded upon and remains committed to social responsibility. Such social responsibility was originally defined as providing decent and affordable housing to people without regard to race. Intergroup Corp. has a market cap of $23.54 million; its shares were traded at around $10.64 with and P/S ratio of 0.47. Intergroup Corp. had an annual average earning growth of 24% over the past 5 years.
Highlight of Business Operations:
As of June 30, 2009, the Company owned approximately 76% of the common sharesof Santa Fe Financial Corporation ("Santa Fe"), a public company (OTCBB: SFEF).
Santa Fe's revenue is primarily generated through its 68.8% owned subsidiary,
Portsmouth Square, Inc. ("Portsmouth"), a public company (OTCBB: PRSI).
InterGroup also directly owns approximately 11.7% of Portsmouth. Portsmouth
has a 50.0% limited partnership interest in Justice Investors, a California
limited partnership ("Justice" or the "Partnership") and serves as one of two
the general partners. The other general partner, Evon Corporation ("Evon"),
served as the managing general partner of Justice until December 1, 2008. As
discussed below, the Limited Partnership Agreement was amended, effective
December 1, 2008, to provide for a change in the respective roles of the
general partners. Pursuant to that amendment, Portsmouth became the Managing
General Partner of Justice while Evon assumed the role of Co-General Partner of
Justice. The financial statements of Justice are consolidated with those of the
Company. See Note 2 to the Consolidated Financial Statements.
On December 1, 2008, Portsmouth and Evon, as the two general partners of
Justice, entered into a 2008 Amendment to the Limited Partnership Agreement
(the "Amendment") that provides for a change in the respective roles of the
general partners. Pursuant to the Amendment, Portsmouth assumed the role of
Managing General Partner and Evon continued on as the Co-General Partner of
Justice. The Amendment was ratified by approximately 98% of the limited
partnership interests. The Amendment also provides that future amendments to
the Limited Partnership Agreement may be made only upon the consent of the
general partners and at least seventy five percent (75%) of the interests if
the limited partners. Consent of at least 75% of the interests of the limited
partners will also be required to remove a general partner pursuant to the
Amendment.
Concurrent with the Amendment to the Limited Partnership Agreement, a new
General Partner Compensation Agreement (the "Compensation Agreement") was
entered into on December 1, 2008, among Justice, Portsmouth and Evon to
terminate and supersede all prior compensation agreement for the general
partners. Pursuant to the Compensation Agreement, the general partners of
Justice will be entitled to receive an amount equal to 1.5% of the gross annual
revenues of the Partnership (as defined), less $75,000 to be used as a
contribution toward the cost of Justice engaging an asset manager. In no event
shall the annual compensation be less than a minimum base of approximately
$285,000, with eighty percent (80%) of that amount being allocated to
Portsmouth for its services as managing general partner and twenty percent
(20%) allocated to Evon as the co-general partner. Compensation earned by the
general partners in each calendar year in excess of the minimum base, will be
payable in equal fifty percent (50%) shares to Portsmouth and Evon.
Pursuant to the Franchise Agreement, the Partnership pays monthly royalty fees
for the first two years of three percent (3%) of the Hotel's gross room
revenue, as defined, for the preceding calendar month; the third year will be
four percent (4%) of the Hotel's gross room revenue; and the fourth year until
the end of the term will be five percent (5%) of the Hotel's gross room
revenue. Justice also pays a monthly program fee of four percent (4%) of the
Hotel's gross room revenue. The amount of the monthly program fee is subject to
change; however, the increase cannot exceed one percent (1%) of the Hotel gross
room revenue in any calendar year, and the cumulative increases in the monthly
fees will not exceed five percent (5%) of gross room revenue. The Partnership
also pays a monthly information technology recapture charge of 0.75% of the
Hotel's gross revenue. In this difficult environment, Hilton agreed to reduce
its information technology fees to 0.50% for the 2009 calendar year.
In February 2007, the Partnership entered into a management agreement with
Prism Hospitality ("Prism") to manage and operate the Hotel as its agent,
effective February 10, 2007. Prism is an experienced Hilton approved operator
of upscale and luxury hotels throughout the Americas. The agreement is
effective for a term of ten years, unless the agreement is extended as provided
in the agreement, and the Partnership has the right to terminate the agreement
upon ninety days written notice without further obligation. Under the
management agreement, the Partnership is to pay base management fees of 2.5% of
gross operating revenues for the fiscal year. However, 0.75% of the stated
management fee is due only if the partially adjusted net operating income for
the subject fiscal year exceeds the amount of a minimum Partnership's return
($7 million) for that fiscal year. Prism is also entitled to an incentive
management fee if certain milestones are accomplished. No incentive fees were
earned during the years ended June 30, 2009 and 2008. In support of the
Partnership's efforts to reduce costs in this difficult economic environment ,
Prism agreed to reduce its management fees by fifty percent from January 1,
2009 through December 31, 2009 after which the original fee arrangement will
remain in effect. Management fees paid to Prism during the years ended June 30,
2009 and 2008 were $398,000 and $571,000, respectively.
The prior compensation agreement provided that the general partners will
receive annual base compensation of 1.5% of gross revenues, with a minimum
annual base compensation of $262,000, adjusted for inflation. From the minimum
annual base compensation, 80% was paid to Evon for its services as the managing
general partner and 20% was paid to Portsmouth as the other general partner.
Base annual compensation in excess of the minimum was payable in equal amounts
to Evon and Portsmouth. The maximum base annual compensation that could be
earned by the general partners was 1.5% of $40,000,000 of gross revenues. The
prior compensation agreement also provided for incentive compensation to the
general partners in a sum equal to 5.0% of the annual net operating income of
Justice, that is in excess of $7,000,000, payable in equal amounts to Evon and
Portsmouth.
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