MORTGAGE NOTES PAYABLE AND MEZZANINE FINANCING

9 Months Ended

Mar. 31, 2026

MORTGAGE NOTES PAYABLE AND MEZZANINE FINANCING

NOTE 10 – MORTGAGE NOTES PAYABLE AND MEZZANINE FINANCING

See Note 1 (Going Concern) for management’s evaluation under ASC 205-40 and Note 9 – Related Party and Other Financing Transactions for the related-party credit facility with The InterGroup Corporation.

The Company’s Annual Report on Form 10-K for the year ended June 30, 2025 and the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2025 include a detailed description of the Company’s prior senior mortgage and mezzanine loan, related forbearance agreements and default notices, and the refinancing completed on March 28, 2025. There were no material changes to the terms of the Company’s senior mortgage and mezzanine financing arrangements during the quarter ended March 31, 2026.

Senior Mortgage and Mezzanine Financing (Current Facilities)

On March 28, 2025, the Company refinanced the senior mortgage and amended and restated the mezzanine loan, fully retiring the prior facilities.

	●	Senior Mortgage (Prime Finance): The Company, through Justice Operating Company, LLC (“Operating”), entered into a $67,000,000 Mortgage Loan Agreement with Prime Finance (“Prime”). The loan bears interest at Term SOFR + 4.75% (with a Term SOFR cap of 4.50%) and is interest-only through maturity. The initial maturity date is April 9, 2027, with three one-year extension options subject to satisfaction of specified conditions. The loan is secured by the Hilton San Francisco Financial District (the “Hotel”). An interest rate cap was purchased at inception (premium approximately $136,000). See Note 6 for information regarding the interest rate cap.
	●	Mezzanine Loan (CRED REIT Holdco LLC): Operating’s mezzanine lender executed an amended and restated mezzanine loan agreement in the principal amount of $36,300,000, bearing interest at a fixed rate of 7.25%, with maturity and potential extension terms matching the senior mortgage. The mezzanine loan is secured by the membership interest in Operating.
	●	Guaranties and covenants: The loan agreements include customary covenants, representations and warranties, and events of default. Portsmouth provides a limited guaranty in connection with both facilities.
	●	Status: As of March 31, 2026, the Company was current on required debt service and in compliance applicable covenants.

Cash-Management/Lockbox and debt service coverage ratio (“DSCR”) Provisions

The loan agreements include a lender-controlled cash-management/lockbox arrangement pursuant to which Hotel receipts are deposited into controlled accounts and disbursed in accordance with approved budgets and waterfall provisions. Distributions are subject to DSCR and other conditions specified in the Loan Agreements. These cash-management provisions remain in effect under the current facilities.

Additional Information

The Company’s Annual Report on Form 10-K for the year ended June 30, 2025 includes additional information regarding the terms of these arrangements.