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FAIR VALUE MEASUREMENTS
 12 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 7 - FAIR VALUE MEASUREMENTS

 

The carrying values of the Company’s financial instruments that are not measured at fair value on a recurring basis approximate fair value due to their short maturities (including 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 (such as other notes payable and mortgage notes payable). Management evaluates their instruments in accordance with ASC 820 and has determined that there are no material differences between the carrying amounts and estimated fair values of these financial instruments as of June 30, 2025 and 2024. There were no transfers between Levels 1, 2, and 3 during years ended June 30, 2025 and 2024.

 

 

The assets measured at fair value on a recurring basis are as follows:

 

As of June 30, 2025  Level 1 
Assets:     
Investment in marketable securities:     
REITs and real estate companies  $966,000 
Technology   3,000 
Total  $969,000 

 

As of June 30, 2024  Level 1 
Assets:     
Investment in marketable securities:     
REITs and real estate companies  $3,358,000 
Communication services   1,994,000 
T-Notes   933,000 
Energy   303,000 
Financial services   269,000 
Healthcare   179,000 
Utilities   163,000 
Industrial   159,000 
Basic materials   75,000 
Technology   21,000 
Total  $7,454,000 

 

The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date (quoted prices in active markets; Level 1 inputs).

 

On March 31, 2025, Portsmouth, through its affiliate Justice Operating Company, LLC, entered into an interest rate cap agreement (the “Interest Rate Cap”) with Goldman Sachs Bank USA as required under the March 28, 2025 senior Loan Agreement, intended to economically limit the Company’s exposure to increases in Term SOFR. The Interest Rate Cap caps Term SOFR at 4.50% and has a notional amount equal to or greater than the outstanding principal balance of the loan. The Company paid a premium of approximately $136,000 for the cap at inception. Changes in the fair value of the Interest Rate Cap are recorded in Other Income (Expense) within the consolidated statements of operations. At inception the cap was recorded at its fair value, which equaled the premium paid; subsequent changes in fair value are recognized in earnings in each reporting period.

 

The Interest Rate Cap is not designated as a hedging instrument under ASC 815 and is therefore accounted for at fair value, with changes in fair value recognized in earnings each reporting period. The cap is classified as a Level 2 financial instrument under the fair value hierarchy established by ASC 820, as its valuation is based on observable market inputs including interest rate curves and volatility assumptions obtained from a third-party pricing service. The Interest Rate Cap is associated with the Hotel senior mortgage and is held at the Portsmouth subsidiary level.

 

The following table summarizes the fair value of the derivative instrument as of June 30, 2025:

 

Derivative instruments measured at fair value on a recurring basis

 

Derivative Type  Notional Amount  

Balance Sheet

Classification

  Fair Value  

Fair Value

Hierarchy

  
Interest Rate  $67,000,000   Other Assets  $52,000(a)  Level 2  

 

(a)Fair value was not material as of June 30, 2025; the asset is included within Other Assets on the consolidated balance sheets. The Company had no derivative liabilities outstanding as of June 30, 2025.

 

There have been no material changes to the Company’s fair value measurement methodologies or classification of instruments during the periods presented.