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FAIR VALUE MEASUREMENTS
 9 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 7 - FAIR VALUE MEASUREMENTS

 

The carrying values of the Company’s financial instruments not required to be carried at fair value on a recurring basis approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).

 

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

 

As of  March 31, 2025   June 30, 2024 
   Total - Level 1   Total - Level 1 
Assets:        
Investment in marketable securities:          
REITs and real estate companies  $749,000   $3,358,000 
Technology   2,000    21,000 
T-Notes   -    933,000 
Financial services   -    269,000 
Basic material   -    75,000 
Healthcare   -    179,000 
Communication services   -    1,994,000 
Industrial   -    159,000 
Energy   -    303,000 
Utilities   -    163,000 
Total  $751,000   $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.

 

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. The agreement was executed in connection with a variable-rate mortgage loan and is 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 statement of operations.

 

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 following table summarizes the fair value of the derivative instrument as of March 31, 2025:

 

Derivative Type  Notional Amount   Balance Sheet Classification  Fair Value  Fair Value Hierarchy 
Interest Rate  $67,000,000   Other Assets  $136,000  Level 2