Portsmouth Square Reports Improved Net Loss of $712,000 for Q1 2025

Portsmouth Square, Inc. reported a net loss of $712,000 for the three months ending March 31, 2025, a significant improvement compared to a net loss of $2,871,000 during the same period in 2024. The company's hotel operations generated total revenues of $12.2 million, reflecting a 13% increase from the previous year, driven primarily by a $1.5 million rise in room revenues. Operating income before interest, depreciation, and amortization reached $2.5 million, up from $1.5 million in the prior year. For the nine months ending March 31, 2025, Portsmouth reported a net loss of $6.6 million, slightly down from $7.0 million in the same period last year, attributed to increased room revenues and reduced operating expenses.

The company has undergone significant strategic developments, including the successful refinancing of its senior mortgage and mezzanine loans on March 28, 2025. The new senior mortgage loan amounts to $67 million, with a floating interest rate tied to the 30-day Secured Overnight Financing Rate (SOFR), capped at 4.50%. Concurrently, the mezzanine loan was modified to a fixed rate of 7.25% for a principal balance of $36.3 million. These refinancing efforts are expected to enhance the company's financial flexibility and address immediate liquidity needs.

Operationally, Portsmouth has seen improvements in key performance indicators. The average daily room rate increased by $9, and occupancy rates rose by 11% compared to the previous year. The hotel’s revenue per available room (RevPAR) also improved by $33. However, the company continues to face challenges in the San Francisco market, including high interest rates and reduced business travel demand, which have impacted overall performance. As of March 31, 2025, Portsmouth had cash and cash equivalents totaling $3 million, down from $3.5 million at the end of the previous fiscal year, while restricted cash increased significantly to $6.97 million.

Despite the positive developments, Portsmouth's management has expressed concerns regarding the company's ability to continue as a going concern due to ongoing market pressures and the need to maintain compliance with financial covenants. The company has outstanding obligations of $100.3 million under its senior mortgage and mezzanine loans, which had matured in January 2024. Although the recent refinancing has alleviated some immediate pressures, management acknowledges that the company must achieve forecasted cash flows and secure additional financing to meet its obligations over the next twelve months.

Looking ahead, Portsmouth Square, Inc. is focused on managing operational efficiencies and exploring potential equity capital raises to bolster liquidity. The company remains committed to enhancing its competitive position through property improvements and strategic cost control measures. However, the ongoing economic challenges in the hospitality sector, particularly in San Francisco, continue to pose risks to the company's financial stability and operational performance.