Company: BHM
Filing Date: 2025-04-09
Form Type: 424B3
Source: 0001104659-25-033384
Chunk: 156

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-04-09
Form: 424B3
Chunk 156
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 future cash flows to be generated from the collateral underlying the investment. The inputs and assumptions utilized to estimate the future cash flows of the underlying collateral are based upon our evaluation of the operating results, economy, market trends, and other factors, including judgments regarding costs to complete any construction activities, lease-up and occupancy rates, rental rates, and capitalization rates utilized to estimate the projected cash flows at the disposition. We may also obtain a third-party valuation which may value the collateral through an “as-is” or “stabilized value” methodology. If upon completion of the valuation the fair value of the underlying collateral securing the investment is less than the net carrying value, we record a provision for credit loss on that loan investment. As the investment no longer displays the characteristics that are similar to those of the pool of loan investments, the investment is removed from the CECL collective (pool) analysis described above.

Preferred Equity Investments

We perform an individual
assessment of expected credit losses for our preferred equity investments, which are accounted for as AFS debt securities, that have
an unrealized loss recorded at the reporting date. If it is determined that the borrower is experiencing financial difficulty, or a foreclosure
is probable, or we expect repayment through the sale of the collateral, we calculate expected credit losses based on the value of the
underlying collateral as of the reporting date. During this review process, if we determine that it is probable that we will not be able
to collect all amounts due for both principal and interest according to the contractual terms of an investment, that preferred equity
investment is not considered fully recoverable and a provision for credit loss is recorded.

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New Accounting Pronouncements

See Note 2, “Basis
of Presentation and Summary of Significant Accounting Policies,” to our Notes to the Consolidated Financial Statements appearing
in our Annual Report on Form 10-K for the year ended December 31, 2024, which is incorporated herein by reference, for a description
of accounting pronouncements. We do not believe these new pronouncements will have a significant impact on our Consolidated Financial
Statements, cash flows or results of operations.

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OUR INDUSTRY AND MARKET OPPORTUNITY</div>

Market and Investment Opportunity

The residential rental industry
has historically been more resilient to economic downturns than other commercial real estate sectors and is currently benefiting from
significant industry tailwinds that began during the COVID-19 pandemic. Rental market fundamentals are strong