Company: BHM
Filing Date: 2025-07-08
Form Type: DRS
Source: 0001104659-25-066400
Chunk: 31

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-07-08
Form: DRS
Chunk 31
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 the United
States remained elevated throughout 2023 and 2024 and may continue to remain high in the future. While inflation has shown signs of moderating,
it remains uncertain whether substantial inflation in the United States will be sustained over an extended period of time or have a significant
effect on the United States or other economies. Rising inflation could have an adverse impact on our operating expenses as well as our
general and administrative expenses. For example, it is possible that the impact of the rate of inflation may not be adequately offset
by annual rent escalations or the resetting of rents from our renewal and re-leasing activities, which may adversely affect our business,
financial condition, results of operations, and cash flows. Compensation costs and professional service fees are also subject to the
impact of inflation and are expected to increase proportionately with increasing market prices for such services. Consequently, inflation
may increase our general and administrative expenses over time and may adversely impact our results of operations and cash flows.

While the Federal Reserve
held rates steady between July 2023 and September 2024, then reduced interest rates by 50-basis points in September 2024,
with another 25-basis point reduction in each of November 2024 and December 2024, there can be no assurances that interest
rates will not rise again. Our exposure to increases in interest rates in the short term is limited to our variable-rate borrowings.
As of March 31, 2025, we had interest rate caps and swaps which effectively limit our exposure to interest rate risk by providing
a ceiling on the underlying floating interest rate for $150.3 million of our floating rate debt. However, the effect of inflation on
interest rates could increase our financing costs over time, either through borrowings on floating-rate lines of credit or refinancing
of our existing borrowings that may incur higher interest expenses related to the issuance of new debt.

Additionally, inflationary
pricing may have a negative effect on the construction costs necessary to complete our development projects, including, but not limited
to, costs of construction materials, labor and services from third-party contractors and suppliers. Certain increases in the costs of
construction materials can often be managed in our development projects through either general budget contingencies built into our overall
construction costs estimates for each project or guaranteed maximum price construction contracts, which stipulate a maximum price for
certain construction costs and shift inflation risk to construction general contractors. However, no assurance can be given that our
budget contingencies would accurately account