Company: BHM
Filing Date: 2025-07-08
Form Type: DRS
Source: 0001104659-25-066400
Chunk: 157

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-07-08
Form: DRS
Chunk 157
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 that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

In November 2024, the
FASB issued Accounting Standards Update No. 2024-03 “Disaggregation of Income Statement Expenses (Subtopic 220-40)” (“ASU
2024-03”). The amendments in ASU 2024-03 require additional disclosure of specified information about certain costs and expenses
within the notes to the financial statements. The amendments in ASU 2024-03 are effective for us for annual reporting periods beginning
after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact
of adopting ASU 2024-03 on our financial disclosures.

Current Expected Credit Losses (CECL)

Notes Receivable

We estimate provision for
credit losses on our loan investments (notes receivable) under CECL. This method is based on expected credit losses for the life of the
investment as of each balance sheet date. The method for calculating the estimate of expected credit loss considers historical experience
and current conditions for similar loans and reasonable and supportable forecasts about the future.

We estimate our provision
for credit losses using a collective (pool) approach for investments with similar risk characteristics, such as collateral and duration
of investment. In measuring the CECL provision for investments that share similar characteristics, we apply a default rate to the investments
for the remaining loan investment hold period. As we do not have a significant historical population of loss data on our loan investments,
our default rate utilized for CECL is based on an external historical loss rate for commercial real estate loans.

In addition to analyzing
investments as a pool, we perform an individual investment assessment of expected credit losses. 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 loan investment is not considered fully recoverable and a provision for credit loss is recorded.

In estimating the value of