Company: BHM
Filing Date: 2025-03-20
Form Type: 424B3
Source: 0001104659-25-026164
Chunk: 183

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-20
Form: 424B3
Chunk 183
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’s provision for credit losses.

The
Company previously classified its preferred equity investments as held-to-maturity debt securities as the investments met the criteria
of a security under ASC 320 Investments – Debt Securities. As of December 31, 2024, the Company
does not have the positive intent to hold all the securities to maturity. As such, the Company has reclassified all its previously held-to-maturity
debt securities to AFS debt securities.

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Table of Contents

For
investments that do not meet the criteria of a security under ASC 320 Investments – Debt Securities,
the Company has concluded that the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate.
The Company recognizes interest income on its notes receivable on the accrual method unless a significant uncertainty of collection exists.
If a significant uncertainty exists, interest income is recognized as collected. Costs incurred to originate its notes receivable are
deferred and amortized using the effective interest method over the term of the related note receivable. The Company evaluates the collectability
of each loan investment and estimates a provision for credit loss, as applicable. Refer to the CECL section of this Note for further information
regarding CECL and the Company’s provision for credit losses.

Fair Value of Financial
Instruments

As of December 31, 2024 and December 31, 2023, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, due to and due from affiliates, accounts payable, other accrued liabilities, and distributions payable approximate their fair value based on their highly-liquid nature and/or short-term maturities. The carrying values of notes receivable approximate fair value because stated interest rate terms are consistent with interest rate terms on new deals with similar leverage and risk profiles. The fair values of notes receivable are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations. The Company measures the fair value of its AFS debt securities utilizing observable and unobservable market inputs. The observable market inputs include recent transactions and broker quotes (“market data”). However, given the implied price dispersion amongst the market data, the fair value determination for the AFS debt securities has also utilized significant unobservable inputs in discounted cash flow models based on recent performance of the collateral, the underlying collateral characteristics, industry trends as well as expectations of macroeconomic events. At each measurement date, the Company considers both the observable and un