Company: BHM
Filing Date: 2025-04-07
Form Type: POS AM
Source: 0001104659-25-032524
Chunk: 156

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-04-07
Form: POS AM
Chunk 156
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 as a liability within other accrued liabilities on our consolidated balance sheet.

Other property revenues are recognized in the period earned.

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 the underlying collateral when determining if a loan investment is fully recoverable, we evaluate estimated 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