Company: BHM
Filing Date: 2025-11-18
Form Type: S-11/A
Source: 0001104659-25-113674
Chunk: 166

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-11-18
Form: S-11/A
Chunk 166
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 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)

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. We first evaluate whether we intend to sell, or it is more likely than not that we
will be required to sell, the AFS debt security before recovery of our amortized cost basis. If either criteria regarding intent or requirement
to sell is met, the amortized cost basis of the security is written down to its fair value through income. If these criteria are not
met, we evaluate whether the decline in fair value of the AFS debt security has resulted from 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 preferred equity investment is not considered fully recoverable. As a result,
a provision for credit loss is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any remaining
noncredit loss component of unrealized loss would be recognized as a component of other comprehensive income.

Changes in the provision
for credit loss are recorded as a provision for (or recovery of) credit loss expense. Losses are charged against the allowance when we
believe the non-collectability of an AFS debt security is confirmed or when either