Company: BHM
Filing Date: 2025-10-08
Form Type: S-11
Source: 0001104659-25-097905
Chunk: 340

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-10-08
Form: S-11
Chunk 340
---
 to the extent described below, if a loan is secured by real
property and other property and the highest principal amount of a loan outstanding during a taxable year exceeds the fair market value
of the real property securing the loan as of the date the REIT agreed to originate or acquire the loan (or, if there has been a “significant
modification” to the loan since its origination or acquisition by the REIT, then as of the date of that “significant modification”),
a portion of the interest income from such loan will not be qualifying income for purposes of the 75% gross income test, but will be qualifying
income for purposes of the 95% gross income test. The portion of the interest income that will not be qualifying income for purposes of
the 75% gross income test will be equal to the interest income attributable to the portion of the principal amount of the loan that is
not secured by real property, that is, the amount by which the loan exceeds the value of the real estate that is security for the loan.
However, in the case of a loan that is secured by both real property and personal property, if the fair market value of such personal
property does not exceed 15% of the total fair market value of all property securing the loan, then the personal property securing the
loan will be treated as real property for purposes of determining the interest on such loan is qualifying income for purposes of the 75%
gross income test.

<div align='center'>158</div>

Mezzanine loans are loans
secured by equity interests in an entity that directly or indirectly owns real property, rather than by a direct mortgage of the real
property. IRS Revenue Procedure 2003-65 provides a safe harbor pursuant to which a mezzanine loan, if it meets each of the requirements
contained in the Revenue Procedure, will be treated by the IRS as a real estate asset for purposes of the REIT asset tests described below,
and interest derived from it will be treated as qualifying income for both the 75% and 95% gross income test. Although the Revenue Procedure
provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. Moreover, we anticipate that
any mezzanine loans we may originate or acquire may not meet all of the requirements for reliance on this safe harbor. To the extent that
any mezzanine loans that we originate do not qualify for the safe harbor described above, the interest income from the loans will be qualifying
income