Company: BHM
Filing Date: 2025-03-20
Form Type: 424B3
Source: 0001104659-25-026164
Chunk: 48

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-20
Form: 424B3
Chunk 48
---
 may continue to remain high in the future. While inflation has shown signs of moderating, it remains uncertain whether substantial inflation in the United States will be sustained over an extended period of time or have a significant effect on the United States or other economies. Rising inflation could have an adverse impact on our operating expenses as well as our general and administrative expenses. For example, it is possible that the impact of the rate of inflation may not be adequately offset by annual rent escalations or the resetting of rents from our renewal and re-leasing activities,

12

Table of Contents

which may adversely
affect our business, financial condition, results of operations, and cash flows. Compensation costs and professional service fees are
also subject to the impact of inflation and are expected to increase proportionately with increasing market prices for such services.
Consequently, inflation may increase our general and administrative expenses over time and may adversely impact our results of operations
and cash flows.

While
the Federal Reserve has held rates steady between July 2023 and September 2024 and reduced interest rates by 50-basis points in September
2024, 25-basis points in November 2024 and 25-basis points in December 2024, there can be no assurances that interest rates will not rise
again. Our exposure to increases in interest rates in the short term is limited to our variable-rate borrowings. As of December 31, 2024,
we had interest rate caps and swaps which effectively limit our exposure to interest rate risk by providing a ceiling on the underlying
floating interest rate for $155.6 million of our floating rate debt. However, the effect of inflation on interest rates could increase
our financing costs over time, either through borrowings on floating-rate lines of credit or refinancing of our existing borrowings that
may incur higher interest expenses related to the issuance of new debt.

Additionally,
inflationary pricing may have a negative effect on the construction costs necessary to complete our development projects, including, but
not limited to, costs of construction materials, labor and services from third-party contractors and suppliers. Certain increases in the
costs of construction materials can often be managed in our development projects through either general budget contingencies built into
our overall construction costs estimates for each project or guaranteed maximum price construction contracts, which stipulate a maximum
price for certain construction costs and shift inflation risk to construction general contractors. However, no assurance can be given
that our budget contingencies would accurately account for potential construction cost increases given the current