Company: BHM
Filing Date: 2025-11-18
Form Type: S-11/A
Source: 0001104659-25-113674
Chunk: 73

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-11-18
Form: S-11/A
Chunk 73
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 loan. The principal balance of the mortgage loan will not be reduced (except in the
case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest-only period,
we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum or “balloon”
payment at maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase
our risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount of our scheduled
payments also may increase at a time of rising interest rates. Increased payments and substantial principal or balloon maturity payments
will reduce the funds available for distribution to our stockholders because cash otherwise available for distribution will be required
to pay principal and interest associated with these mortgage loans.

To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective, may reduce the overall returns on your investment and may expose us to the credit risk of counterparties.

To the extent consistent with
maintaining our qualification as a REIT, we may use derivative financial instruments to hedge exposures to interest rate fluctuations
on loans secured by our assets and investments in collateralized mortgage-backed securities. Derivative instruments may include interest
rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual
hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from time
to time.

To the extent that we use
derivative financial instruments to hedge against interest rate fluctuations, we will be exposed to financing, basis risk and legal enforceability
risks. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair
value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index
upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making
the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty
will breach the terms of, or fail to perform its obligations under, the derivative contract. If we are unable to manage these risks effectively,
our results of operations, financial condition and ability to make distributions to you will be adversely affected.

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