Company: BHM
Filing Date: 2025-03-20
Form Type: 424B3
Source: 0001104659-25-026164
Chunk: 84

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-20
Form: 424B3
Chunk 84
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Table of Contents

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.

Complying with REIT requirements may limit our ability to hedge risk effectively.

We
must satisfy two gross income tests annually to maintain our qualification as a REIT. First, at least 75% of our gross income for each
taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property
or mortgages on real property or qualified temporary investment income (the “75% Gross Income Test”). Second, at least 95%
of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% Gross Income Test,
other types of interest and dividends, gain from the sale or disposition of shares or securities, or any combination of these (the “95%
Gross Income Test”).

These
and other REIT provisions of the Code may limit our ability to hedge