Company: BHM
Filing Date: 2025-03-28
Form Type: POS AM
Source: 0001104659-25-029225
Chunk: 154

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-28
Form: POS AM
Chunk 154
---
 rights in
the entity. Substantive participating rights (whether granted by contract or law) provide for the ability to effectively participate
in significant decisions of the entity that would be expected to be made in the ordinary course of business.

We analyze each investment
that involves real estate acquisition, development, and construction to consider whether the investment qualifies as an investment in
a real estate acquisition, development, and construction arrangement. We have evaluated our real estate investments as required by ASC
310-10 Receivables and concluded that no investments are considered an investment in a real estate acquisition, development, or
construction arrangement. As such, we next evaluate if these investments are considered a security under ASC 320 Investments – Debt Securities.

For investments that meet
the criteria of a security under ASC 320 Investments – Debt Securities, we classify each investment as an available-for-sale
(“AFS”) debt security as we do not have the positive intent to hold all investments to maturity. We account for these investments
as preferred equity investments in our consolidated balance sheets, and we earn a fixed return on these investments which is included
within income from preferred equity investments in our consolidated statements of operations and comprehensive income. AFS debt securities
are carried at fair value in our consolidated balance sheets, and any unrealized gains or losses on AFS debt securities are reported
as a component of accumulated other comprehensive income in our consolidated balance sheets, and as a component of other comprehensive
income in our consolidated statements of operations and comprehensive income. We evaluate the collectability of each preferred equity
investment and estimate a provision for credit loss, as applicable. Refer to the Current Expected Credit Losses (“CECL”)
section below for further information regarding CECL and our provision for credit losses.

<div align='center'>77</div>

We previously classified
our preferred equity investments as held-to-maturity debt securities as the investments met the criteria of a security under ASC 320
Investments – Debt Securities. As of December 31, 2024, we do not have the positive intent to hold all the securities
to maturity. As such, we have reclassified all our previously held-to-maturity debt securities to AFS debt securities.

For investments that do
not meet the criteria of a security under ASC 320 Investments – Debt Securities, we have concluded that the characteristics
and the facts and circumstances indicate that loan accounting treatment is appropriate. We recognize interest income on our notes receivable
on the accrual method unless a significant uncertainty of collection exists.