Company: BHM
Filing Date: 2025-07-08
Form Type: DRS
Source: 0001104659-25-066400
Chunk: 79

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-07-08
Form: DRS
Chunk 79
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 an internalization of our management functions; and |

| · | The possibility that the competing demands for the time of our Manager, its affiliates and our officers may result in them spending insufficient time on our business, which may result in our missing investment opportunities or having less efficient operations, which could reduce our profitability and result in lower distributions to you. |

The Incentive Fee we pay our Manager may induce it to make riskier investments, which could adversely affect our financial condition, results of operations and the trading price of our stock.

The Incentive Fee payable
by us to our Manager will be determined based on AFFO, which may create an incentive for our Manager to make investments that are risky
or more speculative than would otherwise be in our best interests. In evaluating investments and other management strategies, the incentive
fee structure may lead our Manager to place undue emphasis on the maximization of AFFO at the expense of other criteria, such as preservation
of capital, in order to increase the Incentive Fee. Investments with higher yields generally have higher risk of loss than investments
with lower yields, and could result in higher investment losses, particularly during cyclical economic downturns, which could adversely
affect the trading price of our stock.

We may be obligated to pay our Manager quarterly Incentive Fees even if we incur a net loss during a particular quarter, and our Manager will receive a Base Management Fee regardless of the performance of our portfolio.

Our Manager will be entitled
to a quarterly Incentive Fee based on our pre-Incentive Fee AFFO, which will reward our Manager if our quarterly AFFO exceeds an 8% hurdle
on our adjusted stockholders’ equity. Our AFFO for a particular quarter will exclude the effect of any unrealized gains, losses
or other items during that quarter that do not affect realized net income, even if these adjustments result in a net loss on our statement
of operations for that quarter. Thus, we may be required to pay our Manager an Incentive Fee for a fiscal quarter even if we incur a net
loss for that quarter as determined in accordance with accounting principles generally accepted in the Unites States of America (“GAAP”).
In addition, our Manager will be entitled to receive a Base Management Fee based on a percentage of stockholders’ equity, regardless
of our performance or its performance in managing our business. Our Manager will also receive reimbursement of expenses and fees incurred
directly on our behalf regardless of its or our performance. As a result, even