Company: BHM
Filing Date: 2025-10-08
Form Type: S-11
Source: 0001104659-25-097905
Chunk: 161

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-10-08
Form: S-11
Chunk 161
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 amortized cost basis of the security is written down to its fair value through income. If these criteria are not met,
we evaluate whether the decline in fair value of the AFS debt security has resulted from credit losses. If it is determined that
the borrower is experiencing financial difficulty, or a foreclosure is probable, or we expect repayment through the sale of the collateral,
we calculate expected credit losses based on the value of the underlying collateral as of the reporting date. During this review process,
if we determine that it is probable that we will not be able to collect all amounts due for both principal and interest according to the
contractual terms of an investment, that preferred equity investment is not considered fully recoverable and a provision for credit loss
is recorded.

Changes in the provision
for credit loss are recorded as a provision for (or recovery of) credit loss expense. Losses are charged against the allowance when we
believe the non-collectability of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to
sell is met. Accrued interest receivable on AFS debt securities is excluded from the estimate of credit losses.

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OUR INDUSTRY AND MARKET OPPORTUNITY</div>

Market and Investment Opportunity

The residential rental industry
has historically been more resilient to economic downturns than other commercial real estate sectors and is currently benefiting from
significant industry tailwinds that began during the COVID-19 pandemic. Rental market fundamentals are strong and demographic trends support
further strengthening, particularly from rental-biased and debt-burdened millennials now reaching peak household-formation and homeownership
age. We believe that a continued upswing in the propensity to rent, coupled with the limited and depleting supply for the middle-income
range, signals significant opportunity. Specifically:

| · | Renting currently represents a significant cost saving to homeownership, and the recent increases in both housing prices and mortgage rates have exacerbated the difference. The median cost to rent versus owning a home is near the widest gap on record, reaching approximately $1,300 per month, with only 27% of United States households able to qualify for a standard Freddie Mac loan on a median priced home. (Source: Marcus & Millichap, 2025 Multifamily Investment Outlook.) |
| · | Favorable demographic trends should drive demand for residential rental product. The aging of the millennial cohort into their prime household formation years and desire for more space combined with the