Company: BHM
Filing Date: 2025-03-20
Form Type: 424B3
Source: 0001104659-25-026164
Chunk: 166

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-20
Form: 424B3
Chunk 166
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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.

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. If a significant
uncertainty exists, interest income is recognized as collected. Costs incurred to originate our notes receivable are deferred and amortized
using the effective interest method over the term of the related note receivable. We evaluate the collectability of each loan investment
and estimate a provision for credit loss, as applicable.

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Table of Contents

Real Estate Assets Real Estate Purchase Price Allocations Upon acquisition, we evaluate our acquired residential properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Purchases of residential properties are treated as asset acquisitions and, as such, are recorded at their purchase price, including acquisition costs, which is allocated to land and building based upon their relative fair values at the date of acquisition. Acquisition costs typically include legal fees, broker commissions and title fees, as well as other closing costs. In making estimates of fair values for purposes of allocating the purchase price of acquired properties, we utilize various sources including our own market knowledge obtained from historical transactions, published market data, and independent appraisers. In this regard, we also utilize information obtained from county tax assessment records to assist in the determination of the fair value of the land and building. Intangible assets include the value of in-place leases which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would