Company: BHM
Filing Date: 2025-05-09
Form Type: 424B3
Source: 0001104659-25-046667
Chunk: 8

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-05-09
Form: 424B3
Chunk 8
---
 is less than the net carrying value, the Company records
a provision for credit loss on that loan investment. As the investment no longer displays characteristics that are similar to those of
the pool of loan investments, the investment is removed from the CECL collective (pool) analysis described above.

Preferred Equity Investments

The
Company performs an individual assessment of expected credit losses for its preferred equity investments, which are accounted for as AFS
debt securities, that have an unrealized loss recorded at the reporting date. If it is determined that the borrower is experiencing financial
difficulty, or a foreclosure is probable, or the Company expects repayment through the sale of the collateral, the Company calculates
expected credit losses based on the value of the underlying collateral as of the reporting date. During this review process, if the Company
determines that it is probable that it 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.

Significant Risks and Uncertainties

Uncertainty Due to Economic Volatility

The
Company’s results of operations in the future may be directly or indirectly affected by uncertainties such as the effects of inflation
and related volatility in the market. As inflation accelerated rapidly in the first half of 2023, the Federal Reserve increased interest
rates a total of four times during 2023 to curb the effects of rising inflation. While the Federal Reserve held rates steady between July
2023 and September 2024, then reduced interest rates by 50-basis points in September 2024, with another 25-basis point reduction in each
of November and December 2024, there can be no assurances that interest rates will not rise again, and the Company’s operating costs,
including utilities and payroll, may increase as a result of increases in inflation. Rising interest rates cause uncertainty in credit
and capital markets which could have material and adverse effects on the Company’s financial condition, results of operations and
cash flows. In addition, any tariffs imposed by the current administration or other countries may cause further inflationary pressures
in the economy, uncertainty and volatility of debt and equity markets, and a slowdown in the U.S. and global economies. The announced
tariffs are likely to increase construction costs and further reduce already constrained new supply starts, which could adversely impact
the timing of actual completion and/or stabilization of build - to - rent communities, including potential delays