Company: BHM
Filing Date: 2025-08-13
Form Type: 424B3
Source: 0001104659-25-077615
Chunk: 77

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-08-13
Form: 424B3
Chunk 77
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 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. The Company first evaluates whether it intends to sell,
or it is more likely than not that it will be required to sell, the AFS debt security before recovery of its amortized cost basis. If
either criteria regarding intent or requirement to sell is met, the amortized cost basis of the security is written down to its fair value
through income. If these criteria are not met, the Company evaluates 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 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.

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 the Company believes 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.

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 reduced interest rates by 50-basis
points in September 2024, with another 25-basis point reduction in each of November and December 2024, and have held rates steady during
the first half of 2025, 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