Company: BHM
Filing Date: 2025-04-09
Form Type: 424B3
Source: 0001104659-25-033384
Chunk: 155

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-04-09
Form: 424B3
Chunk 155
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 December 31, 2024 and 2023, we had recorded
impairments related to held for sale units of $3.3 million and $1.3 million, respectively, which is included in gain on sale and (impairment)
of real estate investments, net in our consolidated statements of operations and comprehensive income.

Revenue Recognition

We recognize rental revenue
on a straight-line basis over the terms of the rental agreements and in accordance with ASC Topic 842 Leases. Rental revenue is
recognized on an accrual basis and when the collectability of the amounts due from tenants is deemed probable. Rental revenue is included
within rental and other property revenues on our consolidated statements of operations and comprehensive income. Amounts received in
advance are recorded as a liability within other accrued liabilities on our consolidated balance sheet.

Other property revenues are recognized in the period earned.

Current Expected Credit Losses (CECL)

Notes Receivable

We estimate provision for
credit losses on our loan investments (notes receivable) under CECL. This method is based on expected credit losses for the life of the
investment as of each balance sheet date. The method for calculating the estimate of expected credit loss considers historical experience
and current conditions for similar loans and reasonable and supportable forecasts about the future.

We estimate our provision
for credit losses using a collective (pool) approach for investments with similar risk characteristics, such as collateral and duration
of investment. In measuring the CECL provision for investments that share similar characteristics, we apply a default rate to the investments
for the remaining loan investment hold period. As we do not have a significant historical population of loss data on our loan investments,
our default rate utilized for CECL is based on an external historical loss rate for commercial real estate loans.

In addition to analyzing
investments as a pool, we perform an individual investment assessment of expected 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 loan investment is not considered fully recoverable and a provision for credit loss is recorded.

In estimating the value of the underlying collateral when determining if a loan investment is fully recoverable, we evaluate estimated