Company: BHM
Filing Date: 2025-03-20
Form Type: 424B3
Source: 0001104659-25-026164
Chunk: 193

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-20
Form: 424B3
Chunk 193
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 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 loan investment is not considered fully recoverable
and a provision for credit loss is recorded.

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Table of Contents

In
estimating the value of the underlying collateral when determining if a loan investment is fully recoverable, the Company evaluates estimated
future cash flows to be generated from the collateral underlying the investment. The inputs and assumptions utilized to estimate the future
cash flows of the underlying collateral are based upon the Company’s evaluation of the operating results, economy, market trends,
and other factors, including judgments regarding costs to complete any construction activities, lease-up and occupancy rates, rental rates,
and capitalization rates utilized to estimate the projected cash flows at the disposition. The Company may also obtain a third-party valuation
which may value the collateral through an “as-is” or “stabilized value” methodology. If upon completion of the
valuation the fair value of the underlying collateral securing the investment 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 the 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