Company: BHM
Filing Date: 2025-10-08
Form Type: S-11
Source: 0001104659-25-097905
Chunk: 159

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-10-08
Form: S-11
Chunk 159
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 CECL and our provision for credit losses.

Prior to the fourth quarter
2024, we 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 June 30, 2025, 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 will evaluate the characteristics and the
facts and circumstances to determine if loan accounting treatment is appropriate. If loan accounting treatment is deemed 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.

In circumstances where we
do have significant influence in the investment, however we determine that the investment does not meet the criterial of a security under
ASC 320 Investments – Debt Securities and that loan accounting treatment is not appropriate, we generally account
for these investments under the equity method. The equity method of accounting requires these investments to be initially recorded at
cost and subsequently increased (decreased) for our share of net income (loss), and increased (decreased) for contributions (distributions).
The proportionate share of the results of operations of these investments is recognized on a one-quarter lag and is recorded in our earnings
or losses.

Income Taxes

For the three and six months
ended June 30, 2025, we recorded current income tax expense of approximately $0.5 million and $0.8 million, respectively, and
state income tax expense of $0.1 million and $0.2 million, respectively, related to income earned in certain taxable REIT subsidiaries.
We record these amounts in income tax expense on our consolidated statements of operations and comprehensive income. No income
tax expense was recorded in 2024.

Interim Financial Information

Our accompanying unaudited
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the Unites States
of America (“GAAP”) for interim financial reporting, and the instructions to Form 10-Q and Article 10-1 of Regulation
S-X. Accordingly