Bluerock Homes Trust, Inc. 10-Q

Item 1. Financial Statements BLUEROCK HOMES TRUST, INC. COMBINED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Unaudited) ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2023 2022 ASSETS ​ ​ Net Real Estate Investments ​ ​ Land ​ $ 68,913 ​ $ 69,369 Buildings and improvements ​ 414,112 ​ 412,463 Furniture, fixtures and equipment ​ 12,630 ​ 8,159 Total Gross Real Estate Investments ​ 495,655 ​ 489,991 Accumulated depreciation ​ ( 29,754 ) ​ ( 17,865 ) Total Net Real Estate Investments ​ 465,901 ​ 472,126 Cash and cash equivalents ​ 89,435 ​ 78,426 Restricted cash ​ 6,148 ​ 4,136 Accounts receivable, prepaids and other assets, net ​ 23,931 ​ 17,916 Preferred equity investments in unconsolidated real estate joint ventures, net ​ 85,259 ​ 86,289 TOTAL ASSETS ​ $ 670,674 ​ $ 658,893 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND EQUITY ​ ​ ​ ​ Mortgages payable ​ $ 97,075 ​ $ 98,191 Revolving credit facilities ​ 70,000 ​ 55,000 Accounts payable ​ 921 ​ 1,751 Other accrued liabilities ​ 11,041 ​ 9,752 Due to affiliates ​ 2,575 ​ 2,211 Distributions payable ​ ​ 12 ​ ​ — Total Liabilities ​ 181,624 ​ 166,905 6.0 % Series A Redeemable Preferred Stock, liquidation preference $ 25.00 per share, 30,000,000 shares authorized; 152,222 and no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively ​ ​ 3,417 ​ ​ — Equity ​ ​ ​ ​ Stockholders’ Equity ​ ​ ​ ​ Preferred stock, $ 0.01 par value, 220,000,000 shares authorized; no shares issued and outstanding as of September 30, 2023 and December 31, 2022 ​ ​ — ​ — Common stock - Class A, $ 0.01 par value, 562,500,000 shares authorized; 3,868,697 and 3,835,013 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively ​ ​ 39 ​ 38 Common stock - Class C, $ 0.01 par value, 187,500,000 shares authorized; 8,489 shares issued and outstanding as of September 30, 2023 and December 31, 2022 ​ ​ — ​ — Additional paid-in-capital ​ ​ 124,657 ​ ​ 126,623 Retained earnings ​ ​ 30,382 ​ ​ 33,325 Total Stockholders’ Equity ​ ​ 155,078 ​ ​ 159,986 Noncontrolling Interests ​ ​ ​ ​ ​ ​ Operating partnership units ​ ​ 314,287 ​ ​ 307,825 Partially owned properties ​ ​ 16,268 ​ ​ 24,177 Total Noncontrolling Interests ​ ​ 330,555 ​ ​ 332,002 Total Equity ​ ​ 485,633 ​ ​ 491,988 TOTAL LIABILITIES AND EQUITY ​ $ 670,674 ​ $ 658,893 ​ See Notes to Combined Consolidated Financial Statements 3 Table of Contents BLUEROCK HOMES TRUST, INC. COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, (1) ​ September 30, (1) ​ 2023 2022 2023 2022 Revenues ​ ​ ​ ​ Rental and other property revenues ​ $ 10,183 ​ $ 8,608 ​ $ 30,591 ​ $ 23,136 Interest income from loan investments ​ — ​ 69 ​ — ​ 1,285 Total revenues ​ 10,183 ​ 8,677 ​ 30,591 ​ 24,421 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses ​ ​ ​ ​ ​ ​ ​ ​ Property operating ​ 5,094 ​ 4,440 ​ 14,233 ​ 10,994 Property management and asset management fees ​ 1,113 ​ 1,098 ​ 3,308 ​ 2,591 General and administrative ​ 1,675 ​ 1,802 ​ 5,464 ​ 4,991 Management fees to related party ​ 1,993 ​ — ​ 5,875 ​ — Acquisition and other transaction costs ​ 7 ​ 28 ​ 1,787 ​ 98 Weather-related losses, net ​ ​ — ​ ​ — ​ ​ ( 17 ) ​ ​ — Depreciation and amortization ​ 4,100 ​ 3,631 ​ 12,092 ​ 12,159 Total expenses ​ 13,982 ​ 10,999 ​ 42,742 ​ 30,833 Operating loss ​ ​ ( 3,799 ) ​ ​ ( 2,322 ) ​ ​ ( 12,151 ) ​ ​ ( 6,412 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (expense) income ​ ​ ​ ​ ​ ​ ​ ​ Other (expense) income ​ ( 165 ) ​ — ​ ( 121 ) ​ 100 Preferred returns on unconsolidated real estate joint ventures ​ 2,959 ​ 2,613 ​ 8,649 ​ 5,801 (Provision for) recovery of credit losses, net ​ ( 37 ) ​ ( 4 ) ​ ( 63 ) ​ 369 Gain on sale of real estate investments ​ ​ — ​ ​ — ​ ​ 661 ​ ​ — Interest expense, net ​ ( 2,576 ) ​ ( 22 ) ​ ( 7,050 ) ​ ( 2,982 ) Total other income ​ 181 ​ 2,587 ​ 2,076 ​ 3,288 Net (loss) income from continuing operations ​ ( 3,618 ) ​ 265 ​ ( 10,075 ) ​ ( 3,124 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discontinued operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income on operations of rental property ​ ​ — ​ ​ 53 ​ ​ — ​ ​ 53 Gain on sale of assets from discontinued operations ​ ​ — ​ ​ 258 ​ ​ — ​ ​ 258 Income from discontinued operations ​ ​ — ​ ​ 311 ​ ​ — ​ ​ 311 Net (loss) income ​ ​ ( 3,618 ) ​ ​ 576 ​ ​ ( 10,075 ) ​ ​ ( 2,813 ) Preferred stock dividends ​ ​ ( 12 ) ​ ​ — ​ ​ ( 12 ) ​ ​ — Net (loss) income attributable to noncontrolling interests ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating partnership units ​ ( 2,142 ) ​ 554 ​ ( 5,780 ) ​ 21 Partially owned properties ​ ( 420 ) ​ ( 265 ) ​ ( 1,364 ) ​ ( 2,844 ) Net (loss) income attributable to noncontrolling interests ​ ( 2,562 ) ​ 289 ​ ( 7,144 ) ​ ( 2,823 ) Net (loss) income attributable to common stockholders ​ $ ( 1,068 ) ​ $ 287 ​ $ ( 2,943 ) ​ $ 10 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income per common share – Basic (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ ( 0.28 ) ​ $ 0.05 ​ $ ( 0.77 ) ​ $ ( 0.02 ) Discontinued operations ​ ​ — ​ ​ 0.03 ​ ​ — ​ ​ 0.02 ​ ​ $ ( 0.28 ) ​ $ 0.08 ​ $ ( 0.77 ) ​ $ 0.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income per common share – Diluted (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ ( 0.28 ) ​ $ 0.05 ​ $ ( 0.77 ) ​ $ ( 0.02 ) Discontinued operations ​ ​ — ​ ​ 0.03 ​ ​ — ​ ​ 0.02 ​ ​ $ ( 0.28 ) ​ $ 0.08 ​ $ ( 0.77 ) ​ $ 0.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average basic common shares outstanding (2) ​ ​ 3,845,926 ​ ​ 3,843,502 ​ ​ 3,844,488 ​ ​ 3,843,502 Weighted average diluted common shares outstanding (2) ​ ​ 3,845,926 ​ ​ 3,843,502 ​ ​ 3,844,488 ​ ​ 3,843,502 (1) The consolidated financial statements for the three and nine months ended September 30, 2023 represent the Company’s results of operations as an independent, publicly traded company. The combined consolidated financial statements for the three and nine months ended September 30, 2022 present the Company’s results of operations prior to the spin-off transaction on October 6, 2022, which represents a carve-out of operations attributable to the Company related to Bluerock Residential’s single-family residential home business. As such, results of operations for the three and nine months ended September 30, 2023 may not be comparable to the Company’s results of operations for the prior periods presented. (2) Basic and diluted net income (loss) per common share for the three and nine months ended September 30, 2022 were calculated using the number of common stock shares distributed on October 6, 2022 in connection with the spin-off transaction. See Notes to Combined Consolidated Financial Statements ​ 4 Table of Contents BLUEROCK HOMES TRUST, INC. FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A Common Stock ​ ​ Class C Common Stock ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ ​ ​ ​ ​ Number ​ ​ ​ ​ Paid-in ​ Cumulative ​ Retained ​ Noncontrolling ​ ​ ​ ​ ​ of Shares Par Value ​ of Shares Par Value Capital Distributions Earnings Interests Total Equity Balance, July 1, 2023 ​ ​ 3,868,697 ​ $ 39 ​ ​ 8,489 ​ $ — ​ $ 125,666 ​ $ — ​ $ 31,450 ​ $ 329,081 ​ $ 486,236 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of restricted Class A common stock and LTIP Units for equity incentive plan compensation ​ — ​ — ​ — ​ ​ — ​ ​ 47 ​ ​ — ​ ​ — ​ ​ 667 ​ ​ 714 Issuance of C-LTIP Units to Manager ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,347 ​ ​ 2,347 Series A Preferred Stock distributions declared ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 12 ) ​ ​ — ​ ​ — ​ ​ ( 12 ) Distributions to partially owned properties noncontrolling interests ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 34 ) ​ ​ ( 34 ) Adjustment for noncontrolling interest ownership in the Operating Partnership ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,056 ) ​ ​ — ​ ​ — ​ ​ 1,056 ​ ​ — Net loss ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,056 ) ​ ​ ( 2,562 ) ​ ​ ( 3,618 ) Balance, September 30, 2023 ​ ​ 3,868,697 ​ $ 39 ​ ​ 8,489 ​ $ — ​ $ 124,657 ​ $ ( 12 ) ​ $ 30,394 ​ $ 330,555 ​ $ 485,633 ​ See Notes to Combined Consolidated Financial Statements ​ 5 Table of Contents BLUEROCK HOMES TRUST, INC. FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 COMBINED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Predecessor ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Bluerock ​ Retained ​ Noncontrolling ​ ​ ​ Homes Equity Earnings Interests Total Equity Balance, July 1, 2022 ​ $ 150,502 ​ $ 34,048 ​ $ 376,580 ​ $ 561,130 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contributions, net ​ ​ 7,690 ​ ​ — ​ ​ 16,454 ​ ​ 24,144 Distributions to partially owned properties noncontrolling interests ​ ​ — ​ ​ — ​ ​ ( 170 ) ​ ​ ( 170 ) Net income ​ ​ — ​ ​ 287 ​ ​ 289 ​ ​ 576 Balance, September 30, 2022 ​ $ 158,192 ​ $ 34,335 ​ $ 393,153 ​ $ 585,680 ​ See Notes to Combined Consolidated Financial Statements ​ 6 Table of Contents BLUEROCK HOMES TRUST, INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A Common Stock ​ Class C Common Stock ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ ​ ​ Number ​ ​ ​ Paid-in ​ Cumulative ​ Retained ​ Noncontrolling ​ ​ ​ ​ of Shares Par Value of Shares Par Value Capital Distributions Earnings Interests Total Equity Balance, January 1, 2023 ​ ​ 3,835,013 ​ $ 38 ​ ​ 8,489 ​ $ — ​ $ 126,623 ​ $ — ​ $ 33,325 ​ $ 332,002 ​ $ 491,988 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of restricted Class A common stock and LTIP Units for equity incentive plan compensation ​ ​ 31,260 ​ 1 ​ ​ — ​ — ​ 62 ​ ​ — ​ — ​ 1,935 ​ 1,998 Issuance of C-LTIP Units to Manager ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,763 ​ ​ 6,763 Series A Preferred Stock distributions declared ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 12 ) ​ ​ — ​ ​ — ​ ​ ( 12 ) Distributions to partially owned properties noncontrolling interests ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 230 ) ​ ​ ( 230 ) Acquisition of noncontrolling interests ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,515 ​ ​ — ​ ​ — ​ ​ ( 6,564 ) ​ ​ ( 5,049 ) Conversion of Operating Partnership Units to Class A common stock ​ ​ 2,424 ​ ​ — ​ ​ — ​ ​ — ​ ​ 100 ​ ​ — ​ ​ — ​ ​ ( 100 ) ​ ​ — Contributions from noncontrolling interests ​ ​ — ​ — ​ ​ — ​ — ​ — ​ ​ — ​ — ​ 250 ​ 250 Adjustment for noncontrolling interest ownership in the Operating Partnership ​ ​ — ​ — ​ ​ — ​ — ​ ( 3,643 ) ​ ​ — ​ — ​ 3,643 ​ — Net loss ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,931 ) ​ ​ ( 7,144 ) ​ ​ ( 10,075 ) Balance, September 30, 2023 ​ ​ 3,868,697 ​ $ 39 ​ ​ 8,489 ​ $ — ​ $ 124,657 ​ $ ( 12 ) ​ $ 30,394 ​ $ 330,555 ​ $ 485,633 ​ See Notes to Combined Consolidated Financial Statements ​ 7 Table of Contents BLUEROCK HOMES TRUST, INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 COMBINED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Predecessor ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Bluerock ​ Retained ​ Noncontrolling ​ ​ ​ ​ Homes Equity Earnings Interests Total Equity Balance, January 1, 2022 ​ $ 116,510 ​ $ 34,325 ​ $ 311,136 ​ $ 461,971 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contributions, net ​ ​ 41,682 ​ — ​ ​ 86,116 ​ 127,798 Distributions to partially owned properties noncontrolling interests ​ ​ — ​ — ​ ​ ( 1,276 ) ​ ( 1,276 ) Net income (loss) ​ ​ — ​ ​ 10 ​ ​ ( 2,823 ) ​ ​ ( 2,813 ) Balance, September 30, 2022 ​ $ 158,192 ​ $ 34,335 ​ $ 393,153 ​ $ 585,680 ​ See Notes to Combined Consolidated Financial Statements ​ 8 Table of Contents BLUEROCK HOMES TRUST, INC. COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2023 2022 Cash flows from operating activities ​ ​ Net loss ​ $ ( 10,075 ) ​ $ ( 2,813 ) Adjustments to reconcile net loss to net cash provided by operating activities: ​ ​ ​ ​ Depreciation and amortization ​ 14,277 ​ 13,740 Amortization of fair value adjustments ​ ( 240 ) ​ ( 240 ) Preferred returns on unconsolidated real estate joint ventures ​ ( 8,649 ) ​ ( 5,801 ) Gain on sale of real estate investments ​ ​ ( 661 ) ​ ​ — Gain on sale of assets from discontinued operations ​ ​ — ​ ​ ( 258 ) Fair value adjustment of interest rate caps and swaps ​ 1,336 ​ ( 2,759 ) Provision for (recovery of) credit losses, net ​ 63 ​ ( 369 ) Distributions of income and preferred returns from preferred equity investments in unconsolidated real estate joint ventures ​ 1,290 ​ 1,707 Share-based compensation attributable to equity incentive plans ​ 1,997 ​ — Share-based compensation to Manager – C-LTIP Units ​ 6,763 ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ Due to affiliates, net ​ 363 ​ 333 Accounts receivable, prepaids and other assets ​ ( 837 ) ​ 369 Notes and accrued interest receivable ​ — ​ 2,942 Accounts payable and other accrued liabilities ​ 1,162 ​ 3,664 Net cash provided by operating activities ​ 6,789 ​ 10,515 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ Acquisitions of real estate investments ​ ( 4,330 ) ​ ( 144,228 ) Capital expenditures ​ ( 7,201 ) ​ ( 16,311 ) Investment in notes receivable ​ — ​ ( 9,645 ) Repayments on notes receivable ​ — ​ 45,645 Proceeds from sale of real estate investments ​ ​ 5,625 ​ ​ — Proceeds from redemption of unconsolidated real estate joint ventures ​ 8,494 ​ — Investment in unconsolidated real estate joint venture interests ​ ( 7,528 ) ​ ( 43,392 ) Net cash used in investing activities ​ ( 4,940 ) ​ ( 167,931 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ Distributions to partially owned properties noncontrolling interests ​ ( 230 ) ​ ( 1,276 ) Contributions from Bluerock Residential ​ — ​ 41,682 Contributions from noncontrolling interests ​ 250 ​ 86,116 Purchase of interests from noncontrolling interests ​ ​ ( 5,049 ) ​ ​ — Borrowings on mortgages payable ​ — ​ 41,941 Repayments on mortgages payable ​ ( 1,124 ) ​ ( 5,452 ) Proceeds from revolving credit facilities ​ ​ 21,000 ​ ​ 55,000 Repayments on revolving credit facilities ​ ( 6,000 ) ​ — Payments of deferred financing fees ​ ( 1,092 ) ​ ( 4,544 ) Purchase of interest rate caps ​ ​ — ​ ​ ( 2,136 ) Net proceeds from issuance of 6.0% Series A Redeemable Preferred Stock ​ ​ 3,417 ​ ​ — Net cash provided by financing activities ​ 11,172 ​ 211,331 ​ ​ ​ ​ ​ Net increase in cash, cash equivalents and restricted cash ​ $ 13,021 ​ $ 53,915 Cash, cash equivalents and restricted cash, beginning of year ​ 82,562 ​ 136,929 Cash, cash equivalents and restricted cash, end of period ​ $ 95,583 ​ $ 190,844 ​ ​ ​ ​ ​ ​ ​ Reconciliation of cash, cash equivalents and restricted cash ​ ​ ​ ​ Cash and cash equivalents ​ $ 89,435 ​ $ 186,278 Restricted cash ​ ​ 6,148 ​ ​ 4,566 Total cash, cash equivalents and restricted cash, end of period ​ $ 95,583 ​ $ 190,844 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information ​ ​ ​ ​ Cash paid for interest (net of interest capitalized) ​ $ 5,272 ​ $ 4,673 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of non-cash investing and financing activities ​ ​ ​ ​ Distributions payable – declared and unpaid ​ $ 12 ​ $ 1,276 Capital expenditures held in accounts payable and other accrued liabilities ​ $ 883 ​ $ 1,564 ​ See Notes to Combined Consolidated Financial Statements ​ 9 Table of Contents BLUEROCK HOMES TRUST, INC. NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS ​ Note 1 – Organization and Nature of Business Bluerock Homes Trust, Inc. (the “Company” or “Bluerock Homes”) was formed in Maryland as a wholly owned subsidiary of Bluerock Residential Growth REIT, Inc (“Bluerock Residential”) on December 16, 2021, and historically operated as part of Bluerock Residential and not as a standalone company. On October 6, 2022, Bluerock Residential completed a spin-off transaction that resulted in its single-family residential real estate business and certain other assets being contributed to Bluerock Homes, and Bluerock Homes becoming an independent, publicly traded company. Financial statements for the period ended and prior to October 6, 2022 have been derived from Bluerock Residential's historical accounting records and are presented on a carve-out basis. All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the financial statements. The financial statements for the period ended and prior to October 6, 2022 also include general and administrative expenses that have been allocated to the Company from Bluerock Residential based on relative unit count. These allocated expenses are for corporate office expenses and management including, but not limited to, executive oversight, asset management, treasury, finance, human resources, tax, accounting, financial reporting, information technology and investor relations. However, amounts recognized by the Company are not representative of the amounts that would have been reflected in these financial statements had the Company operated independently of Bluerock Residential. Any references to “the Company” for all periods ended October 6, 2022 and prior refer to Bluerock Homes as owned by Bluerock Residential. The Company owns and operates high-quality single-family properties located in attractive markets with a focus on the knowledge-economy and high-quality of life growth markets of the Sunbelt and Western United States. The Company’s principal objective is to generate attractive risk-adjusted returns on investments where it believes it can drive growth in funds from operations and net asset value by acquiring pre-existing single-family residential units, developing build-to-rent communities, and through Value-Add renovations. The Company’s Value-Add strategy focuses on repositioning lower-quality, less current assets to drive rent growth and expand margins to increase net operating income and maximize the Company’s return on investment. As of September 30, 2023, the Company held seventeen real estate investments, consisting of ten consolidated operating investments and seven preferred equity investments. The seventeen investments contain an aggregate of 3,996 residential units, comprised of 2,331 consolidated operating units and 1,665 units held through preferred equity investments. As of September 30, 2023, the Company’s consolidated operating investments were approximately 94.4 % occupied. In October 2023, the Company filed its U.S. federal income tax return for the taxable year ending December 31, 2022 and elected to be treated, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes. As a REIT, the Company generally is not subject to corporate-level income taxes. To maintain its REIT status, the Company is required, among other requirements, to distribute annually at least 90 % of its “REIT taxable income,” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), to the Company’s stockholders. If the Company fails to qualify as a REIT in any taxable year, it would be subject to federal income tax on its taxable income at regular corporate tax rates and it would not be permitted to qualify as a REIT for four years following the year in which its qualification was denied. The Company intends to continue to organize and operate in such a manner as to remain qualified as a REIT. Note 2 – Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The Company conducts its operations through Bluerock Residential Holdings, L.P., its operating partnership (the “Operating Partnership”), of which it is the sole general partner. The combined consolidated financial statements include the Company’s accounts and those of the Operating Partnership and its subsidiaries. As of September 30, 2023, limited partners other than the Company owned approximately 68.27 % of the common units of the Operating Partnership ( 60.30 % is held by holders of limited partnership interest in the Operating Partnership (“OP Units”) and 7.97 % is held by holders of the Operating Partnership’s long-term incentive plan units (“LTIP Units”), including 4.48 % which are not vested as of September 30, 2023). 10 Table of Contents The combined consolidated financial statements include certain prior period reclassifications made by the Company to reflect the Operating Partnership unitholders’ approximately 66 % ownership in the Company following the spin-off transaction. Reclassifications to net income (loss) on the combined consolidated statements of operations, along with reclassifications to stockholders’ equity and noncontrolling interest for Operating Partnership unitholders on the combined consolidated balances sheets and statements of stockholders’ equity, were made for the period ending and prior to October 6, 2022. Real Estate Investments and Preferred Equity Investments The Company first analyzes an investment to determine if it is a variable interest entity (“VIE”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810: Consolidation and, if so, whether the Company is the primary beneficiary requiring consolidation of the entity. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are contractual, ownership, or other financial interests in a VIE that change in value with changes in the fair value of the VIE’s net assets. The Company continuously re-assesses at each level of the investment whether (i) the entity is a VIE, and (ii) the Company is the primary beneficiary of the VIE. If it was determined that an entity in which the Company holds an interest qualified as a VIE and the Company was the primary beneficiary, the entity would be consolidated. If, after consideration of the VIE accounting literature, the Company has determined that an entity is not a VIE, the Company assesses the need for consolidation under all other provisions of ASC 810. These provisions provide for consolidation of majority-owned entities through a majority voting interest held by the Company providing control. In assessing whether the Company is in control of and requiring consolidation of the limited liability company and partnership venture structures, the Company evaluates the respective rights and privileges afforded each member or partner (collectively referred to as “member”). The Company’s member would not be deemed to control the entity if any of the other members has either (i) substantive kickout rights providing the ability to dissolve (liquidate) the entity or otherwise remove the managing member or general partner without cause or (ii) substantive participating rights in the entity. Substantive participating rights (whether granted by contract or law) provide for the ability to effectively participate in significant decisions of the entity that would be expected to be made in the ordinary course of business. The Company analyzes each investment that involves real estate acquisition, development, and construction to consider whether the investment qualifies as an investment in a real estate acquisition, development, and construction arrangement. The Company has evaluated its real estate investments as required by ASC 310-10 Receivables and concluded that no investments are considered an investment in a real estate acquisition, development, or construction arrangement. As such, the Company next evaluates if these investments are considered a security under ASC 320 Investments – Debt Securities . For investments that meet the criteria of a security under ASC 320 Investments – Debt Securities , the Company classifies each preferred equity investment as a held-to-maturity debt security as the Company has the intention and ability to hold the investment to maturity. The Company earns a fixed return on these investments which is included within preferred returns on unconsolidated real estate joint ventures in its combined consolidated statements of operations. The Company evaluates the collectability of each preferred equity investment and estimates a provision for credit loss, as applicable. Refer to the Current Expected Credit Losses (“CECL”) section of this Note for further information regarding CECL and the Company’s provision for credit losses. The Company accounts for these investments as preferred equity investments in unconsolidated real estate joint ventures in its combined consolidated balance sheets. For investments that do not meet the criteria of a security under ASC 320 Investments – Debt Securities , the Company has concluded that the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. The Company recognizes interest income on its 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 its notes receivable are deferred and amortized using the effective interest method over the term of the related notes receivable. The Company evaluates the collectability of each loan investment and estimates a provision for credit loss, as applicable. Refer to the CECL section of this Note for further information regarding CECL and the Company’s provision for credit losses. The Company did not have any loan investments at September 30, 2023. 11 Table of Contents 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 2022 and into 2023, the Federal Reserve increased interest rates a total of seven times during 2022 and four times to date during 2023 to curb the effects of rising inflation. 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. The long-term impact of these economic developments will largely depend on any future action by the Federal Reserve, future laws that may be enacted, the impact on job growth and the broader economy, and reactions by consumers, companies, governmental entities and capital markets. The Company continues to closely monitor the impact of economic volatility on all aspects of its business. Summary of Significant Accounting Policies Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission (“SEC”) on March 22, 2023 for discussion of the Company’s significant accounting policies. During the nine months ended September 30, 2023, there were no material changes to these policies. Interim Financial Information The accompanying unaudited combined consolidated financial statements of the Company 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, the financial statements for interim reporting do not include all the information and notes or disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for interim periods should not be considered indicative of the operating results for a full year. The balance sheet at December 31, 2022 has been derived from the audited financial statements at that date but does not include all the information and disclosures required by GAAP for complete financial statements. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s audited combined consolidated financial statements for the year ended December 31, 2022 contained in the Annual Report on Form 10-K as filed with the SEC on March 22, 2023. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. New Accounting Pronouncements In January 2021, the FASB issued Accounting Standards Update (“ASU”) No. 2021-01 “Reference Rate Reform (Topic 848)” (“ASU 2021-01”). The amendments in ASU 2021-01 permit entities to elect certain optional expedients in connection with reference rate reform activities and their impact on debt, contract modifications and derivative instruments as it is expected the global market will transition from LIBOR and other interbank offered rates to alternative reference rates. The amendments in ASU 2021-01 are effective immediately, though as the sunset date of Topic 848 was deferred through the issuance of ASU No. 2022-06, such amendments may be elected over time as reference rate reform activities occur through December 31, 2024. The Company has not elected the optional expedients, though it continues to evaluate the impact of the guidance and may apply elections as applicable as changes in the market occur. ​ 12 Table of Contents Current Expected Credit Losses The Company estimates provision for credit losses on its loans (notes receivable) and preferred equity investments 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. The Company estimates its 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, the Company applies a default rate to the investments for the remaining loan or preferred equity investment hold period. As the Company does not have a significant historical population of loss data on its loan and preferred equity investments, the Company’s 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, the Company performs 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 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 or preferred equity 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 or preferred equity 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 or preferred equity investment. As the investment no longer displays the characteristics that are similar to those of the pool of loans or preferred equity investments, the investment is removed from the CECL collective (pool) analysis described above. ​ ​ Note 3 – Discontinued Operations The following table summarizes amounts related to discontinued operations that resulted from trailing sales activity of multifamily investments in 2021 (amounts in thousands). The Company previously concluded that these multifamily investment sales were discontinued operations as the asset group represented a component of an entity, the component met the criteria of held for sale in 2021, and the disposals represented a strategic shift in the Company’s business from multifamily apartment communities to single-family residential units. As a result, certain items were reclassified as part of discontinued operations for comparative purposes. ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, 2022 ​ September 30, 2022 Total Revenues ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ Expenses ​ ​ Property operating ​ ( 53 ) ​ ( 53 ) Total expenses ​ ( 53 ) ​ ( 53 ) Income on operations of rental property ​ 53 ​ 53 ​ ​ ​ ​ ​ ​ ​ Gain on sale of real estate investments ​ 258 ​ 258 Income from discontinued operations ​ $ 311 ​ $ 311 ​ There are no amounts in the statement of cash flows that are included in discontinued operations for the nine months ended September 30, 2022. ​ 13 Table of Contents Note 4 – Sale of Real Estate Assets During the second quarter 2023, the Company closed on the following sales: one unit in the Golden Pacific portfolio, six units in the Peak JV 2 portfolio, and two units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sales agreements. The nine units were sold for an aggregate of approximately $ 2.8 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for payments of closing costs and fees of $ 0.1 million, the sales of the nine units generated net proceeds of approximately $ 2.7 million and a gain on sales of approximately $ 0.7 million. During the third quarter 2023, the Company closed on the sales of eighteen units in the Peak JV 3 portfolio pursuant to the terms and conditions of multiple separate purchase and sales agreements. The eighteen units were sold for an aggregate of approximately $ 3.0 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for payments of closing costs and fees of $ 0.1 million, the sales of the eighteen units generated net proceeds of approximately $ 2.9 million and no gain on sales. ​ Note 5 - Investments in Real Estate As of September 30, 2023, the Company held seventeen real estate investments, consisting of ten consolidated operating investments and seven preferred equity investments. The following tables provide summary information regarding the Company’s consolidated operating investments and preferred equity investments. Consolidated Operating Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Average Year ​ Ownership Name Market Units Built Interest ​ Ballast ​ AZ / CO / WA ​ 84 ​ 1998 ​ 95 % Golden Pacific IN / KS / MO 170 1977 97 % ILE TX / SE US 482 1991 95 % Indy-Springfield, formerly Peak JV 1 IN / MO 334 1999 100 % Navigator Villas Pasco, WA 176 2013 90 % Peak JV 2 Various / TX 602 1980 80 % Peak JV 3 Dallas-Fort Worth, TX 169 1960 56 % Savannah-84, formerly Peak JV 4 Savannah, GA 84 2022 100 % Wayford at Concord Concord, NC 150 2019 83 % Yauger Park Villas Olympia, WA 80 2010 95 % Total Units ​ 2,331 ​ ​ Depreciation expense was $ 4.1 million and $ 3.5 million, and $ 12.1 million and $ 9.1 million, for the three and nine months ended September 30, 2023 and 2022, respectively. Intangibles related to the Company’s consolidated investments in real estate consist of the value of in-place leases. Amortization expense related to the in-place leases was zero and $ 0.1 million, and zero and $ 2.7 million, for the three and nine months ended September 30, 2023 and 2022, respectively. 14 Table of Contents Preferred Equity Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actual / ​ Actual / ​ Actual / ​ ​ ​ ​ Planned ​ Estimated ​ Estimated ​ ​ ​ ​ Number of ​ Initial ​ Construction Lease-up Investment Name Location / Market Units Occupancy Completion The Cottages at Warner Robins ​ Warner Robins, GA ​ 251 ​ 1Q 2023 ​ 2Q 2023 The Woods at Forest Hill ​ Forest Hill, TX ​ 76 ​ 4Q 2022 ​ 3Q 2023 Willow Park Willow Park, TX 46 2Q 2022 3Q 2023 The Cottages at Myrtle Beach ​ Myrtle Beach, SC ​ 294 ​ 2Q 2023 ​ 4Q 2023 The Cottages of Port St. Lucie ​ Port St. Lucie, FL ​ 286 ​ 2Q 2023 ​ 1Q 2024 Wayford at Innovation Park Charlotte, NC 210 3Q 2023 3Q 2024 Total Lease-up Units ​ 1,163 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Investment Name ​ ​ ​ Number of Units ​ ​ ​ ​ Peak Housing (1) ​ IN / MO / TX ​ 502 ​ ​ ​ ​ Total Operating Units ​ ​ ​ 502 ​ ​ ​ ​ Total Units ​ ​ ​ 1,665 ​ ​ ​ ​ (1) Peak Housing is a stabilized operating portfolio and the number of units shown represents those collateralizing the Company’s preferred equity investment in the Peak REIT OP as of September 30, 2023 (refer to Note 8 for further information). Unit count excludes units presented in the consolidated operating investments table above . Note 6 – Acquisition of Real Estate and Additional Interests Acquisition of Additional Savannah-84 units, formerly Peak JV 4 On February 23, 2023, the Company acquired 18 single-family residential units located in Savannah, Georgia that were added to the existing Savannah-84 portfolio. The Company has a 100 % interest in the units and the purchase price of approximately $ 4.2 million was fully funded in cash upon acquisition. Purchase Price Allocation The real estate acquisition above has been accounted for as an asset acquisition. The purchase price was allocated to the acquired assets based on their estimated fair values at the date of acquisition. The following table summarizes the assets acquired at the acquisition date for the additional Savannah-84 units (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ Purchase Price ​ Allocation Land ​ $ 499 Building ​ 3,831 Total assets acquired (1) ​ $ 4,330 (1) The $ 4.3 million of total assets acquired includes $ 0.1 million of acquisition expenses that have been capitalized as the acquisition of additional real estate units has been accounted for as an asset acquisition. 15 Table of Contents Acquisition of Additional Interests in Investments During the nine months ended September 30, 2023, the Company acquired the noncontrolling partner’s interest in the following consolidated operating investments ($ in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Previous ​ New ​ ​ ​ ​ ​ ​ ​ Ownership ​ Ownership Property Date Amount Interest Interest Savannah-84 ​ January 6, 2023 ​ $ 939 ​ 80 % 100 % Indy-Springfield, formerly Peak JV 1 ​ March 8, 2023 ​ 4,110 60 % 100 % ​ ​ ​ Note 7 – Notes and Interest Receivable At September 30, 2023 and December 31, 2022, the Company held no loan investments and there were no outstanding interest receivable amounts due to the Company. Allowance for Credit Losses The provision for and recovery of credit losses of the Company’s loan investments during the year ended December 31, 2022 is summarized in the table below (amounts in thousands). The Company had no provision for or recovery of credit losses on loan investments at September 30, 2023. ​ ​ ​ ​ ​ ​ December 31, ​ 2022 Beginning balance, net as of January 1, 2022 ​ $ 59 Recovery of credit losses on pool of assets (1) ​ ( 59 ) Allowance for credit losses, end of period ​ $ — (1) Under CECL, a provision for credit losses for similar assets is calculated based on a historical default rate applied to the remaining life of the assets. The recovery of credit losses during the year ended December 31, 2022 was a result of the sale of The Hartley at Blue Hill. The following table is a summary of the interest income from loan investments for the three and nine months ended September 30, 2022 (amounts in thousands). The Company did no t record any interest income from loan investments during the three and nine months ended September 30, 2023 as it held no loan investments during this period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended Property September 30, 2022 ​ September 30, 2022 The Hartley at Blue Hill (1) ​ $ — ​ $ 784 Weatherford 185 (2) ​ ​ 69 ​ ​ 501 Total ​ $ 69 ​ $ 1,285 (1) In the first quarter 2022, The Hartley at Blue Hill property was sold and the mezzanine loan provided by the Company was paid off in full. The Hartley at Blue Hill senior loan provided by the Company was paid off in full in the second quarter 2022. (2) On July 22, 2022, the Weatherford 185 mezzanine loan provided by the Company was paid off in full. ​ 16 Table of Contents Note 8 – Preferred Equity Investments in Unconsolidated Real Estate Joint Ventures The carrying amount of the Company’s preferred equity investments in unconsolidated real estate joint ventures as of September 30, 2023 and December 31, 2022 is summarized in the table below (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, Property 2023 2022 Peak Housing ​ $ 11,824 ​ $ 20,318 The Cottages at Myrtle Beach ​ 17,913 ​ 17,913 The Cottages at Warner Robins ​ 13,250 ​ 13,250 The Cottages of Port St. Lucie ​ 18,785 ​ 18,785 The Woods at Forest Hill ​ 5,541 ​ 3,300 Wayford at Innovation Park ​ 13,400 ​ 10,205 Willow Park ​ 4,631 ​ 2,540 Total ​ $ 85,344 ​ $ 86,311 Allowance for credit losses ​ ( 85 ) ​ ( 22 ) Total, net ​ $ 85,259 ​ $ 86,289 ​ Allowance for Credit Losses The provision for and recovery of credit losses of the Company’s preferred equity investments at September 30, 2023 and December 31, 2022 are summarized in the table below (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ 2023 2022 Beginning balances, net as of January 1, 2023 and 2022, respectively ​ $ 22 ​ $ 73 Provision for (recovery of) credit losses on pool of assets, net (1) ​ 63 ​ ( 51 ) Allowance for credit losses, net, end of period ​ $ 85 ​ $ 22 ​ ​ ​ ​ ​ ​ ​ Recovery of credit loss – Alexan Southside Place (2) ​ $ — ​ $ ( 292 ) (1) Under CECL, a provision for credit losses for similar assets is calculated based on a historical default rate applied to the remaining life of the assets. The provision for credit losses during the nine months ended September 30, 2023 was primarily attributable to an increase in the trailing twelve-month historical default rate. (2) In 2021, Alexan Southside Place, the property underlying the Company’s preferred equity investment, was sold. In 2022, the Company recognized a partial recovery of a previously recorded credit loss on Alexan Southside Place. As of September 30, 2023, the Company, through wholly-owned subsidiaries of the Operating Partnership, had outstanding preferred equity investments in seven joint ventures which are classified as held to maturity debt securities as the Company has the intention and ability to hold the investments to maturity. The Company earns a fixed return on these investments, which is included within preferred returns on unconsolidated real estate joint ventures in its combined consolidated statements of operations. Each joint venture’s purpose is to develop or operate a portfolio of residential units. 17 Table of Contents The preferred returns on the Company’s unconsolidated real estate joint ventures for the three and nine months ended September 30, 2023 and 2022 are summarized below (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, Property 2023 2022 2023 2022 Peak Housing ​ $ 303 ​ $ 476 ​ $ 1,087 ​ $ 1,412 The Cottages at Myrtle Beach ​ 664 ​ 664 ​ 1,970 ​ 1,624 The Cottages at Warner Robins ​ 491 ​ 448 ​ 1,457 ​ 660 The Cottages of Port St. Lucie ​ 696 ​ 682 ​ 2,066 ​ 1,490 The Woods at Forest Hill ​ 201 ​ 107 ​ 464 ​ 173 Wayford at Innovation Park ​ 428 ​ 152 ​ 1,191 ​ 192 Willow Park ​ 176 ​ 84 ​ 414 ​ 250 Total preferred returns on unconsolidated joint ventures (1) ​ $ 2,959 ​ $ 2,613 ​ $ 8,649 ​ $ 5,801 (1) Total includes both current and accrued preferred return amounts. The accrued portion of the total preferred returns was $ 2.7 million and $ 2.1 million, and $ 7.6 million and $ 4.4 million, for the three and nine months ended September 30, 2023 and 2022, respectively. The occupancy percentages of the Company’s unconsolidated real estate joint ventures at September 30, 2023 and December 31, 2022 are as follows: ​ ​ ​ ​ ​ ​ ​ Property September 30, 2023 December 31, 2022 Peak Housing (1) 90.0 % 95.4 % The Cottages at Myrtle Beach (2) ​ 24.8 % — ​ The Cottages at Warner Robins (2) ​ 91.6 % — ​ The Cottages of Port St. Lucie (2) ​ 15.4 % — ​ The Woods at Forest Hill (3) ​ 42.1 % 1.3 % Wayford at Innovation Park (4) ​ 2.9 % — ​ Willow Park (3) 50.0 % 30.4 % (1) Percent occupied for Peak Housing at September 30, 2023 excludes 41 down/renovation units. (2) The Cottages investments commenced lease-up in 2023 as follows: at Myrtle Beach in April, at Warner Robins in February, and of Port St. Lucie in June. (3) The Woods at Forest Hill and Willow Park commenced lease-up in October 2022 and late June 2022, respectively. (4) Wayford at Innovation Park commenced lease-up in August 2023. Peak Housing Interests and Financing The Company, along with the operating partnership of Peak Housing REIT (the "Peak REIT OP"), holds a common equity interest in Peak JV 3. In addition to its common equity interest, the Company, through a wholly-owned lender-entity, provided a $ 20.0 million mezzanine loan to the Peak JV 3 portfolio owner. The entity through which the Company provided the loan (the lender-entity) and the entity to which the loan was provided (the property owner) consolidate into the Company's financial statements. As such, the loan receivable balance and the loan payable balance, and the loan interest income and loan interest expense attributable to the Company, are eliminated through consolidation on the combined consolidated balance sheets and statements of operations, respectively. The Company (as lender entity) recognizes Peak REIT OP's portion of interest expense on the loan as income and this amount is reflected in net income (loss) attributable to common stockholders in the Company's combined consolidated statements of operations. The mezzanine loan matures on December 31, 2023, contains two six-month extension options, subject to certain conditions, and can be prepaid without penalty. During 2023, proceeds from the sales of 18 units in the Peak JV 3 portfolio (refer to Note 4 for further information) have been used to reduce the outstanding balance of the mezzanine loan provided by the Company to $ 17.9 million as of September 30, 2023. 18 Table of Contents On March 3, 2023, the Company’s agreement with Peak REIT OP regarding its total preferred equity investment in Peak Housing was amended. Previously, the Company earned a 7.0 % current return and a 3.0 % accrued return, for a total preferred return of 10.0 % per annum, on $ 16.0 million of its investment. On the Company’s remaining $ 4.3 million investment, it earned a 4.0 % current return and a 4.0 % accrued return, for a total preferred return of 8.0 % per annum. On the Company’s total $ 20.3 million investment, it earned a total weighted average preferred return of 9.6 % per annum. As part of the amendment, the Company’s two tranches of preferred equity investments were combined into one $ 20.3 million preferred equity investment earning a 6.4 % current return and a 3.2 % accrued return, for a total preferred return of 9.6 % per annum. In addition, the amendment increased the collateral underlying the Company’s preferred equity investment from 474 units to 648 units, and the net assets of the Peak REIT OP were included as additional collateral. Peak REIT OP may sell the units collateralizing the Company’s preferred equity investment, though Peak REIT OP is required to distribute any net sale proceeds to the Company, after consideration for partnership operating expenses and reserve requirements, until the Company’s full preferred equity investment has been repaid in full, subject to certain rate of return requirements and including any accrued but unpaid preferred returns. During 2023, the Company’s preferred equity investment in the Peak REIT OP was partially redeemed in the aggregate amount of $ 9.3 million, which included principal investment of $ 8.5 million and accrued preferred return of $ 0.8 million. The Company's partial redemption of its preferred equity investment was a result of the sale by Peak REIT OP of 146 of the 648 units that collateralized the Company's investment. As of September 30, 2023, the Company’s remaining preferred equity investment in the Peak REIT OP was $ 11.8 million, with a remaining 502 units as collateral underlying the Company's investment. The Woods at Forest Hill Interests The Company is party to a joint venture agreement with the Peak REIT OP (the “Woods JV”) to develop approximately 76 build-for-rent, single-family residential units in Forest Hill, Texas. The Company made an original commitment to invest $ 3.3 million of preferred equity interests in the Woods JV. On March 17, 2023, the Company increased its commitment in the Woods JV by $ 2.3 million, for a total preferred equity investment commitment of $ 5.6 million, of which nearly all had been funded as of September 30, 2023. The Company earns a 13.0 % per annum accrued return on its original preferred equity investment of $ 3.3 million. On its additional preferred equity investment commitment of $ 2.3 million, the Company earns an accrued return on its outstanding capital contributions at a rate of 15.0 % per annum compounded monthly, subject to a minimum multiple. Willow Park Interests The Company is party to a joint venture agreement with the Peak REIT OP (the “Willow Park JV”) to develop approximately 46 build-for-rent, single-family residential units in Willow Park, Texas. The Company made an original commitment to invest $ 2.5 million of preferred equity interests in the Willow Park JV. On February 28, 2023, the Company increased its commitment in the Willow Park JV by $ 2.1 million, for a total preferred equity investment commitment of $ 4.6 million, of which nearly all had been funded as of September 30, 2023. The Company earns a 13.0 % per annum accrued return on its original preferred equity investment of $ 2.5 million. On its additional preferred equity investment commitment of $ 2.1 million, the Company earns an accrued return on its outstanding capital contributions at a rate of 15.0 % per annum compounded monthly, subject to a minimum multiple. ​ Note 9— Revolving Credit Facilities The outstanding balances on the revolving credit facilities as of September 30, 2023 and December 31, 2022 are as follows (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Revolving Credit Facilities September 30, 2023 December 31, 2022 DB Credit Facility ​ $ 50,000 ​ $ 35,000 ILE Sunflower Credit Facility ​ 20,000 ​ 20,000 Total ​ $ 70,000 ​ $ 55,000 ​ 19 Table of Contents Deutsche Bank Credit Facility (“DB Credit Facility”) On April 6, 2022, certain of the Company’s subsidiaries entered into a credit facility (the “DB Credit Facility”) with Deutsche Bank Securities Inc. (“Deutsche Bank”), as sole lead arranger, Deutsche Bank AG, New York Branch, as administrative agent, the financial institutions party thereto as lenders and Computershare Trust Company, N.A., as paying agent and calculation agent, and the Company as a guarantor. The DB Credit Facility provides for a revolving loan with a maximum commitment amount of $ 150 million. Borrowings under the DB Credit Facility are limited to financings related to the acquisition, renovation, rehabilitation, maintenance and leasing of single-family residential units initially only in the Peak JV 2 portfolio, though in the second quarter 2023, the DB Credit Facility was amended such that borrowings can also be applied to units in the Indy-Springfield (formerly Peak JV 1) and Savannah-84 (formerly Peak JV 4) portfolios. During the initial term of the DB Credit Facility, borrowings bear interest on the amount drawn at Term SOFR plus 2.80 %, and borrowings can be prepaid without premium or penalty. The interest rate on outstanding borrowings was 8.13 % at September 30, 2023. The DB Credit Facility matures on April 6, 2024 and contains two (2) one-year extension options, subject to certain conditions. The DB Credit Facility contains certain financial and operating covenants, including maximum leverage ratio, minimum debt yield and minimum debt service coverage ratio. At September 30, 2023, the DB Credit Facility was drawn at $ 50 million and the Company was in compliance with all covenants under the DB Credit Facility. The availability of borrowings under the DB Credit Facility at September 30, 2023 was approximately $ 10 million and is based on the collateral and compliance with various ratios related to those assets. ILE Sunflower Credit Facility On December 27, 2021, the Company’s unaffiliated joint venture partner, ILE, entered into a credit facility with Sunflower Bank, N.A. (the “ILE Sunflower Credit Facility”). The ILE Sunflower Credit Facility provides for a revolving loan with an initial commitment amount of $ 20 million, which commitment contains an accordion feature to a maximum total commitment of up to $ 50 million. The ILE Sunflower Credit Facility, along with four other separate non-revolving credit facilities (refer to Note 10 for further information), is used in the financing of acquisitions of single-family residential units. Borrowings under the ILE Sunflower Credit Facility bear interest at LIBOR plus 3.0 %, subject to a rate floor, and can be prepaid without penalty or premium. The interest rate on outstanding borrowings was 8.43 % at September 30, 2023. The ILE Sunflower Credit Facility matures on December 27, 2024 and contains certain financial and operating covenants, including a minimum fixed charge coverage ratio. At September 30, 2023, ILE was in compliance with all covenants under the ILE Sunflower Credit Facility and the initial commitment was fully drawn at $ 20 million. A principal of ILE has guaranteed the obligations under the ILE Sunflower Credit Facility and the Company and ILE have pledged certain assets as collateral. 20 Table of Contents Note 10 – Mortgages Payable The following table summarizes certain information as of September 30, 2023 and December 31, 2022 with respect to the Company’s senior mortgage indebtedness (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding Principal As of September 30, 2023 ​ ​ September 30, ​ December 31, ​ ​ ​ Interest-only ​ ​ Property 2023 2022 Interest Rate through date Maturity Date ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed Rate: ​ ​ ILE (1) ​ $ 25,327 ​ $ 25,976 3.69 % (2) ​ (1) ILE (3) ​ ​ 4,593 ​ ​ — ​ 6.00 % (2) ​ August 9, 2028 Navigator Villas (4) ​ 19,788 ​ 20,039 4.57 % (2) ​ June 1, 2028 Yauger Park Villas (5) ​ 14,426 ​ 14,643 4.86 % (2) ​ April 1, 2026 Total Fixed Rate ​ $ 64,134 ​ $ 60,658 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Floating Rate: ​ ​ ​ ​ ​ ​ ​ ​ ILE (3) ​ $ — ​ $ 4,600 ​ ​ ​ ​ ​ Wayford at Concord (6) ​ 32,973 ​ 32,973 4.73 % May 2027 ​ May 1, 2029 Total Floating Rate ​ $ 32,973 ​ $ 37,573 ​ ​ Total ​ $ 97,107 ​ $ 98,231 ​ ​ Fair value adjustments ​ 996 ​ 1,235 ​ ​ Deferred financing costs, net ​ ( 1,028 ) ​ ( 1,275 ) ​ ​ Total mortgages payable ​ $ 97,075 ​ $ 98,191 ​ ​ (1) ILE’s fixed rate debt represents the aggregate debt outstanding across two separate credit agreements. Of the $ 25.3 million balance, $ 6.5 million held through one credit agreement has a fixed rate of 3.50 % , while the remaining $ 18.8 million held through the second credit agreement has a fixed rate of 3.75 % . Both credit agreements mature in 2026. (2) The loan requires monthly payments of principal and interest. (3) During the second quarter 2023, one ILE credit agreement was amended to reduce and temporarily convert its interest rate from floating to fixed rate through August 1, 2023, upon which such date an interest rate swap became effective, converting the credit agreement to a fixed rate of 6.00 % . (4) The principal balance includes a $ 14.3 million senior loan at a fixed rate of 4.31 % and a $ 5.5 million supplemental loan at a fixed rate of 5.23 % . (5) The principal balance includes a $ 10.0 million senior loan at a fixed rate of 4.81 % and a $ 4.4 million supplemental loan at a fixed rate of 4.96 % . (6) The Wayford at Concord loan bears interest at the 30-day average SOFR plus 2.23 % . In September 2023, the 30-day average SOFR in effect was 5.31 % . SOFR rate is subject to a 2.50 % rate cap through April 2025. Please refer to Note 12 for further information. Deferred financing costs Costs incurred in obtaining long-term financing are amortized on a straight-line basis to interest expense over the terms of the related financing agreements, as applicable, which approximates the effective interest method. Fair value adjustments of debt The Company records a fair value adjustment based upon the fair value of the loans on the date they were assumed in conjunction with acquisitions. The fair value adjustments are being amortized to interest expense over the remaining life of the loans. ​ 21 Table of Contents Loss on Extinguishment of Debt and Debt Modification Costs Upon repayment of or in conjunction with a material change (i.e., a 10% or greater difference in the cash flows between instruments) in the terms of an underlying debt agreement, the Company writes-off any unamortized deferred financing costs and fair market value adjustments related to the original debt that was extinguished. Prepayment penalties incurred on the early repayment of debt and costs incurred in a debt modification that are not capitalized are also included within loss on extinguishment of debt and debt modification costs on the combined consolidated statements of operations. Loss on extinguishment of debt and debt modification costs were zero for the three and nine months ended September 30, 2023 and 2022. Debt maturities As of September 30, 2023, contractual principal payments for the five subsequent years and thereafter are as follows (amounts in thousands): ​ ​ ​ ​ ​ Year Total 2023 (October 1–December 31) ​ $ 402 2024 ​ 1,639 2025 ​ 1,717 2026 ​ 37,471 2027 ​ 866 Thereafter ​ 55,012 ​ ​ $ 97,107 Add: Unamortized fair value debt adjustment ​ 996 Subtract: Deferred financing costs, net ​ ( 1,028 ) Total ​ $ 97,075 ​ The net book value of real estate assets providing collateral for these above borrowings, including the revolving credit facilities (refer to Note 9 for further information), was $ 368.5 million as of September 30, 2023. The mortgage loans encumbering the Company’s properties are nonrecourse, subject to certain exceptions for which the Company would be liable for any resulting losses incurred by the lender. These exceptions generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities. In addition, upon the occurrence of certain events, such as fraud or filing of a bankruptcy petition by the borrower, the Company or our joint ventures would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses. The mortgage loans have a period where a prepayment fee or yield maintenance would be required. Note 11 – Fair Value of Financial Instruments Fair Value Measurements For financial assets and liabilities recorded at fair value on a recurring or non-recurring basis, fair value is the price the Company would expect to receive to sell an asset, or pay to transfer a liability, in an orderly transaction with a market participant at the measurement date under current market conditions. In the absence of such data, fair value is estimated using internal information consistent with what market participants would use in a hypothetical transaction. In determining fair value, observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions; preference is given to observable inputs. In accordance with GAAP and as defined in ASC Topic 820: Fair Value Measurement, these two types of inputs create the following fair value hierarchy: ● Level 1: Quoted prices for identical instruments in active markets ● Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable ● Level 3: Significant inputs to the valuation model are unobservable 22 Table of Contents If the inputs used to measure the fair value fall within different levels of the hierarchy, the fair value is determined based upon the lowest level input that is significant to the fair value measurement. Whenever possible, the Company uses quoted market prices to determine fair value. In the absence of quoted market prices, the Company uses independent sources and data to determine fair value. Fair Value of Financial Instruments As of September 30, 2023 and December 31, 2022, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, due to affiliates, accounts payable, other accrued liabilities, and distributions payable approximate their fair value based on their highly-liquid nature and/or short-term maturities. Derivative Financial Instruments The estimated fair values of derivative financial instruments are valued using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and volatility. The fair value of interest rate caps is determined using the market-standard methodology of discounting the future expected cash receipts which would occur if floating interest rates rise above the strike rate of the caps. The floating interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.The inputs used in the valuation of interest rate caps and swaps fall within Level 2 of the fair value hierarchy. Fair Value of Debt As of September 30, 2023 and December 31, 2022, based on the discounted amount of future cash flows using rates currently available to the Company for similar liabilities, the fair value of the Company’s mortgages payable is estimated at $ 91.9 million and $ 93.7 million, respectively, compared to the carrying amounts, before adjustments for deferred financing costs, net, of $ 98.1 million and $ 99.5 million, respectively. The fair value of mortgages payable is estimated based on the Company’s current interest rates (Level 3 inputs of the fair value hierarchy) for similar types of borrowing arrangements. Note 12 – Derivative Financial Instruments The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings. The Company’s objectives in using interest rate derivative financial instruments are to add stability to interest expense and to manage the Company’s exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate caps and swaps as part of its interest rate risk management strategy. Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company has not designated any of the interest rate derivatives as hedges. Although these derivative financial instruments were not designated or did not qualify for hedge accounting, the Company believes the derivative financial instruments are effective economic hedges against increases in interest rates. The Company does not use derivative financial instruments for trading or speculative purposes. As of September 30, 2023, the Company had interest rate caps and swaps which effectively limit the Company’s exposure to interest rate risk by providing a ceiling on the underlying interest rate for $ 94.0 million of the Company’s debt. 23 Table of Contents The table below presents the classification and fair value of the Company’s derivative financial instruments on the combined consolidated balance sheets as of September 30, 2023 and December 31, 2022 (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivatives not designated as hedging ​ Fair Values of Derivative Instruments instruments under ASC 815-20 Balance Sheet Location September 30, 2023 December 31, 2022 Interest rate caps Accounts receivable, prepaids and other assets ​ $ 3,225 ​ $ 4,702 Interest rate swaps Accounts receivable, prepaids and other assets ​ 788 ​ 647 ​ The table below presents the classification and effect of the Company’s derivative financial instruments on the combined consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Effect of Derivative Instruments on the ​ ​ ​ Statements of Operations Derivatives not designated as hedging ​ Location of Gain (Loss) ​ Three Months Ended September 30, ​ Nine Months Ended September 30, instruments under ASC 815-20 Recognized in Income ​ 2023 2022 2023 2022 Interest rate caps Interest Expense ​ $ ( 792 ) ​ $ 1,903 ​ $ ( 1,477 ) ​ $ 2,070 Interest rate swaps Interest Expense ​ 94 ​ ​ 688 ​ 141 ​ 688 ​ ​ ​ Note 13 – Related Party Transactions Management Agreement On October 5, 2022, the Company entered into a management agreement (the “Management Agreement”) with the Operating Partnership and Bluerock Homes Manager, LLC (the “Manager”), which is an affiliate of Bluerock Real Estate, LLC (“BRE”), pursuant to which the Manager will provide for the day-to-day management of the Company’s operations. Pursuant to the terms of the Management Agreement, the Manager will provide the Company with a management team and appropriate support personnel to provide such management services to the Company. The Management Agreement requires the Manager to manage the Company’s business affairs under the supervision and direction of the Company’s board of directions (the “Board”). Specifically, the Manager will be responsible for (i) the selection, purchase and sale of the Company’s portfolio investments, (ii) the Company’s financing activities, and (iii) providing the Company with advisory services, in each case in conformity with the investment guidelines and other policies approved and monitored by its Board. The initial term of the Management Agreement expires on October 6, 2023 and will be automatically renewed for a one-year term on each anniversary date thereafter unless earlier terminated or not renewed in accordance with the terms thereof. The Company will pay the Manager a base management fee (the “base management fee”) in an amount equal to 1.50 % of the Company’s New Stockholders’ Equity (as defined in the Management Agreement) per year, as well as an incentive fee (the “incentive fee”) with respect to each calendar quarter (or part thereof that the Management Agreement is in effect) in arrears. The Company will also be required to reimburse the Manager for certain expenses and pay all operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. The Management Agreement provides that (i) the base management fee and the incentive fee shall be allocated and payable as one half ( 50 %) in C-LTIP Units and the remainder payable in cash or C-LTIP Units, at the discretion of the Board, and (ii) expense reimbursements shall be payable either in cash or C-LTIP Units, at the discretion of the Board. The number of C-LTIP Units payable and issued to the Manager for the base management fee, the incentive fee and expense reimbursements will be equal to the dollar amount (of the portion deemed payable in C-LTIP Units) of the fees earned or reimbursement amount divided by the average of the closing prices of the Class A common stock for the five business days prior to issuance. For the three and nine months ended September 30, 2023, the Company recorded base management fees of $ 2.0 million and $ 5.9 million, respectively, and expense reimbursements of $ 0.5 million and $ 1.4 million, respectively. The expense reimbursements were recorded as part of general and administrative expenses in the Company’s consolidated statement of operations. There has been no incentive fee expense incurred during the nine months ended September 30, 2023. 24 Table of Contents The table below presents the related party amounts payable to the Manager as of September 30, 2023 and December 31, 2022 pursuant to the terms of the Management Agreement (amounts in thousands). The Company records these payables in due to affiliates in its combined consolidated balance sheets. ​ ​ ​ ​ ​ ​ ​ ​ Amounts payable to the Manager under the Management Agreement ​ September 30, 2023 ​ December 31, 2022 Base management fee ​ $ 1,993 ​ $ 1,787 Operating and direct expense reimbursements ​ 490 ​ 424 Offering expense reimbursements ​ ​ 92 ​ ​ — Total amounts payable to the Manager ​ $ 2,575 ​ $ 2,211 ​ As of September 30, 2023 and December 31, 2022, the Company had no receivables due from any related parties. Selling Commissions and Dealer Manager Fees In conjunction with the offering of the Company’s Series A Preferred Stock (refer to Note 14 for further information), the Company engaged a related party as dealer manager, and pays up to 10 % of the gross offering proceeds from the offering as selling commissions and dealer manager fees. The dealer manager re-allows the substantial majority of the selling commissions and dealer manager fees to participating broker-dealers and incurs costs in excess of the 10 %, which costs are borne by the dealer manager without reimbursement by the Company. For the nine months ended September 30, 2023, the Company has incurred $ 0.3 million in selling commissions and discounts and $ 0.1 million in dealer manager fees and discounts related to its offering of Series A Preferred Stock. In addition, the Manager was, or shall be, reimbursed for offering costs of $ 0.1 million in conjunction with the offering of Series A Preferred Stock during the nine months ended September 30, 2023. The selling commissions, dealer manager fees, discounts and reimbursements for offering costs were recorded as a reduction to the proceeds of the offering. Administrative Services Agreement Prior to the completion of the spin-off transaction on October 6, 2022, Bluerock Residential was party to an Administrative Services Agreement (the “ASA”) and a Leasehold Cost-Sharing Agreement (the “CSA”) with BRE and its affiliate, Bluerock Real Estate Holdings, LLC (together “BREH”). Pursuant to the ASA, BREH provided Bluerock Residential with certain human resources, investor relations, marketing, legal and other administrative services (the “Services”). In addition, the ASA permitted certain Bluerock Residential employees to provide services to BREH, on an at-cost basis, generally allocated based on the use of such services for the benefit of the business of BREH, and otherwise subject to the terms of the Services provided by BREH to Bluerock Residential under the ASA. Pursuant to the CSA, Bluerock Residential and BREH were allocated costs, including those costs associated with tenant improvements, with respect to the lease for their New York headquarters (the “NY Lease”). Payments by Bluerock Residential of any amounts payable to BREH under the ASA and CSA were made in cash or, at the discretion of its board of directors, in the form of Bluerock Residential’s long-term incentive plan units. Pursuant to the terms of the ASA, operating expenses were (i) paid by BREH on behalf of Bluerock Residential, and (ii) paid by Bluerock Residential on behalf of BREH. Pursuant to the terms of the CSA, costs with respect to the NY Lease were paid by BREH on behalf of Bluerock Residential. Recorded as part of general and administrative expenses in the Company’s combined consolidated statements of operations, operating expenses paid by BREH on behalf of Bluerock Residential of $ 0.2 million and $ 0.6 million were expensed during the three and nine months ended September 30, 2022, respectively. Additionally, Bluerock Residential paid operating expenses on behalf of BREH of $ 0.2 million and $ 0.7 million during the three and nine months ended September 30, 2022, respectively. These prior period amounts were allocated to the Company by applying an allocation percentage, which was determined by taking the number of units carved out of the Bluerock Residential portfolio divided by Bluerock Residential’s total portfolio unit count, to the total operating expenses paid on behalf of or by Bluerock Residential. Prior period operating expense amounts recognized by the Company are not representative of the amounts that would have been reflected in the financial statements had the Company operated independently of Bluerock Residential. Both the ASA and CSA were terminated in connection with the completion of the spin-off transaction on October 6, 2022. ​ 25 Table of Contents Note 14 – Stockholders’ Equity and Redeemable Preferred Stock On October 6, 2022 (the “Distribution Date”), each of the Company’s stockholders received one share of the Company’s common stock for every eight shares of Bluerock Residential common stock held as of the close of business on September 29, 2022. An aggregate of 3,843,502 shares of the Company’s common stock was distributed to its stockholders, comprised of 3,835,013 shares of the Company’s Class A common stock and 8,489 shares of the Company’s Class C common stock. As the Company had no common stock outstanding prior to the Distribution Date, basic and diluted earnings per share for all prior periods have been calculated based on the aggregate of 3,843,502 shares of the Company’s common stock distributed to its stockholders on the Distribution Date. Net (Loss) Income Per Common Share Basic net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders, less dividends on restricted stock, LTIP Units and C-LTIP Units expected to vest, by the weighted average number of common shares outstanding for the period. Diluted net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders by the sum of the weighted average number of common shares outstanding and any potential dilutive shares for the period. Net (loss) income attributable to common stockholders is computed by adjusting net (loss) income for the non-forfeitable dividends paid on non-vested restricted stock, LTIP Units and C-LTIP Units. The Company considers the requirements of the two-class method when preparing earnings per share. The Company has two classes of common stock outstanding: Class A common stock, $ 0.01 par value per share, and Class C common stock, $ 0.01 par value per share. Earnings per share is not affected by the two-class method because the Company’s Class A and C common stock participate in dividends on a one -for- one basis. 26 Table of Contents The following table reconciles the components of basic and diluted net (loss) income per common share for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands, except share and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2023 2022 2023 2022 (Loss) income from continuing operations (1) ​ $ ( 3,630 ) ​ $ 265 ​ $ ( 10,087 ) ​ $ ( 3,124 ) Net (loss) income from continuing operations attributable to noncontrolling interests ​ ​ ( 2,562 ) ​ ​ 84 ​ ​ ( 7,144 ) ​ ( 3,034 ) (Loss) income from continuing operations attributable to BHM ​ $ ( 1,068 ) ​ $ 181 ​ $ ( 2,943 ) ​ $ ( 90 ) Income from discontinued operations ​ ​ — ​ ​ 311 ​ ​ — ​ ​ 311 Net income from discontinued operations attributable to noncontrolling interests ​ ​ — ​ ​ 205 ​ ​ — ​ ​ 211 Income from discontinued operations attributable to BHM ​ ​ — ​ ​ 106 ​ ​ — ​ ​ 100 Net (loss) income attributable to common stockholders ​ $ ( 1,068 ) ​ $ 287 ​ $ ( 2,943 ) ​ $ 10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding (2) ​ ​ 3,845,926 ​ ​ 3,843,502 ​ ​ 3,844,488 ​ 3,843,502 Potential dilutive shares (3) ​ ​ — ​ ​ — ​ ​ — ​ — Weighted average common shares outstanding and potential dilutive shares (2) ​ ​ 3,845,926 ​ ​ 3,843,502 ​ ​ 3,844,488 ​ 3,843,502 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income per common share, basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ ( 0.28 ) ​ $ 0.05 ​ $ ( 0.77 ) ​ $ ( 0.02 ) Discontinued operations ​ ​ — ​ ​ 0.03 ​ ​ — ​ ​ 0.02 ​ ​ $ ( 0.28 ) ​ $ 0.08 ​ $ ( 0.77 ) ​ $ 0.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income per common share, diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing operations ​ $ ( 0.28 ) ​ $ 0.05 ​ $ ( 0.77 ) ​ $ ( 0.02 ) Discontinued operations ​ ​ — ​ ​ 0.03 ​ ​ — ​ ​ 0.02 ​ ​ $ ( 0.28 ) ​ $ 0.08 ​ $ ( 0.77 ) ​ $ 0.00 (1) Loss from continuing operations for both the three and nine months ended September 30, 2023 includes $( 12 ) of preferred stock dividend expense. (2) Amounts relate to shares of the Company’s Class A and Class C common stock outstanding. (3) For the three and nine months ended September 30, 2023, potential vesting of restricted Class A common stock of zero shares and 3,702 shares, respectively, are excluded from the diluted shares calculation as the effect is antidilutive. The effect of the conversion of OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Class A common stock on a one-for-one basis. The income allocable to such OP Units is allocated on this same basis and reflected as noncontrolling interests in the accompanying combined consolidated financial statements. As such, the assumed conversion of these OP Units would have no net impact on the determination of diluted earnings per share. 27 Table of Contents Series A Redeemable Preferred Stock On June 28, 2023, the SEC declared effective the Company’s registration statement on Form S-11 (File No. 333-269415) (the “2023 Registration Statement”). On June 30, 2023, the Company filed a prospectus supplement to the 2023 Registration Statement offering a maximum of 20,000,000 shares of 6.0 % Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $ 25.00 per share (the “Stated Value”), for a maximum offering amount of $ 500,000,000 in Series A Preferred Stock (the “Series A Preferred Offering”), and on August 11, 2023, the Company made the initial issuances of Series A Preferred Stock pursuant to the Series A Preferred Offering. The Series A Preferred Stock ranks senior to all classes of the Company’s common stock. The Series A Preferred Stock is entitled, when and as authorized by the Board and declared by the Company out of legally available funds, to priority cumulative dividends at an annual rate of 6.0 % of the Stated Value to be paid monthly, in arrears. Holders may, at their option, elect to have the Company redeem their shares through the first year from issuance subject to a 12 % redemption fee. After year one , the redemption fee decreases to 9 %, after year two it decreases to 6 %, after year three it decreases to 3 %, and after year four there is no redemption fee. Any redeemed shares are entitled to any accrued but unpaid dividends at the time of the redemption, payable by the Company, at its option, in either cash or in equal value of shares of its Class A common stock. The Company has the right to redeem the Series A Preferred Stock beginning two years from the original issuance for the Stated Value, plus any accrued and unpaid dividends, in either cash or in equal value of shares of its Class A common stock, at the Company's option, with the number of shares of Class A common stock issued for redemption (if any) based on the closing price per share of the Class A common stock for the single trading day prior to the date of redemption. As of September 30, 2023, the Company had issued 152,222 shares of Series A Preferred Stock pursuant to the Series A Preferred Offering with net proceeds of approximately $ 3.4 million after commissions, dealer manager fees and discounts of approximately $ 0.4 million. The Company did not redeem any shares of Series A Preferred Stock during the nine months ended September 30, 2023. Operating Partnership and Long-Term Incentive Plan Units As of September 30, 2023, limited partners other than the Company owned approximately 68.27 % of the common units of the Operating Partnership ( 7,368,303 OP Units, or 60.30 %, is held by OP Unit holders, and 973,463 LTIP Units, or 7.97 %, is held by LTIP Unit holders, including 4.48 % which are not vested as of September 30, 2023). Subject to certain restrictions set forth in the Operating Partnership’s Partnership Agreement, OP Units are exchangeable for Class A common stock on a one-for-one basis, or, at the Company’s election, redeemable for cash. LTIP Units and C-LTIP Units may be convertible into OP Units under certain conditions and then may be settled in shares of the Company’s Class A common stock or, at the Company’s election, cash. The Company granted C-LTIP Units to the Manager pursuant to the Management Agreement in payment of (i) the base management fee and (ii) the operating expense reimbursement as follows: (a) 85,750 and 17,462 C-LTIP Units, respectively, granted on February 22, 2023 for the fourth quarter 2022, (b) 114,391 and 20,531 C-LTIP Units, respectively, granted on May 17, 2023 for the first quarter 2023, and (c) 125,491 and 24,753 C-LTIP Units, respectively, granted on August 15, 2023 for the second quarter 2023. Such C-LTIP Units were fully vested upon issuance. In the future, the Operating Partnership may issue OP Units or preferred OP Units from time to time in connection with acquisitions of properties or for financing, compensation or other reasons. Equity Incentive Plans The Board has adopted, and the Company’s sole initial stockholder has approved, the Bluerock Homes Trust, Inc. 2022 Equity Incentive Plan for Individuals (the “BHM Individuals Plan”) and the Bluerock Homes Trust, Inc. 2022 Equity Incentive Plan for Entities (the “BHM Entities Plan”). Together, the Company refers to the BHM Individuals Plan and the BHM Entities Plan as the “BHM Incentive Plans.” The BHM Incentive Plans provide for the grant of options to purchase shares of our common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards, and are administered by the compensation committee of the Board. LTIP Unit Grants On January 1, 2023, the Company granted 3,303 LTIP Units pursuant to the BHM Incentive Plans to each independent member of the Board in payment of the equity portion of their respective annual retainers. Such LTIP Units were fully vested upon issuance and the Company recognized expense of $ 0.3 million based on the fair value at the date of grant. 28 Table of Contents On May 25, 2023, the Company granted 141,665 LTIP Units pursuant to the BHM Incentive Plans to the Manager as an annual long-term incentive equity grant for the year ended December 31, 2022. Such LTIP Units will vest in equal installments on an annual basis over a three -year period from April 1, 2023. The Company recognizes compensation expense ratably over the vesting period for time-based LTIP Units based on the fair value at the date of grant. During the three and nine months ended September 30, 2023, the Company recognized compensation expense for such LTIP Units of approximately $ 0.7 million and $ 1.7 million, respectively. Such expense was recorded as part of general and administrative expenses in the Company’s consolidated statements of operations. As of September 30, 2023, there was $ 9.6 million of total unrecognized compensation expense related to unvested LTIP Units granted under the BHM Incentive Plans. The remaining expense is expected to be recognized over a period of 3.7 years. Restricted Stock Grants On May 25, 2023, the Company granted 31,260 shares of Class A common stock as restricted stock grants (“RSGs”), pursuant to the BHM Incentive Plans, to the Manager as an annual incentive grant for the year ended December 31, 2022. Such RSGs will vest in equal installments on an annual basis over a three -year period from April 1, 2023. During the three and nine months ended September 30, 2023, the Company recognized compensation expense for such RSGs of approximately $ 0.05 million and $ 0.06 million, respectively. Such expense was recorded as part of general and administrative expenses in the Company’s consolidated statements of operations. As of September 30, 2023, there was $ 0.5 million of total unrecognized compensation expense related to the unvested RSGs granted under the BHM Incentive Plans. The remaining expense is expected to be recognized over a period of 2.5 years. The Company currently uses authorized and unissued shares to satisfy share award grants. Distributions ​ ​ ​ ​ ​ ​ ​ ​ ​ Declaration Date Payable to stockholders of record as of Amount Paid / Payable Date Series A Preferred Stock (1) ​ September 11, 2023 ​ August 25, 2023 ​ $ 0.125 ​ October 5, 2023 September 11, 2023 ​ September 25, 2023 ​ $ 0.125 ​ October 5, 2023 (1) Holders of record of newly issued Series A Preferred Stock shares that are held only a portion of the applicable monthly dividend period will receive a prorated dividend based on the actual number of days in the applicable dividend period during which each such share of Series A Preferred Stock was outstanding. A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that the Company will continue to declare dividends or at this rate. Holders of restricted stock, OP Units, LTIP Units and C-LTIP Units are entitled to receive "distribution equivalents" at the same time as dividends are paid to holders of the Company's Class A common stock. Distributions declared and paid for the nine months ended September 30, 2023 were as follows (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Distributions 2023 ​ Declared ​ Paid Series A Preferred Stock $ 12 $ — Total ​ $ 12 ​ $ — ​ ​ Note 15 – Commitments and Contingencies The aggregate amount of the Company’s contractual commitments to fund future cash obligations in certain of its preferred equity and joint venture investments was $ 0.2 million and $ 3.4 million as of September 30, 2023 and December 31, 2022, respectively. The Company is subject to various legal actions and claims arising in the ordinary course of business. Although the outcome of any legal matter cannot be predicted with certainty, management does not believe that any of these legal proceedings or matters will have a material adverse effect on the consolidated financial position or results of operations or liquidity of the Company. 29 Table of Contents Note 16 – Subsequent Events Declaration of Dividends ​ ​ ​ ​ ​ ​ ​ ​ ​ Declaration Date Payable to stockholders of record as of Amount Paid / Payable Date Series A Preferred Stock (1) ​ October 13, 2023 ​ October 25, 2023 ​ $ 0.125 ​ November 3, 2023 October 13, 2023 ​ November 24, 2023 ​ $ 0.125 ​ December 5, 2023 October 13, 2023 ​ December 22, 2023 ​ $ 0.125 ​ January 5, 2024 Series A Preferred Stock Special Dividend ​ ​ ​ ​ ​ ​ ​ November 7, 2023 ​ Each day of November 1 - 30, 2023 ​ ​ (2) ​ December 5, 2023 November 7, 2023 ​ Each day of December 1 - 31, 2023 ​ ​ (2) ​ January 5, 2024 (1) Holders of record of newly issued Series A Preferred Stock shares that are held only a portion of the applicable monthly dividend period will receive a prorated dividend based on the actual number of days in the applicable dividend period during which each such share of Series A Preferred Stock was outstanding. (2) Holders of record of Series A Preferred Stock shares as of the close of business on each day of the applicable month are entitled to additional contingent special daily dividends for each such day, to be aggregated and payable (if at all) on the payable date, in each case equal to the amount (if any) by which (i) the Stated Value of the Series A Preferred Stock multiplied by (a) the sum of (I) the average 10-year Daily Treasury Par Yield Curve Rate for the period from the 26 th of the prior month to the 25 th of the applicable month (as reported by the United States Department of the Treasury), plus (II) two percent ( 2.0 )%, divided by (b) twelve ( 12 ), divided further by (c) the actual number of days in the applicable month, exceeds (ii) the quotient of (a) $ 0.125 divided by (b) the actual number of days in the applicable month. Distributions Paid The following distributions were declared and/or paid to the Company's stockholders subsequent to September 30, 2023 (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares Declaration Date Record Date Date Paid Distributions per Share Total Distribution Series A Preferred Stock ​ September 11, 2023 ​ August 25, 2023 ​ October 5, 2023 ​ $ 0.125 ​ $ 2 Series A Preferred Stock ​ September 11, 2023 ​ September 25, 2023 ​ October 5, 2023 ​ 0.125 ​ 10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A Preferred Stock ​ October 13, 2023 ​ October 25, 2023 ​ November 3, 2023 ​ 0.125 ​ 22 Total ​ ​ ​ ​ ​ $ 34 ​ Sale of Willow Park Interests On October 26, 2023, Willow Park, the underlying asset of an unconsolidated joint venture located in Willow Park, Texas, was sold. Upon the sale, the Company’s preferred equity investment was redeemed for $ 4.1 million, which included $ 2.9 million of its total principal investment and $ 1.2 million of accrued preferred return. The accrued preferred return was earned by the Company on its total principal investment and based on rates and terms agreed upon for its original and additional principal investments (refer to Note 8 for further information). The remaining $ 1.7 million of the Company’s principal investment is collateralized by The Woods at Forest Hill and Peak REIT OP. ​ 30 Table of Contents Willow Park Loan Financing On October 26, 2023, the Company provided a $ 9.4 million senior mortgage loan (the “Willow Loan”) to the new owner of Willow Park, an unaffiliated third party. The Willow Loan bears interest at a fixed rate of 5.08 % per annum during the initial term with regular monthly payments that are interest-only. The Willow Loan matures on October 28, 2024, contains two six-month extension options subject to certain conditions, and can be prepaid in part, subject to a minimum payment, or in whole without penalty. ​ Incentive Grant Forfeitures and Reissuances Effective November 2, 2023, for tax efficiency purposes, the Manager forfeited (i) 367,357 unvested LTIP Units granted to the Manager on November 3, 2022 in payment of the initial staking grant pursuant to the BHM Entities Plan, and (ii) (a) 83,995 unvested LTIP Units and (b) 31,260 unvested RSGs that were, in each case, granted to the Manager on May 25, 2023 in payment of the annual equity incentive grant pursuant to the BHM Entities Plan. On November 3, 2023, by mutual agreement of the Manager and the Company, and at the direction of the Manager, the foregoing aggregate numbers of unvested LTIP Units and unvested RSGs were issued directly to and among certain of the BREH Personnel (as defined below), pursuant to the BHM Individuals Plan, as equity compensation for services provided to the Manager in such capacities. These issuances are in satisfaction of the Manager’s obligation to its affiliate, BREH, for compensation-related expenses incurred by BREH in connection with its employment of the Manager’s executive management team and personnel who provide other services to the Manager (collectively, the “BREH Personnel”). ​ ​ 31 Table of Contents