What changed in this filing

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Item 1. Business

2024-03-12 compared with 2023-03-22 · 80 added, 93 removed, 118 unchanged (59% of the section changed)

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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 us and Bluerock Homes becoming an independent publicly traded company.

We intend to elect to be taxed and to operate in a manner that will allow us to qualify as a real estate investment trust (“REIT”) for federal income tax purposes beginning with our taxable year ended December 31, 2022.

As a REIT, we generally will not be subject to corporate-level income taxes.

To qualify and maintain our REIT status, we will be required, among other requirements, to distribute annually at least 90% of our “REIT taxable income,” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), to our stockholders.

If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax on our taxable income at regular corporate tax rates.

We have elected to be taxed and have qualified as a real estate investment trust (“REIT”) for federal income tax purposes beginning with our taxable year ended December 31, 2022.

As a REIT, we generally are not subject to corporate-level income taxes.

In order to maintain our REIT status, we are required, among other requirements, to distribute annually at least 90% of our “REIT taxable income,” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), to our stockholders.

If we fail to maintain our qualification as a REIT in any taxable year, we would be subject to federal income tax on our taxable income at regular corporate tax rates and we would not be permitted to qualify as a REIT for four years following the year in which we lost our qualification.

We intend to continue to organize and operate in such a manner as to remain qualified as a REIT.

Unless otherwise indicated or the context requires otherwise, all references to “the Company,” “we,” “us” and “our” mean Bluerock Homes Trust, Inc., a Maryland corporation, together with its consolidated subsidiaries, including, without limitation, Bluerock Residential Holdings, L.P., a Delaware limited partnership (our “Operating Partnership”), of which we are the sole general partner.

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We are externally managed by the Manager, which manages our day-to-day operations under a Management Agreement (the “Management Agreement”).

Our Management Agreement has a one-year term expiring October 6, 2023 and will be automatically renewed for a one-year term each year on October 6, unless previously terminated in accordance with the terms of the Management Agreement.

The current term of our Management Agreement expires October 6, 2024 and will be automatically renewed for a one-year term each year on October 6, unless previously terminated in accordance with the terms of the Management Agreement.

The Manager is responsible for managing our affairs on a day-to-day basis and for identifying and making real estate investments on our behalf.

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Investments in Real Estate

As of December 31, 2022, we held an aggregate of 3,977 residential units held through seventeen real estate investments, consisting of ten consolidated operating investments and seven investments held through preferred equity investments.

As of December 31, 2023, we held eighteen real estate investments, consisting of eleven consolidated investments and seven preferred equity and loan investments.

The eighteen investments represent an aggregate of 4,059 residential units, comprised of 2,475 consolidated units, of which 170 units are under development, and 1,584 units through preferred equity and loan investments.

As of December 31, 2023, our consolidated operating investments were approximately 94.1% occupied.

For more information regarding our investments, see “Item 2.

Investments”.

The Separation and the Distribution

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Following the Separation, the Distribution and the Spin-Off, the former holders of Bluerock Residential common stock who received shares of the Company’s common stock in the Distribution indirectly owned approximately 34% of the Company’s single-family residential business, and holders of units in the Operating Partnership (other than the holders of the Company’s common stock) indirectly owned approximately 66% of the Company’s single-family residential business.

Financial statements representing the historical operations of Bluerock Residential’s residential rental business have been derived from Bluerock Residential’s historical accounting records and are presented on a carve-out basis.

Financial statements for the period ended and prior to October 6, 2022 represent the historical operations of Bluerock Residential’s single-family residential real estate business, 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 Bluerock Homes are included in the financial statements.

The financial statements also include allocations of certain general, administrative, sales and marketing expenses and operations from Bluerock Residential for the period ended and prior to October 6, 2022.

However, amounts recognized by us are not necessarily representative of the amounts that would have been reflected in the financial statements had we operated independently of Bluerock Residential.

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 us are not necessarily representative of the amounts that would have been reflected in the financial statements had we operated independently of Bluerock Residential during that period.

All significant intercompany balances and transactions have been eliminated.

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These will be located across a diverse group of growth markets and will target a growing pool of middle-income renters seeking the single-family lifestyle without the upfront and ongoing investments associated with home ownership.

By implementing our investment strategies and our institutional-quality management, we expect to be able to achieve sustainable long-term growth in both our FFO and NAV.

By implementing our investment strategies and our institutional-quality management, we expect to be able to achieve sustainable long-term growth in both our funds from operations (“FFO”) and net asset value (“NAV”)

Value Creation Execution.

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The following table presents a summary of our real estate investments during the years ended December 31, 2023 and 2022:

Month Acquired (1)

Investment Name

Location / Market

Date of Investment (1)

Ownership Interest

Number of Units

Second Quarter

Peak Housing (2)(5)

Yauger Park Villas

Wayford at Concord (3)

Wayford at Innovation Park (4)(5)

Charlotte, NC

Willow Park (5)

Willow Park, TX

Third Quarter

Corpus Christi, TX

Weatherford, TX

Peak JV 1 (7)

The Cottages of Port St.

Peak JV 2 (8)

The Cottages at Myrtle Beach (4)(5)

Myrtle Beach, SC

Fourth Quarter

Peak JV 2 (8)

Golden Pacific

Peak JV 2 (8)

Peak JV 3, formerly DFW 189

Dallas-Fort Worth, TX

The Cottages at Warner Robins (4)(5)

Warner Robins, GA

The Woods at Forest Hill (5)

Forest Hill, TX

First Quarter

1 unchanged sentence

Weatherford, TX

Peak JV 2 (8)

Peak JV 4, formerly Savannah 319

February 15,2022

Savannah-84, formerly Peak JV 4 (3)

Golden Pacific

1 unchanged sentence

Golden Pacific

Savannah-84 (3)

Third Quarter

Golden Pacific

Savannah-84 (3)

Fourth Quarter

Golden Pacific

(1) For those months where “Various” is listed, we, on various dates throughout that specified quarter, acquired additional units that were added to the respective existing portfolios.

Savannah-84 (3)

February 23,2023

Willow Park (4)

Willow Park, TX

October 26,2023

November 15,2023

Abode Wendell Falls (6)

December 20,2023

The Woods at Forest Hill (4)

Forest Hill, TX

December 28,2023

(1) For those dates where a month is listed, additional units were acquired and added to the respective existing portfolio throughout that specified month.

For those dates where “Various” is listed, additional units were acquired and added to the respective existing portfolios on various dates throughout that specified quarter.

For Ballast, the units acquired in the second quarter 2022 were our first acquisitions for the portfolio.

(2) Peak Housing consists of our preferred equity investments in a private single-family home REIT (refer to Note 8 of our combined consolidated financial statements for further information).

Unit count excludes consolidated operating investment units which are presented separately.

(3) We purchased the Wayford at Concord property from our unaffiliated joint venture partner, and as part of the transaction, our preferred equity investment was redeemed.

Refer to Note 8 of our combined consolidated financial statements for further information.

(4) The property is a development project.

(5) Our investment in the property is through a preferred equity investment with an unaffiliated third party.

Refer to Note 8 of our combined consolidated financial statements for further information.

(6) We recapitalized Corpus and Jolin on December 22, 2021 and received full payoffs of the bridge loans.

As part of the recapitalization, both Corpus and Jolin, along with two portfolios of units previously owned solely by our unaffiliated joint venture partner, were combined into one portfolio and contributed into the existing Peak JV 2 joint venture.

(7) Peak JV 1 includes the portfolios formerly presented as Indy and Springfield.

(8) Peak JV 2 includes the portfolios formerly presented as Axelrod, Granbury, Granbury 2.0, Lubbock, Lubbock 2.0, Lubbock 3.0, Lynnwood, Lynnwood 2.0, Springtown, Springtown 2.0, Texarkana and Texas Portfolio 183, of which all are in Texas.

The number of units presented reflect the aggregate of the portfolios acquired during the period specified.

(2) Our investment in the property was through a mezzanine loan to an unaffiliated third party.

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Refer to the table below.

The following table presents a summary of our real estate sales, loan payoffs and redemption of preferred equity during the years ended December 31, 2022 and 2021:

Date Sold / Payoff

ARIUM Grandewood

January 28, 2021

James at South First

February 24, 2021

Marquis at The Cascades

March 1, 2021

The Conley (1)

March 18, 2021

Alexan Southside Place (1)

March 25, 2021

Plantation Park

Lake Jackson, TX

April 26, 2021

Wayford at Concord (1)

Vickers Historic Roswell (2)

June 29, 2021

Park & Kingston

Charlotte, NC

The District at Scottsdale

Scottsdale, AZ

Mira Vista (1)

September 23, 2021

Thornton Flats (1)

December 14, 2021

Corpus Christi, TX

December 22, 2021

Weatherford, TX

December 22, 2021

(3) In January 2023, we acquired the unaffiliated joint venture partner’s interest in Savannah-84, increasing our interest from 80% to 100%.

(4) Our investment is through a note receivable provided to an unaffiliated third party.

Refer to Note 7 of our combined consolidated financial statements for further information.

(5) Our investment in Chandler is through a preferred equity investment with an unaffiliated third party.

Refer to Note 8 of our combined consolidated financial statements for further information.

(6) Abode Wendell Falls is a build to rent development project expected to commence construction in the second quarter 2024.

The total estimated project cost is $56.0 million, of which $6.5 million was incurred as of December 31, 2023.

Abode Wendell Falls is classified as a consolidated investment.

The following table presents a summary of our loan payoffs, real estate sales, and redemption of preferred equity investments during the years ended December 31, 2023 and 2022:

Date of Payoff, Sale

Investment Name

Location / Market

or Redemption (1)

The Hartley at Blue Hill (2)

4 unchanged sentences

July 22, 2022

(1) Our investment in the property, which was through a preferred equity investment with an unaffiliated third party, was redeemed.

Refer to Note 8 of our combined consolidated financial statements for further information.

First Quarter

Peak Housing (3)

Second Quarter

Golden Pacific

Brownsburg, IN

Peak Housing (3)

Dallas-Fort Worth, TX

Third Quarter

Peak Housing (3)

Dallas-Fort Worth, TX

Fourth Quarter

Golden Pacific

Lee’s Summit, MO

October 18, 2023

Peak Housing (3)

Dallas-Fort Worth, TX

Willow Park (4)

Willow Park, TX

October 26, 2023

The Cottages at Warner Robins (4)

Warner Robins, GA

December 15, 2023

(1) For those dates where “Various” is listed, units were sold from the respective portfolios on various dates throughout that specified quarter.

(2) Our investment in the property, which was through one or more loans that we provided, was paid off in full.

Refer to Note 7 of our combined consolidated financial statements for further information.

(3) We recapitalized Corpus and Jolin on December 22, 2021 and received full payoffs of the bridge loans.

(3) Our investment in the property, which is through a preferred equity investment with an unaffiliated third party, was partially redeemed as units collateralizing our investment (such units collectively known as “Peak Housing”) were sold.

Refer to Note 8 of our combined consolidated financial statements for further information.

(4) Our investment in the property, which was through a preferred equity investment with an unaffiliated third party, was redeemed.

Refer to Note 8 of our combined consolidated financial statements for further information.

Distribution Policy

We intend to qualify and maintain our qualification as a REIT for federal income tax purposes.

We intend to maintain our qualification as a REIT for federal income tax purposes.

The Code generally requires that a REIT annually distribute at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain, and imposes tax on any taxable income retained by a REIT, including capital gains.

To satisfy the requirements for qualification as a REIT and generally not be subject to federal income and excise tax, we intend to make regular distributions of all or substantially all of our REIT taxable income, determined without regard to dividends paid, to our stockholders out of assets legally available for such purposes.

All future distributions will be determined at the sole discretion of our Board of Directors (the “Board”) on a quarterly basis.

When determining the amount of future distributions, we expect that our Board will consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future operating cash flows, (iii) our determination of near-term cash needs for acquisitions of new properties, development investments, general property capital improvements and debt repayments, (iv) our ability to continue to access additional sources of capital, (v) the requirements of Maryland law, (vi) the amount required to be distributed to qualify and maintain our qualification as a REIT and to reduce any income and excise taxes that we otherwise would be required to pay and (vii) any limitations on our distributions contained in our credit or other agreements.

Holders of shares of 6.0% Series A Redeemable Preferred Stock, $0.01 par value per share (the “Series A Redeemable Preferred Stock”), will be entitled to receive, when and as authorized by our Board and declared by us out of legally available funds, cumulative cash dividends on each share of Series A Redeemable Preferred Stock at an annual rate of six percent (6.0%) of the $25.00 liquidation preference per share (equivalent to the fixed annual amount of $1.50 per share).

Cash dividends on each share of Series A Redeemable Preferred Stock will begin accruing on, and will be cumulative from, the date of original issuance or the end of the most recent dividend period for which cash dividends on the Series A Redeemable Preferred Stock have been paid on each such share, payable monthly in arrears on the 5 th day of each month to holders of record on the 25 th day of the prior month;

provided, however, that any such cash dividend may vary among holders of Series A Redeemable Preferred Stock and may be prorated with respect to any shares of Series A Redeemable Preferred Stock that were outstanding less than the total number of days in the dividend period immediately preceding the applicable dividend payment date, with the amount of any such prorated dividend being computed on the basis of the actual number of days in such dividend period during which such shares of Series A Redeemable Preferred Stock were outstanding.

All future distributions will be determined at the sole discretion of our Board on a quarterly basis.

When determining the amount of future distributions, we expect that our Board will consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future operating cash flows, (iii) our determination of near-term cash needs for acquisitions of new properties, development investments, general property capital improvements and debt repayments, (iv) our ability to continue to access additional sources of capital, (v) the requirements of Maryland law, (vi) the amount required to be distributed to maintain our qualification as a REIT and to reduce any income and excise taxes that we otherwise would be required to pay and (vii) any limitations on our distributions contained in our credit or other agreements.

Holders of shares of the Series A Preferred Stock will be entitled to receive, when and as authorized by our Board and declared by us out of legally available funds, cumulative cash dividends on each share of Series A Preferred Stock at an annual rate of six percent (6.0%) of the $25.00 liquidation preference per share (equivalent to the fixed annual amount of $1.50 per share).

Cash dividends on each share of Series A Preferred Stock will begin accruing on, and will be cumulative from, the date of original issuance or the end of the most recent dividend period for which cash dividends on the Series A Preferred Stock have been paid on each such share, payable monthly in arrears on the 5 th day of each month to holders of record on the 25 th day of the prior month;

provided, however, that any such cash dividend may vary among holders of Series A Preferred Stock and may be prorated with respect to any shares of Series A Preferred Stock that were outstanding less than the total number of days in the dividend period immediately preceding the applicable dividend payment date, with the amount of any such prorated dividend being computed on the basis of the actual number of days in such dividend period during which such shares of Series A Preferred Stock were outstanding.

Holders of shares of Class A common stock, $0.01 par value per share (the “Class A common stock”), and Class C common stock $0.01 par value per share (the “Class C common stock”), will be entitled to receive cash dividends when, as and if authorized by our Board and declared by us.

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Our distribution policy enables us to review the alternative funding sources available to us from time to time.

Our actual results of operations will be affected by a number of factors, including the revenues we receive from our properties, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures.

Our actual results of operations will be affected by a number of factors, including the revenues we receive from our properties and other investments, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures.

For more information regarding risk factors that could materially adversely affect our actual results of operations, please see “Item 1A – Risk Factors.”

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business