What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 283 added, 192 removed, 619 unchanged (43% of the section changed)

17 unchanged sentences

In-place lease intangible assets, net

Non-real estate assets associated with operating real estate held for sale

LIABILITIES AND EQUITY

5 unchanged sentences

Distributions payable

Liabilities associated with operating real estate held for sale

Total Liabilities

6.0 % Series A Redeemable Preferred Stock, liquidation preference $ 25.00 per share, 30,000,000 shares authorized;

832,303 and 436,675 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

2,196,795 and 436,675 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Stockholders’ Equity

Preferred stock, $ 0.01 par value, 220,000,000 shares authorized;

no shares issued and outstanding at March 31, 2024 and December 31, 2023

no shares issued and outstanding at June 30, 2024 and December 31, 2023

Common stock - Class A, $ 0.01 par value, 562,500,000 shares authorized;

3,871,265 shares issued and outstanding at March 31, 2024 and December 31, 2023

3,946,348 and 3,871,265 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock - Class C, $ 0.01 par value, 187,500,000 shares authorized;

8,489 shares issued and outstanding at March 31, 2024 and December 31, 2023

8,489 shares issued and outstanding at June 30, 2024 and December 31, 2023

Additional paid-in-capital

11 unchanged sentences

Three Months Ended

Six Months Ended

Rental and other property revenues

6 unchanged sentences

Acquisition and other transaction costs

Weather-related losses, net

Depreciation and amortization

Total expenses

Other income (expense)

Other income, net

Other (expense) income

Other (expense) income, net

Preferred returns on unconsolidated real estate joint ventures

Provision for credit losses, net

Gain on sale and impairment of real estate investments, net

(Impairment) and gain on sale of real estate investments, net

Interest expense, net

Interest income

Total other income (expense)

Total other (expense) income

Preferred stock dividends

Preferred stock accretion

Net loss attributable to noncontrolling interests

9 unchanged sentences

BLUEROCK HOMES TRUST, INC.

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOR THE THREE MONTHS ENDED JUNE 30, 2024

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

3 unchanged sentences

Noncontrolling

Distributions

Balance, April 1, 2024

Issuance of restricted Class A common stock and long-term incentive plan (“LTIP”) Units for equity incentive plan compensation, net of shares withheld for employee taxes

Issuance of C-LTIP Units to Manager

Series A Preferred Stock distributions declared

Series A Preferred Stock accretion

Distributions to partially owned properties’ noncontrolling interests

Holder redemption of Series A Preferred Stock and conversion into Class A common stock

Adjustment for noncontrolling interest ownership in the Operating Partnership

Balance, June 30, 2024

See Notes to Consolidated Financial Statements

BLUEROCK HOMES TRUST, INC.

FOR THE THREE MONTHS ENDED JUNE 30, 2023

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands, except share amounts)

Class A Common Stock

Class C Common Stock

Noncontrolling

Balance, April 1, 2023

Issuance of restricted Class A common stock and LTIP Units for equity incentive plan compensation

Issuance of C-LTIP Units to Manager

Distributions to partially owned properties’ noncontrolling interests

Conversion of Operating Partnership Units to Class A common stock

Adjustment for noncontrolling interest ownership in the Operating Partnership

Balance, June 30, 2023

See Notes to Consolidated Financial Statements

BLUEROCK HOMES TRUST, INC.

FOR THE SIX MONTHS ENDED JUNE 30, 2024

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands, except share amounts)

Class A Common Stock

Class C Common Stock

Noncontrolling

Balance, January 1, 2024

Issuance of restricted Class A common stock and long-term incentive plan (“LTIP”) Units for equity incentive plan compensation

Issuance of restricted Class A common stock and LTIP Units for equity incentive plan compensation, net of shares withheld for employee taxes

Issuance of C-LTIP Units to Manager

Series A Preferred Stock distributions declared

Series A Preferred Stock accretion

Distributions to partially owned properties’ noncontrolling interests

Contributions from noncontrolling interests

Holder redemption of Series A Preferred Stock and conversion into Class A common stock

Adjustment for noncontrolling interest ownership in the Operating Partnership

Balance, March 31, 2024

Balance, June 30, 2024

See Notes to Consolidated Financial Statements

BLUEROCK HOMES TRUST, INC.

FOR THE THREE MONTHS ENDED MARCH 31, 2023

FOR THE SIX MONTHS ENDED JUNE 30, 2023

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

4 unchanged sentences

Balance, January 1, 2023

Issuance of LTIP Units for equity incentive plan compensation

Issuance of restricted Class A common stock and LTIP Units for equity incentive plan compensation

Issuance of C-LTIP Units to Manager

1 unchanged sentence

Distributions to partially owned properties’ noncontrolling interests

Conversion of Operating Partnership Units to Class A common stock

Contributions from noncontrolling interests

Adjustment for noncontrolling interest ownership in the Operating Partnership

Balance, March 31, 2023

Balance, June 30, 2023

See Notes to Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

1 unchanged sentence

Preferred returns on unconsolidated real estate joint ventures

Gain on sale and impairment of real estate investments, net

Impairment and (gain) on sale of real estate investments, net

Fair value adjustment of interest rate caps and swaps

4 unchanged sentences

Changes in operating assets and liabilities:

Due (from) to affiliates, net

Due to affiliates, net

Accounts receivable, prepaids and other assets

1 unchanged sentence

Accounts payable and other accrued liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

1 unchanged sentence

Capital expenditures

Purchase of interest rate cap

Investment in notes receivable

16 unchanged sentences

Net proceeds from issuance of 6.0 % Series A Redeemable Preferred Stock

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of year

19 unchanged sentences

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 March 31, 2024, the Company held twenty real estate investments, consisting of twelve consolidated investments and eight preferred equity and loan investments.

The twenty investments represent an aggregate of 4,366 residential units, comprised of 2,745 consolidated units, of which 170 units are under development, and 1,621 units through preferred equity and loan investments.

As of March 31, 2024, the Company’s consolidated operating investments were approximately 94.8 % occupied.

As of June 30, 2024, the Company held twenty-one real estate investments, consisting of twelve consolidated investments and nine preferred equity and loan investments.

The twenty-one investments represent an aggregate of 4,362 residential units, comprised of 2,732 consolidated units, of which 170 units are under development, and 1,630 units through preferred equity and loan investments.

As of June 30, 2024, the Company’s consolidated operating investments were approximately 92.2 % occupied;

excluding units classified as held for sale and down/renovation units, the Company’s consolidated operating investments were approximately 95.4 % occupied.

The Company has elected to be treated, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes.

7 unchanged sentences

The consolidated financial statements include the Company’s accounts and those of the Operating Partnership and its subsidiaries.

As of March 31, 2024, limited partners other than the Company owned approximately 69.34 % of the common units of the Operating Partnership ( 58.20 % is held by holders of limited partnership interest in the Operating Partnership (“OP Units”) and 11.14 % is held by holders of the Operating Partnership’s long-term incentive plan units (“LTIP Units”), including 3.68 % which are not vested as of March 31, 2024).

As of June 30, 2024, limited partners other than the Company owned approximately 69.19 % of the common units of the Operating Partnership ( 57.38 % is held by holders of limited partnership interest in the Operating Partnership (“OP Units”) and 11.81 % is held by holders of the Operating Partnership’s long-term incentive plan units (“LTIP Units”), including 3.76 % which are not vested as of June 30, 2024).

Certain amounts in prior year financial statement presentation have been reclassified to conform to the current year presentation.

23 unchanged sentences

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.

Costs incurred to originate its notes receivable are deferred and amortized using the effective interest method over the term of the related note receivable.

The Company evaluates the collectability of each loan investment and estimates a provision for credit loss, as applicable.

10 unchanged sentences

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission (“SEC”) on March 12, 2024 for discussion of the Company’s significant accounting policies.

During the three months ended March 31, 2024, there were no material changes to these policies.

During the six months ended June 30, 2024, there were no material changes to these policies.

Interim Financial Information

9 unchanged sentences

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 the London Interbank Offered Rate (“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.

In November 2023, the FASB issued Accounting Standards Update No.

1 unchanged sentence

The amendments in ASU 2023-07 require additional disclosures regarding reportable segments, including a segment’s significant expenses on both an annual and interim basis.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods with fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07 on its financial disclosures.

The amendments in ASU 2023-07 will be effective for fiscal years beginning after December 15, 2023, and for interim periods with fiscal years beginning after December 15, 2024, with early adoption permitted.

ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements unless it is impracticable to do so.

The Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update No.

3 unchanged sentences

The Company is currently evaluating the impact of adopting ASU 2023-09 on its financial disclosures.

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 – Acquisition of Real Estate and Additional Interests

21 unchanged sentences

The twenty-four units were sold for an aggregate of approximately $ 3.9 million, subject to certain prorations and adjustments typical in such real estate transactions, and generated net proceeds of approximately $ 3.7 million and a gain on sales of approximately $ 0.3 million.

During the second quarter 2024, the Company closed on the following sales:

one unit in the ILE portfolio, one unit in the Indy-Springfield portfolio, three units in the Peak JV 2 portfolio, and eight units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sales agreements.

The thirteen units were sold for an aggregate of approximately $ 2.6 million, subject to certain prorations and adjustments typical in such real estate transactions, and generated net proceeds of approximately $ 2.5 million and a gain on sales of approximately $ 0.4 million.

Held for Sale

At March 31, 2024, the Company classified an aggregate of 96 units as held for sale in its consolidated balance sheets, and for the three months ended March 31, 2024, the Company recorded an impairment of $ 0.1 million related to held for sale units which is included in gain on sale and impairment of real estate investments, net in the consolidated statements of operations.

The units are included in the following portfolios:

34 units of Indy-Springfield, 11 units of Peak JV 2, and 51 units of Peak JV 3.

At June 30, 2024, the Company classified an aggregate of 391 units as held for sale in its consolidated balance sheets, and for the three and six months ended June 30, 2024, the Company recorded an impairment of $ 1.1 million and $ 1.2 million, respectively, related to held for sale units which is included in impairment and gain on sale of real estate investments, net in the consolidated statements of operations.

The 391 units classified as held for sale are included in the following portfolios:

44 units of Indy-Springfield, 48 units of Peak JV 2, all 123 units of Peak JV 3, and all 176 units of Navigator Villas.

These units were identified based on submarket analysis and individual unit-level operational review.

Real estate assets classified as held for sale are reported at the lower of their carrying value or estimated fair value less costs to sell and are presented separately within operating real estate held for sale, net on the Company’s consolidated balance sheets.

Note 5 - Investments in Real Estate

As of March 31, 2024, the Company held twenty real estate investments, consisting of twelve consolidated operating investments and eight held through preferred equity and loan investments.

As of June 30, 2024, the Company held twenty-one real estate investments, consisting of twelve consolidated operating investments and nine held through preferred equity and loan investments.

The following tables provide summary information regarding the Company’s consolidated operating investments and preferred equity and loan investments.

13 unchanged sentences

Total Development Units

(1) Total operating units includes an aggregate of 96 units classified as held for sale and includes the following portfolios:

34 units in Indy-Springfield, 11 units in Peak JV 2, and 51 units in Peak JV 3.

(2) 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 $ 6.6 million had been incurred as of March 31, 2024.

Depreciation expense was $ 4.0 million and $ 4.0 million for the three months ended March 31, 2024 and 2023, respectively.

(1) Total operating units includes an aggregate of 391 units classified as held for sale, and such units are included in the following portfolios:

44 units of Indy-Springfield, 48 units of Peak JV 2, all 123 units of Peak JV 3, and all 176 units of Navigator Villas.

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

The total estimated project cost is $ 56.9 million, of which $ 6.8 million had been incurred as of June 30, 2024.

Depreciation expense was $ 4.3 million and $ 4.0 million, and $ 8.3 million and $ 8.0 million, for the three and six months ended June 30, 2024 and 2023, respectively.

Intangibles related to the Company’s consolidated investments in real estate consist of the value of in-place leases.

There was no amortization expense related to in-place leases for the three months ended March 31, 2024 and 2023.

Amortization expense related to the in-place leases was $ 0.5 million for both the three and six months ended June 30, 2024.

There was no amortization expense related to in-place leases during 2023.

Preferred Equity and Loan Investments

18 unchanged sentences

Total Operating Units

(1) The Woods at Forest Hill unit count decreased from 76 units at December 31, 2023 to 56 units at March 31, 2024 resulting from the sales of 20 units during the first quarter 2024.

(1) The Woods at Forest Hill unit count decreased from 76 units at December 31, 2023 to 41 units at June 30, 2024 resulting from the sales of 35 units during the six months ended June 30, 2024.

Proceeds from the sales of these units were used to paydown the Company’s loan investment in The Woods at Forest Hill.

1 unchanged sentence

(2) Wayford at Pringle is a loan investment for which the Company disburses loan proceeds to the borrower for unit acquisitions upon construction completion.

Of the total 102 -build for rent units that are to be acquired, construction of 37 units was completed during the first quarter 2024 for which the Company provided the borrower with loan proceeds for their acquisition.

Of the total 102 -build for rent units that are to be acquired, construction of 59 units was completed during the six months ended June 30, 2024 for which the Company provided the borrower with loan proceeds for their acquisition.

The Company estimates that all units will be completed and acquired, and its loan commitment fully funded, by the end of 2024.

Refer to Note 6 for further information.

(3) 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 March 31, 2024 (refer to Note 7 for further information).

(3) 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 June 30, 2024 (refer to Note 7 for further information).

Unit count excludes units presented in the consolidated investments table above.

Note 6 – Notes and Interest Receivable

Following is a summary of the notes and accrued interest receivable due from loan investments at March 31, 2024, and December 31, 2023 (amounts in thousands):

Following is a summary of the notes and accrued interest receivable due from loan investments at June 30, 2024 and December 31, 2023 (amounts in thousands):

Investment Name

March 31, 2024

June 30, 2024

December 31, 2023

10 unchanged sentences

Allowance for Credit Losses

The provision for credit losses of the Company’s loan investments at March 31, 2024 and December 31, 2023 are summarized in the table below (amounts in thousands).

The provision for credit losses of the Company’s loan investments at June 30, 2024 and December 31, 2023 are summarized in the table below (amounts in thousands):

Beginning balances, net as of January 1, 2024 and 2023, respectively

2 unchanged sentences

(1) Under CECL, a provision for, or recovery of, 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 period ended March 31, 2024 was attributable to the addition of one investment to the pool of assets and an increase in the trailing twelve-month historical default rate.

The following table is a summary of the interest income from loan investments for the three months ended March 31, 2024 (amounts in thousands).

The Company did no t record any interest income from loan investments during the three months ended March 31, 2023 as it held no loan investments during this period.

Investment Name

March 31, 2024

The Woods at Forest Hill

Wayford at Pringle

The occupancy percentages of the Company’s loan investments at March 31, 2024 and December 31, 2023 are as follows:

The provision for credit losses during the six months ended June 30, 2024 was attributable to the addition of one investment to the pool of assets and an increase in the trailing twelve-month historical default rate.

The following table is a summary of the interest income from loan investments for the three and six months ended June 30, 2024 (amounts in thousands).

The Company did no t record any interest income from loan investments during the three and six months ended June 30, 2023 as it held no loan investments during this period.

Three Months Ended

Six Months Ended

Investment Name

June 30, 2024

The Woods at Forest Hill

Wayford at Pringle

(1) Wayford at Pringle commenced lease-up in February 2024.

Peak Housing Financing

3 unchanged sentences

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 consolidated statements of operations.

The mezzanine loan matures on June 30, 2024, has one six-month extension option subject to certain conditions, and can be prepaid without penalty.

The mezzanine loan was to mature on June 30, 2024;

however, on May 22, 2024, the property owner delivered written notice to the Company of its intention to exercise the loan’s final six-month extension option, extending the maturity date to December 30, 2024.

The loan can be prepaid without penalty.

At December 31, 2023, the outstanding balance of the loan provided by the Company was $ 15.9 million.

During the first quarter 2024, proceeds from the sales of 19 units in the Peak JV 3 portfolio (refer to Note 4 for further information) have been used to reduce the outstanding balance of the loan to $ 13.5 million at March 31, 2024.

During the six months ended June 30, 2024, proceeds from the sales of 27 units in the Peak JV 3 portfolio (refer to Note 4 for further information) have been used to reduce the outstanding balance of the loan to $ 12.5 million at June 30, 2024.

Wayford at Pringle Loan Financing

12 unchanged sentences

Note B can be prepaid in part or in whole subject to minimum interest.

As of March 31, 2024, construction was completed on 37 of the total 102 units and the Company had funded $ 1.8 million of Note A and fully funded the $ 7.8 million of Note B.

There were no unrealized gains or losses associated with Note B as of March 31, 2024 as the Company determined that the $ 7.8 million face value of Note B represents its fair value at such measurement date.

As of June 30, 2024, construction was completed on 59 of the total 102 units, and the Company had funded $ 8.5 million of Note A and fully funded the $ 7.8 million of Note B.

There were no unrealized gains or losses associated with Note B as of June 30, 2024 as the Company determined that the $ 7.8 million face value of Note B represents its fair value at such measurement date.

The Woods at Forest Hill Loan Financing

4 unchanged sentences

Subsequently, pursuant to the waterfall of the joint venture agreement, the remaining available proceeds shall be used to repay the Company’s preferred equity investment, including any accrued but unpaid preferred returns, until the investment has been repaid in full.

During the first quarter 2024, the Company received paydowns on the Woods Loan in the aggregate amount of $ 4.1 million, which included principal investment of $ 4.0 million and accrued interest of $ 0.1 million.

During the six months ended June 30, 2024, the Company received paydowns on the Woods Loan in the aggregate amount of $ 7.3 million, which included principal investment of $ 7.1 million and accrued interest of $ 0.2 million.

The paydowns on the Woods Loan were a result of the sales by the borrower of 35 of the 76 units that collateralized the Company’s loan and preferred equity investments.

At March 31, 2024, the Company’s outstanding principal investment in the Woods Loan was $ 4.3 million, with a remaining 56 units as collateral underlying the Company’s loan and preferred equity investments.

At June 30, 2024, the Company’s outstanding principal investment in the Woods Loan was $ 1.2 million, with a remaining 41 units as collateral underlying the Company’s loan and preferred equity investments.

Note 7 – 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 at March 31, 2024 and December 31, 2023 is summarized in the table below (amounts in thousands):

The carrying amount of the Company’s preferred equity investments in unconsolidated real estate joint ventures at June 30, 2024 and December 31, 2023 is summarized in the table below (amounts in thousands):

Investment Name

5 unchanged sentences

Allowance for Credit Losses

The provision for credit losses of the Company’s preferred equity investments at March 31, 2024 and December 31, 2023 are summarized in the table below (amounts in thousands):

The provision for credit losses of the Company’s preferred equity investments at June 30, 2024 and December 31, 2023 are summarized in the table below (amounts in thousands):

Beginning balances, net as of January 1, 2024 and 2023, respectively

2 unchanged sentences

(1) Under CECL, a provision for, or recovery of, 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 period ended March 31, 2024 was primarily attributable to an increase in the trailing twelve-month historical default rate.

At March 31, 2024, the Company, through wholly-owned subsidiaries of the Operating Partnership, had outstanding preferred equity investments in six 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 provision for credit losses during the six months ended June 30, 2024 was primarily attributable to an increase in the trailing twelve-month historical default rate.

At June 30, 2024, 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 consolidated statements of operations.

Each joint venture’s purpose is to develop or operate a portfolio of residential units.

The preferred returns on the Company’s unconsolidated real estate joint ventures for the three months ended March 31, 2024 and 2023 are summarized below (amounts in thousands):

The preferred returns on the Company’s unconsolidated real estate joint ventures for the three and six months ended June 30, 2024 and 2023 are summarized below (amounts in thousands):

Three Months Ended

Six Months Ended

Investment Name

6 unchanged sentences

Total preferred returns on unconsolidated joint ventures (2)

(1) The Company’s preferred equity investments in The Cottages at Warner Robins and Willow Park were redeemed on December 15, 2023 and October 26, 2023, respectively.

(1) The Company’s preferred equity investments in The Cottages at Warner Robins and Willow Park were redeemed in December 2023 and October 2023, respectively.

(2) Total includes both current and accrued preferred return amounts.

The accrued portion of the total preferred returns was $ 2.5 million and $ 2.4 million for the three months ended March 31, 2024 and 2023, respectively.

The occupancy percentages of the Company’s unconsolidated real estate joint ventures at March 31, 2024 and December 31, 2023 are as follows:

Investment Name

March 31, 2024

December 31, 2023

Peak Housing (2)

The Cottages at Myrtle Beach (3)

The Cottages of Port St.

The Woods at Forest Hill

Wayford at Innovation Park (4)

(1) Chandler had not commenced lease-up as of March 31, 2024.

(2) Percent occupied for Peak Housing excludes 12 and 32 down/renovation units at March 31,2024 and December 31, 2023, respectively.

(3) The Cottages investments commenced lease-up in 2023 as follows:

at Myrtle Beach in April and of Port St.

Lucie in June.

(4) Wayford at Innovation Park commenced lease-up in August 2023.

The accrued portion of the total preferred returns was $ 2.7 million and $ 2.6 million, and $ 5.2 million and $ 4.9 million, for the three and six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and December 31, 2023, the Company had $ 18.9 million and $ 13.7 million, respectively, of total accrued preferred returns, which is recorded in accounts receivable, prepaids and other assets, net in its consolidated balance sheets.

Indigo Cove Interests

On June 27, 2024, the Company entered into a joint venture agreement with an unaffiliated third party (the “Indigo JV”) to develop approximately 82 build-for-rent, single-family residential units in Bluffton, South Carolina.

The Company made a commitment to invest $ 5.3 million for preferred equity interests in the Indigo JV, of which $ 1.9 million had been funded as of June 30, 2024.

The Company earns an accrued return on its outstanding capital contributions at a rate of 17.0 % per annum compounded monthly, subject to a minimum return, with preferred return payments commencing in December 2025 contingent upon the property generating cash flows in excess of operating costs.

The Indigo JV is required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (addressed below) is repaid or refinanced, or earlier upon the occurrence of certain events.

In conjunction with the Indigo Cove development, the Indigo Cove property owner, which is owned by an entity in which the Company has an equity interest, entered into a $ 22.0 million construction loan, of which $ 0.4 million is outstanding as of June 30, 2024.

The loan bears interest on the amount drawn based on one-month Term SOFR plus 5.55 %, subject to a 9.87 % rate floor, with interest-only monthly payments during the term of the loan.

The loan matures on June 18, 2026 and is secured by the fee simple interest in the Indigo Cove development.

The loan contains two (2) six-month extension options, subject to certain conditions, and can be prepaid without penalty.

Peak Housing Interests

2 unchanged sentences

During 2023, the Company’s preferred equity investment was partially redeemed resulting from the sales by Peak REIT OP of 196 of the 648 units that collateralized the Company’s investment.

At December 31, 2023, the Company’s outstanding preferred equity investment in Peak REIT OP was $ 10.6 million, with a remaining 452 units as collateral underlying the Company’s investment.

During the first quarter 2024, the Company’s preferred equity investment in the Peak REIT OP was partially redeemed in the aggregate amount of $ 2.0 million, which included principal investment of $ 1.8 million and accrued preferred return of $ 0.2 million.

At December 31, 2023, the Company’s outstanding preferred equity principal investment in Peak REIT OP was $ 10.6 million, with a remaining 452 units as collateral underlying the Company’s investment.

During the six months ended June 30, 2024, the Company’s preferred equity investment in the Peak REIT OP was partially redeemed in the aggregate amount of $ 3.9 million, which included principal investment of $ 3.5 million and accrued preferred return of $ 0.4 million.

The Company’s partial redemption of its preferred equity investment was a result of the sales by Peak REIT OP of 103 of the 452 units that collateralized the Company’s investment.

At March 31, 2024, the Company’s outstanding preferred equity investment in the Peak REIT OP was $ 8.8 million, with a remaining 407 units as collateral underlying the Company’s investment.

At June 30, 2024, the Company’s outstanding preferred equity investment in the Peak REIT OP was $ 7.1 million, with a remaining 349 units as collateral underlying the Company’s investment.

Note 8— Revolving Credit Facilities

The outstanding balances on the revolving credit facilities at March 31, 2024 and December 31, 2023 are as follows (amounts in thousands):

The outstanding balances on the revolving credit facilities at June 30, 2024 and December 31, 2023 are as follows (amounts in thousands):

Revolving Credit Facilities

March 31, 2024

June 30, 2024

December 31, 2023

7 unchanged sentences

Borrowings under the Amended DB Credit Facility 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 March 31, 2024.

The interest rate on outstanding borrowings was 8.13 % at June 30, 2024.

The Amended DB Credit Facility matures on April 6, 2025 and contains a one-year extension option, subject to certain conditions.

The Amended DB Credit Facility contains certain financial and operating covenants, including maximum leverage ratio, minimum debt yield and minimum debt service coverage ratio.

At March 31, 2024, the Amended DB Credit Facility was drawn at $ 85 million and the Company was in compliance with all covenants under the Amended DB Credit Facility.

The availability of borrowings under the Amended DB Credit Facility at March 31, 2024 was approximately $ 15 million and is based on the collateral and compliance with various ratios related to those assets.

The Amended DB Credit Facility contains certain financial and operating covenants, including maximum leverage ratio, minimum debt yield and minimum debt service coverage ratios.

At June 30, 2024, the Amended DB Credit Facility was drawn at $ 85 million and the Company was in compliance with all covenants under the Amended DB Credit Facility.

The availability of borrowings under the Amended DB Credit Facility at June 30, 2024 was approximately $ 15 million and is based on the collateral and compliance with various ratios related to those assets.

Amended ILE Sunflower Credit Facility

4 unchanged sentences

The Amended 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 Amended ILE Sunflower Credit Facility, along with four other separate non-revolving credit facilities (refer to Note 9 for further information), is used in the financing of acquisitions of single-family residential units.

The Amended ILE Sunflower Credit Facility, along with three other separate non-revolving credit facilities (refer to Note 9 for further information), is used in the financing of acquisitions of single-family residential units.

Borrowings under the Amended ILE Sunflower Credit Facility bear interest at Term SOFR plus 3.11 %, subject to a rate floor, and can be prepaid without penalty or premium.

The interest rate on outstanding borrowings was 8.45 % at March 31, 2024.

The interest rate on outstanding borrowings was 8.46 % at June 30, 2024.

The Amended ILE Sunflower Credit Facility matures on December 27, 2024 and contains certain financial and operating covenants, including a minimum fixed charge coverage ratio.

At March 31, 2024, the Company was in compliance with all covenants under the Amended ILE Sunflower Credit Facility and the initial commitment was fully drawn at $ 20 million.

The Company expects to refinance the loan by year end and is currently in term sheet negotiations with lenders.

At June 30, 2024, the Company was in compliance with all covenants under the Amended ILE Sunflower Credit Facility and the initial commitment was fully drawn at $ 20 million.

A principal of ILE has guaranteed the obligations under the Amended ILE Sunflower Credit Facility and the joint venture has pledged certain assets as collateral.

Note 9 – Mortgages Payable

The following table summarizes certain information as of March 31, 2024 and December 31, 2023 with respect to the Company’s senior mortgage indebtedness (amounts in thousands):

The following table summarizes certain information as of June 30, 2024 and December 31, 2023 with respect to the Company’s senior mortgage indebtedness (amounts in thousands):

Outstanding Principal

As of March 31, 2024

As of June 30, 2024

Interest-only

21 unchanged sentences

(5) The Wayford at Concord loan bears interest at the 30-day average SOFR plus 2.23 % .

In March 2024, the 30-day average SOFR in effect was 5.32 % .

In June 2024, the 30-day average SOFR in effect was 5.32 % .

SOFR rate is subject to a 2.50 % rate cap through April 2025.

Please refer to Note 11 for further information.

Refer to Note 11 for further information.

Deferred financing costs

6 unchanged sentences

Prepayment penalties incurred on the early repayment of debt and costs incurred in a debt modification that are not capitalized would also be included within loss on extinguishment of debt and debt modification costs on the consolidated statements of operations.

The Company had no loss on extinguishment of debt and debt modification costs during the three months ended March 31, 2024 and 2023.

The Company had no loss on extinguishment of debt or debt modification costs for the three and six months ended June 30, 2024 and 2023.

Debt maturities

At March 31, 2024, contractual principal payments for the five subsequent years and thereafter are as follows (amounts in thousands):

2024 (April 1–December 31)

At June 30, 2024, contractual principal payments for the five subsequent years and thereafter are as follows (amounts in thousands):

2024 (July 1–December 31)

Unamortized fair value debt adjustment

Deferred financing costs, net

The net book value of real estate assets providing collateral for these above borrowings, including the revolving credit facilities (refer to Note 8 for further information), was $ 403.4 million at March 31, 2024.

Total mortgages payable

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.

19 unchanged sentences

Fair Value of Financial Instruments

At March 31, 2024 and December 31, 2023, 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.

The carrying values of notes receivable approximate fair value because stated interest rate terms are consistent with interest rate terms on new deals with similar leverage and risk profiles.

The fair values of notes receivable are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.

At June 30, 2024 and December 31, 2023, 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.

The carrying values and fair values of the Company’s financial instruments at June 30, 2024 and December 31, 2023 are summarized in the table below (amounts in thousands):

June 30, 2024

December 31, 2023

Carrying Value

Note receivable (available for sale) (1)

Mortgages payable (2)

(1) Represents Note B of the Pringle Loan which, due to conversion options, meets the criteria of a debt security and is considered as available for sale (refer to Note 6 for further information).

The fair value of the note receivable is estimated by modeling the expected contractual cash flows required under the instrument and discounting such cash flows back to their present value using estimates of current market rates.

As the estimated current market rates did not substantially differ from the discount rates originally applied, the carrying amount of the note receivable approximates its fair value.

There were no purchases, sales, issuances, or settlements during the three and six months ended June 30, 2024 other than the $ 7.8 million initial funding of the note in the first quarter 2024.

(2) The carrying values of the mortgages payable include $ 2,212 and $ 916 of unamortized fair value debt adjustments and exclude $ 1,166 and $ 951 of deferred financing costs at June 30, 2024 and December 31, 2023, respectively.

The fair value of mortgages payable is estimated based on interest rates obtained from third party lenders for similar types of borrowing arrangements.

The Company’s operating units classified as held for sale for which it has recorded impairments, measured at fair value on a non-recurring basis, for the three and six months ended June 30, 2024 are summarized below (amounts in thousands).

The Company had no operating units classified as held for sale during these same periods in 2023.

Three Months Ended

Six Months Ended

June 30, 2024

Investment in operating units classified as held for sale (Level 3)

Pre-impairment amount

Total impairments

Fair value (1)

(1) Real estate assets classified as held for sale are reported at the lower of their carrying value or estimated fair value less costs to sell and are presented separately within operating real estate held for sale, net on the Company’s consolidated balance sheets.

The estimated fair value is based on discussions with third party brokers, historical sales experience, and current market conditions.

Derivative Financial Instruments

4 unchanged sentences

The fair value of interest rate swaps is 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

At March 31, 2024 and December 31, 2023, 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 $ 116.8 million and $ 93.0 million, respectively, compared to the carrying amounts, before adjustments for deferred financing costs, net, of $ 121.5 million and $ 97.6 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.

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.

Note 11 – Derivative Financial Instruments

9 unchanged sentences

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.

Although these derivative financial instruments were not designated or did not qualify for hedge accounting, the Company believes these derivative financial instruments mitigate increases in interest rates.

The Company does not use derivative financial instruments for trading or speculative purposes.

At March 31, 2024, 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 $ 128.9 million of the Company’s debt.

The following table summarizes the Company's derivative financial instruments at March 31, 2024 ($ in thousands):

At June 30, 2024, 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 $ 128.5 million of the Company’s debt.

The following table summarizes the Company’s derivative financial instruments at June 30, 2024 ($ in thousands):

Interest Rate Caps

4 unchanged sentences

Latest maturity date

(1) In April 2024, the Company entered into a new interest rate cap agreement that becomes effective upon the May 2024 maturity date of the current rate cap and is in the same notional amount as the current rate cap.

The table below presents the classification and fair value of the Company’s derivative financial instruments on the consolidated balance sheets at March 31, 2024 and December 31, 2023 (amounts in thousands):

The table below presents the classification and fair value of the Company’s derivative financial instruments on the consolidated balance sheets at June 30, 2024 and December 31, 2023 (amounts in thousands):

Derivatives not designated as hedging

2 unchanged sentences

Balance Sheet Location

March 31, 2024

June 30, 2024

December 31, 2023

3 unchanged sentences

Accounts receivable, prepaids and other assets

The table below presents the classification and effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2024 and 2023 (amounts in thousands):

The table below presents the classification and effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 (amounts in thousands):

The Effect of Derivative Instruments on the

2 unchanged sentences

Location of Gain (Loss)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

instruments under ASC 815-20

1 unchanged sentence

Interest rate caps

Interest Expense

Interest expense, net

Interest rate swaps

Interest Expense

Interest expense, net

Note 12 – Related Party Transactions

6 unchanged sentences

The Company pays 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 is 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) operating expense reimbursements shall be payable either in cash or C-LTIP Units, at the discretion of the Board.

The Company is required to reimburse the Manager for certain expenses and pay all operating expenses (the “operating expense reimbursement”) with respect to each calendar quarter (or part thereof that the Management Agreement is in effect) in arrears, 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) the operating expense reimbursement 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 months ended March 31, 2024 and 2023, the Company recorded base management fees of $ 2.1 million and $ 1.9 million, respectively.

For the first quarter 2024, the Company will pay the base management fee to the Manager as one half ( 50 %) in C-LTIP Units and the remainder in cash;

for the first quarter 2023, the Company paid the full base management fee to the Manager through the issuance of C-LTIP Units.

For the three and six months ended June 30, 2024 and 2023, the Company recorded base management fees of $ 2.2 million and $ 2.0 million, and $ 4.2 million and $ 3.9 million, respectively.

Commencing with the base management fee for the first quarter 2024, the Company paid, and expects to continue to pay, the base management fee to the Manager as one half ( 50 )% in C-LTIP Units and the remainder in cash;

prior to the first quarter 2024, the Company paid the base management fee to the Manager entirely through the issuance of C-LTIP Units.

There have been no incentive fee expenses incurred during 2024 or the year ended December 31, 2023.

For the three months ended March 31, 2024 and 2023, the Company recorded operating expense reimbursements of $ 1.2 million and $ 0.3 million, respectively.

For the first quarter 2024, the Company will pay the full operating expense reimbursement to the Manager in cash;

for the first quarter 2023, the Company paid the full operating expense reimbursement to the Manager through the issuance of C-LTIP Units.

The operating expense reimbursement for the first quarter 2024 included a $ 0.8 million reimbursement to the Manager for accounting and legal services.

For the three and six months ended June 30, 2024 and 2023, the Company recorded operating expense reimbursements of $ 1.1 million and $ 0.4 million, and $ 2.3 million and $ 0.8 million, respectively.

Commencing with the operating expense reimbursement for the first quarter 2024, the Company paid, and expects to continue to pay, the operating expense reimbursement to the Manager entirely in cash;

prior to the first quarter 2024, the Company paid the operating expense reimbursement to the Manager entirely through the issuance of C-LTIP Units.

The operating expense reimbursement for each of the first and second quarters of 2024 included an average reimbursement to the Manager of $ 0.8 million for accounting and legal services.

Prior to the fourth quarter 2023, the Manager elected to not seek reimbursement for accounting and legal services during the Company’s first year of operations.

In addition, for the three months ended March 31, 2024 and 2023, the Company recorded direct expense reimbursements of $ 0.1 million and $ 0.1 million, respectively, which were paid to the Manager in cash.

In addition, for the three and six months ended June 30, 2024 and 2023, the Company recorded direct expense reimbursements of $ 0.07 million and $ 0.04 million, and $ 0.2 million and $ 0.1 million, respectively, which were paid to the Manager in cash.

Both the operating and direct expense reimbursements were recorded as part of general and administrative expenses in the Company’s consolidated statements of operations.

The table below presents the related party amounts payable to the Manager at March 31, 2024 and December 31, 2023 pursuant to the terms of the Management Agreement (amounts in thousands).

The table below presents the related party amounts payable to the Manager pursuant to the terms of the Management Agreement, along with amounts payable to related parties other than the Manager, at June 30, 2024 and December 31, 2023 (amounts in thousands).

The Company records these payables in due to affiliates in its consolidated balance sheets.

Amounts payable to the Manager under the Management Agreement

March 31, 2024

June 30, 2024

December 31, 2023

3 unchanged sentences

Total amounts payable to the Manager

At March 31, 2024 and December 31, 2023, the Company had no receivables due from any related parties.

Total amounts payable to Related Parties other than the Manager

Total amounts payable to Related Parties

At June 30, 2024 and December 31, 2023, the Company had no receivables due from any related parties.

Selling Commissions and Dealer Manager Fees

1 unchanged sentence

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 three months ended March 31, 2024, the Company incurred $ 0.7 million in selling commissions and discounts and $ 0.3 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 $ 0.2 million in conjunction with the offering of Series A Preferred Stock during the three months ended March 31, 2024.

For the six months ended June 30, 2024, the Company incurred $ 3.1 million in selling commissions and discounts and $ 1.3 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 $ 0.4 million in conjunction with the offering of Series A Preferred Stock during the six months ended June 30, 2024.

The selling commissions, dealer manager fees, discounts and reimbursements for offering costs were recorded as a reduction to the proceeds of the offering.

7 unchanged sentences

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.

The following table reconciles the components of basic and diluted net loss per common share for the three months ended March 31, 2024 and 2023 (amounts in thousands, except share and per share amounts):

The following table reconciles the components of basic and diluted net loss per common share for the three and six months ended June 30, 2024 and 2023 (amounts in thousands, except share and per share amounts):

Three Months Ended

Six Months Ended

Net loss attributable to common stockholders

5 unchanged sentences

(1) Amounts relate to shares of the Company’s Class A and Class C common stock outstanding.

(2) For the three months ended March 31, 2024, potential vesting of restricted Class A common stock of 4,531 shares are excluded from the diluted shares calculation as the effect is antidilutive.

(2) For the three and six months ended June 30, 2024, potential vesting of restricted Class A common stock of 4,772 shares and zero shares, respectively, are excluded from the diluted shares calculation as the effect is antidilutive.

For the three and six months ended June 30, 2023, potential vesting of restricted Class A common stock of 1,418 shares and 4,002 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.

2 unchanged sentences

Series A Redeemable Preferred Stock

During the three months ended March 31, 2024, the Company issued 395,628 shares of 6.0 %Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $ 25.00 per share (the “Stated Value”) under its continuous registered offering with net proceeds of approximately $ 8.6 million after (i) commissions, dealer manager fees and sales discounts of approximately $ 1.0 million, and (ii) costs related to establishing the offering of Series A Preferred Stock of approximately $ 0.3 million.

As of March 31, 2024, the Company had issued a total of 832,303 shares of Series A Preferred Stock with total net proceeds of approximately $ 17.3 million after commissions, dealer manager fees, sales discounts and offering costs.

As of March 31, 2024, the Company had not redeemed any shares of Series A Preferred Stock.

During the six months ended June 30, 2024, the Company issued 1,761,120 shares of 6.0 %Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $ 25.00 per share (the “Stated Value”) under its continuous registered offering with net proceeds of approximately $ 38.8 million after (i) commissions, dealer manager fees and sales discounts of approximately $ 4.4 million, and (ii) costs related to establishing the offering of Series A Preferred Stock of approximately $ 0.8 million.

As of June 30, 2024, the Company had issued a total of 2,197,795 shares of Series A Preferred Stock with total net proceeds of approximately $ 47.1 million after commissions, dealer manager fees, sales discounts and offering costs.

During the six months ended June 30, 2024, the Company, at the request of holders, redeemed 1,000 shares of Series A Preferred Stock through the issuance of 1,346 shares of Class A common stock.

Class A Common Stock Repurchase Plan

4 unchanged sentences

Open market repurchases will be structured to occur in conformity with the method, timing, price and volume requirements of Rule 10b-18 of the Exchange Act.

As of March 31, 2024, no repurchases of Class A common stock had been made by the Company.

As of June 30, 2024, no repurchases of Class A common stock had been made by the Company.

Operating Partnership and Long-Term Incentive Plan Units

As of March 31, 2024, limited partners other than the Company owned approximately 69.34 % of the common units of the Operating Partnership ( 7,365,735 OP Units, or 58.20 %, is held by OP Unit holders, and 1,410,986 LTIP Units, or 11.14 %, is held by LTIP Unit holders, including 3.68 % which are not vested as of March 31, 2024).

As of June 30, 2024, limited partners other than the Company owned approximately 69.19 % of the common units of the Operating Partnership ( 7,365,735 OP Units, or 57.38 %, is held by OP Unit holders, and 1,515,185 LTIP Units, or 11.81 %, is held by LTIP Unit holders, including 3.76 % which are not vested as of June 30, 2024).

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.

On February 21, 2024, the Company granted 151,600 and 95,204 C-LTIP Units pursuant to the Management Agreement to the Manager in payment of the (i) base management fee of $ 2.0 million, and (ii) operating expense reimbursement of $ 1.3 million, respectively, for the fourth quarter 2023.

Such C-LTIP Units were fully vested upon issuance.

On February 21, 2024, the Company granted to the Manager (i) 151,600 C-LTIP Units in payment of the full base management fee of $ 2.0 million, and (ii) 95,204 C-LTIP Units in payment of the full operating expense reimbursement of $ 1.3 million, incurred for the fourth quarter 2023.

On May 14, 2024, the Company granted 60,080 C-LTIP Units to the Manager in payment of one half ( 50 )% of the total base management fee of $ 2.1 million incurred for the first quarter 2024.

All such C-LTIP Units were issued pursuant to the Management Agreement and 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.

7 unchanged sentences

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.

Effective April 1, 2024, for tax efficiency purposes, the Manager forfeited 57,670 unvested LTIP Units granted to the Manager on May 25, 2023 in payment of the annual long-term incentive equity grant pursuant to the BHM Entities Plan.

During the three and six months ended June 30, 2024, the Company reversed previously recognized compensation expense of approximately $ 0.3 million and $ 0.3 million, respectively.

Such expense reversal was recorded as part of general and administrative expenses in the Company’s consolidated statements of operations.

On April 30, 2024 the Company granted 101,789 LTIP Units, including (by mutual agreement of the Manager and the Company, and at the direction of the Manager) the 57,670 unvested LTIP Units forfeited by the Manager, pursuant to the BHM Incentive Plans, directly to and among certain of the Manager’s executive management team and personnel who provide other services to the Manager as an annual long-term incentive equity grant for the year ended December 31, 2023.

Such LTIP Units will vest ratably on an annual basis over a three-year period from the date of grant.

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 months ended March 31, 2024 and 2023, the Company recognized compensation expense for such LTIP Units of approximately $ 0.7 million and $ 0.5 million, respectively.

During the three and six months ended June 30, 2024 and 2023, the Company recognized compensation expense for such LTIP Units of approximately $ 0.7 million and $ 0.5 million, and $ 1.3 million and $ 1.0 million, respectively.

Such expense was recorded as part of general and administrative expenses in the Company’s consolidated statements of operations.

At March 31, 2024, there was $ 8.3 million of total unrecognized compensation expense related to unvested LTIP Units granted under the BHM Incentive Plans.

At June 30, 2024, there was $ 8.6 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 3.1 years.

Restricted Stock Grants

In November 2023, the Company issued 31,260 shares of Class A common stock as restricted stock grants (“RSGs”) as equity compensation, pursuant to the BHM Individuals Plans, directly to and among certain of the Manager’s executive management team and personnel who provide other services to the Manager.

Such RSGs will vest one-third on May 25, 2024, and the remainder will vest ratably on an annual basis over a two-year period from April 1, 2024.

During the three months ended March 31, 2024, the Company recognized compensation expense for such RSGs of approximately $ 0.05 million.

In November 2023, the Company issued 31,260 shares of Class A common stock as restricted stock grants (“RSGs”), pursuant to the BHM Individuals Plans, directly to and among certain of the Manager’s executive management team and personnel who provide other services to the Manager (collectively, the “BREH Personnel”), as equity compensation for services provided to the Manager in such capacities.

One-third of such RSGs vested on May 25, 2024, and the remainder will vest ratably on an annual basis over a two-year period from April 1, 2024.

On April 1, 2024 and on April 30, 2024, the Company issued 66,846 shares and 10,435 shares, respectively, of Class A common stock as RSGs, pursuant to the BHM Individual Plans, directly to and among certain of the BREH Personnel as an annual long-term incentive equity grant for the year ended December 31, 2023.

Such RSGs will vest ratably on an annual basis over a three-year period from their date of grant.

During the three and six months ended June 30, 2024 and 2023, the Company recognized compensation expense for all such RSGs of approximately $ 0.2 million and $ 0.02 million, and $ 0.2 million and $ 0.02 million, respectively.

Such expense was recorded as part of general and administrative expenses in the Company’s consolidated statements of operations.

At March 31, 2024, there was $ 0.4 million of total unrecognized compensation expense related to the unvested RSGs granted under the BHM Incentive Plans.

At June 30, 2024, there was $ 1.5 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.

25 unchanged sentences

April 5, 2024

April 12, 2024

April 25, 2024

April 12, 2024

June 25, 2024

Series A Preferred Special Dividend (2)

11 unchanged sentences

April 5, 2024

April 12, 2024

Each day of April 1 - 30, 2024

Series A Preferred Enhanced Special Dividend (3)

June 25, 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, divided by (b) twelve , 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.

(2) Holders of record of Series A Preferred Stock shares as of the close of business on each day of the applicable month were 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, divided by (b) twelve , 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.

(3) Holders of record of Series A Preferred Stock shares are entitled to an enhanced special dividend, which replaces the additional contingent special daily dividends, equal to the amount by which (i) the Stated Value of the Series A Preferred Stock multiplied by (a) the sum of (I) the average of the one -month Term SOFR for each day commencing on the 26 th of the prior month to the 25 th of the applicable month, plus (II) two percent, divided by (b) twelve , exceeds (ii) the standard monthly dividend of $ 0.125 per share of Series A Preferred Stock.

The enhanced special dividend will be aggregated with the standard monthly dividend so as to effect a dividend rate on the Series A Preferred Stock that is subject to a 6.5 % minimum and 8.5 % maximum annual rate.

A portion of each dividend may constitute a return of capital for tax purposes.

1 unchanged sentence

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 three months ended March 31, 2024 were as follows (amounts in thousands):

Distributions declared and paid for the six months ended June 30, 2024 were as follows (amounts in thousands):

Distributions

5 unchanged sentences

Total first quarter

(1) Series A Preferred Stock amounts include the standard dividend at an annual rate of 6.0 % of the Stated Value and any special dividends .

Second Quarter

Series A Preferred Stock (1)

Total second quarter

(1) Series A Preferred Stock amounts include the standard dividend at an annual rate of 6.0 % of the Stated Value plus any special and enhanced special dividends .

Note 14 – Commitments and Contingencies

The aggregate amount of the Company’s contractual commitments to fund future cash obligations in certain of its loan and consolidated real estate investments was $ 20.7 million and $ 0.2 million at March 31, 2024 and December 31, 2023, respectively.

The aggregate amount of the Company’s contractual commitments to fund future cash obligations in certain of its loan, preferred equity and consolidated real estate investments was $ 17.4 million and $ 0.2 million at June 30, 2024 and December 31, 2023, respectively.

In connection with the Company moving its New York (Manhattan) headquarters, effective on May 31, 2024, the Company and an unaffiliated third-party landlord entered into a lease for separate corporate space (the “NY Premises Lease”) located at 919 Third Avenue, New York, New York (the “Future NY Premises”).

The NY Premises Lease will commence on the date of the landlord’s consent thereto, upon which such time the Company will record a right-of-use asset and lease liability on its consolidated balance sheets.

The Company expects the NY Premises Lease to commence in the fourth quarter 2024, with the Company occupying the Future NY Premises shortly thereafter.

The Company is subject to various legal actions and claims arising in the ordinary course of business.

6 unchanged sentences

Series A Preferred Stock (1)

April 12, 2024

April 25, 2024

April 12, 2024

June 25, 2024

Series A Preferred Special Dividend

April 12, 2024

Each day of April 1 - 30, 2024

July 12, 2024

July 25, 2024

August 5, 2024

July 12, 2024

August 23, 2024

September 5, 2024

July 12, 2024

September 25, 2024

October 4, 2024

Series A Preferred Enhanced Special Dividend

June 25, 2024

July 12, 2024

July 25, 2024

August 5, 2024

July 12, 2024

August 23, 2024

September 5, 2024

July 12, 2024

September 25, 2024

October 4, 2024

(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, divided by (b) twelve, 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.

(2) Holders of record of Series A Preferred Stock shares are entitled to an enhanced special dividend equal to the amount by which (i) the Stated Value of the Series A Preferred Stock multiplied by (a) the sum of (I) the average of the one-month Term SOFR for each day commencing on the 26 th of the prior month to the 25 th of the applicable month, plus (II) two percent, divided by (b) twelve , exceeds (ii) the standard monthly dividend of $ 0.125 per share of Series A Preferred Stock.

The enhanced special dividend will be aggregated with the standard monthly dividend so as to affect a dividend rate on the Series A Preferred Stock that is subject to a 6.5 % minimum and 8.5 % maximum annual rate.

Distributions Paid

The following distributions were declared and/or paid to the Company’s stockholders subsequent to March 31, 2024 (amounts in thousands):

The following distributions were declared and/or paid to the Company’s stockholders subsequent to June 30, 2024 (amounts in thousands):

Declaration Date

2 unchanged sentences

Series A Preferred Stock (1)

January 15, 2024

March 25, 2024

April 12, 2024

June 25, 2024

Series A Preferred Stock (1)

April 12, 2024

April 25, 2024

(1) Series A Preferred Stock distribution per share amounts include the standard dividend at an annual rate of 6.0 % of the Stated Value and any special dividends.

July 12, 2024

July 25, 2024

August 5, 2024

(1) Series A Preferred Stock distribution per share amounts include the standard dividend at an annual rate of 6.0 % of the Stated Value and any enhanced special dividends.

Acquisition of Additional Interests in Navigator Villas

On July 30, 2024, the Company purchased the noncontrolling partner’s interest in Navigator Villas for $ 2.6 million, increasing the Company’s ownership in the joint venture entity from 90 % to 100 %.

Acquisition of Avenue Royale

On July 31, 2024, the Company acquired a 200 -unit single-family residential community located in Jacksonville, Florida known as Avenue Royale.

The Company has a full ownership interest in Avenue Royale, and the purchase price of $ 33.8 million was funded, in part, with a $ 23.7 million senior loan secured by Avenue Royale, along with cash of $ 12.9 million funded by the Company.

Sale of Navigator Villas

On August 7, 2024, the Company closed on the sale of Navigator Villas located in Pasco, Washington.

The property was sold for $ 36.4 million, subject to certain prorations and adjustments typical in such real estate transactions.

After deduction for the payoff of existing mortgage indebtedness encumbering the property in the amount of $ 19.5 million, the payment of early extinguishment of debt costs of $ 0.3 million, and closing costs and fees, the sale of Navigator Villas generated net proceeds of approximately $ 16.0 million.

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-Q

Item 1. Financial Statements