What changed in this filing

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Item 1. Business

2025-03-20 compared with 2024-03-12 · 92 added, 97 removed, 101 unchanged (65% of the section changed)

Bluerock Homes Trust, Inc.

(“Bluerock Homes,” “the Company,” “we,” “us,” or “our”) was formed in Maryland as a wholly owned subsidiary of Bluerock Residential Growth REIT, Inc.

(“Bluerock Residential” or “Parent”) on December 16, 2021, and historically operated as part of Bluerock Residential and not as a standalone company.

On October 6, 2022, Bluerock Residential completed a spin-off transaction that resulted in its single-family residential real estate business and certain other assets being contributed to us and Bluerock Homes becoming an independent publicly traded company.

(“Bluerock Homes,” “the Company,” “we,” “us,” or “our”) was incorporated on December 16, 2021 under the laws of the state of Maryland.

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.

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Substantially all our business is conducted through our Operating Partnership, of which we are the sole general partner.

The principal executive offices of our Company and the Manager are located at 1345 Avenue of the Americas, 32 nd Floor, New York, New York 10105.

The principal executive offices of our Company and the Manager are located at 919 Third Avenue, 40 th Floor, New York, New York 10022.

Our telephone number is (212) 843-1601.

Investments in Real Estate

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, 2024, we held twenty-three real estate investments, consisting of fourteen consolidated investments and nine preferred equity and loan investments.

The twenty-three investments represent an aggregate of 5,087 residential units, comprised of 3,453 consolidated units, of which 170 units are under development, and 1,634 units through preferred equity and loan investments, which includes planned units and those under development.

As of December 31, 2024, our consolidated operating investments were approximately 91.6% occupied;

excluding units classified as held for sale and down/renovation units, our consolidated operating investments were approximately 94.0% occupied.

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

Investments”.

The Separation and the Distribution

On December 20, 2021, Bluerock Residential entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Badger Parent and Badger Merger Sub LLC (“Merger Sub”).

As contemplated by the Merger Agreement, on October 5, 2022, we entered into a Separation and Distribution Agreement with Bluerock Residential, Badger Parent, Badger Holdco LLC and the Operating Partnership, pursuant to which, among other things, Bluerock Residential contributed to us its single-family residential real estate business and certain other assets (the “Separation”).

On October 6, 2022, following the Separation, Bluerock Residential completed the spin-off of Bluerock Homes by distributing all our outstanding shares of Class A common stock and Class C common stock to the holders of Bluerock Residential common stock (the “Distribution”) as of the record date, September 29, 2022 (the “Spin-Off”).

Pursuant to the terms and conditions of the Merger Agreement, following the Separation, the Distribution and the Spin-Off, Bluerock Residential merged with and into Merger Sub, with Merger Sub continuing as the surviving company, and the separate existence of Bluerock Residential ceased.

As a result of the Separation, the Distribution and the Spin-Off, Bluerock Homes became an independent, publicly traded company and our Class A common stock is listed under the symbol “BHM” on the NYSE American.

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 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.

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.

Any references to “the Company,” “we,” “us,” or “our” for all periods ended October 6, 2022 and prior refer to Bluerock Homes as owned by Bluerock Residential, and for all periods subsequent to October 6, 2022 refer to Bluerock Homes as an independent, publicly traded company.

Business and Growth Strategies

Our principal business objective is to generate attractive risk-adjusted investment returns by assembling a portfolio of pre-existing single-family rental homes and developing build-to-rent communities.

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.

Our principal business objective is to generate attractive risk-adjusted investment returns by assembling a portfolio of institutional residential properties including single-family homes, build-to-rent communities, and other residential communities, located across a diverse group of growth markets.

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.

We acquire single-family rental properties with potential for long-term value creation for our stockholders.

We acquire residential rental properties with potential for long-term value creation for our stockholders.

We utilize the following internal and external growth strategies to drive growth in FFO and NAV for our investors:

● Scattered-Site Aggregation .

Currently, there is a high level of fragmentation in the single-family rental home market.

We believe we can generate economies of scale and enable transaction efficiencies by targeting individual or small portfolios of quality, scattered, single-family rental homes with strong and stable cash flows and aggregate them into larger portfolios, which will allow us to reduce per unit costs, including leasing, marketing, insurance and maintenance related costs through increased purchasing power and sharing of resources.

We look for middle-market rents that deliver attractive unlevered yields relative to private market portfolio and public market dividend yields.

To date, we have acquired scattered-site homes at year one nominal cap rates exceeding 5% and gross rental yields exceeding 9%.

We see an opportunity to replicate this strategy across our markets utilizing our network as a force multiplier on the sourcing and execution fronts.

● Build-to-Rent.

We develop build-to-rent communities at attractive stabilized unlevered yields, investing selectively in target markets that we believe will enable us to capture development premiums on completion.

We may use a convertible loan or convertible preferred equity structure to provide income during the development stage and/or the ability to capture development premiums at completion by exercising our conversion rights to take ownership.

● Value-Add Renovation .

We see significant potential for capital appreciation through renovation of existing assets.

Our value-add strategy focuses on working with our local experts to reposition lower-quality, less current assets and drive rent growth and expand margins, increasing net operating income (“NOI”) and maximizing our return on investment.

Our value-add strategy focuses on working with our local experts to reposition residential rental communities and drive rent growth and expand margins, increasing net operating income (“NOI”) and maximizing our return on investment.

● Income and Appreciation.

We invest in well-located institutional residential properties with strong and stable cash flows in demographically attractive knowledge economy growth markets where we believe there exists significant potential for medium-term capital appreciation through renovation or redevelopment, to reposition the asset and drive future rental growth.

● Invest-to Own.

We selectively invest in the development of build-to rent and other residential properties in target markets where we believe we can capture significant development premiums upon completion.

We generally make common equity investments or use a preferred equity structure which provides income during the development stage and/or the ability to capture development premiums at completion by exercising our conversion rights to take ownership.

● Institutional Property Management / NOI Margin Expansion .

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Operational PropTech solutions include focus on streamlining value-add initiatives, integrating smart-home technology, automating the lease process and providing robust and coordinated maintenance services.

Invest in Institutional Residential Properties.

We intend to continue to acquire institutional residential properties targeting the high disposable income renter by choice, where we believe we can create long-term value growth for our stockholders.

Focus on Growth Markets.

We intend to continue to focus on demographically attractive growth markets, which we define as markets with strong employment drivers in industries creating high disposable income jobs over the long term.

Employment growth is highly correlated with institutional property demand;

therefore, we believe that selecting markets with job growth significantly above the national average will provide high potential for increased rental demand leading to revenue growth and attractive risk-adjusted returns.

Implement our Value Creation Strategies.

We intend to continue to focus on creating value at our properties utilizing our Value-Add, Opportunistic and Invest-to-Own investment strategies in order to maximize our return on investment.

We work with each member of our network to evaluate property needs along with value-creation opportunities and create an asset-specific business plan to best position or reposition each property to drive rental growth and asset values.

We then provide an aggressive asset management presence to manage our network partner and ensure execution of the plan, with the goal of driving rental growth and values.

Implement our Live/Work/Play Initiatives.

We intend to continue to implement our amenities and attributes to transform the residential community from a purely functional product (i.e., as solely a place to live), to a lifestyle product (i.e., as a place to live, interact, and socialize).

Our Live/Work/Play initiatives are property specific, and generally consist of attributes that go beyond traditional features, including highly amenitized common areas, cosmetic and architectural improvements, technology, music and other community-oriented activities to appeal to our residents’ desire for a “sense of community” by creating places to gather, socialize and interact in an amenity-rich environment.

We believe this creates an enhanced perception of value among residents, allowing for premium rental rates and improved resident retention.

Diversify Across Markets, Strategies and Investment Size.

We will seek to grow our institutional portfolio of residential properties diversified by geography and by investment strategy and by size to manage concentration risk, while driving both current income and capital appreciation throughout the portfolio.

Our network enables us to diversify across multiple markets and multiple strategies efficiently, without the logistical burden and time delay of building operating infrastructure in multiple markets and across multiple investment strategies.

Harvest and Redeploy Capital Selectively.

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Date of Investment

Ownership Interest

Number of Units

First Quarter

Weatherford 185 (2)

Weatherford, TX

February 23, 2023

Savannah-84, formerly Peak JV 4 (3)

Golden Pacific

Second Quarter

Golden Pacific

Savannah-84 (3)

Third Quarter

Golden Pacific

Savannah-84 (3)

Fourth Quarter

Golden Pacific

Savannah-84 (3)

February 23,2023

Willow Park (1)

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

The loan was paid off in July 2022.

Refer to the table below.

(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.

Wayford at Pringle (5)

Charlotte, NC

January 10, 2024

Villas at Huffmeister

March 25, 2024

Indigo Cove (2)

June 27, 2024

Avenue at Timberlin Park

Jacksonville, FL

July 31, 2024

Amira at Westly (6)

October 31, 2024

Allure at Southpark

Charlotte, NC

December 6, 2024

River Ford (2)

Brunswick, GA

December 6, 2024

Canvas at Wildwood (2)

December 11, 2024

(1) Our investment in Willow Park is through a loan provided to an unaffiliated third party.

Refer to Note 6 of our consolidated financial statements for further information.

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

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

(3) Abode Wendell Falls is a build-to-rent development project that commenced construction in 2024.

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:

(4) Our investment in The Woods at Forest Hill, which was through a loan provided to an unaffiliated third party, was fully paid off in 2024.

Refer to the table below.

(5) Our investments in Wayford at Pringle are through a debt security investment and a loan investment, both made with an unaffiliated third party.

Refer to Note 6 and Note 7 of our consolidated financial statements for further information.

(6) Our investment in Amira at Westly is through a Delaware statutory trust.

At December 31, 2024, we hold a 93% ownership interest in the property.

Refer to Note 3 of our consolidated financial statements for further information.

The following table presents a summary of our loan payoff, real estate sales, and redemptions of preferred equity investments during the years ended December 31, 2024 and 2023:

Date of Payoff, Sale

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or Redemption (1)

The Hartley at Blue Hill (2)

Chapel Hill, NC

February 28, 2022

Weatherford 185 (2)

Weatherford, TX

July 22, 2022

First Quarter

Peak Housing (3)

Second Quarter

Golden Pacific

Brownsburg, IN

Peak Housing (2)

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 (3)

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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) 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.

Indy-Springfield

Peak Housing (2)

Dallas-Fort Worth, TX

The Woods at Forest Hill (4)

Forest Hill, TX

Navigator Villas (5)

August 7, 2024

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

(2) Our investment in the portfolio, which was through a preferred equity investment with an unaffiliated third party, was fully redeemed in 2024 as units collateralizing our investment (such units collectively known as “Peak Housing”) were sold.

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

(3) 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.

(4) We held both a loan investment and a preferred equity investment with unaffiliated third parties in The Woods at Forest Hill.

We received the final loan payoff amount in August 2024, and we received our final preferred equity redemption payment in November 2024.

Refer to Note 6 and Note 7 of our consolidated financial statements for further information.

(5) Prior to the sale of Navigator Villas, we purchased our unaffiliated joint venture partner ’ s interest in the property, increasing our interest from 90% to 100%.

Distribution Policy

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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.

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 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 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).

In addition, for each month for which the Board declares the Series A Preferred Regular Dividends, holders of shares of the Series A Preferred Stock will be entitled to receive an enhanced special dividend, which will be aggregated with the Series A Preferred Regular Dividends so as to effect a dividend rate of the average one month Term Secured Overnight Financing Rate (“SOFR”) plus 2.0%, subject to a 6.5% minimum and 8.5% maximum annual rate, calculated and paid monthly.

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;

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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.

On March 11, 2025, we declared quarterly cash dividends of $0.125 per share, or $0.50 per share annually, for our Class A common stock and Class C common stock for each quarter of fiscal year 2025.

The common share dividends will be paid on a quarterly basis.

We cannot assure you that we will generate sufficient cash flows to make distributions to our stockholders, or that we will be able to sustain those distributions.

If our operations do not generate sufficient cash flow to allow us to satisfy the REIT distribution requirements, we may be required to fund distributions from working capital, offering proceeds, borrowing funds, selling assets, making a taxable distribution of our equity or debt securities, or reducing such distributions.

If our operations do not generate sufficient cash flow to allow us to satisfy the REIT distribution requirements, we may be required to fund distributions from working capital, offering proceeds, proceeds from our DST Program, borrowing funds, selling assets, making a taxable distribution of our equity or debt securities, or reducing such distributions.

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

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To that end, our Manager or its affiliates have undertaken various initiatives, including the following:

● implementing an Environmental, Social, and Corporate Governance Initiative to codify and disclose its commitment to good corporate citizenship, including the appointment of an internal corporate responsibility committee in support of its ongoing commitment to sustainability, health and safety, corporate social responsibility, corporate governance, and other public policy matters;

commitment to sustainability, health and safety, corporate social responsibility, corporate governance, and other public policy matters;

● providing department-specific training, access to online training seminars and opportunities to participate in industry conferences;

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Industry Segments

We own and operate residential investments that generate rental and other property-related income through the leasing of units to a diverse base of tenants.

We evaluate operating performance on an individual property investment level and based on the investments’ similar economic characteristics.

Our primary financial measure for operating performance is NOI as it measures the core operations of property performance by excluding corporate level expenses and those other items not related to property operating performance.

We view our residential real estate assets as one reportable segment, and, accordingly, aggregate our properties into one reportable segment.

We own and operate residential real estate assets that generate rental and other property-related income through the leasing of residential units to a diverse base of tenants.

We view our residential real estate assets as two reportable segments, consisting of (i) scattered single-family homes, and (ii) residential communities.

Our Chief Operating Decision Makers, which are our Chief Executive Officer, Chief Investment Officer and Chief Financial Officer, do not distinguish or group operations on a geographic, tenant or other basis when assessing the financial performance of our portfolio of properties/investments.

Scattered single-family homes segment includes the acquisition, ownership, management, and renovation of scattered single-family homes, which are, generally, detached homes with no onsite property management.

Residential communities segment includes the acquisition, ownership, management, renovation, construction, and development of residential communities, which include both detached single-family home communities and attached unit communities such as apartments, townhouses, and duplexes.

Each residential community is, generally, located on a single, contiguous land parcel and has amenities including clubhouses, gyms, pools and common areas.

In addition, these residential communities typically have onsite property management.

Available Information

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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