What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-20 compared with 2024-03-12 · 715 added, 631 removed, 859 unchanged (61% of the section changed)

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Management’s Annual Report on Internal Control over Financial Reporting

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the Securities and Exchange Commission for newly public companies .

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)).

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated, as of December 31, 2024, the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting, as of December 31, 2024, was effective.

Changes in Internal Control over Financial Reporting

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Our combined consolidated financial statements and supplementary data are included as a separate section in this Annual Report on Form 10-K commencing on page F-1 and are incorporated herein by reference.

Our consolidated financial statements and supplementary data are included as a separate section in this Annual Report on Form 10-K commencing on page F-1 and are incorporated herein by reference.

Form 10-K Summary

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/s/ Romano Tio

INDEX TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Combined Consolidated Balance Sheets as of December 31, 2023 and 2022

Combined Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

Combined Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023 and 2022

Combined Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

Notes to Combined Consolidated Financial Statements

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

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Opinion on the Financial Statements

We have audited the accompanying combined consolidated balance sheets of Bluerock Homes Trust, Inc.

(a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related combined consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Bluerock Homes Trust, Inc.

(a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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BLUEROCK HOMES TRUST, INC.

COMBINED CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

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Furniture, fixtures and equipment

Construction in process

Total gross operating real estate investments

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Accounts receivable, prepaids and other assets, net

Preferred equity investments in unconsolidated real estate joint ventures, net

Preferred equity investments, net

In-place lease intangible assets, net

Due from affiliates

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

LIABILITIES AND EQUITY

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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;

436,675 and no shares issued and outstanding at December 31, 2023 and 2022, respectively

4,628,681 and 436,675 shares issued and outstanding at December 31, 2024 and 2023, respectively

Stockholders’ Equity

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Additional paid-in-capital

Retained earnings

Cumulative earnings in excess of distributions

Accumulated other comprehensive loss

Total Stockholders’ Equity

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TOTAL LIABILITIES AND EQUITY

See Notes to Combined Consolidated Financial Statements

See Notes to Consolidated Financial Statements

BLUEROCK HOMES TRUST, INC.

COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share amounts)

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Other income, net

Preferred returns on unconsolidated real estate joint ventures

(Provision for) recovery of credit losses

Transaction costs

Income from preferred equity investments

Recovery of (provision for) credit losses

Gain on sale and (impairment) of real estate investments, net

Loss on extinguishment of debt costs

Interest expense, net

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Total other income

Net loss from continuing operations

Discontinued operations

Income on operations of rental property

Gain on sale of assets from discontinued operations

Income from discontinued operations

Preferred stock dividends

Preferred stock accretion

Net loss attributable to noncontrolling interests

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Net loss per common share – Basic

Continuing operations

Discontinued operations

Net loss per common share - Diluted

Continuing operations

Discontinued operations

Weighted average basic common shares outstanding

Weighted average diluted common shares outstanding

(1) The consolidated financial statements for the year ended December 31, 2023 represent the Company’s results of operations as an independent, publicly traded company.

The combined consolidated financial statements for the year ended December 31, 2022 includes (i) the Company’s results of operations for the period of October 6 – December 31, 2022, which represents the Company’s results of operations following its spin-off from Bluerock Residential, and (ii) the Company’s results of operations for the period ending and prior to October 6, 2022, which represents a carve-out of revenues and expenses attributable to the Company related to Bluerock Residential’s single-family residential home business.

As a result, results of operations for the year ended December 31, 2023 may not be comparable to the Company’s results of operations for the year ended December 31, 2022.

See Notes to Combined Consolidated Financial Statements

Other comprehensive loss

Unrealized loss on available for sale investments

Less unrealized loss attributable to Operating partnership units

Other comprehensive loss attributable to common stockholders

Comprehensive loss attributable to noncontrolling interests

Comprehensive loss attributable to common stockholders

See Notes to Consolidated Financial Statements

BLUEROCK HOMES TRUST, INC.

COMBINED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

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Class C Common Stock

Bluerock Homes

Comprehensive

Noncontrolling

Paid-in Capital

Distributions

Balance, January 1, 2023

Contributions, net

Cash distribution to Parent at spin-off

Predecessor Bluerock Homes Equity reclassified at spin-off

Issuance of Class A common stock at spin-off

Issuance of Class C common stock at spin-off

Issuance of LTIP Units for equity incentive plan compensation

Issuance of LTIP Units to Manager

Distributions to partially owned properties’ noncontrolling interests

Adjustment for noncontrolling interest ownership in the Operating Partnership

Balance, December 31, 2022

Issuance of restricted Class A common stock and 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

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Balance, December 31, 2023

See Notes to Combined Consolidated Financial Statements

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

Acquisition of noncontrolling interests

Total comprehensive loss

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

Contributions from noncontrolling interests

Adjustment for noncontrolling interest ownership in the Operating Partnership and partially owned properties

Net income (loss)

Balance, December 31, 2024

See Notes to Consolidated Financial Statements

BLUEROCK HOMES TRUST, INC.

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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Amortization of fair value adjustments

Preferred returns on unconsolidated real estate joint ventures

Income from preferred equity investments

(Gain) on sale and impairment of real estate investments, net

Gain on sale of assets from discontinued operations

Fair value adjustment of interest rate caps and swaps

Provision for (recovery of) credit losses, net

Distributions of income and preferred returns from preferred equity investments in unconsolidated real estate joint ventures

(Recovery of) provision for credit losses, net

Loss on extinguishment of debt costs

Distributions of income and income from preferred equity investments

Share-based compensation attributable to equity incentive plan

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Changes in operating assets and liabilities:

Due to affiliates, net

Due (from) to affiliates, net

Accounts receivable, prepaids and other assets

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Capital expenditures

Purchase of interest rate cap

Investment in notes receivable

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Proceeds from sale of real estate investments

Proceeds from redemption of unconsolidated real estate joint ventures

Investments in unconsolidated real estate joint venture interests

Proceeds from redemption of preferred equity investments

Insurance proceeds related to real estate investments

Investments in preferred equity investments

Net cash used in investing activities

Cash flows from financing activities

Distributions to common stockholders

Distributions to noncontrolling interests

Distributions to partially owned properties’ noncontrolling interests

Distributions to preferred stockholders

Contribution from Parent

Contributions from noncontrolling interests

Cash distribution to Parent at spin-off

Purchase of interests from noncontrolling interests

Borrowings on mortgages payable

Repayments on mortgages payable

Repayments on mortgages payable including prepayment penalties

Proceeds from revolving credit facilities

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Payments of deferred financing fees

Other financing activities

Purchase of interest rate caps

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

Net cash provided by financing activities

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

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of year

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Supplemental disclosure of non-cash investing and financing activities

Conversion of note receivable to preferred equity investment

Distributions payable – declared and unpaid

Mortgage assumed upon property acquisition

Capital expenditures held in accounts payable and other accrued liabilities

See Notes to Combined Consolidated Financial Statements

Right-of-use asset recognized

Lease liability recognized

See Notes to Consolidated Financial Statements

BLUEROCK HOMES TRUST, INC.

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Organization and Nature of Business

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(the “Company” or “Bluerock Homes”) was incorporated as a Maryland corporation on December 16, 2021.

The Company previously operated as part of Bluerock Residential Growth REIT, Inc (“Bluerock Residential”) and not as a standalone company.

On October 6, 2022, Bluerock Residential completed a spin-off transaction (see “The Separation and the Distribution” below) that resulted in its single-family residential real estate business and certain other assets being contributed to the Company.

The accompanying combined consolidated financial statements have been derived from (i) Bluerock Residential’s historical accounting records and are presented on a carve-out basis for the period ended and prior to October 6, 2022, and (ii) the Company’s accounting records as a standalone company subsequent to the spin-off transaction.

All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the financial statements.

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

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

Related-party allocations are discussed further in Note 13.

All significant intercompany balances and transactions have been eliminated.

Any references to “the Company,” “we,” “us,” or “our” for all periods ended and prior to October 6, 2022 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.

The Company owns and operates high-quality single-family properties located in attractive markets with a focus on the knowledge-economy and high-quality of life growth markets of the Sunbelt and Western United States.

The Company’s principal objective is to generate attractive risk-adjusted returns on investments where it believes it can drive growth in funds from operations and net asset value by acquiring pre-existing single-family residential units, developing build-to-rent communities, and through Value-Add renovations.

The Company owns and operates a portfolio of institutional residential properties including single-family homes, build-to-rent communities, and other residential communities located in attractive markets with a focus on the knowledge-economy and high-quality of life growth markets of the Sunbelt and Western United States.

The Company’s principal objective is to generate attractive risk-adjusted returns on investments where it believes it can drive growth in funds from operations and net asset value by acquiring residential units, developing residential communities, and through Value-Add renovations.

The Company’s Value-Add strategy focuses on repositioning lower-quality, less current assets to drive rent growth and expand margins to increase net operating income and maximize the Company’s return on investment.

As of December 31, 2023, the Company 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, the Company 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, the Company’s consolidated operating investments were approximately 91.6 % occupied;

In October 2023, the Company filed its U.S.

federal income tax return for the taxable year ending December 31, 2022 and elected to be treated, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes.

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

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

As a REIT, the Company generally is not subject to corporate-level income taxes.

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The Company intends to continue to organize and operate in such a manner as to remain qualified as a REIT.

The Separation and the Distribution

On October 5, 2022, the Company entered into a Separation and Distribution Agreement with Bluerock Residential, Badger Parent LLC, Badger Holdco LLC and Bluerock Residential Holdings, L.P., the Company’s operating partnership (the “Operating Partnership”), pursuant to which, among other things, Bluerock Residential contributed to the Company 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 the Company by distributing all the Company’s 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”).

As a result of the Separation, the Distribution and the Spin-Off, the Company became an independent, publicly traded company and its 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.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The Company conducts its operations through the Operating Partnership, of which it is the sole general partner.

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

As of December 31, 2023, limited partners other than the Company owned approximately 68.68 % of the common units of the Operating Partnership ( 59.45 % is held by holders of limited partnership interest in the Operating Partnership (“OP Units”) and 9.23 % is held by holders of the Operating Partnership’s long-term incentive plan units (“LTIP Units”), including 3.76 % which are not vested at December 31, 2023).

The combined consolidated financial statements include certain prior period reclassifications made by the Company to reflect the Operating Partnership unitholders’ approximately 66 % ownership in the Company following the Separation and the Distribution.

Reclassifications to net loss on the combined consolidated statements of operations, along with reclassifications to stockholders’ equity and noncontrolling interest for Operating Partnership unitholders on the combined consolidated balances sheets and statements of stockholders’ equity, were made for the period ending and prior to October 6, 2022.

Significant Risks and Uncertainties

Uncertainty Due to Economic Volatility

The Company’s results of operations in the future may be directly or indirectly affected by uncertainties such as the effects of inflation and related volatility in the market.

As inflation accelerated rapidly in 2022 and into 2023, the Federal Reserve increased interest rates a total of seven times during 2022 and four times during 2023 to curb the effects of rising inflation.

While the Federal Reserve has held rates steady since July 2023 and has forecasted rate cuts in 2024, there can be no assurances that interest rates will not rise again, and the Company’s operating costs, including utilities and payroll, may increase as a result of future increases in inflation.

Rising interest rates cause uncertainty in credit and capital markets which could have material and adverse effects on the Company’s financial condition, results of operations and cash flows.

The long-term impact of these economic developments will largely depend on any future action by the Federal Reserve, future laws that may be enacted, the impact on job growth and the broader economy, and reactions by consumers, companies, governmental entities and capital markets.

The Company continues to closely monitor the impact of economic volatility on all aspects of its business.

The Company conducts its operations through Bluerock Residential Holdings, L.P., its operating partnership (the “Operating Partnership”), of which it is the sole general partner.

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

As of December 31, 2024, limited partners other than the Company owned approximately 69.48 % of the common units of the Operating Partnership, of which 56.72 % is held by holders of limited partnership interest in the Operating Partnership (“OP Units”) and 12.76 % is held by holders of the Operating Partnership’s long-term incentive plan units (“LTIP Units”), including 3.09 % which are not vested at December 31, 2024.

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

Summary of Significant Accounting Policies

Real Estate Investments, Preferred Equity Investments and Notes Receivable (Real Estate Loan Investments)

Real Estate Investments, Preferred Equity Investments and Notes Receivable

The Company first analyzes an investment to determine if it is a variable interest entity (“VIE”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810:

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As such, the Company next evaluates if these investments are considered a security under ASC 320 Investments – Debt Securities .

For investments that meet the criteria of a security under ASC 320 Investments – Debt Securities , the Company classifies each preferred equity investment as a held-to-maturity debt security as the Company has the intention and ability to hold the investment to maturity.

The Company earns a fixed return on these investments which is included within preferred returns on unconsolidated real estate joint ventures in its combined consolidated statements of operations.

For investments that meet the criteria of a security under ASC 320 Investments – Debt Securities , the Company classifies each investment as an available-for-sale (“AFS”) debt security as it does not have the positive intent to hold all investments to maturity.

The Company accounts for these investments as preferred equity investments in its consolidated balance sheets, and it earns a fixed return on these investments which is included within income from preferred equity investments in its consolidated statements of operations and comprehensive income.

AFS debt securities are carried at fair value in the Company’s consolidated balance sheets, and any unrealized gains or losses on AFS debt securities are reported as a component of accumulated other comprehensive income in its consolidated balance sheets, and as a component of other comprehensive income in its consolidated statements of operations and comprehensive income.

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

Refer to the Current Expected Credit Losses (“CECL”) section of this Note for further information regarding CECL and the Company’s provision for credit losses.

The Company accounts for these investments as preferred equity investments in unconsolidated real estate joint ventures in its combined consolidated balance sheets.

The Company previously classified its preferred equity investments as held-to-maturity debt securities as the investments met the criteria of a security under ASC 320 Investments – Debt Securities .

As of December 31, 2024, the Company does not have the positive intent to hold all the securities to maturity.

As such, the Company has reclassified all its previously held-to-maturity debt securities to AFS debt securities.

For investments that do not meet the criteria of a security under ASC 320 Investments – Debt Securities , the Company has concluded that the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate.

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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.

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Fair Value of Financial Instruments

As of December 31, 2023 and December 31, 2022, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, due to affiliates, accounts payable, other accrued liabilities, and distributions payable approximate their fair value based on their highly-liquid nature and/or short-term maturities.

As of December 31, 2024 and December 31, 2023, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, due to and due from 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.

The Company measures the fair value of its AFS debt securities utilizing observable and unobservable market inputs.

The observable market inputs include recent transactions and broker quotes (“market data”).

However, given the implied price dispersion amongst the market data, the fair value determination for the AFS debt securities has also utilized significant unobservable inputs in discounted cash flow models based on recent performance of the collateral, the underlying collateral characteristics, industry trends as well as expectations of macroeconomic events.

At each measurement date, the Company considers both the observable and unobservable valuation inputs in the determination of fair value.

However, given the significance of the unobservable inputs, the fair values of AFS debt securities are classified in Level 3 of the fair value hierarchy.

Refer to Note 11 for further information regarding fair value measurements.

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In this regard, the Company also utilizes information obtained from county tax assessment records to assist in the determination of the fair value of the land and building.

Intangible assets include the value of in-place leases which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up.

The Company amortizes the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which is on average six months.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, prevailing interest rates and the number of years the property will be held for investment.

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Repair and maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate asset.

Accordingly, many factors are considered as part of our evaluation processes with no one factor necessarily determinative.

Accordingly, many factors are considered as part of the Company’s evaluation processes with no one factor necessarily determinative.

Depreciation and amortization expense are computed on the straight-line method over the asset’s estimated useful life.

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In-place leases

Intangible Assets

The Company amortizes the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which is on average six months .

The following table summarizes the Company’s in-place lease intangible assets at December 31, 2024 and 2023 (amounts in thousands):

Gross carrying value

Accumulated amortization

Net carrying value

The following table summarizes the Company’s in-place lease activity for the year ended December 31, 2024 (amounts in thousands):

In-place Leases

Beginning balance, January 1, 2024

Ending balance, December 31, 2024

The Company did not acquire any in-place leases or incur any related amortization expense during the year ended December 31, 2023.

At December 31, 2024, the Company’s estimated aggregate amortization of its in-place lease intangible assets for the next five years is $ 2.7 million, with the full amount expected to be incurred in 2025 and no amount thereafter.

Impairment of Operating Real Estate Assets

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of the Company’s operating real estate and related intangible assets may not be recoverable.

When indicators of potential impairment suggest that the carrying value of operating real estate and related intangible assets may not be recoverable, the Company assesses the recoverability of the assets by estimating whether the Company will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition.

Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the operating real estate and related intangible assets, the Company will record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the operating real estate and related intangible assets.

No impairment charges on operating real estate and related intangible assets were recorded in 2023 or 2022.

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its operating real estate and related intangible assets may not be recoverable.

The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgement and make certain key assumptions, including the following:

(i) capitalization rate, (ii) discount rate, (iii) number of years the property will be held, (iv) property operating revenue including occupancy and market rental rates, and (v) property operating expenses.

There are inherent uncertainties in making these estimates such as market conditions, and performance and sustainability of property operations.

When indicators of potential impairment suggest that the carrying value of operating real estate and related intangible assets may not be recoverable, the Company assesses the recoverability of the assets by estimating whether it will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition.

During 2024, the Lubbock, Texas submarket experienced deterioration, and as a result, the Company recorded a $ 1.4 million impairment loss on the Peak JV 2 portfolio as of December 31, 2024, which is included in gain on sale and (impairment) of real estate investments, net in its consolidated statements of operations and comprehensive income.

The Peak JV 2 portfolio is included in the scattered single-family homes segment.

No impairment losses on operating real estate and related intangible assets were recorded in 2023.

Held for Sale Real Estate Assets

Real estate assets are classified as held for sale when they meet the applicable GAAP criteria in accordance with ASC 360-10 Property, Plant, and Equipment - Overall , including, but not limited to, the availability of the real estate asset for immediate sale in its present condition, the existence of an active program to locate a buyer, the probable sale of the real estate asset within one year, and actions required to complete the sale of the real estate asset are likely to occur.

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 combined consolidated balance sheets.

At December 31, 2023, the Company had 118 units classified as held for sale, with a recorded impairment related to held for sale units of $ 1.3 million which is included in gain on sale and impairment of real estate investments, net within the combined consolidated statements of operations.

There were no real estate assets classified as held for sale at December 31, 2022 and no impairment charges were recorded in 2022.

Refer to Note 4 for further information.

Cash and Cash Equivalents

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Restricted Cash

Restricted cash is composed of lender-imposed escrow accounts for replacement reserves, tenant deposits, real estate taxes and insurance.

Restricted cash includes amounts established pursuant to various agreements which limit the use of funds for specific purposes related to property preservation and compliance, such as lender-imposed escrow accounts for replacement reserves, tenant deposits, real estate taxes and insurance.

Concentration of Credit Risk

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Deferred financing fees represent commitment fees, legal fees and other third-party costs associated with obtaining financing.

Fees associated with the Company’s revolving lines of credit are recorded within accounts receivable, prepaids and other assets on the combined consolidated balance sheets.

Fees associated with the Company’s revolving lines of credit are recorded within accounts receivable, prepaids and other assets on the consolidated balance sheets.

Deferred fees associated with its lines of credit are amortized to interest expense over the terms of the financing agreements using the straight-line method, which approximates the effective interest method.

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Rental revenue is recognized on an accrual basis and when the collectability of the amounts due from tenants is deemed probable.

Rental revenue is included within rental and other property revenues on the Company’s combined consolidated statement of operations.

Amounts received in advance are recorded as a liability within other accrued liabilities on the Company’s combined consolidated balance sheet.

Rental revenue is included within rental and other property revenues on the Company’s consolidated statements of operations and comprehensive income.

Amounts received in advance are recorded as a liability within other accrued liabilities on the Company’s consolidated balance sheets.

Other property revenues are recognized in the period earned.

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To the extent that funds available for distribution are less than the amount required to be distributed to stockholders to satisfy the requirements to maintain its REIT status, the Company may consider various means to cover any such shortfall, including borrowing under loans, selling certain assets or using a portion of the net proceeds from future offerings of equity, equity-related securities or debt securities or declaring taxable share dividends.

In addition, the Company’s charter allows the issuance of preferred equity shares that could have a preference on dividends, and such dividend preference on the preferred equity could limit the ability to pay dividends to the holders of our common stock.

The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and has qualified since the taxable year ended December 31, 2022.

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However, the Company intends to continue to organize and operate in such a manner as to remain qualified for treatment as a REIT.

For the year ended December 31, 2023, 100 % of the distributions received by both the common and preferred stockholders were classified as capital gains for income tax purposes and none were a return of capital.

For the common and preferred stockholders, 0.4022 % and 0.5665 % of the capital gains, respectively, qualified as Section 1250 gains.

For the year ended December 31, 2022 , the Company did not make any distributions.

ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.

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If any interest and penalties related to income tax assessments arose, the Company would record them as income tax expense.

The statute of limitations for the Company’s returns is generally 3 years and as of December 31, 2023, tax returns for the calendar year 2022 remains subject to examination by the Internal Revenue Service and various state tax jurisdictions.

Reportable Segment

The Company owns and operates residential investments that generate rental and other property-related income through the leasing of units to a diverse base of tenants.

The Company evaluates operating performance on an individual property investment level and based on the investments’ similar economic characteristics.

The Company’s primary financial measure for operating performance is net operating income (“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.

The Company views its residential real estate assets as one reportable segment, and, accordingly, aggregates its properties into one reportable segment.

The statute of limitations for the Company’s returns is generally 3 years and as of December 31, 2024, tax returns for the calendar years 2022 and 2023 remain subject to examination by the Internal Revenue Service and various state tax jurisdictions.

Lessor Accounting

The Company’s current portfolio generates rental revenue by leasing residential units.

As lease revenues for residential units fall under the scope of ASC Topic 842, such lease revenues are classified as operating leases with straight-line recognition over the terms of the relevant lease agreement and inclusion within rental revenue.

As lease revenues for residential units fall under the scope of ASC Topic 842 Leases , such lease revenues are classified as operating leases with straight-line recognition over the terms of the relevant lease agreement and inclusion within rental revenue.

Resident leases are generally for one-year or month-to-month terms and are renewable by mutual agreement between the Company and the resident.

Non-lease components of the Company’s leases are combined with the related lease component and accounted for as a single lease component under ASC Topic 842.

The balances of net real estate investments and related depreciation on the Company’s combined consolidated financial statements relate to assets for which the Company is the lessor.

The balances of net real estate investments and related depreciation on the Company’s consolidated financial statements relate to assets for which the Company is the lessor.

Lessee Accounting

The Company determines whether an arrangement is a lease at inception.

The Company determined that its lessee operating lease commitments have no material impact on its combined consolidated financial statements with the adoption of ASC Topic 842.

The Company will continue to assess any modification of existing lease agreements and execution of any new lease agreements for the potential requirement of recording a right-of-use asset or liability in the future.

In accordance with ASC Topic 842 Leases , the Company determines whether an arrangement is a lease at inception.

For operating leases with a term of greater than one year, a lease liability and a right-of-use asset are recognized and recorded in the Company’s consolidated balance sheets.

The lease liability represents the Company’s obligation to make lease payments arising from a lease and is measured as the present value of the lease payments at the commencement date.

As the rate implicit in a lease may not be known at lease commencement, the Company will use its incremental borrowing rate to discount its lease obligation.

The right-of-use asset represents the Company’s right to use a specified asset for the lease term and is determined as the initial measurement of the lease liability, adjusted for any lease payments made at or before the commencement date, less any lease incentives received, plus any initial direct costs incurred by the Company.

By way of practical expedient, the Company elects to account for lease and non-lease components as a single lease component in its consolidated statements of operations and comprehensive income.

The Company recognizes the single lease component on a straight-line basis over the term of the lease, and expenses that are non-components of the lease, such as real estate taxes for which the Company is not a direct beneficiary of the arrangement, are expensed in the period in which the obligation for those payments are incurred.

Refer to Note 15 for further information about the Company’s current lease for separate corporate space in which it is the lessee.

Use of Estimates

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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 were effective immediately and 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 initial sunset date for election of the amendments in ASU 2021-01 was December 31, 2022, though with the issuance by FASB of ASU 2022-06 “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848”, the amendments in ASU 2021-01 can 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.

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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 are effective for fiscal years beginning after December 15, 2023, and interim periods with fiscal years beginning after December 15, 2024.

The disclosures are applied retrospectively to all periods presented and early adoption was permitted.

The Company evaluated the impact of ASU 2023-07 on its financial disclosures and has included the applicable segment disclosures in the notes to its consolidated financial statements.

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

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The amendments in ASU 2023-09 are effective for the Company for annual reporting periods beginning after December 15, 2024.

The Company continues to evaluate the impact of ASU 2023-09 on its financial disclosures.

In November 2024, the FASB issued Accounting Standards Update No.

2024-03 “Disaggregation of Income Statement Expenses (Subtopic 220-40)” (“ASU 2024-03”).

The amendments in ASU 2024-03 require additional disclosure of specified information about certain costs and expenses within the notes to the financial statements.

The amendments in ASU 2024-03 are effective for the Company for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact of adopting ASU 2024-03 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.

Notes Receivable

The Company estimates provision for credit losses on its loan investments (notes receivable) under CECL.

This method is based on expected credit losses for the life of the investment as of each balance sheet date.

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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 measuring the CECL provision for investments that share similar characteristics, the Company applies a default rate to the investments for the remaining loan investment hold period.

As the Company does not have a significant historical population of loss data on its loan 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.

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 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 investment is fully recoverable, the Company evaluates estimated future cash flows to be generated from the collateral underlying the investment.

The inputs and assumptions utilized to estimate the future cash flows of the underlying collateral are based upon the Company’s evaluation of the operating results, economy, market trends, and other factors, including judgments regarding costs to complete any construction activities, lease-up and occupancy rates, rental rates, and capitalization rates utilized to estimate the projected cash flows at the disposition.

The Company may also obtain a third-party valuation which may value the collateral through an “as-is” or “stabilized value” methodology.

If upon completion of the valuation the fair value of the underlying collateral securing the investment is less than the net carrying value, the Company records a provision for credit loss on that loan or preferred equity investment.

As the investment no longer displays the characteristics that are similar to those of the pool of loans or preferred equity investments, the investment is removed from the CECL collective (pool) analysis described above.

Note 3 – Discontinued Operations

The following table summarizes amounts for the year ended December 31, 2022 related to discontinued operations that resulted from trailing sales activity of multifamily investments in 2021 (amounts in thousands).

The Company previously concluded that these multifamily investment sales were discontinued operations as the asset group represented a component of an entity, the component met the criteria of held for sale in 2021, and the disposals represented a strategic shift in the Company’s business from multifamily apartment communities to single-family residential units.

Total Revenues

Property operating

Total expenses

Income on operations of rental property

Gain on sale of real estate assets

Income from discontinued operations

There are no amounts in the combined consolidated statement of cash flows that are included in discontinued operations for the year ended December 31, 2022.

As the investment no longer displays the characteristics that are similar to those of the pool of loan investments, the investment is removed from the CECL collective (pool) analysis described above.

Preferred Equity Investments

The Company performs an individual assessment of expected credit losses for its preferred equity investments, which are accounted for as AFS debt securities, that have an unrealized loss recorded at 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 preferred equity investment is not considered fully recoverable and a provision for credit loss is recorded.

Significant Risks and Uncertainties

Uncertainty Due to Economic Volatility

The Company’s results of operations in the future may be directly or indirectly affected by uncertainties such as the effects of inflation and related volatility in the market.

As inflation accelerated rapidly in the first half of 2023, the Federal Reserve increased interest rates a total of four times during 2023 to curb the effects of rising inflation.

While the Federal Reserve held rates steady between July 2023 and September 2024, then reduced interest rates by 50-basis points in September 2024, and another 25-basis point reduction in each of November and December 2024, there can be no assurances that interest rates will not rise again, and the Company’s operating costs, including utilities and payroll, may increase as a result of increases in inflation.

Rising interest rates cause uncertainty in credit and capital markets which could have material and adverse effects on the Company’s financial condition, results of operations and cash flows.

In addition, any tariffs imposed by the current administration or other countries may cause further inflationary pressures in the economy.

The Company continues to closely monitor the impact of economic volatility on all aspects of its business.

Note 3 – Acquisition of Real Estate

Acquisition of Additional Savannah-84 units

On February 23, 2023, the Company acquired 18 single-family residential units located in Savannah, Georgia that were added to the existing Savannah-84 portfolio.

The Company has a 100 % interest in the units and the purchase price of approximately $ 4.2 million was fully funded in cash upon acquisition.

Development of Abode Wendell Falls

In December 2023, the Company made a commitment to fund the total estimated project costs of $ 56.9 million for the construction of Abode Wendell Falls, a 170 -unit build-to-rent development project in Wendell, North Carolina.

The Abode Wendell Falls development project commenced construction in 2024, and the Company classifies the Abode Wendell Falls development project as a consolidated investment.

Acquisition of Villas at Huffmeister

On March 25, 2024, the Company, through a 95 % owned joint venture entity, acquired a 294 -unit residential community located in Houston, Texas known as Villas at Huffmeister.

The purchase price of $ 41.2 million was funded with a $ 24.3 million senior loan assumption secured by Villas at Huffmeister, along with cash of $ 18.1 million funded by the Company, inclusive of certain adjustments typical in such real estate transactions.

Acquisition of Avenue at Timberlin Park

On July 31, 2024, the Company acquired a 200 -unit residential community located in Jacksonville, Florida known as Avenue at Timberlin Park.

The Company has a full ownership interest in the community, and the purchase price of $ 33.8 million was funded with a $ 23.7 million senior loan secured by Avenue at Timberlin Park, along with cash of $ 12.9 million funded by the Company, inclusive of certain adjustments typical in such real estate transactions.

Acquisition of Amira at Westly

On October 31, 2024, the Company, through BR Amira DST, a Delaware statutory trust and a wholly owned subsidiary of its Operating Partnership (the “Amira DST”), acquired a 408 -unit residential community located in Tampa, Florida known as Amira at Westly.

The purchase price of $ 103.0 million was funded with (i) a $ 56.7 million senior loan secured by Amira at Westly, (ii) borrowings of $ 36.0 million on the KeyBank Credit Facility, and (iii) cash of $ 14.5 million funded by the Company, inclusive of certain adjustments typical in such real estate transactions.

Amira at Westly is the first property acquired by the Company through a Delaware statutory trust to be part of a private placement offering through which interests in the Amira DST will be issued to third party accredited investors therein (as further described below).

Following the acquisition of Amira at Westly, the organizational structure with respect to the ownership of Amira at Westly is such that Amira at Westly is owned by the Amira DST, and the Amira DST is wholly owned by BHM Amira Investment Co, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Operating Partnership (“BHM Amira Investment Co”).

BHM Amira Investment Co initially owns all Class 2 DST Interests in the Amira DST, which will be redeemed over time to permit the issuance of Class 1 DST Interests in the Amira DST to third party accredited investors therein as part of a private placement offering.

Amira at Westly is subject to a Master Lease Agreement with BHM Amira Leaseco, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Operating Partnership (“BHM Amira Leaseco”), pursuant to which the Company, through BHM Amira Leaseco, receives and is obligated to pay rent received from Amira at Westly to the Amira DST.

Acquisition of Allure at Southpark

On December 6, 2024, the Company, through a 98.05 % owned joint venture entity, acquired a 350 -unit residential community located in Charlotte, North Carolina known as Allure at Southpark.

The purchase price of $ 92.0 million was funded with a $ 55.2 million senior loan secured by Allure at Southpark, along with cash of $ 39.3 million funded by the Company, inclusive of certain adjustments typical in such real estate transactions.

Purchase Price Allocation

The real estate acquisitions above have been accounted for as asset acquisitions.

The purchase prices were allocated to the acquired assets and mortgage assumed based on their estimated fair values at the dates of acquisition.

The following table summarizes the assets acquired and mortgage assumed at the acquisition dates for the Company’s acquisitions made during the year ended December 31, 2024 (amounts in thousands):

Building improvements

Land improvements

Furniture and fixtures

In-place leases

Total assets acquired (1)

Mortgage assumed

Fair value adjustment

Total liabilities assumed

The $ 274.6 million of total assets acquired includes $ 4.7 million of acquisition expenses that have been capitalized as the acquisitions have been accounted for as asset acquisitions.

Acquisition of Additional Interests in Investments

In January 2023, the Company purchased the noncontrolling partner’s interest in Savannah-84 for $ 0.9 million, increasing the Company’s interest in the portfolio from 80 % to 100 %.

In March 2023, the Company purchased the noncontrolling partner’s interest in Indy-Springfield for $ 4.1 million, increasing the Company’s interest in the portfolio from 60 % to 100 %.

Note 4 – Sale of Real Estate Assets and Held for Sale Real Estate Assets

Sale of The Hartley at Blue Hill

On February 28, 2022, The Hartley at Blue Hill, a property located in Chapel Hill, North Carolina, was sold.

The mezzanine loan provided by the Company was paid off for $ 34.4 million, which included principal repayment of $ 31.0 million and accrued interest of $ 3.4 million.

On April 29, 2022, the senior loan provided by the Company, which was secured by a parcel of land adjacent to The Hartley at Blue Hill property, was paid off for $ 5.0 million.

Weatherford 185 Mezzanine Loan Repayment

On July 22, 2022, the outstanding balance of the Weatherford 185 mezzanine loan provided by the Company was paid off for $ 9.4 million, which included principal repayment of $ 9.3 million and accrued interest of $ 0.1 million.

Sale of Consolidated Operating Units

During 2023, the Company closed on the following sales:

two units in the Golden Pacific portfolio, twelve units in the Peak JV 2 portfolio, and thirty-nine units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sales agreements.

The fifty-three units were sold for an aggregate of approximately $ 9.5 million, subject to certain closing costs, prorations and adjustments typical in such real estate transactions, and generated net proceeds of approximately $ 9.1 million and a gain on sales of approximately $ 0.3 million.

Sale of Willow Park Interests

On October 26, 2023, Willow Park, the underlying asset of an unconsolidated joint venture located in Willow Park, Texas, was sold.

Upon the sale, the Company’s preferred equity investment was redeemed for $ 4.1 million, which included $ 2.9 million of its total $ 4.6 million principal investment and $ 1.2 million of accrued preferred return.The remaining $ 1.7 million of the Company’s principal investment is collateralized by The Woods at Forest Hill and Peak REIT OP.

Refer to Note 8 for further information.

The Company’s investment was collateralized by The Woods at Forest Hill and the operating partnership of Peak Housing REIT (the “Peak REIT OP”), and the remaining $ 1.7 million of the Company’s principal investment was fully redeemed in 2024.

Sale of The Cottages at Warner Robins Interests

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Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $ 16.6 million, which included its original preferred investment of $ 13.3 million, accrued preferred return of $ 3.1 million and a minimum interest payment of $ 0.2 million.

Sale of Navigator Villas

Prior to the sale of the property, and to effectuate a tax-deferred exchange under Section 1031 of the Code, the Company purchased its joint venture partner’s interest in Navigator Villas for $ 2.9 million, inclusive of estimated post-close adjustments.

On August 7, 2024, the Company closed on the sale of Navigator Villas located in Pasco, Washington for a sale price of $ 36.4 million, subject to certain prorations and adjustments typical in such real estate transactions.

After deductions for the payoff of existing mortgage indebtedness encumbering the property in the amount of $ 19.5 million, the purchase price of the joint venture partner’s interest, the payment of early extinguishment of debt costs, and closing costs and fees, the sale of Navigator Villas generated net proceeds of approximately $ 12.7 million and a gain on sale of approximately $ 10.0 million.

The Company recorded a loss on extinguishment of debt of $ 0.1 million related to the sale.

Sale of Consolidated Operating Units

During 2023, the Company closed on the following sales:

During 2024, the Company closed on the following sales:

four units in the ILE portfolio, eleven units in the Indy-Springfield portfolio, twenty-three units in the Peak JV 2 portfolio, and sixty units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sales agreements.

The ninety-eight units were sold for an aggregate of approximately $ 15.3 million, subject to certain closing costs, prorations and adjustments typical in such real estate transactions, and generated net proceeds of approximately $ 14.4 million and a gain on sales of approximately $ 1.8 million.

Held for Sale

As of December 31, 2023, the Company classified an aggregate of 118 units as held for sale in its combined consolidated balance sheets, with a $ 1.3 million recorded impairment related to held for sale units which is included in gain on sale and impairment of real estate investments, net on the combined consolidated statements of operations.

The units are included in the following portfolios:

35 units of Indy-Springfield (formerly Peak JV 1), 13 units of Peak JV 2, and 70 units of Peak JV 3.

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

At December 31, 2023, the Company classified an aggregate of 118 units as held for sale in its consolidated balance sheets, and for the year ended December 31, 2023, the Company recorded an impairment of $ 1.3 million related to held for sale units which is included in gain on sale and (impairment) of real estate investments, net in its consolidated statements of operations and comprehensive income.

The 118 units classified as held for sale are all reported in the Company’s scattered single-family homes segment and were included in the following portfolios:

35 units of Indy-Springfield, 13 units of Peak JV 2, and 70 units of Peak JV 3.

At December 31, 2024, the Company classified an aggregate of 167 units as held for sale in its consolidated balance sheets, and for the year ended December 31, 2024, the Company recorded an impairment of $ 3.3 million related to held for sale units which is included in gain on sale and (impairment) of real estate investments, net in its consolidated statements of operations and comprehensive income.

The 167 units classified as held for sale are all reported in the Company’s scattered single-family homes segment and are included in the following portfolios:

8 units of ILE, 37 units of Indy-Springfield, 32 units of Peak JV 2, and all 90 units of Peak JV 3.

Units classified as held for sale were identified based on submarket analysis and individual unit-level operational review.

Real estate assets classified as held for sale generally represent assets that are actively marketed or contracted for sale with the closing expected to occur within one year.

Note 5 – Investments in Real Estate

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

As of December 31, 2024, the Company held twenty-three real estate investments, consisting of fourteen consolidated investments and nine held through preferred equity and loan investments.

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

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Operating Investment Name

Market / Location

Location / Market

Scattered Single-Family Homes

Golden Pacific

Indy-Springfield, formerly Peak JV 1

Navigator Villas

Indy-Springfield

Dallas-Fort Worth, TX

Savannah-84, formerly Peak JV 4

Total Scattered Single-Family Homes

Residential Communities

Allure at Southpark

Charlotte, NC

Amira at Westly

Avenue at Timberlin Park

Jacksonville, FL

Villas at Huffmeister

Wayford at Concord

Yauger Park Villas

Total Residential Communities Units

Total Operating Units

Development Investment Name

Residential Communities

Abode Wendell Falls

Total Development Units

(1) Total operating units includes an aggregate of 118 units classified as held for sale and includes the following portfolios:

35 units in Indy-Springfield, 13 units in Peak JV 2, and 70 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 $ 6.5 million was incurred as of December 31, 2023.

(1) Total operating units includes an aggregate of 167 units classified as held for sale, with such units included in the following portfolios:

8 units of ILE, 37 units of Indy-Springfield, 32 units of Peak JV 2, and all 90 units of Peak JV 3.

Depreciation expense was $ 17.4 million and $ 16.2 million for the years ended December 31, 2024 and 2023, respectively.

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In-place leases are amortized over the remaining term of the in-place leases, which is approximately six months.

Amortization expense related to the in-place leases was zero and $ 2.7 million for the years ended December 31, 2023 and 2022, respectively.

Amortization expense related to the in-place leases was $ 2.5 million and zero for the years ended December 31, 2024 and 2023, respectively.

The Company’s real estate assets are leased to tenants under operating leases for which the terms and expirations vary.

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Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of their security deposit.

Security deposits received in cash related to tenant leases are included within other accrued liabilities in the accompanying combined consolidated balance sheets and totaled $ 2.3 million and $ 2.1 million as of December 31, 2023 and 2022, respectively, for the Company’s consolidated real estate investments.

Security deposits received in cash related to tenant leases are included within other accrued liabilities in the accompanying consolidated balance sheets and totaled $ 2.4 million and $ 2.3 million as of December 31, 2024 and 2023, respectively, for the Company’s consolidated real estate investments.

No individual tenant represents over 10% of the Company’s annualized base rent for the consolidated real estate investments.

Preferred Equity and Loan Investments

Actual / Estimated

Lease-up Investment Name

1 unchanged sentence

Number of Units

The Woods at Forest Hill

Forest Hill, TX

Willow Park, TX

The Cottages at Myrtle Beach

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Charlotte, NC

Wayford at Pringle

Charlotte, NC

Willow Park, TX

Total Lease-up Units

Development Investment Name

Canvas at Wildwood

Brunswick, GA

Total Development Units

Operating Investment Name

Number of Units

Peak Housing (1)

Total Operating Units

(1) Peak Housing is a stabilized operating portfolio and the number of units shown represents those collateralizing the Company’s preferred equity investment in the Peak REIT OP as of December 31, 2023 (refer to Note 8 for further information).

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

Note 6 – Acquisition of Real Estate

The following describes the Company’s significant acquisition activity and related new financing during the years ended December 31, 2023 and 2022 ($ in thousands):

Investment Name

Market / Location

First Quarter

Savannah-84, formerly Peak JV 4

Golden Pacific

Second Quarter

Golden Pacific

Third Quarter

Golden Pacific

Fourth Quarter

Golden Pacific

February 23, 2023

Abode Wendell Falls (6)

December 20, 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 the first acquisitions by the Company for the portfolio.

(2) For those investments where no debt amount is presented, the purchase price was funded in full by the Company and its unaffiliated joint venture partner, or solely by the Company for investments where it holds full ownership, upon acquisition.

(3) As part of the acquisition, the Company provided a mezzanine loan to the consolidated portfolio owner in the full amount shown.

During 2022, this loan was converted into a common equity interest.

Refer to the Peak Housing disclosure in Note 7 for further information.

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

(5) As there are four separate credit agreements under which the ILE portfolio acquisitions are financed, the debt amount represents the aggregate debt held through one or more of these credit agreements.

Refer to Note 9 and Note 10 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.

Purchase Price Allocation

The real estate acquisitions above have been accounted for as asset acquisitions.

The purchase prices were allocated to the acquired assets based on their estimated fair values at the dates of acquisition.

The following table summarizes the assets acquired at the acquisition date for acquisitions made during the year ended December 31, 2023 (amounts in thousands):

Purchase Price

Total assets acquired (1)

(1) The $ 10.8 million of total assets acquired includes $ 0.9 million of acquisition expenses that have been capitalized as the acquisitions of additional real estate have been accounted for as asset acquisitions.

Acquisition of Additional Interests in Investments

During the year ended December 31, 2023, the Company acquired the noncontrolling partner’s interest in the following consolidated operating investments ($ in thousands):

Previous Ownership

New Ownership

Investment Name

January 6, 2023

Indy-Springfield, formerly Peak JV 1

March 8, 2023

Note 6 – Notes and Interest Receivable

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

At December 31, 2022, the Company held no loan investments and there were no outstanding interest receivable amounts due to the Company.

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

Investment Name

1 unchanged sentence

The Woods at Forest Hill (1)

Wayford at Pringle

Total notes receivable

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The Woods at Forest Hill (1)

Wayford at Pringle

Total accrued interest receivable

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Allowance for credit losses

In August 2024, the Company’s loan investment in The Woods at Forest Hill was paid off in full, including any accrued but unpaid interest amounts.

Refer to Loan Investment Summary disclosure below for further information.

Allowance for Credit Losses

The provision for and recovery of credit losses of the Company’s loan investments at December 31, 2023 and 2022 are summarized in the table below (amounts in thousands):

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

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

Provision for (recovery of) credit losses on pool of assets (1)

Provision for credit losses on pool of assets (1)

Allowance for credit losses, end of period

(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 year ended December 31, 2023 was attributable to the addition of two investments to the pool of assets.

The recovery of credit losses during the year ended December 31, 2022 was a result of the sale of The Hartley at Blue Hill.

The provision for credit losses during the year ended December 31, 2024 was attributable to the addition of one investment to the pool of assets (which was only partially offset by the removal of one investment from the pool of assets) and an increase in the trailing twelve-month historical default rate.

Following is a summary of the interest income from loan investments for the years ended December 31, 2024 and 2023 (amounts in thousands):

Investment Name

The Hartley at Blue Hill (1)

The Woods at Forest Hill (1)

Weatherford 185 (2)

(1) In the first quarter 2022, The Hartley at Blue Hill property was sold and the mezzanine loan provided by the Company was paid off in full.

The Hartley at Blue Hill senior loan provided by the Company was paid off in full in the second quarter 2022.

Refer to the disclosure below for further information.

(2) In July 2022, the Weatherford 185 mezzanine loan provided by the Company was paid off in full.

Refer to the disclosure below for further information.

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

Investment Name

The Woods at Forest Hill (1)

Willow Park (2)

(1) The Woods at Forest Hill commenced lease-up in October 2022.

(2) Willow Park commenced lease-up in late June 2022.

Peak Housing Financing

Prior to 2023, the Company made a preferred equity investment in the operating partnership of Peak Housing REIT (the “Peak REIT OP”), and in addition, made common equity investments, through joint ventures with Peak REIT OP, in sixteen portfolios of single-family residential units through Indy-Springfield (formerly Peak JV 1), Peak JV 2, Peak JV 3, and Savannah-84 (formerly Peak JV 4).

In addition to its common and/or preferred equity investments, the Company, through wholly-owned lender-entities, provided the full mortgage or mezzanine loan to fifteen of the sixteen respective portfolio owners within Indy-Springfield, Peak JV 2, and Peak JV 3 (no loan was provided in conjunction with Savannah-84).

These portfolio owners are owned by joint ventures in which the Company has its common equity investments along with Peak REIT OP.

During the second quarter 2022, the mortgage and mezzanine loans provided by the Company to fourteen of the respective portfolio owners in Indy-Springfield and Peak JV 2 were converted into a total of $ 105.4 million of common equity interests, which included the full principal loan balances in the aggregate amount of $ 99.8 million and an aggregate amount of $ 5.6 million representing the minimum interest associated with the respective loans.

As of December 31, 2023, one mezzanine loan that the Company provided to the portfolio owner in Peak JV 3 in the initial amount of $ 20.0 million remains.

The entity through which the Company provided the loan (the lender-entity) and the entity to which the loan was provided (the property owner) consolidate into the Company’s financial statements.

As such, the loan receivable balance and the loan payable balance, and the loan interest income and loan interest expense attributable to the Company, are eliminated through consolidation on the combined consolidated balance sheets and statements of operations, respectively.

The Company (as lender entity) recognizes Peak REIT OP’s portion of interest expense on the loan as income and this amount is reflected in net income (loss) attributable to common stockholders in the Company’s combined consolidated statements of operations.

The mezzanine loan was to mature on December 31, 2023, however on November 30, 2023, the property owner delivered written notice to the Company of its intention to exercise one of the loan’s two six-month extension options, extending the maturity date to June 30, 2024.

The loan has one six-month extension option remaining, subject to certain conditions, and the loan can be prepaid without penalty.

During 2023, proceeds from the sales of 39 units in the Peak JV 3 portfolio (refer to Note 4 for further information) have been used to reduce the outstanding balance of the mezzanine loan provided by the Company to $ 15.9 million as of December 31, 2023.

The Hartley at Blue Hill Loan Financing

The Company provided a $ 31.0 million mezzanine loan (the “Hartley Mezz Loan”) to BR Chapel Hill JV, LLC (“BR Chapel Hill JV”), which owns a 100 % interest in BR Chapel Hill, LLC (“BR Chapel Hill”) and is a joint venture with common interests held by Bluerock Special Opportunity + Income Fund, LLC, Bluerock Special Opportunity + Income Fund II, LLC (“Fund II”), and BR Chapel Hill Investment, LLC, all managed by affiliates of BRG Manager, LLC (the “former Manager”).

The Hartley Mezz Loan was to mature on March 31, 2024 or earlier upon the occurrence of certain events, including the date of sale or transfer or property, and could be prepaid without penalty.

The Hartley Mezz Loan bore interest at a current rate of 5.25 % and an accrued rate of 6.5 % for a total interest rate of 11.75 % per annum.

In conjunction with the Hartley Mezz Loan, the Company provided a $ 5.0 million senior loan to BR Chapel Hill.

The senior loan was secured by BR Chapel Hill’s fee simple interest in The Hartley at Blue Hill property.

The senior loan was to mature on March 31, 2024 and could be prepaid without penalty.

The senior loan bore interest at a fixed rate of 10.0 % per annum with regular monthly payments that were interest-only during the initial term.

In February 2022, The Hartley at Blue Hill property was sold and the Hartley Mezz Loan was paid off for $ 34.4 million, which included principal repayment of $ 31.0 million and accrued interest of $ 3.4 million.

In April 2022, the senior loan of $ 5.0 million was paid off in full.

The Woods at Forest Hill Loan Financing

On December 28,2023, the Company assumed an $ 8.3 million senior loan (the “Woods Loan”) made to an unaffiliated third-party borrower for 76 -build for rent, single-family residential units in Forest Hill, Texas.

The Woods Loan investment by the Company is in addition to its existing preferred equity investment in The Woods at Forest Hill (refer to Note 8 for further information).

The Woods Loan bears interest at the prime rate plus 1.50 % per annum, subject to a 4.75 % rate floor, with regular monthly payments that are interest-only through June 2024 and future payments based on twenty-five -year amortization.

The Woods Loan matures on December 20, 2024, contains two (2) one-year extension options subject to certain conditions, and can be prepaid in part or in whole subject to a make whole premium.

Weatherford 185 Mezzanine Loan Financing

In February 2022, the Company provided a $ 9.6 million mezzanine loan to an unaffiliated third party to purchase land in Weatherford, Texas for the development of approximately 185 -build for rent, single-family residential units.

The loan bore interest at a fixed rate of 12 % per annum with interest-only payments during the term of the loan.

The loan was to initially mature on May 16, 2022 and contained three (3) thirty-day extension options, of which the borrower exercised all three options, extending the maturity date to August 14, 2022.

At the time of each such extension, the borrower was required to make a payment to the Company of $ 0.1 million toward the unpaid principal amount of the loan.

The loan could be prepaid without penalty.

In July 2022, the outstanding balance of the Weatherford 185 mezzanine loan provided by the Company was paid off for $ 9.4 million, which included principal repayment of $ 9.3 million and accrued interest of $ 0.1 million.

Willow Park Loan Financing

On October 26, 2023, Willow Park, the underlying asset of an unconsolidated joint venture located in Willow Park, Texas, was sold and the Company’s preferred equity investment was redeemed (refer to Note 8 for further information).

As part of the sale, the Company provided a $ 9.4 million senior loan (the “Willow Loan”) to the new unaffiliated third-party owner of Willow Park for 58 -build for rent, single-family residential units.

Of the 58 total units acquired by the Willow Loan borrower, 46 units previously collateralized the Company’s preferred equity investment in Willow Park, with the remaining 12 units previously owned by unaffiliated third parties.

The Willow Loan bears interest at a fixed rate of 5.08 % per annum during the initial term with regular monthly payments that are interest-only.

The Willow Loan matures on October 28, 2024, contains two six-month extension options subject to certain conditions, and can be prepaid in part, subject to a minimum payment, or in whole without penalty.

Note 8 – Preferred Equity Investments in Unconsolidated Real Estate Joint Ventures

The carrying amount of the Company’s preferred equity investments in unconsolidated real estate joint ventures at December 31, 2023 and 2022 is summarized in the table below (amounts in thousands):

Wayford at Pringle

(1) In August 2024, the Company’s loan investment in The Woods at Forest Hill was paid off in full, including any accrued but unpaid interest amounts.

Refer to Loan Investment Summary disclosure below for further information.

Loan Investment Summary

During the year ended December 31, 2024, the Company entered into an agreement to provide a loan in the maximum aggregate amount of $ 22.3 million (the “Pringle Loan”) to an unaffiliated, third-party borrower for 102 build-to-rent, single-family residential units in Charlotte, North Carolina known as Wayford at Pringle.

The Pringle Loan had been fully funded as of December 31, 2024.

In addition to the Pringle Loan, the Company also holds a debt security investment in Wayford at Pringle;

refer to Note 7 for further information.

In addition, and during the year ended December 31, 2024, the Company’s loan investment in The Woods at Forest Hill was paid off in full in the aggregate amount of $ 8.5 million, which included principal investment of $ 8.3 million and accrued interest of $ 0.2 million.

Prior to 2024, the Company provided a mezzanine loan to the portfolio owner in Peak JV 3, which is owned through a joint venture between the Company and the operating partnership of Peak Housing REIT (the “Peak REIT OP”).

The loan receivable balance and the loan payable balance, and the loan interest income and loan interest expense attributable to the Company, are eliminated through consolidation on the Company’s consolidated balance sheets and statements of operations and comprehensive income, respectively.

The Company (as lender entity) recognizes Peak REIT OP’s portion of interest expense on the loan as income with this amount reflected in net income (loss) attributable to common stockholders in the Company’s consolidated statements of operations and comprehensive income.

The mezzanine loan was to mature on December 31, 2024;

however, on December 20, 2024, the loan agreement was amended and restated to provide for two (2) additional six-month extension options, and in conjunction with the loan’s amendment and restatement, the property owner delivered written notice to the Company of its intention to exercise the first additional six-month extension option, extending the maturity date to June 30, 2025.

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 year ended December 31, 2024, proceeds from the sales of 60 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 $ 8.5 million at December 31, 2024.

Note 7 – Preferred Equity Investments

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

Investment Name

Canvas at Wildwood

Peak Housing (1)

The Cottages at Myrtle Beach

The Cottages at Warner Robins (1)

The Cottages of Port St.

1 unchanged sentence

Wayford at Innovation Park

Willow Park (2)

Wayford at Pringle

Allowance for credit losses

(1) On December 15, 2023, the Company’s preferred equity investment was redeemed.

Refer to the disclosures below for further information.

(2) On October 26, 2023, the Company’s preferred equity investment was redeemed.

Refer to the disclosures below for further information.

Gross unrealized loss, net (2)

(1) The Company’s preferred equity investments in Peak Housing and The Woods at Forest Hill were fully redeemed in September 2024 and November 2024, respectively.

Refer to the Preferred Equity Investment Summary disclosure below for further information.

(2) During 2024, the Company’s preferred equity investments were reclassified from held-to-maturity debt securities to available-for-sale debt securities.

At December 31, 2024, these investments were classified as available-for-sale debt securities and were carried at a net fair value of $ 81.7 million, with the unrealized loss of ($ 0.5 ) million due to fluctuations in market interest rates.

At December 31, 2023, these investments were classified as held-to-maturity debt securities and carried at a net cost of $ 81.2 million.

Refer to the Real Estate Investments, Preferred Equity Investments and Notes Receivable disclosure in Note 2 for further information.

The following table summarizes the net carrying amount and fair value of the Company’s preferred equity investments, which are classified as available-for-sale debt securities, by contractual maturity at December 31, 2024.

Available-for-sale

Net carrying amount

Due within one year

Due after one year through three years

Due after three years

Allowance for Credit Losses

The provision for and recovery of credit losses of the Company’s preferred equity investments at December 31, 2023 and 2022 are summarized in the table below (amounts in thousands):

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

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

Provision for (recovery of) credit losses on pool of assets, net (1)

Provision for credit losses on pool of assets, net (1)

Reclassification adjustment (2)

Allowance for credit losses, net, end of period

Recovery of credit loss – Alexan Southside Place (2)

(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 year ended December 31, 2023 was attributable to the addition of one investment to the pool of assets (which was only partially offset by the removal of two investments from the pool of assets) and an increase in the trailing twelve-month historical default rate.

(2) In 2021, Alexan Southside Place, the property underlying the Company’s preferred equity investment, was sold.

In 2022, the Company recognized a partial recovery of a previously recorded credit loss on Alexan Southside Place.

As of December 31, 2023, 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 Company earns a fixed return on these investments which is included within preferred returns on unconsolidated real estate joint ventures in its combined consolidated statements of operations.

The provision for credit losses during the year ended December 31, 2024 was primarily attributable to the addition of four investments to the pool of assets (which was only partially offset by the removal of two investments from the pool of assets) and an increase in the trailing twelve-month historical default rate.

(2) Represents the adjustment for the reclassification of preferred equity investments from held-to-maturity debt securities to available-for-sale debt securities.

Refer to the Real Estate Investments, Preferred Equity Investments and Notes Receivable disclosure in Note 2 for further information.

As of December 31, 2023, the Company, through wholly-owned subsidiaries of the Operating Partnership, had outstanding preferred equity investments in eight joint ventures which are classified as available-for-sale debt securities.

The Company earns a fixed return on these investments which is included within income from preferred equity investments in its consolidated statements of operations and comprehensive income.

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 years ended December 31, 2023 and 2022 are summarized below (amounts in thousands):

The following table summarizes the Company’s income from preferred equity investments for the years ended December 31, 2024 and 2023 (amounts in thousands):

Investment Name

Canvas at Wildwood

Peak Housing (1)

The Cottages at Myrtle Beach

3 unchanged sentences

Wayford at Innovation Park

Wayford at Pringle

Willow Park (2)

Total preferred returns on unconsolidated joint ventures (3)

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

The accrued balance of the total preferred returns was $ 8.0 million and $ 6.7 million at December 31, 2023 and 2022, respectively.

The occupancy percentages of the Company’s unconsolidated real estate joint ventures at December 31, 2023 and 2022 are as follows:

Investment Name

Peak Housing (2)

The Cottages at Myrtle Beach (3)

The Cottages of Port St.

The Woods at Forest Hill (4)

Wayford at Innovation Park (5)

(1) Chandler had not commenced lease-up as of December 31, 2023.

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

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

at Myrtle Beach in April and of Port St.

Lucie in June.

(4) The Woods at Forest Hill commenced lease-up in October 2022.

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

Chandler Interests

On November 15, 2023, the Company made a $ 15.0 million preferred equity investment in a joint venture (the “Chandler JV”) with an unaffiliated third party for Chandler, a 208 -unit community located in Chandler, Arizona.

The Company earns a preferred return on its investment of 13.5 % per annum, subject to a minimum multiple, as follows:

for the first two years following the initial investment, the return will be fully accrued;

after year two, the return will be paid 4.0 % on a current basis with the remaining 9.5 % accrued;

after year three, the return will be paid 6.0 % on a current basis with the remaining 7.5 % accrued.

The Chandler JV is required to redeem the Company’s preferred equity investment plus any accrued but unpaid preferred return on November 15, 2030 (the “redemption date”) or earlier upon the occurrence of certain events.

The redemption date can be extended through three ( 3 ) one-year extension options subject to certain conditions.

Peak Housing Interests

Prior to 2023, the Company made a preferred equity investment in the Peak REIT OP in the aggregate amount of $ 20.3 million which was collateralized by 474 single-family residential units (“Peak Housing”) located throughout Texas.

The Company earned a 7.0 % current return and a 3.0 % accrued return, for a total preferred return of 10.0 % per annum, on $ 16.0 million of its investment.

On its remaining $ 4.3 million investment, the Company earned a 4.0 % current return and a 4.0 % accrued return, for a total preferred return of 8.0 % per annum.

On the Company’s total $ 20.3 million investment, it earned a total weighted average preferred return of 9.6 % per annum.

On March 3, 2023, the Company’s agreement with the Peak REIT OP regarding its total preferred equity investment in Peak Housing was amended.

As part of the amendment, the Company’s two tranches of preferred equity investments were combined into one $ 20.3 million preferred equity investment earning a 6.4 % current return and a 3.2 % accrued return, for a total preferred return of 9.6 % per annum.

In addition, the amendment increased the collateral underlying the Company’s preferred equity investment from 474 units to 648 units, and the net assets of the Peak REIT OP were included as additional collateral.

Peak REIT OP may sell the units collateralizing the Company’s preferred equity investment, though Peak REIT OP is required to distribute any net sale proceeds to the Company, after consideration for partnership operating expenses and reserve requirements, until the Company’s full preferred equity investment has been repaid in full, subject to certain rate of return requirements and including any accrued but unpaid preferred returns.

During 2023, the Company’s preferred equity investment in the Peak REIT OP was partially redeemed in the aggregate amount of $ 10.7 million, which included principal investment of $ 9.7 million and accrued preferred return of $ 1.0 million.

The Company’s partial redemption of its preferred equity investment was a result of the sale by Peak REIT OP of 196 of the 648 units that collateralized the Company’s investment.

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

The Cottages at Myrtle Beach Interests

In September 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Cottages MB JV”) and developed 294 -build for rent, single-family residential units in Myrtle Beach, South Carolina.

The Company made a commitment to invest $ 17.9 million of preferred equity interests in the Cottages MB JV, all of which had been funded as of December 31, 2023.

The Company earns a 14.5 % per annum accrued return on outstanding capital contributions with payments to be remitted when the properties generate cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of properties.

The Cottages MB JV is required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

In conjunction with The Cottages at Myrtle Beach investment, The Cottages at Myrtle Beach property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $ 40.2 million construction loan, of which $ 36.7 million was outstanding as of December 31, 2023.

The loan matures on March 9, 2025 and is secured by the fee simple interest in The Cottages at Myrtle Beach property.

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

The loan bears interest on the amount drawn at the greater of 3.10 % or one-month LIBOR plus 2.60 % with interest-only monthly payments through the initial term of the loan.

The Cottages at Warner Robins Interests

In December 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Cottages WR JV”) and developed 251 -build for rent, single-family residential units in Warner Robins, Georgia.

The Company made a preferred equity investment of $ 13.3 million in the Cottages WR JV, all of which had been funded.

The Company earned a 14.5 % per annum accrued return on outstanding capital contributions with payments to be remitted when the properties generated cash flow in excess of operating costs and/or there were available net proceeds from financing, refinancing or sale of properties.

The Cottages WR JV was required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) was due and payable or earlier upon the occurrence of certain events.

In conjunction with The Cottages at Warner Robins investment, The Cottages at Warner Robins property owner, which was owned by an entity in which the Company had a preferred equity interest, entered into a $ 34.5 million construction loan.

The loan was to mature on April 5, 2025,was secured by the fee simple interest in The Cottages at Warner Robins property, and could be prepaid without penalty.

The loan bore interest on the amount drawn with interest-only monthly payments through the initial term of the loan.

On December 15, 2023, The Cottages at Warner Robins was sold, and the Company’s preferred equity investment in The Cottages at Warner Robins was redeemed by the Cottages WR JV for $ 16.6 million, which included its original preferred investment of $ 13.3 million, accrued preferred return of $ 3.1 million and a minimum interest payment of $ 0.2 million.

The Cottages of Port St.

Lucie Interests

In August 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Cottages St.

Lucie JV”) to develop approximately 286 -build for rent, single-family residential units in Port St.

Lucie, Florida.

The Company made a commitment to invest $ 18.8 million of preferred equity interests in the Cottages St.

Lucie JV, all of which had been funded as of December 31, 2023.

The Cottages St.

Lucie JV is required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

In conjunction with The Cottages of Port St.

Lucie investment, The Cottages of Port St.

Lucie property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $ 45.2 million construction loan, of which $ 40.1 million was outstanding as of December 31, 2023.

The loan matures on August 26, 2024 and is secured by the fee simple interest in The Cottages of Port St.

Lucie property.

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

The loan bears interest on the amount drawn at the greater of 3.50 % or one-month LIBOR plus 2.75 % with interest-only monthly payments through the initial term of the loan.

The Woods at Forest Hill Interests

In December 2021, the Company entered into a joint venture agreement with Peak REIT OP (the “Woods JV”) and developed 76 -build for rent, single-family residential units in Forest Hill, Texas.

The Company made an original commitment to invest $ 3.3 million of preferred equity interests in the Woods JV, however on March 17, 2023, the Company increased its commitment in the Woods JV by $ 2.3 million, for a total preferred equity investment commitment of $ 5.6 million, of which all had been funded as of December 31, 2023.

The Company earns a 13.0 % per annum accrued return on its original preferred equity investment of $ 3.3 million.

On its additional preferred equity investment commitment of $ 2.3 million, the Company earns an accrued return on its outstanding capital contributions at a rate of 15.0 % per annum compounded monthly, subject to a minimum multiple.

Payments of the Company’s preferred return are to be remitted when the properties generate cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of properties.

The Woods JV is required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

In conjunction with The Woods at Forest Hill development, The Woods at Forest Hill property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into an $ 8.3 million construction loan, of which the full amount was outstanding as of December 31, 2023.

The loan matures on December 20, 2024 and is secured by the fee simple interest in The Woods at Forest Hill property.

The loan contains two (2) one-year extension options, subject to certain conditions, and can be prepaid subject to a make whole premium.

The loan bears interest on the amount drawn at the greater of 4.75 % or the prime rate plus 1.50 % with interest-only monthly payments through July 2024 and future monthly payments based on twenty-five-year amortization.

On December 28, 2023, the Company made a loan investment in The Woods at Forest Hill in addition to its existing preferred equity investment.

Refer to Note 7 for further information.

Wayford at Innovation Park Interests

In June 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Wayford IP JV”) to develop approximately 210 -build for rent, single-family residential units in Charlotte, North Carolina.

The Company made a commitment to invest $ 13.4 million of preferred equity interests in the Wayford IP JV, of which all had been funded as of December 31, 2023.

The Company earns a 12.5 % per annum accrued return on outstanding capital contributions with payments to be remitted when the property generates cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of the property.

The Wayford IP JV is required to redeem the Company’s preferred equity interest plus any accrued preferred return on June 17, 2026 or earlier upon the occurrence of certain events.

In conjunction with the Wayford at Innovation Park development, the Wayford at Innovation Park property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $ 39.6 million construction loan, of which $ 18.0 million was outstanding as of December 31, 2023.

The loan matures on October 15, 2026, can be prepaid without penalty, and is secured by the fee simple interest in the Wayford at Innovation Park property.

The loan bears interest on the amount drawn at the greater of 3.50 % or one-month LIBOR plus 2.25 % with interest-only monthly payments through October 2024 and future monthly payments based on thirty-year amortization.

Willow Park Interests

In June 2021, the Company entered into a joint venture agreement with Peak REIT OP (the “Willow Park JV”) and developed 46 -build for rent, single-family residential units in Willow Park, Texas.

The Company made an original commitment to invest $ 2.5 million of preferred equity interests in the Willow Park JV, however on February 28, 2023, the Company increased its commitment in the Willow Park JV by $ 2.1 million, for a total preferred equity investment commitment of $ 4.6 million, of which nearly all had been funded.

The Company earned a 13.0 % per annum accrued return on its original preferred equity investment of $ 2.5 million.

On its additional preferred equity investment commitment of $ 2.1 million, the Company earned an accrued return on its outstanding capital contributions at a rate of 15.0 % per annum compounded monthly, subject to a minimum multiple.

Payments of the Company’s preferred return were to be remitted when the properties generated cash flow in excess of operating costs and/or there were available net proceeds from financing, refinancing or sale of properties.

The Willow Park JV was required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) was due and payable or earlier upon the occurrence of certain events.

In conjunction with the Willow Park development, the Willow Park property owner, which was owned by an entity in which the Company had a preferred equity interest, entered into an $ 8.8 million construction loan.

The loan was to mature on August 5, 2024, was secured by the fee simple interest in the Willow Park property, and could be prepaid subject to a make whole premium.

The loan bore interest on the amount drawn with interest-only monthly payments through February 2024.

On October 26, 2023, Willow Park was sold, and the Company’s preferred equity investment in Willow Park was redeemed by the Willow Park JV for $ 4.1 million, which included $ 2.9 million of its total $ 4.6 million principal investment and $ 1.2 million of accrued preferred return.

The accrued preferred return was earned by the Company on its total principal investment and based on rates and terms agreed upon for its original and additional principal investments.

The remaining $ 1.7 million of the Company’s principal investment is collateralized by The Woods at Forest Hill and Peak REIT OP investments and is recorded within accounts receivable, prepaids and other assets of the Company’s consolidated balance sheet.

As part of the sale, the Company provided a loan to the new unaffiliated third-party owner of Willow Park.

(1) The Company’s preferred equity investments in Peak Housing and The Woods at Forest Hill were fully redeemed in September 2024 and November 2024, respectively.

Refer to the Preferred Equity Investment Summary disclosure below for further information.

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

(3) Total income from preferred equity investments includes both current and accrued income amounts.

For the years ended December 31, 2024 and 2023, the accrued portion of the total income was $ 10.6 million and $ 8.0 million, respectively.

At December 31, 2024 and 2023, the Company had $ 23.3 million and $ 13.7 million, respectively, of total accrued preferred equity income, which is recorded in accounts receivable, prepaids and other assets, net in its consolidated balance sheets.

Preferred Equity Investment Summary

During the year ended December 31, 2024, the Company entered into three separate joint venture agreements with unaffiliated third parties to develop build-to-rent, single-family residential units.

The Company made commitments to invest capital for preferred equity interests in the three joint ventures as follows:

(i) $ 5.3 million for 82 units located in Bluffton, South Carolina known as Indigo Cove, (ii) $ 7.0 million for 170 units located in Brunswick, Georgia known as River Ford, and (iii) $ 14.6 million for 224 units located in Wildwood, Florida known as Canvas at Wildwood.

Of the Company’s aggregate commitment to invest approximately $ 26.9 million in the three joint ventures, $ 9.3 million had been funded as of December 31, 2024.

In addition, and during the year ended December 31, 2024, the Company entered into an agreement with an unaffiliated third party to make a debt security investment in the aggregate amount of $ 7.8 million, all of which was funded during 2024, for 102 build-to-rent, single-family residential units located in Charlotte, North Carolina known as Wayford at Pringle.

The Company also holds a loan investment in Wayford at Pringle;

refer to Note 6 for further information.

During the year ended December 31, 2024, the Company’s preferred equity interests in two joint ventures with unaffiliated third parties were fully redeemed as follows:

(i) the Company’s investment in the Peak REIT OP (which was collateralized by single-family residential units collectively known as “Peak Housing”) which included its remaining principal investment of $ 10.6 million and accrued preferred return of $ 0.6 million, and (ii) the Company’s investment in The Woods at Forest Hill which included its principal investment of $ 5.6 million, accrued preferred return of $ 1.1 million, and a minimum multiple payment of $ 0.6 million.

In addition, the remaining $ 1.7 million of the Company’s preferred equity investment in Willow Park, which was redeemed in 2023 and collateralized by The Woods at Forest Hill and other Peak REIT OP investments, was received in full by the Company in 2024.

Note 8 – DST Program

The Company has a program to raise capital through private placement offerings under which it sells beneficial interests in specific Delaware statutory trusts (each, a “DST”) holding real properties (collectively, the “DST Program”).

Under the DST Program, the private placement offers interest in the real property placed into a Delaware statutory trust (a “DST Property”).

The underlying interest of the real property sold to investors pursuant to such private placement is leased-back by a wholly-owned subsidiary of the Operating Partnership on a long-term basis through a master lease agreement.

The master lease agreement is partially guaranteed by the Operating Partnership in the form of a demand note capitalizing the lessee.

Additionally, the Operating Partnership retains a fair market value purchase option giving it the right, but not the obligation, to acquire the interests in the Delaware statutory trust from the investors in exchange for OP Units or cash commencing two years after full syndication.

As the Company is the primary beneficiary of the DST Property for the financial reporting purposes, the Company consolidates the DST Property and operations in its financial statements.

Under the master lease, a wholly-owned indirect subsidiary of the Operating Partnership is responsible for subleasing the property to tenants, paying certain underlying costs associated with operating the property, and remitting rent to the DST that owns such property.

As of December 31, 2024, the Company had one offering in its DST Program and had raised $ 4.5 million in offering proceeds of the $ 66.0 million total offering, with total net real estate investments associated with the DST Program of $ 103.4 million.

Note 9 — Revolving Credit Facilities

2 unchanged sentences

Amended DB Credit Facility

DB Credit Facility

ILE Sunflower Credit Facility

KeyBank Credit Facility

Amended ILE Sunflower Credit Facility

Amended Deutsche Bank Credit Facility (“Amended DB Credit Facility”)

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(“Deutsche Bank”), as sole lead arranger, Deutsche Bank AG, New York Branch, as administrative agent, the financial institutions party thereto as lenders and Computershare Trust Company, N.A., as paying agent and calculation agent, and the Company as a guarantor.

The Amended DB Credit Facility extended the maturity date of the credit facility to April 6, 2025, included the addition of a one-year extension option, subject to certain conditions, and included changes in certain financial and operating covenants.

There were no other material changes in terms from the previous credit facility.

The Amended DB Credit Facility provides for a revolving loan with a maximum commitment amount of $ 150 million.

Borrowings under the Amended DB Credit Facility are limited to financings related to the acquisition, renovation, rehabilitation, maintenance and leasing of single-family residential units initially only in the Peak JV 2 portfolio, though in the second quarter 2023, the credit facility was amended such that borrowings can also be applied to units in the Indy-Springfield (formerly Peak JV 1) and Savannah-84 (formerly Peak JV 4) portfolios.

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.

Borrowings under the Amended DB Credit Facility bear interest on the amount drawn at Term Secured Overnight Financing Rate (“SOFR”) plus 2.80 %, and borrowings can be prepaid without premium or penalty.

The interest rate on outstanding borrowings was 7.35 % at December 31, 2024.

The Amended DB Credit Facility matures on April 6, 2025 and contains a one-year extension option, which the Company intends to exercise, subject to certain conditions and the payment of an extension fee.

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

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The availability of borrowings under the Amended DB Credit Facility at December 31, 2024 was approximately $ 13 million and is based on the collateral and compliance with various ratios related to those assets.

ILE Sunflower Credit Facility

On December 27, 2021, the Company’s unaffiliated joint venture partner, ILE, entered into a credit facility with Sunflower Bank, N.A.

(the “ILE Sunflower Credit Facility”).

The ILE Sunflower Credit Facility provides for a revolving loan with an initial commitment amount of $ 20 million, which commitment contains an accordion feature to a maximum total commitment of up to $ 50 million.

The ILE Sunflower Credit Facility, along with four other separate non-revolving credit facilities (refer to Note 10 for further information), is used in the financing of acquisitions of single-family residential units.

Borrowings under the ILE Sunflower Credit Facility bear interest at LIBOR plus 3.0 %, subject to a rate floor, and can be prepaid without penalty or premium.

Amended ILE Sunflower Credit Facility

In 2023, the Company, along with its unaffiliated joint venture partner, ILE, entered into an amended and restated credit facility with Sunflower Bank, N.A.

(the “Amended ILE Sunflower Credit Facility”).

The Amended ILE Sunflower Credit Facility provided for a revolving loan with an initial commitment amount of $ 20 million, which commitment contained an accordion feature to a maximum total commitment of up to $ 50 million.

The Amended ILE Sunflower Credit Facility, along with three other separate non-revolving credit facilities (refer to Note 10 for further information), was used in the financing of acquisitions of single-family residential units.

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

The Amended ILE Sunflower Credit Facility was to mature in December 2024 and contained certain financial and operating covenants, including a minimum fixed charge coverage ratio.

In October 2024, the Company, along with ILE, fully paid off the outstanding balance of the Amended ILE Sunflower Credit Facility.

KeyBank Credit Facility

On October 25, 2024, the Company, through a subsidiary of its Operating Partnership, entered into a credit agreement with KeyBank National Association (the “KeyBank Credit Facility”) related to the Company’s DST Program.

The KeyBank Credit Facility provides for a revolving loan with a maximum commitment amount of $ 50 million.

The Company has provided a guarantee on any outstanding balance and up to the full commitment and has pledged interests in certain assets as collateral.

Borrowings under the KeyBank Credit Facility bear interest per annum, at the Company’s option, at SOFR (Daily Simple or Term) plus 3.60 % or the base rate plus 2.50 % (base rate determined by reference to the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.50 %, and (iii) Adjusted Term SOFR for a one-month interest period plus 1.00 %), and borrowings can be prepaid without premium or penalty.

The interest rate on outstanding borrowings was 7.94 % at December 31, 2024.

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

At December 31, 2023, ILE was in compliance with all covenants under the ILE Sunflower Credit Facility and the initial commitment was fully drawn at $ 20 million.

A principal of ILE has guaranteed the obligations under the ILE Sunflower Credit Facility and the Company and ILE have pledged certain assets as collateral.

The Company pays a fee on the unused portion of the KeyBank Credit Facility at an annual rate of 0.30 %.

The KeyBank Credit Facility matures on October 25, 2026;

however, borrowings under the KeyBank Credit Facility mature one-year from the date of funding, subject to certain minimum paydowns, and timing of such paydowns, pursuant to the terms of the KeyBank Credit Facility.

The KeyBank Credit Facility contains certain financial and operating covenants, including maximum leverage ratio, minimum debt service coverage ratio and minimum tangible net worth.

At December 31, 2024, the KeyBank Credit Facility was drawn at $ 36 million, and the Company was in compliance with all covenants under the KeyBank Credit Facility.

Note 10 – Mortgages Payable

The following table summarizes certain information as of December 31, 2023 and 2022 with respect to the Company’s senior mortgage indebtedness (amounts in thousands):

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

Outstanding Principal

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Interest-only

Investment Name

Interest Rate

Maturity Date

Allure at Southpark

Interest-only

January 1, 2030

Amira at Westly

Interest-only

November 1, 2034

Avenue at Timberlin Park

August 1, 2029

Navigator Villas (4)

Villas at Huffmeister

October 1, 2029

Yauger Park Villas (5)

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Floating Rate:

Interest-only

October 1, 2027

Wayford at Concord (7)

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Total mortgages payable

(1) ILE’s fixed rate debt represents the aggregate debt outstanding across two separate credit agreements.

Of the $ 25.1 million balance, $ 6.4 million held through one credit agreement has a fixed rate of 3.50 % , while the remaining $ 18.7 million held through the second credit agreement has a fixed rate of 3.75 % .

Both credit agreements mature in 2026.

(2) At December 31, 2023, the lender waived the minimum debt service coverage ratio covenant under the credit agreement to remain in compliance with such covenant.

(1) ILE’s fixed rate debt represents the aggregate debt outstanding across three separate credit agreements.

Of the outstanding balance, one credit agreement (“CA1”) has a balance of $ 5.6 million at a fixed rate of 3.50 % , the second credit agreement (“CA2”) has a balance of $ 17.6 million at a fixed rate of 3.75 % , and the third credit agreement (“CA3”) has a balance of $ 4.5 million at a fixed rate of 6.00 % .

CA1 and CA3 each bear interest at a floating rate that is subject to an interest rate swap to effectuate a fixed rate;

refer to Note 12 for further information.

CA1 and CA2 both mature in 2026;

CA3 matures in 2028.

(2) At December 31, 2024, the lender waived the minimum debt service coverage ratio covenant under CA2 to remain in compliance with such covenant.

(3) The loan requires monthly payments of principal and interest.

(4) During the second quarter 2023, one ILE credit agreement was amended to reduce and temporarily convert its interest rate from floating to fixed rate through August 1, 2023, upon which such date an interest rate swap became effective, converting the credit agreement to a fixed rate of 6.00 %.

(5) The principal balance includes a $ 14.2 million senior loan at a fixed rate of 4.31 % and a $ 5.5 million supplemental loan at a fixed rate of 5.23 % .

(4) The Company sold Navigator Villas in August 2024.

(5) The principal balance includes a $ 9.7 million senior loan at a fixed rate of 4.81 % and a $ 4.3 million supplemental loan at a fixed rate of 4.96 % .

(6) The ILE loan bears interest at one-month Term SOFR plus 2.85 % , subject to a 6.50 % rate floor.

In December 2024, the one-month Term SOFR in effect for this loan was 4.52 % .

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

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The fair value adjustments are being amortized to interest expense over the remaining life of the loans.

Amortization of fair value adjustments was $ 0.3 million and $ 0.3 million for the years ended December 31, 2023 and 2022, respectively.

Amortization of fair value adjustments was $ 0.1 million of expense and $ 0.3 million of income for the years ended December 31, 2024 and 2023, respectively.

Loss on Extinguishment of Debt and Debt Modification Costs

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a 10% or greater difference in the cash flows between instruments) in the terms of an underlying debt agreement, the Company writes-off any unamortized deferred financing costs and fair market value adjustments related to the original debt that was extinguished.

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

Loss on extinguishment of debt and debt modification costs were zero for the years ended December 31, 2023 and 2022.

The Company had $ 0.2 million of loss on extinguishment of debt costs and no debt modification costs for the year ended December 31, 2024.

The Company had no loss on extinguishment of debt or debt modification costs during 2023.

Debt maturities

As of December 31, 2023, contractual principal payments for the five subsequent years and thereafter are as follows (amounts in thousands):

At December 31, 2024, contractual principal payments of the Company’s borrowings, including the revolving credit facilities (refer to Note 9 for further information), for the five subsequent years and thereafter are as follows (amounts in thousands):

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 9 for further information), was $ 365.3 million as of December 31, 2023.

The net book value of real estate assets providing collateral for these above borrowings, including the revolving credit facilities, was $ 594.6 million at December 31, 2024.

The mortgage loans encumbering the Company’s properties are nonrecourse, subject to certain exceptions for which the Company would be liable for any resulting losses incurred by the lender.

These exceptions generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities.

In addition, upon the occurrence of certain events, such as fraud or filing of a bankruptcy petition by the borrower, the Company or our joint ventures would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses.

In addition, upon the occurrence of certain events, such as fraud or filing of a bankruptcy petition by the borrower, the Company or its joint ventures would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses.

The mortgage loans have a period where a prepayment fee or yield maintenance would be required.

Note 11 – Fair Value of Financial Instruments

Note 11 – Fair Value

Fair Value Measurements

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Fair Value of Financial Instruments

As of December 31, 2023 and 2022, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, due to affiliates, accounts payable, other accrued liabilities, and distributions payable approximate their fair value based on their highly-liquid nature and/or short-term maturities.

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.

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

December 31, 2024

December 31, 2023

Carrying Value

Preferred equity investments (1)

Mortgages payable (2)

(1) Represents the Company’s preferred equity investments which are classified as available-for-sale (“AFS”) debt securities (refer to Note 7 for further information).

These investments were previously classified as held-to-maturity debt securities and were carried at cost at December 31, 2023;

however, as these investments were reclassified from held-to-maturity debt securities to AFS debt securities in 2024, these investments were carried at fair value at December 31, 2024.

The Company measures the fair value of its AFS preferred equity investments utilizing observable and unobservable market inputs.

The observable market inputs include recent transactions and broker quotes (“market data”).

However, given the implied price dispersion amongst the market data, the fair value determination for the AFS preferred equity investments has also utilized significant unobservable inputs in discounted cash flow models based on recent performance of the collateral, the underlying collateral characteristics, industry trends as well as expectations of macroeconomic events.

At each measurement date, the Company considers both the observable and unobservable valuation inputs in the determination of fair value.

However, given the significance of the unobservable inputs, the fair values of AFS preferred equity investments are classified in Level 3 of the fair value hierarchy.

(2) The carrying values of the mortgages payable include ($ 2,400 ) and $ 916 of unamortized fair value debt adjustments and exclude $ 5,416 and $ 951 of deferred financing costs at December 31, 2024 and 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 years ended December 31, 2024 and 2023 are summarized in the table below (amounts in thousands):

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

Pre-impairment amount

Total impairments (1)

Fair value (2)

(1) Impairment amounts are included in gain on sale and (impairment) of real estate investments, net in the Company’s consolidated statements of operations and comprehensive income.

(2) 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.

Fair Value Measurements on a Nonrecurring Basis

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its operating real estate and related intangible assets may not be recoverable.

If the Company does not believe that it will be able to recover the carrying value of operating real estate, the Company will record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the operating real estate based on discounted cash flows of the operating asset using inputs that fall within Level 3 of the fair value hierarchy.

The Peak JV 2 portfolio is included in the scattered single-family homes segment.

No impairment losses on operating real estate and related intangible assets were recorded in 2023.

Derivative Financial Instruments

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The inputs used in the valuation of interest rate caps and swaps fall within Level 2 of the fair value hierarchy.

Fair Value of Debt

As of December 31, 2023 and December 31, 2022, based on the discounted amount of future cash flows using rates currently available to the Company for similar liabilities, the fair value of the Company’s mortgages payable is estimated at $ 93.0 million and $ 93.7 million, respectively, compared to the carrying amounts, before adjustments for deferred financing costs, net, of $ 97.6 million and $ 99.5 million, respectively.

The fair value of mortgages payable is estimated based on the Company’s current interest rates (Level 3 inputs of the fair value hierarchy) for similar types of borrowing arrangements.

Note 12 – Derivative Financial Instruments

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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.

As of December 31, 2023, the Company had interest rate caps and swaps which effectively limit the Company’s exposure to interest rate risk by providing a ceiling on the underlying interest rate for $ 94.0 million of the Company’s debt.

The table below presents the classification and fair value of the Company’s derivative financial instruments on the combined consolidated balance sheets at December 31, 2023 and 2022 (amounts in thousands):

At December 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 $ 155.6 million of the Company’s debt.

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

Interest Rate Caps

Interest Rate Swaps

Notional balance

Number of instruments

Earliest maturity date

Latest maturity date

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

Derivatives not designated as hedging

6 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 combined consolidated statements of operations for the years ended December 31, 2023 and 2022 (amounts in thousands):

The table below presents the classification and effect of the Company’s derivative financial instruments on its consolidated statements of operations and comprehensive income for the years ended December 31, 2024 and 2023 (amounts in thousands):

The Effect of Derivative Instruments

Derivatives not designated as hedging

Location of Gain (Loss)

The Effect of Derivative Instruments

on the Statements of Operations

instruments under ASC 815-20

Recognized in Income

on the Statements of Operations

and Comprehensive Income

Interest rate caps

6 unchanged sentences

Management Agreement with the Manager

On October 5, 2022, and in conjunction with the Separation and the Distribution, the Company entered into a management agreement (the “Management Agreement”) with the Operating Partnership and Bluerock Homes Manager, LLC (the “Manager”), which is an affiliate of Bluerock Real Estate, LLC (“BRE”), pursuant to which the Manager will provide for the day-to-day management of the Company’s operations.

In October 2022, the Company entered into a management agreement (the “Management Agreement”) with the Operating Partnership and Bluerock Homes Manager, LLC (the “Manager”), which is an affiliate of Bluerock Real Estate, LLC (“BRE”), pursuant to which the Manager provides for the day-to-day management of the Company’s operations.

Pursuant to the terms of the Management Agreement, the Manager provides the Company with a management team and appropriate support personnel to provide such management services to the Company.

1 unchanged sentence

Specifically, the Manager is responsible for (i) the selection, purchase and sale of the Company’s portfolio investments, (ii) the Company’s financing activities, and (iii) providing the Company with advisory services, in each case in conformity with the investment guidelines and other policies approved and monitored by its Board.

The initial term of the Management Agreement expires on October 6, 2023 and will be automatically renewed for a one-year term on each anniversary date thereafter unless earlier terminated or not renewed in accordance with the terms thereof.

The Management Agreement expires on October 6, 2025 and will be automatically renewed for a one-year term on each anniversary date thereafter unless earlier terminated or not renewed in accordance with the terms thereof.

The Company 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) 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.

Prior to the fourth quarter 2024, the Management Agreement provided that (i) the base management fee and the incentive fee would 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.

Commencing with the fourth quarter 2024, the Management Agreement provides that (i) the base management fee shall be paid in cash unless there is an agreement between the Board and the Manager to pay all or a portion of the base management fee in C-LTIP Units, and (ii) the operating expense reimbursement remains 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 year ended December 31, 2023 and for the period of October 6 – December 31, 2022, the Company recorded base management fees of $ 7.9 million and $ 1.8 million, respectively, and expense reimbursements of $ 2.8 million and $ 0.4 million, respectively.

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

There has been no incentive fee expense incurred during the years ended December 31, 2023 and 2022.

The table below presents the related party amounts payable to the Manager as of December 31, 2023 and 2022 pursuant to the terms of the Management Agreement (amounts in thousands).

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

For the year ended December 31, 2024, the Company recorded a base management fee of $ 9.1 million, of which $ 3.6 million was, or shall be, paid in C-LTIP Units with the remainder paid in cash.

For the year ended December 31, 2023, the Company recorded a base management fee of $ 7.9 million, of which all was paid in C-LTIP Units.

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

For the years ended December 31, 2024 and 2023, the Company recorded operating expense reimbursements of $ 4.4 million and $ 2.8 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 the year ended December 31, 2024 included reimbursements to the Manager in the aggregate amount of $ 2.9 million for accounting and legal services.

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

In addition, for the years ended December 31, 2024 and 2023, the Company recorded direct expense reimbursements of $ 0.4 million and $ 0.3 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 and comprehensive income.

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

3 unchanged sentences

Total amounts payable to the Manager

At December 31, 2023 and 2022, the Company had no receivables due from any related parties.

Leasehold Cost-Sharing Agreement with Bluerock Real Estate Holdings, LLC

In connection with a new lease on the Company’s New York (Manhattan) headquarters, effective 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 “NY Premises”).

The NY Premises Lease commenced in November 2024 when the landlord made the NY Premises available to the Company to begin its own alterations and improvements.

With respect to the NY Premises, the Company and Bluerock Real Estate Holdings, LLC (“BREH”), which is an affiliate of the Manager, entered into a leasehold cost-sharing agreement (the “Leasehold Cost-Sharing Agreement”) to provide for the allocation and sharing between BREH and the Company of the costs thereunder, including costs associated with tenant improvements.

BREH and certain of its respective subsidiaries and/or affiliates will share occupancy of the NY Premises.

Under the Leasehold Cost-Sharing Agreement, if there is a change in control of either BREH or the Company, the allocation of costs under the Leasehold Cost-Sharing Agreement shall be modified to thereafter allocate such costs based on the average of the cost-sharing percentages between BREH and the Company over the four most recently-completed calendar quarters immediately preceding the change in control date (or shall be the average cost-sharing percentages over such shorter period, if the change in control occurs earlier than the completion of four calendar quarters).

Under the NY Premises Lease, the Company, through its Operating Partnership, issued a payment of approximately $ 450,000 as a security deposit.

Payment by BREH of any amounts payable under the Leasehold Cost-Sharing Agreement to the Company will be made in cash.

The table below presents the related party amounts receivable from BREH at December 31, 2024 pursuant to the terms of the Leasehold Cost-Sharing Agreement (amounts in thousands).

No amounts were receivable from BREH at December 31, 2023.

The Company records these receivables in due from affiliates in its consolidated balance sheets.

Amounts receivable from BREH under the Leasehold Cost-Sharing Agreement

Capital improvement cost reimbursements

Operating and direct expense reimbursements

Total amounts receivable from the Manager

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

BR Amira DST Manager, LLC - Amira at Westly DST

The Company has agreed to pay an asset management fee equal to 0.02 % per annum of the Amira at Westly purchase price of $ 103 million, or $ 206,000 annually, to BR Amira DST Manager, LLC, which is wholly owned by Bluerock Asset Management, LLC.

During the year ended December 31 2024, the Company incurred a total asset management fee related to Amira at Westly of $ 35,000 which is recorded within property management and asset management fees on the Company’s consolidated statements of operations and comprehensive income.

The Company did no t incur any asset management fees related to Amira at Westly in 2023.

In addition, the Company incurred a one-time acquisition fee of $ 2.1 million payable to BR Amira DST Manager, LLC upon the completion of the Amira at Westly private placement offering.

The table below presents the related party amounts payable to BR Amira DST Manager, LLC at December 31, 2024 (amounts in thousands).

No amounts were payable at December 31, 2023.

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

Amounts payable to BR Amira DST Manager, LLC

One-time acquisition fee

Asset management fees

Total amounts payable to BR Amira DST Manager, LLC

Selling Commissions and Dealer Manager Fees

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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 year ended December 31, 2023, the Company has incurred $ 0.8 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.

For the year ended December 31, 2024, the Company incurred $ 7.3 million in selling commissions and discounts and $ 3.1 million in dealer manager fees and discounts related to its offering of Series A Preferred Stock.

In addition, the Manager was, or shall be, reimbursed for offering costs of $ 1.0 million in conjunction with the offering of Series A Preferred Stock during the year ended December 31, 2024.

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

Administrative Services Agreement

Prior to the completion of the Spin-Off on October 6, 2022, Bluerock Residential was party to an Administrative Services Agreement (the “ASA”) and a Leasehold Cost-Sharing Agreement (the “CSA”) with BRE and its affiliate, Bluerock Real Estate Holdings, LLC (together “BREH”).

Pursuant to the ASA, BREH provided Bluerock Residential with certain human resources, investor relations, marketing, legal and other administrative services (the “Services”).

In addition, the ASA permitted certain Bluerock Residential employees to provide services to BREH, on an at-cost basis, generally allocated based on the use of such services for the benefit of the business of BREH, and otherwise subject to the terms of the Services provided by BREH to Bluerock Residential under the ASA.

Pursuant to the CSA, Bluerock Residential and BREH were allocated costs, including those costs associated with tenant improvements, with respect to the lease for their New York headquarters (the “NY Lease”).

Payments by Bluerock Residential of any amounts payable to BREH under the ASA and CSA were made in cash or, at the discretion of its board of directors, in the form of Bluerock Residential’s long-term incentive plan units.

Pursuant to the terms of the ASA, operating expenses were (i) paid by BREH on behalf of Bluerock Residential, and (ii) paid by Bluerock Residential on behalf of BREH.

Pursuant to the terms of the CSA, costs with respect to the NY Lease were paid by BREH on behalf of Bluerock Residential.

Recorded as part of general and administrative expenses in the Company’s combined consolidated statements of operations, operating expenses paid by BREH on behalf of Bluerock Residential of $ 0.7 million were expensed during 2022 for the period ending and prior to October 6, 2022.

Additionally, during this same period, Bluerock Residential paid operating expenses on behalf of BREH of $ 0.7 million.

These prior period amounts were allocated to the Company by applying an allocation percentage, which was determined by taking the number of units carved out of the Bluerock Residential portfolio divided by Bluerock Residential’s total portfolio unit count, to the total operating expenses paid on behalf of or by Bluerock Residential.

Prior period operating expense amounts recognized by the Company are not representative of the amounts that would have been reflected in the financial statements had the Company operated independently of Bluerock Residential.

On October 6, 2022, Bluerock Residential caused the termination of all services under both the ASA and CSA in connection with the transactions related to the Separation, the Distribution and the Spin-Off.

Note 14 – Stockholders’ Equity

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders, less dividends on restricted stock, LTIP Units and C - LTIP Units expected to vest, by the weighted average number of common shares outstanding for the period.

Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the sum of the weighted average number of common shares outstanding and any potential dilutive shares for the period.

Basic and diluted net loss per common share is computed by dividing net loss attributable to common stockholders, less dividends on restricted stock, LTIP Units and C-LTIP Units expected to vest, by the weighted average number of common shares outstanding for the period.

Net loss attributable to common stockholders is computed by adjusting net loss for the non-forfeitable dividends paid on non-vested restricted stock, LTIP Units and C-LTIP Units.

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

Loss from continuing operations (1)

Dividends on restricted stock and LTIP Units expected to vest

Net loss from continuing operations attributable to noncontrolling interests

Loss from continuing operations attributable to BHM

Income from discontinued operations

Net income from discontinued operations attributable to noncontrolling interests

Income from discontinued operations attributable to BHM

Less preferred stock dividends

Less preferred stock accretion

Less dividends on restricted stock and LTIP Units expected to vest

Addback net loss attributable to noncontrolling interests

Net loss attributable to common stockholders

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Net loss per common share, basic

Continuing operations

Discontinued operations

Net loss per common share, diluted

Continuing operations

Discontinued operations

(1) Loss from continuing operations for the year ended December 31, 2023 includes $( 130 ) of preferred stock dividends.

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

(3) For the year ended December 31, 2023, potential vesting of restricted Class A common stock of 3,595 shares is excluded from the diluted shares calculation as the effect is antidilutive.

(2) For the year ended December 31, 2024, (i) the potential vesting of restricted Class A common stock of 5,288 shares, and (ii) the potential conversion of the Series A Preferred Stock into Class A common stock of 3,310,998 shares, are excluded from the diluted shares calculation as the effect is antidilutive.For the year ended December 31, 2023, (i) the potential vesting of restricted Class A common stock of 3,595 shares, and (ii) the potential conversion of the Series A Preferred Stock into Class A common stock of 110,328 shares, are excluded from the diluted shares calculation as the effect is antidilutive.

The effect of the conversion of OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Class A common stock on a one -for-one basis.

The income allocable to such OP Units is allocated on this same basis and reflected as noncontrolling interests in the accompanying combined consolidated financial statements.

The income allocable to such OP Units is allocated on this same basis and reflected as noncontrolling interests in the accompanying consolidated financial statements.

As such, the assumed conversion of these OP Units would have no net impact on the determination of diluted earnings per share.

Series A Redeemable Preferred Stock

The 6.0 % Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) ranks senior to all classes of the Company’s common stock.

The Series A Preferred Stock is entitled, when and as authorized by the Board and declared by the Company out of legally available funds, to priority cumulative dividends at an annual rate of 6.0 % of the stated value of $ 25.00 per share (the “Stated Value”) to be paid monthly, in arrears.

Holders may, at their option, elect to have the Company redeem their shares through the first year from issuance subject to a 12 % redemption fee.

After year one , the redemption fee decreases to 9 %, after year two it decreases to 6 %, after year three it decreases to 3 %, and after year four there is no redemption fee.

Any redeemed shares are entitled to any accrued but unpaid dividends at the time of the redemption, payable by the Company, at its option, in either cash or in equal value of shares of its Class A common stock.

The Company has the right to redeem the Series A Preferred Stock beginning two years from the original issuance for the Stated Value, plus any accrued and unpaid dividends, in either cash or in equal value of shares of its Class A common stock, at the Company’s option, with the number of shares of Class A common stock issued for redemption (if any) based on the closing price per share of the Class A common stock for the single trading day prior to the date of redemption.

In November 2023, the Company announced the payment of additional contingent special daily dividends with respect to the Company’s Series A Preferred Stock.

This dividend was aggregated with the regular monthly dividend so as to effect a dividend rate of two percent over the average 10-Year Daily Treasury Par Yield Curve Rate with a floor of 6 % annually, calculated and paid monthly.

Commencing in November 2023, the Series A Preferred Stock additional contingent special dividend was declared for each month for which the Board declared the regular monthly dividend of $ 0.125 per outstanding share of Series A Preferred Stock.

In May 2024, the Company announced the payment of an enhanced special dividend replacing the additional contingent special daily dividend.

The enhanced special dividend is aggregated with the regular monthly dividend so as to effect a dividend rate of the average one-month Term SOFR rate plus two percent, subject to a 6.5 % minimum and an 8.5 % maximum annual rate, calculated and paid monthly.

Commencing in May 2024, the Series A Preferred enhanced special dividend was declared for each month for which the Board declared the regular monthly dividend of $0.125 per outstanding share of Series A Preferred Stock.

At the date of issuance, the carrying amount of the Series A Preferred Stock was less than the redemption value.

As a result of the Company’s determination that holder redemption is probable, the carrying value will be increased by periodic accretions so that the carrying value will equal the redemption value net of early redemption fees at the earliest redemption date.

As of December 31, 2024, the Company had recorded a total of $ 0.2 million of accretion related to the Series A Preferred Stock.

During the year ended December 31, 2024, the Company issued 4,198,566 shares of Series A Preferred Stock at the Stated Value under its continuous registered offering with net proceeds of approximately $ 92.9 million after (i) commissions, dealer manager fees and sales discounts of approximately $ 10.6 million, and (ii) costs related to establishing the offering of Series A Preferred Stock of approximately $ 1.5 million.

As of December 31, 2024, the Company had issued a total of 4,635,241 shares of Series A Preferred Stock with total net proceeds of approximately $ 101.1 million after commissions, dealer manager fees, sales discounts and offering costs.

During the year ended December 31, 2024, the Company, at the request of holders, redeemed 6,560 shares of Series A Preferred Stock through the issuance of 9,103 shares of Class A common stock.

Class C Common Stock

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Subject to the preferential rights, if any, of holders of any class or series of the Company’s stock other than the Company’s Class A common stock and to the provisions of the Company’s charter regarding the restrictions on the ownership and transfer of stock, the holders of the Company’s Class C common stock will be entitled to receive distributions authorized by the Company’s Board and declared by the Company out of legally available funds after payment of, or provision for, full cumulative distributions on and any required redemptions of shares of any series of preferred stock then outstanding.

Series A Redeemable Preferred Stock

On June 28, 2023, the SEC declared effective the Company’s registration statement on Form S-11 (File No.

333-269415) (the “2023 Registration Statement”).

On June 30, 2023, the Company filed a prospectus supplement related to the 2023 Registration Statement offering a maximum of 20,000,000 shares of 6.0 % Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $ 25.00 per share (the “Stated Value”), for a maximum offering amount of $ 500,000,000 in Series A Preferred Stock (the “Series A Preferred Offering”), and on August 11, 2023, the Company made the initial issuances of Series A Preferred Stock pursuant to the Series A Preferred Offering.

The Series A Preferred Stock ranks senior to all classes of the Company’s common stock.

Holders may, at their option, elect to have the Company redeem their shares through the first year from issuance subject to a 12 % redemption fee.

After year one , the redemption fee decreases to 9 %, after year two it decreases to 6 %, after year three it decreases to 3 %, and after year four there is no redemption fee.

As of December 31, 2023, the Company had issued 436,675 shares of Series A Preferred Stock pursuant to the Series A Preferred Offering with net proceeds of approximately $ 8.7 million after (i) commissions, dealer manager fees and discounts of approximately $ 1.1 million, and (ii) offering costs related to establishing the Series A Preferred Offering of approximately $ 1.1 million.

The Company did not redeem any shares of Series A Preferred Stock during the year ended December 31, 2023.

Class A Common Stock Repurchase Plan

On February 13, 2024, the Company’s Board authorized a stock repurchase plan that provided for the repurchase, from time to time, of up to an aggregate of $ 5 million of the Company’s outstanding shares of Class A common stock, with such repurchases to be conducted in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934 (the “Exchange Act”) and subject to Rule 10b-5 of the Exchange Act.

The repurchase plan had a term of one year and ended in February 2025.

The Company made no repurchases of its Class A common stock under the stock repurchase plan.

The Board did authorize a new stock repurchase plan in late February 2025;

refer to Note 17 for further information.

Operating Partnership and Long-Term Incentive Plan Units

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(the “Partnership Agreement”), pursuant to which Bluerock Residential was the sole general partner of the Operating Partnership.

In connection with the Distribution, the Partnership Agreement was amended by the Thirteenth Amendment thereto, pursuant to which Bluerock Residential withdrew as the general partner of the Operating Partnership and the Company was admitted as the sole general partner thereof.

On September 22, 2022, the Partnership Agreement was amended by the Thirteenth Amendment thereto, pursuant to which Bluerock Residential withdrew as the general partner of the Operating Partnership and the Company was admitted as the sole general partner thereof.

The Company may not be removed as general partner of the Operating Partnership by the limited partners with or without cause.

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OP Units and LTIP Units.

Certain OP units will be designated as “C-OP Units” and certain LTIP units will be designated as “C-LTIP Units.” The Company expects that its Operating Partnership will issue OP units to limited partners, including the Company, in exchange for capital contributions of cash or property, including in connection with the contribution of the net proceeds of any future offering of the Company’s shares, as described above, and that the Company’s Operating Partnership will issue LTIP units, pursuant to the BHM Incentive Plans, to persons (including our Manager, directors and employees) or entities who provide services to the Company.

Certain OP units will be designated as “C-OP Units” and certain LTIP units will be designated as “C-LTIP Units.” The Company expects that its Operating Partnership will issue OP units to limited partners, including the Company, in exchange for capital contributions of cash or property, including in connection with the contribution of the net proceeds of any future offering of the Company’s shares, as described above, and that the Company’s Operating Partnership will issue LTIP units, pursuant to the BHM Incentive Plans, to persons (including its Manager, directors and employees) or entities who provide services to the Company.

In addition, the Company’s Operating Partnership will issue C-LTIP Units to the Company’s Manager pursuant to the Management Agreement.

In calculating the percentage interests of the partners in the Operating Partnership, LTIP Units are treated as OP Units.

Additional C-LTIP Units will also be issuable to the Company’s executive officers or other service providers of the Company at the discretion of the Company’s Board.

Additional C-LTIP Units will also be issuable to the Company’s executive officers or other service providers of the Company at the discretion of its Board.

Pursuant to the Partnership Agreement the Company will be obligated to file a registration statement covering the issuance or resale of shares of common stock received by limited partners who held their Partnership Units as of the date of the partnership agreement (including their transferees and assigns) upon such limited partners’ redemption of their OP units, under which the Company will agree to use reasonable efforts to have the registration statement declared effective, to register or qualify such shares under the securities or blue sky laws of such jurisdictions within the United States as required by law, to list the Company’s shares of common stock issued pursuant to the exercise of redemption rights on any securities exchange or national market system upon which the Company’s shares of common stock are then listed, and to indemnify limited partners exercising redemption rights against all losses caused by any untrue statement of a material fact contained in the registration statement, preliminary prospectus or prospectus or caused by any omission to state a material fact required to be stated or necessary to make the statements therein not misleading, except insofar as such losses are caused by any untrue statement or omission based upon information furnished to us by such limited partners.

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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.

During the year ended December 31, 2023, the Company granted C-LTIP Units to the Manager pursuant to the Management Agreement in payment of (i) the base management fee and (ii) the operating expense reimbursement as follows:

(a) 85,750 and 17,462 C-LTIP Units, respectively, granted on February 22, 2023 for the fourth quarter 2022, (b) 114,391 and 20,531 C-LTIP Units, respectively, granted on May 17, 2023 for the first quarter 2023, (c) 125,491 and 24,753 C-LTIP Units, respectively, granted on August 15, 2023 for the second quarter 2023, and (d) 142,144 and 27,835 C-LTIP Units, respectively, granted on November 14, 2023 for the third quarter 2023.

Such C-LTIP Units were fully vested upon issuance.

During the year ended December 31, 2024, the Company granted C-LTIP Units to the Manager pursuant to the Management Agreement as follows:

(i) 151,600 and 95,204 C-LTIP Units granted on February 21, 2024 in payments of the full base management fee of $ 2.0 million and the full operating expense reimbursement of $ 1.3 million, respectively, incurred for the fourth quarter 2023;

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

(iii) 58,390 C-LTIP Units granted on August 8, 2024 in payment of one half ( 50 %) of the total base management fee of $ 2.2 million incurred for the second quarter 2024;

and (iv) 83,564 C-LTIP Units granted on November 12, 2024 in payment of one half ( 50 %) of the total base management fee of $ 2.4 million incurred for the third quarter 2024.

All such C-LTIP Units were fully vested upon issuance.

In the future, the Operating Partnership may issue OP Units or preferred OP Units from time to time in connection with acquisitions of properties or for financing, compensation or other reasons.

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2022 Equity Incentive Plan for Entities (the “BHM Entities Plan”).

Together, the Company refers to the BHM Individuals Plan and the BHM Entities Plan as the “BHM Incentive Plans.” The BHM Incentive Plans provide for the grant of options to purchase shares of our common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards, and are administered by the compensation committee of our Board.

Together, the Company refers to the BHM Individuals Plan and the BHM Entities Plan as the “BHM Incentive Plans.” The BHM Incentive Plans provide for the grant of options to purchase shares of the Company’s common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards, and are administered by the compensation committee of its Board.

The aggregate number of shares of the Company’s common stock authorized for issuance under the BHM Incentive Plans is 3,597,109 , with (i) 1,200,000 shares available for issuance under the BHM Incentive Plans, and (ii) 2,397,109 shares subject to awards granted under the Bluerock Residential Growth REIT, Inc.

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LTIP Unit Grants

On November 3, 2022, the Company made an initial staking grant of 405,796 LTIP Units to the Manager pursuant to the BHM Incentive Plans.

Effective November 2, 2023, for tax efficiency purposes, the Manager forfeited 367,357 unvested LTIP Units granted to the Manager on November 3, 2022 in payment of the initial staking grant pursuant to the BHM Entities Plan.

On November 3, 2023, by mutual agreement of the Manager and the Company, and at the direction of the Manager, such 367,357 unvested LTIP Units were issued directly to and among certain of the BREH Personnel (as defined below), pursuant to the BHM Individuals Plan, as equity compensation for services provided to the Manager in such capacities.

These issuances were made in satisfaction of the Manager’s obligation to its affiliate, BREH, for compensation - related expenses incurred by BREH in connection with its employment of the Manager’s executive management team and personnel who provide other services to the Manager (collectively, the “BREH Personnel”), and were evidenced by LTIP Unit Vesting Agreements.

Such LTIP Units vested one - fifth on November 3, 2023, and the remainder will vest ratably on an annual basis over a four - year period.

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.

The Company recognized expense of $ 0.3 million related to such grants during the 2022 period.

Once vested, these awards of LTIP Units may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Company, and may then be redeemed for cash or, at the option of the Company and after a one year holding period (including any period during which the LTIP Units were held), settled in shares of the Company’s Class A common stock on a one -for-one basis.

The holders of such LTIP Units will be entitled to receive “distribution equivalents” with respect to such LTIP Units, whether or not vested, at the same time distributions are paid to the holders of the Company’s Class A common stock.

In addition, on November 3, 2022, the Company made an initial staking grant of 5,339 LTIP Units to each independent member of the Board (such grants, collectively, the “Director Grants”).

Each such Director Grant was evidenced by an LTIP Unit Award Agreement.

Such LTIP Units were fully vested upon issuance and may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Company, and may then be redeemed for cash or, at the option of the Company and after a one year holding period (including any period during which the LTIP Units were held), settled in shares of the Company’s Class A common stock on a one -for-one basis.

The Company recognized an aggregate expense of $ 0.5 million immediately based on the fair value at the date of grant.

From the date of grant, holders of such LTIP Units will be entitled to receive “distribution equivalents” with respect to such LTIP Units at the time distributions are paid to the holders of the Company’s Class A common stock.

Additionally, on November 3, 2022, the Company granted 764 LTIP Units to each independent member of the Board in payment of the prorated equity portion of their respective annual retainers for fiscal year 2022 (such grants, collectively, the “Retainer Grants”) pursuant to the BHM Incentive Plans.

Each such Retainer Grant was evidenced by an LTIP Unit Award Agreement.

The Company recognized an aggregate expense of $ 0.1 million immediately based on the fair value at the date of grant.

On January 1, 2023, the Company granted 3,303 LTIP Units pursuant to the BHM Incentive Plans to each independent member of the Board in payment of the equity portion of their respective annual retainers.

Such LTIP Units were fully vested upon issuance and the Company recognized expense of $ 0.3 million based on the fair value at the date of grant.

On May 25, 2023, the Company granted 141,665 LTIP Units pursuant to the BHM Incentive Plans to the Manager as an annual long - term incentive equity grant for the year ended December 31, 2022.

Effective November 2, 2023, for tax efficiency purposes, the Manager forfeited 83,995 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.

On November 3, 2023, by mutual agreement of the Manager and the Company, and at the direction of the Manager, such 83,995 unvested LTIP Units were issued directly to and among certain of the BREH Personnel, pursuant to the BHM Individuals Plan, as equity compensation for services provided to the Manager in such capacities.

Such LTIP Units 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 years ended December 31, 2024 and 2023, under the BHM Incentive Plans, (i) employees were granted LTIP Units and shares of Class A common stock as restricted stock grants (“RSGs”) that vest over a three-year period, and (ii) each independent member of the Board was granted LTIP Units in payment of the equity portion of their respective annual retainers, with such LTIP Units fully vested upon issuance.

A summary of the status of the Company’s non-vested shares and LTIP Units granted under the BHM Incentive Plans as of December 31, 2023 and 2024 is as follows:

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During the years ended December 31, 2024 and 2023, the Company recognized compensation expense for such LTIP Units of approximately $ 2.6 million and $ 2.3 million, respectively.

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

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

As of December 31, 2024, there was $ 7.1 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 2.6 years.

Restricted Stock Grants

On May 25, 2023, the Company granted 31,260 shares of Class A common stock as restricted stock grants (“RSGs”), pursuant to the BHM Incentive Plans, to the Manager as an annual incentive grant for the year ended December 31, 2022.

Such RSGs will vest in equal installments on an annual basis over a three-year period from April 1, 2023.

Effective November 2, 2023, for tax efficiency purposes, the Manager forfeited 31,260 unvested RSGs that were granted to the Manager on May 25, 2023 in payment of the annual equity incentive grant pursuant to the BHM Entities Plan.

On November 3, 2023, by mutual agreement of the Manager and the Company, and at the direction of the Manager, the foregoing aggregate number of unvested RSGs were issued directly to and among certain of the BREH Personnel, pursuant to the BHM Individuals Plan, as equity compensation for services provided to the Manager in such capacities.

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 year ended December 31, 2023, the Company recognized compensation expense for such RSGs of approximately $ 0.1 million.

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

The Company recognized compensation expense ratably over the vesting period for time-based RSGs.

During the years ended December 31, 2024 and 2023, the Company recognized compensation expense for all such RSGs of approximately $ 0.5 million and $ 0.1 million, respectively.

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

As of December 31, 2024, there was $ 1.2 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 2.06 years.

During the years ended December 31, 2024 and 2023, the Company recognized expense of $ 0.3 million and $ 0.3 million, respectively, based on the fair value at the date of grant for the LTIP Units granted to each independent member of the Board.

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

The Company currently uses authorized and unissued shares to satisfy share award grants.

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Declaration Date

Payable to stockholders of record as of

Paid / Payable Date

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Series A Preferred Stock (1)

September 11, 2023

August 25, 2023

October 13, 2023

December 22, 2023

January 5, 2024

January 15, 2024

January 25, 2024

February 5, 2024

January 15, 2024

February 23, 2024

March 5, 2024

January 15, 2024

March 25, 2024

April 5, 2024

April 12, 2024

April 25, 2024

April 12, 2024

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

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January 3, 2025

Series A Preferred Stock Special Dividend (2)

November 7, 2023

Each day of November 1 - 30, 2023

December 5, 2023

Series A Preferred Special Dividend (2)

November 7, 2023

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January 5, 2024

January 15, 2024

Each day of January 1 - 31, 2024

February 5, 2024

January 15, 2024

Each day of February 1 - 29, 2024

March 5, 2024

January 15, 2024

Each day of March 1 - 31, 2024

April 5, 2024

April 12, 2024

Each day of April 1 - 30, 2024

Series A Preferred Enhanced Special Dividend (3)

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

October 14, 2024

October 25, 2024

November 5, 2024

October 14, 2024

November 25, 2024

December 5, 2024

October 14, 2024

December 24, 2024

January 3, 2025

(1) Holders of record of newly issued Series A Preferred Stock shares that are held only a portion of the applicable monthly dividend period will receive a prorated dividend based on the actual number of days in the applicable dividend period during which each such share of Series A Preferred Stock was outstanding.

(2) Holders of record of Series A Preferred Stock shares as of the close of business on each day of the applicable month are entitled to additional contingent special daily dividends for each such day, to be aggregated and payable (if at all) on the payable date, in each case equal to the amount (if any) by which (i) the Stated Value of the Series A Preferred Stock multiplied by (a) the sum of (I) the average 10-year Daily Treasury Par Yield Curve Rate for the period from the 26 th of the prior month to the 25 th of the applicable month (as reported by the United States Department of the Treasury), plus (II) two percent ( 2.0 % ), divided by (b) twelve ( 12 ), divided further by (c) the actual number of days in the applicable month, exceeds (ii) the quotient of (a) $ 0.125 divided by (b) the actual number of days in the applicable month.

(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.

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Distributions

First Quarter

Class A common stock

Class C common stock

Series A Preferred Stock (1)

LTIP / C-LTIP Units

Total First Quarter

Second Quarter

Series A Preferred Stock (1)

Total Second Quarter

Third Quarter

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Fourth Quarter

Class A common stock

Class C common stock

Series A Preferred Stock (1)

LTIP / C-LTIP Units

Total Fourth Quarter

(1) For the third quarter 2023, amounts include only the standard dividend at an annual rate of 6.0 % of the Stated Value.

For the fourth quarter 2023, amounts include the standard dividend at an annual rate of 6.0 % of the Stated Value and any special dividends.

(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 15 – Commitments and Contingencies

The aggregate amount of the Company’s contractual commitments to fund future cash obligations in certain of its consolidated real estate investments and preferred equity investments was $ 0.2 million and $ 3.4 million as of December 31, 2023 and 2022, respectively.

The aggregate amount of the Company’s contractual commitments to fund future cash obligations in certain of its preferred equity investments was $ 17.6 million and $ 0.2 million as of December 31, 2024 and 2023, respectively.

The Company had no contractual commitments to fund future cash obligations in any of its loan investments as of the year ended 2024 or 2023.

In addition, the Company has made a commitment to fund the total estimated project costs of $ 56.9 million for the construction of Abode Wendell Falls, a 170 -unit build-to-rent development project in Wendell, North Carolina.

At December 31, 2024, the remaining estimated project costs to complete the Abode Wendell Falls development was $ 49.4 million.

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

Although the outcome of any legal matter cannot be predicted with certainty, management does not believe that any of these legal proceedings or matters will have a material adverse effect on the combined consolidated financial position or results of operations or liquidity of the Company.

Although the outcome of any legal matter cannot be predicted with certainty, management does not believe that any of these legal proceedings or matters will have a material adverse effect on the consolidated financial position or results of operations or liquidity of the Company.

Lessee – Operating Lease

In connection with the Company moving its New York (Manhattan) headquarters, effective May 31, 2024, the Company, as lessee, and an unaffiliated third-party landlord entered into the NY Premises Lease (hereinafter, the “Lease”) for the NY Premises.

In accordance with ASC Topic 842 Leases , the Company classifies the Lease as an operating lease, and by way of practical expedient, the Company has elected to account for lease and non-lease (ex.

common area maintenance) components of the Lease as a single lease component in its consolidated statements of operations and comprehensive income.

The Company recognizes the single lease component on a straight-line basis over the term of the Lease, and expenses that are non-components of the lease, such as real estate taxes for which the Company is not a direct beneficiary of the arrangement, are expensed in the period in which the obligation for those payments are incurred.

For the year ended December 31, 2024, the Company recorded $ 0.03 million of net rent expense related to the Lease.

Upon commencement of the Lease in November 2024, the Company recorded a right-of-use asset of $ 5.1 million and a lease liability of $ 5.0 million in its consolidated balance sheets.

The right-of-use asset is included within accounts receivable, prepaids and other assets, net, and the lease liability is included within other accrued liabilities.

The calculation of these amounts includes minimum lease payments over the Lease term, and the value of the right-of-use asset exceeds the value of the lease liability due to a prepaid lease payment.

In determining the right-of-use asset and lease liability, the discount rate implicit in the Lease was not readily determinable.

As such, the Company used third-party analysis to determine that a discount rate of 7.61 % approximated the incremental borrowing rate that it would incur for a loan that was of a similar term as the Lease and with a similar form of underlying collateral.

The Lease contains an extension option;

however, the extension option was not included when determining the right-of-use asset or lease liability as it is not reasonably certain that the Company will exercise its option.

The Lease does not include any residual value guarantees , and no variable lease payments were identified or included in the right-of-use asset and lease liability calculations.

At December 31, 2024, the remaining right-of-use asset and lease liability balances were each $ 5.0 million, and the remaining Lease term was approximately 6.5 years.

In addition, the Company incurred tenant improvement costs related to the renovation and buildout of the NY Premises which are capitalized and included within net real estate investments of the Company’s consolidated balance sheets.

Such tenant improvement costs are depreciated on a straight-line basis over the term of the Lease.

The following table summarizes the future minimum lease payments and total operating lease liability as of December 31, 2024 (amounts in thousands):

Total future minimum lease payments (undiscounted cash flows)

Difference between future undiscounted cash flows and discounted cash flows

Total operating lease liability

Note 16 – Segment Information

The Company owns and operates residential real estate assets that generate rental and other property-related income through the leasing of residential units to a diverse base of tenants.

The Company evaluates operating performance on an individual property investment level and based on the investments’ similar economic characteristics.

The Company’s Chief Operating Decision Makers (“CODMs”) are its Chief Executive Officer, Chief Investment Officer and Chief Financial Officer.

The CODMs’ 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.

CODMs are provided financial reports which include an income statement with property revenues, property operating expenses, and property net income.

These financial reports assist the CODMs in assessing the Company’s financial performance and in allocating resources appropriately.

The Company views its residential real estate assets as two reportable segments, consisting of (i) scattered single-family homes, and (ii) residential communities.

The CODMs do not distinguish or group operations on a geographic, tenant or other basis when assessing the financial performance of the Company’s 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.

The following table summarizes NOI by the Company’s reportable segments for the years ended December 31, 2024 and 2023, and reconciles NOI to net income attributable to common stockholders on the Company’s statements of operations and comprehensive income.

Prior year amounts have been reclassified to conform to the current period segment presentation (amounts in thousands):

Rental and other property revenues

Scattered single-family homes

Residential communities

Total rental and other property revenues

Property operating expenses

Scattered single-family homes

Residential communities

Total property operating expenses

Net operating income

Scattered single-family homes

Residential communities

Total net operating income

Reconciling items:

Interest income from loan investments

Property management and asset management fee expenses

General and administrative expenses

Management fees to related party

Acquisition and other transaction costs

Weather-related losses, net

Depreciation and amortization

Income from preferred equity investments

Recovery of (provision for) credit losses, net

Gain on sale and (impairment) of real estate investments, net

Loss on extinguishment of debt

Interest expense, net

Interest income

Preferred stock dividends

Preferred stock accretion

Net loss attributable to noncontrolling interests

Net loss attributable to common stockholders

The following table reconciles the Company’s total revenue for reportable segments to total revenues on the Company’s consolidated statement of operations and comprehensive income for the years ended December 31, 2024 and 2023 (amounts in thousands):

Rental and other property revenues

Scattered single-family homes

Residential communities

Total rental and other property revenues

Interest income from loan investments

Total revenues

Asset information by reportable segment is not provided as the CODMs do not use asset values to make decisions about the allocation of resources.

Note 17 – Subsequent Events

4 unchanged sentences

Declaration Date

Payable to stockholders of record as of

Paid / Payable Date

9 unchanged sentences

April 4, 2025

Series A Preferred Stock Special Dividend

Series A Preferred Enhanced Special Dividend

January 15, 2025

Each day of January 1 - 31, 2024

January 24, 2025

February 5, 2025

January 15, 2025

Each day of February 1 - 29, 2024

February 25, 2025

March 5, 2025

January 15, 2025

Each day of March 1 - 31, 2024

March 25, 2025

April 4, 2025

(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.

Distributions Paid

1 unchanged sentence

Declaration Date

Class A common stock

December 19, 2023

December 29, 2023

January 5, 2024

Class C common stock

December 19, 2023

December 29, 2023

January 5, 2024

Series A Preferred Stock

2 unchanged sentences

January 3, 2025

December 19, 2023

December 29, 2023

January 5, 2024

LTIP / C-LTIP Units

December 19, 2023

December 29, 2023

January 5, 2024

Series A Preferred Stock

6 unchanged sentences

March 5, 2025

(1) The 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.

Issuance of C-LTIP Units for Payment of the Fourth Quarter 2023 Base Management Fee and Operating Expense Reimbursement

The Manager earned a base management fee of $ 2.0 million during the fourth quarter 2023.

This amount was payable 50 % in C-LTIP Units with the other 50 % payable in either cash or C-LTIP Units, at the discretion of the Board.

In addition, the Manager was entitled to a $ 1.3 million reimbursement for operating expenses it incurred on behalf of the Company for the fourth quarter 2023.

This reimbursement was payable in cash or C-LTIP Units, at the discretion of the Board.

Upon consultation with the Manager, the Board elected to pay 100 % of the base management fee and the operating expense reimbursement in C-LTIP Units.

On February 21, 2024, the Company issued 151,600 and 95,204 C-LTIP Units in payment of the base management fee and operating expense reimbursement, respectively, for the fourth quarter 2023.

Wayford at Pringle Loan Financing

On January 10, 2024, the Company entered into an agreement to provide a loan in the maximum aggregate amount up to $ 30.1 million (the “Pringle Loan”) to an unaffiliated, third-party borrower to acquire 102 -build for rent, single-family residential units in Charlotte, North Carolina to be known as Wayford at Pringle.

The units are currently under development, and the Company will disburse loan proceeds to the borrower for unit acquisitions as construction is completed.

The Pringle Loan is comprised of two notes as follows:

Note A in the maximum principal amount up to $ 22.3 million and Note B in the maximum principal amount up to $ 7.8 million.

Both notes have an initial maturity of January 12, 2026 and contain four (4) six-month extension options subject to certain conditions.

Note A bears interest on the amount drawn at one-month SOFR plus 4.50 % through initial maturity, and if extended, such rate becomes subject to a 5.31 % rate floor.

Note A has regular monthly payments that are interest-only during the term of the loan, and no prepayment of Note A, in part or in whole, can be made prior to prepayment of Note B subject to certain conditions.

On Note B, interest shall accrue on the amount drawn at a rate of 15.00 % per annum, compounded monthly, with outstanding principal and accrued interest amounts due upon maturity.

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

As of February 29, 2024, the Company had funded zero and $ 5.9 million of Note A and Note B, respectively.

Stock Repurchase Plan

On February 13, 2024, the Board authorized a stock repurchase plan for the repurchase, from time to time, of up to an aggregate of $5 million of the Company’s outstanding shares of Class A common stock, with such repurchases to be conducted in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and subject to Rule 10b-5 of the Exchange Act.

(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.

Series A Preferred Stock Redemption Safeguard Policy

On February 6, 2025, the Company implemented a new Series A Preferred Stock Redemption Safeguard Policy (the “Policy”) with respect to its Series A Preferred Stock.

The Policy is applicable in the event of any redemption of shares of Series A Preferred Stock in shares of the Company’s Class A common stock rather than in cash (each, a “Preferred Redemption in common stock”).

The Policy provides that if, within 10 business days of any such Preferred Redemption in common stock, any such shares of Class A common stock are sold at a loss (i.e.

a lower price than the Aggregate Redemption Value), the holder can apply to the Company for a cash payment to the holder in an amount equal to the difference between (i) the Aggregate Redemption Value of the Class A common stock so issued, and (ii) the Aggregate Sale Price at which such shares of Class A common stock were sold, subject to certain conditions and requirements as set forth in the Policy.

The Policy applies both retroactively, and on a go-forward basis, to holders of the Company’s Series A Preferred Stock.

Class A Common Stock Repurchase Plan

On February 28, 2025, the Board authorized a new stock repurchase plan for the repurchase, from time to time, of up to an aggregate of $ 5 million of the Company’s outstanding shares of Class A common stock, with such repurchases to be conducted in accordance with the requirements of Rule 10b-18 of the Exchange Act and subject to Rule 10b-5 of the Exchange Act.

The repurchase plan has a term of one year and may be discontinued at any time.

The extent to which the Company repurchases shares of its Class A common stock under the repurchase plan, and the timing of any such repurchases, depends on a variety of factors including general business and market conditions and other corporate considerations.

The Company expects to repurchase shares of its Class A common stock through open market transactions subject to market conditions, certain price limitations and other conditions established under the plan.

The Company expects that any repurchases of its Class A common stock will be through open market transactions, subject to market conditions, certain price limitations and other conditions established under the plan.

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 the filing date of this Annual Report on Form 10-K, no repurchases were made by the Company.

Commencement of Common Stock Dividends

On March 11, 2025 , the Company declared , and its Board previously authorized, quarterly cash dividends of $ 0.125 per share , or $ 0.50 per share annually, for the Company’s Class A common stock and Class C common stock for each quarter of fiscal year 2025.

The common stock dividends will be payable quarterly to the stockholders of record as of (i) March 25, 2025 , (ii) June 25, 2025 , (iii) September 25, 2025 , and (iv) December 24, 2025 , which will be paid in cash on (i) April 4, 2025 , (ii) July 3, 2025 , (iii) October 3, 2025 , and (iv) January 5, 2026 , respectively.

Bluerock Homes Trust, Inc.

9 unchanged sentences

Abode Wendell Falls (1)

Allure at Southpark

Amira at Westly

Avenue at Timberlin Park

Golden Pacific

Indy-Springfield, formerly Peak JV 1 (3)

Navigator Villas

Indy-Springfield (2)

Peak JV 2 (2)

Savannah-84, formerly Peak JV 4 (3)

Peak JV 3 (3)

Savannah-84 (2)

Villas at Huffmeister

Wayford at Concord

2 unchanged sentences

Non-Real Estate assets

REIT Operating Partnership

REIT Operator

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

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

(2) ILE was funded, in part, by the ILE Sunflower Credit Facility.

At December 31, 2023, the outstanding ILE Sunflower Credit Facility balance was $ 20.0 million.

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

(2) Indy-Springfield, Peak JV 2 and Savannah-84 were funded, in part, by the Amended DB Credit Facility.

At December 31, 2024, the outstanding Amended DB Credit Facility balance was $ 85 million.

(4) An aggregate of 118 units are classified as held for sale from the following portfolios:

35 units in Indy-Springfield, 13 units in Peak JV 2, and 70 units in Peak JV 3.

(3) All 90 units of Peak JV 3 were classifed as held for sale at December 31, 2024 and are included in Total Single-family properties held for sale.

(4) An aggregate of 167 units are classifed as held for sale, with such units included in the following portfolios:

8 units of ILE, 37 units of Indy-Springfield, 32 units of Peak JV 2, and all 90 units of Peak JV 3.

Bluerock Homes Trust, Inc.

7 unchanged sentences

Capital expenditures

Impairment of held for sale real estate

Disposition of real estate

21 unchanged sentences

Real Estate Loans on Residential Rental Community (1)

The Woods at Forest Hill

Forest Hills, TX

Wayford at Pringle

Willow Park, TX

(1) Refer to Note 7 for further information regarding the Woods Loan and the Willow Loan.

(1) Refer to Note 6 for further information regarding the Wayford at Pringle and Willow Park loans.

Bluerock Homes Trust, Inc.

88 unchanged sentences

333-269415) filed on January 25, 2023

Contribution Agreement by and between BR S2 Allure JV, LLC, S2 Allure REIT Subsidiary LLC, S2C REIT OP, LP, S2 Allure BEVE LLC, S2 Allure ARO LLC, S2 Allure VAU LLC, and S2 Allure LLC, dated as of November 20, 2024, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on November 26, 2024

Code of Business Conduct and Ethics, effective October 6, 2022, incorporated by reference to Exhibit 14.1 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2022

2 unchanged sentences

Consent of Grant Thornton LLP

Consent of Plante Moran, PC, incorporated by reference to Exhibit 23.1 to the Current Report on Form 8-K filed by the Company on November 14, 2024

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

4 unchanged sentences

Executive Incentive-Based Compensation Recoupment Policy dated October 6, 2022.

Consent of Kroll, LLC, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on February 14, 2024

Press Release of Bluerock Homes Trust, Inc.

issued December 19, 2023, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on December 22, 2023

dated February 22, 2024, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on February 22, 2024

Press Release of Bluerock Homes Trust, Inc.

issued November 14, 2023, incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed by the Company on December 22, 2023

dated May 3, 2024, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on May 7, 2024

Presentation, dated June 4, 2024, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on June 3, 2024

The following information from the Company’s annual report on Form 10-K for the year ended December 31, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language):

5 unchanged sentences

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 9A. Controls and Procedures