Bluerock Homes Trust (BHOM) – BRG Spinco Pitch

BRG arb pitch:
– Multi-family REIT getting acquired by BX at $24.25/share + 1 spin-co share of single-family assets BHOM.
– BHOM NAV stands at $5.6 (at a 9.7% cap rate) vs $2 per share implied cost. BHOM peers trade at much lower 4% cap rates.
– The spin-off will be taxable.

– Discount to other single-family peers deserved due to external manager structure and additional capital required to establish a position in pre-spin BRG.
– Target BHOM spinco valuation of c. $4.9/share.

Exp. gain: +46% for taxable accounts and +144% for no tax on implied BHOM spinco price.

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