Bar Stone Developments Ltd

The principal activities of the company in the year under review were those of developing, letting and operating of own or leased real estate. Review of business Bar Stone Developments Limited is a real estate company registered in England, company registration number 12460716. The Company owns 60 units at Ewing House and leases them to its subsidiary undertaking Bar Stone Residential Limited. The building also includes 1 commercial unit and 74 parking spaces, which the Company holds. The Company is indirectly owned by Heimstaden AB, which is a residential real estate investment and asset management company, providing investment and asset management services to Heimstaden Bostad AB (the 'Group") an investment property company who own and operate c,160,000 homes in 9 countries around Europe. Principal risks and uncertainties Economic environment and impact on property values Current financial climate, increase in energy prices, increase in interest rates and a very volatile and uncertain market is the principal risk at the moment. High energy prices and increase in cost of living will be a key factor which the tenant will keep in mind before choosing where to stay. Our commitment to reducing our customers' energy costs is underscored by a sustainability programme, which lowers energy and water usage. Our assessment is that there is strong demand for homes across Europe, underpinned by longterm trends such as urbanisation and smaller household sizes. The Directors assessment is that development of new homes is slowing a lot, which will only add to the underlying shortage of homes. We expect housing scarcity to remain a feature in UK for the near future. It is our view that this is supportive for values and we are confident in the underlying value of residential real estate over the medium to longer term. Development and related counterparty risk In the UK we consider there to be little existing rental stock in the market that matched our strategic requirements. Because of this, the Group and Company considered new builds are the only viable investment opportunity for the Company. The Company, since acquisition, no longer takes on development risk, but partner with developers who retain all risks related to zoning, planning, and construction. To mitigate counterparty risk, we perform thorough due diligence and only partner with robust and experienced developers. The contracts are structured as forward funding contracts, where we pay at certain construction milestones up to delivery. The Group and Company's policy is for forward purchase or forward funding commitments to make up no more than 10% of the fair value of investment properties at any time. Funding, liquidity and interest rate risk The Company's funding needs are funded by the Group, Heimstaden Bostad AB, providing long-term intra-group loans and capital contribution to the Company. The Group's diversified debt maturity profile, with limited maturities in the next 12 months and available bank financing in substantial volumes provides flexibility to liability management in the coming quarters. As a leading owner and operator of European residential real estate, the Group have strong operational performance, a solid capital structure and committed shareholders to weather the inflationary storm. Rising interest rates may increase financing costs for the Company and the Group and negatively impact profitability. According to the Group's financial policy, the Group shall maintain at least 75% of its loan portfolio at fixed rates, which is managed with loans and bonds at fixed interest rates and interest-rate swaps.