Fixed Return, Planning Gain Strategy

Planning gain remains one of the most powerful value drivers within UK property.

The conversion of underutilised commercial assets into residential use can generate material uplift where residential demand exceeds commercial utility. When structured within a disciplined credit framework, this uplift can support enhanced fixed income returns over a defined term.

Starfortis is developing a fixed income planning gain strategy focused on commercial-to-residential conversion, structured as a 24-month lending instrument.

This is not an equity participation. It is a fixed income structure.

Why Commercial-to-Residential Planning Gain?

Across many UK locations, residential values per square foot exceed those of secondary commercial property. Where planning consent is secured to convert use class, the asset’s valuation basis can shift materially.

The strategy focuses on:

• Acquiring underutilised commercial property
• Securing residential planning consent
• Enhancing asset value through change of use
• Exiting via refinance or disposal

Planning gain allows value to be created prior to construction exposure. The emphasis is on structured uplift rather than speculative build risk.

Investment Overview

✅ Lending Vehicle: Starfortis Equity Ltd

✅ Security: Debentures over the company and

✅ Security: Underlying project SPVs

✅ Capital Raise: £1,000,000

✅ Minimum Investment: £50,000

✅ Return Structure: Fixed income

✅ Interest Payments: Annual

✅ Term: 24 months

✅ Capital Repayment: At maturity

Interest is paid annually during the term, with capital returned at maturity.

Full financial terms are available upon request.

Example Planning Gain Project

To illustrate how the strategy may work in practice, consider a typical commercial-to-residential planning project.

Example: High Street Office Conversion

A secondary office building is acquired in a town centre location where residential demand is strong.

The strategy focuses on securing planning permission to convert the building into residential apartments.

Purchase price: £255k

Planning achieved: 15 apartments

Post-planning valuation: £450k

Planning costs: £100k

Gross margin: £145k

ROCE: 290%

Once planning consent is achieved, the asset value increases as it can now be assessed based on residential development potential rather than its previous commercial use.

At this stage the project may exit through:

✅ Sale of the consented site, or

✅ Refinance onto a longer-term funding structure

This allows the uplift in value created through planning to be realised.

Example: Mixed-Use Commercial Building

In another scenario, a mixed-use commercial property may be acquired with the intention of converting upper floors to residential use while retaining ground-floor commercial space.

Purchase price: £1.2m

Planning achieved: 35 apartments

Post-planning valuation: £1.75m

Planning costs: £255k

Gross margin: £295k

ROCE: 116%

Following planning consent, the improved asset profile can create the opportunity to refinance or dispose of the project.

This type of planning-led repositioning is common in locations where residential demand exceeds the value of secondary commercial space.

Diversification by Design

Rather than relying on a single project outcome, the strategy is designed to deploy capital across multiple planning gain projects throughout the investment term.

Capital is intended to be deployed gradually, with approximately £250,000 allocated per quarter. This staged approach allows projects to be introduced to the portfolio over time rather than all at once. This approach helps to spread exposure across different assets, planning timelines and exit points.

In practical terms, it aims to:

✅ Reduce reliance on any single asset

✅ Diversify planning submission timelines

✅ Blend exit timing across projects

✅ Avoid dependence on one planning uplift event

Diversification is an important part of the strategy. While it can help reduce concentration risk, it does not remove planning, market, or execution risk.

Structured Exit

A key part of the strategy is how projects exit once planning consent has been secured and value uplift has been achieved.

At this stage, projects may transition onto longer-term funding structures such as:

✅ Senior bridging facilities

✅ Mezzanine facilities

These facilities may be provided through the wider Starfortis lending platform, subject to normal underwriting and credit approval processes.

The intention behind this structure is to create a clear and practical refinance route once planning value has been realised. This can allow the uplift in value to be crystallised, support repayment of the fixed income vehicle, and enable capital to be recycled into future projects.

As with any refinance strategy, this remains subject to valuation, underwriting approval and prevailing market conditions.

Optional Early Redemption

The investment has a defined 24-month term. However, as projects progress, the developer may be in a position to redeem a portion of investor capital earlier than the scheduled maturity.

Where investors are agreeable, this may occur after:

✅ 12 months and

✅ 18 months

If early redemption takes place, investors would receive any accrued interest up to that point together with the full return of their capital.

It is important to note that this is a discretionary option available to the borrower, rather than a guaranteed liquidity feature. Investors should therefore assess the strategy on the basis of committing capital for the full 24-month term.

Security Framework

Investor protection is structured through a debenture granted over Starfortis Equity Ltd, together with debentures over each of the underlying project SPVs.

In practical terms, this means security is held at both the company level and the individual project level, providing visibility and control across the project structure.

A debenture typically creates fixed and floating charges over the assets of the company. This structure is intended to strengthen the investors security position.

Portfolio Positioning

As with most private market strategies, investors should be comfortable committing capital for the full term of the investment.

This strategy may be suitable for:

✅ High-net-worth individuals

✅ Professional investors

✅ Portfolios seeking enhanced fixed income

Within a broader portfolio, it may sit alongside more traditional fixed income allocations, providing exposure to higher-yield private credit opportunities.

A Structured High-Yield Fixed Income Approach

This strategy brings together several elements designed to support a disciplined fixed income structure within the planning gain sector.

Key features include:

✅ A defined investment term

✅ Annual interest payments

✅ Diversification across multiple projects

✅ Security through debenture structures

✅ A structured refinance pathway following planning uplift

By combining planning-led value creation with a fixed income structure, the objective is to provide investors with exposure to planning gain while maintaining a clear and defined return framework.

Conclusion

Planning gain can be a powerful driver of value within the UK property market when approached with a disciplined and structured strategy.

By focusing on commercial-to-residential conversions, diversifying capital across multiple projects, and maintaining a defined fixed income framework, the objective is to combine planning-led value creation with a clear and transparent investment structure.

As with all private market investments, careful structuring, diversification and disciplined capital deployment are key to managing risk while pursuing enhanced returns.

Investors interested in learning more about the structure, allocation strategy and full investment terms are welcome to request further information. Full documentation, including detailed financial terms and risk disclosures, is available for eligible investors.

For those exploring planning gain strategies as part of a broader investment portfolio, we are always happy to have an initial conversation.