2026 Calvera Partners Annual Letter

Dear Investors and Friends,

2025 was a year of transition for the multifamily sector. Pricing appears to be stabilizing, and a few select markets have begun to emerge from the broader doldrums. Interest rates remained in a relatively tight band most of the year, with the 10-year US Treasury ending at 4.163%, 41 basis points lower than the start of 2025. Supply challenges persisted across the Sunbelt, and rents fell nationally by 20 basis points according to Yardi Matrix. Lastly, more over-leveraged owners made the news with foreclosures, bankruptcies, and court appearances tied to overly aggressive apartment acquisitions during 2020-2022. While these conditions have not significantly improved, owners remain focused on strengthening operations as the sector gradually stabilizes.

Like all operators, Calvera has experienced the effects of the broader challenges in the multifamily market. Performance across markets and assets has been uneven, reinforcing the importance of the hands-on approach we take across the portfolio. This cycle has also reinforced the importance of diversification across markets and investment vintages when evaluating long-term real estate outcomes.

Our local markets of the San Francisco Bay Area and Minneapolis were hit hardest during the pandemic. However, the Bay Area is showing clear signs of a comeback. Minneapolis is showing improving multifamily fundamentals, but local political and public safety dynamics have created meaningful differences in how individual assets perform. We also expanded into the Sunbelt during the pandemic alongside many other operators due to its rapid growth. When those markets were white hot, we

2026 Outlook

At Calvera, we are expecting modest improvement in 2026 at the national level. Below are highlights from our recent article on 2026 predictions:

1. Values remain relatively flat
2. Operations continue to stabilize
3. Transaction volume improves
4. Normalized sector performance returns

With medium- to longer-term interest rates largely unchanged, and rents not yet accelerating meaningfully, broader market values should remain flat. While we do not expect rents to move significantly at a national level, we do expect modest increases. That should be enough good news to improve transaction volume in multifamily. All of this points to a return to normalcy for apartments: inflationary rent increases with stable operating expenses, and a recognition that the days of 20%+ IRRs for non-value-add or opportunistic investments are likely over.

That said, there are micro-markets where we believe growth will accelerate. One of those is the San Francisco Bay Area. We see a different outcome in the San Francisco Bay Area with limited new supply and improving demand drivers tied to the tech industry and AI (artificial intelligence). AI companies are leasing more office space and creating jobs from San Francisco down to San Jose. Some of the strongest submarkets are showing early signs of improvement with rents appearing to grow faster than inflation in key parts of the Bay Area and vacant units leasing up more quickly in certain areas. At the same time, attractive yield can still be found (outside of San Francisco proper) for new acquisitions, even with stronger rent growth, cap rates appear to be stabilizing and, in some cases, beginning to compress. Coupled with the addition of more pragmatic mayors in both San Francisco and San Jose, businesses feel more confident expanding, bringing employees back to the office, and reengaging with the community. This is why we remain encouraged over the long term in the Bay Area, while continuing to actively manage our investments across all markets.

Calvera’s Future

As we prepare for 2026 and beyond, we are refocusing on our home market, the San Francisco Bay Area, when looking for new acquisitions. We are doing so while continuing to devote significant time and resources to actively managing and stewarding our existing investments across all markets.

The Bay Area is what we know best. It is home to many of our investors, and it has delivered several of our strongest investments. As a value-add investor, local relationships are critical in allowing us to gain better insight into costs during due diligence. We also have an extensive broker network to source new acquisitions and execute when it comes time to sell.

The Bay Area is not without its risks. It remains a cyclical market with periods of volatility. There is always plenty of excitement (and capital) behind the latest technological innovation. That enthusiasm drives up values across the board: homes, rents, stock prices, and company valuations. Inevitably, when values rise far beyond sustainable levels, they tend to come back down. Our challenge is to either buy at a sufficiently strong going-in yield or add enough value in a short period of time to generate an attractive return. We are working toward both, as reflected in our latest acquisition in San Jose that is off to a solid start.

You might ask, what about Dallas-Fort Worth or the Research Triangle? These remain attractive markets in which to invest and continue to rank high on investors’ wish lists. Our focus in Texas and North Carolina is to achieve the best possible exits over the next 12-36 months as those markets continue to improve. That being said, these markets are crowded with no shortage of competitors in addition to significant new apartment supply. At this point in the cycle, relative pricing and supply dynamics suggest more attractive near-term opportunities in the Bay Area. There are also fewer competitors in California, as many investors have redlined the entire state, especially pockets like Los Angeles and the Bay Area, because of the political and regulatory environment that continues to shape our relative focus between geographies.

Investing in the Bay Area also means buying smaller properties. Most recently, we have acquired 150-unit, 200-unit, and 300-unit properties outside of California. With a renewed focus on the Bay Area, we expect to regularly target properties with 25 to 100 units. That is simply the nature of the apartment market there, and the inherent inefficiencies at the sub-institutional level are exactly what we are aiming to capitalize on.

Together, our strategy for 2026 is straightforward:

• Stay disciplined
• Stay patient
• Invest where we see the clearest path to durable cash flow and value creation

While the broader market continues to normalize, we believe this approach positions us well to navigate near-term uncertainty and capitalize on opportunities as they emerge. As always, we appreciate your continued trust and partnership, and we look forward to sharing updates as the year unfolds.

Best regards,

The Calvera Team