Welcome to The Starcore Signal, a quarterly newsletter from Starcore Capital Group. Each issue covers what we are seeing on the ground in multifamily real estate: market reality, portfolio updates, deal flow, and one practical insight to help you build wealth smarter. Raw, real, and earned.

01 · THE STORY

The Wholesaler Who Built Us

“Get the F*** out of here before I have you thrown out.”

That was a granite wholesaler in East Dallas, 2013. Asha and I had walked in with samples. He looked at them for thirty seconds. Then he said it.

Last issue I wrote about the catalyst for our entrepreneurial path: the 2012 Thanksgiving layoff and the years that followed. This is another moment from those years, and it shaped how we operate today.

We had registered StoneWiz before we knew anything about how granite actually worked. We were learning as we went. Cold-calling exporters in India. Knocking on doors across Texas. East Dallas was one of those doors.

I couldn’t sleep that night. The next morning we made a choice: not to take it personally. He didn’t know us. We weren’t going to let him decide what we were building.

Six months later, a customer in North Houston placed our first order. Two containers. The business took off and grew steadily until we eventually sold it.

That instinct still runs how we operate today. In 2024, every external signal said sell Brixton West at a loss and move on. Our instinct said hold. We called our investors. Many of them said the same thing. The decision matched our nature, and it matched theirs. Brixton is operating today.

That is the only way we know how to operate. When the room says no, we ask better questions. When the market signals fear, we get to work.

02 · MARKET REALITY CHECK

What Two of the Largest Apartment Owners in America Just Told Us About 2026

On May 21, 2026, AvalonBay Communities and Equity Residential announced an all-stock merger of equals valued at approximately $69 billion in enterprise value. AvalonBay (NMHC #4, ~87,000 units) and Equity Residential (#6, ~85,000 units) will combine into a single platform holding over 180,000 apartments, larger than the current #1 owner Greystar by more than 53,000 units. Pro forma equity market capitalization is approximately $52 billion. The deal is expected to close in the second half of 2026.

The published driver was flat 2025 rents at 0% year-over-year nationally per Yardi Matrix, paired with high development costs. They merged to extract roughly $175M in cost synergies over 18 months and to position for scale. The headlines focused on the cost saves. We focused on the timing.

When the most conservative, longest-tenured institutional capital in this asset class consolidates at this scale, the move is not defensive. It is positional. The smartest money in multifamily has decided that the cycle is bottoming and that the next twelve months are for positioning, not waiting. They are not pricing in further declines. They are pricing in the next leg of the recovery.

That is the macro frame for this issue. Below is what the ground looks like underneath it.

Supply is finally correcting.

The DFW supply wave is receding. 2024 delivered approximately 39,000 units against 27,000 of net absorption, a 12,000-unit oversupply gap. 2026 brings new deliveries down to roughly 21,000 against 19,500 of demand, near balance for the first time since the cycle peaked. 2027 inverts: 16,500 units delivered against 21,000 of demand, a 4,500-unit supply shortage. The construction pipeline has collapsed 80% in three years, from approximately 60,000 units under construction at the peak to 12,000 today.

This is the cycle doing its work. The math is starting to work for properties that can hold occupancy through the next twelve months.

The maturity wall is the immediate force.

Approximately $525B in multifamily debt matures nationally across 2026 and 2027, with $300B of it maturing this year. $115B of that nationally cannot refinance at par under current DSCR thresholds. DFW alone carries $26-31B of that maturing debt, with $6-7B unable to clear par. These are not projections. June through July 2026 saw over $2.2B in Texas Triangle commercial loans flagged for foreclosure auction, with $1.3B in June alone, a new record. Apartments dominated every docket.

Equity is being wiped out. Even good loans are trapped.

Roughly $1.5B to $2B of DFW equity is currently on the hook across deals purchased in 2021 and 2022 with floating-rate or peak-basis debt. Many of those properties are bleeding, with equity being wiped out at reset basis. Properties with healthy fixed-rate loans are not immune either, because this is not the market to sell into and no rational seller wants to crystallize losses at this point in the cycle.

All of that is what the market is telling you. Here is what running properties through it tells us.

The deeper problem is the contagion.

Distressed neighbors offering one to two months of free rent infect every comparable in their submarket. Physical occupancy can hold while economic vacancy quietly expands through bad debt, concessions, and loss-to-lease.

Two important caveats on the contagion. First, it will continue to pressure rents long after the supply pipeline absorbs in 2027. The damage that distressed properties have done to submarket pricing will unwind through years of disciplined operations, not months. Second, demand ultimately depends on jobs. DFW lost 29,200 jobs in renter-heavy sectors between December 2024 and December 2025, with professional and business services down 21,700. Texas added only 10,700 jobs in all of 2025, well below the historical 2% growth rate. The cycle is bottoming because supply is correcting. The cycle stays at the bottom longer if job growth does not return.

Operations is the deal.

Acquiring distressed multifamily at reset basis is the easy part. Running it through the bottom is everything. The pain is not done. Even after the supply pipeline absorbs in 2027, distressed neighbors offering deep concessions will continue to pressure every comparable property for years after that. Cycles bottom flat. We are at the bottom and we will stay here for a while.

An asset bought at a clean basis with weak operations can suck capital like a black hole before the cycle ever turns. Multifamily education is widely available. Business DNA is not. The more ground-level cases we see across this cycle, the more obvious that gap becomes. From 2012 to 2019, rising rents hid every mistake, and any operator could look smart. This cycle does the opposite. It exposes who actually has the DNA, the systems, and the team to run through real pain. Systems matter as much as the person. A real business protects investor capital even if the operator gets hit by a bus.

The operators running their properties well through this cycle are the ones who will do best when the math finally moves. The ones who cannot run through this will not be in the conversation.

Most of the wave is still ahead.

Everything above describes a market that has produced real pain for real investors. We are not minimizing it. We have lived a version of it ourselves.

What that pain has also produced is the rarest setup we have seen in our seven years of operating. Multifamily transaction volume across the United States is currently at its lowest level in sixteen years. The last time the market printed numbers like this was 2010. The investors and operators who deployed capital in the two years that followed did very well over the decade that came after.

One important difference between then and now. 2009 was a V-shaped recovery. Rates dropped fast, capital flooded back in, and the bottom lasted months, not years. This cycle is shaped differently. The supply overhang, the maturity wall stretched across 2026 and 2027, the slow pace of distressed transactions, and the soft job market all point to a U-shaped recovery with a wider bottom. We will be at the floor for longer than 2010 stayed at its floor. That changes who can win from here. A V-shape rewards anyone who shows up with capital. A U-shape only rewards operators who can run their assets through years of flat-to-soft conditions before the math finally moves. The basis is going to be available. Surviving the operating window between acquisition and recovery is the real test.

Two data points worth holding in your head. In all of 2025, brokers sent approximately 350 BOVs (Broker Opinions of Value, the pre-listing inputs sent when sellers begin signaling distress) into the DFW market. In the first quarter of 2026 alone, that number was 450. Q1 2026 alone exceeded the entirety of 2025, and the pace is still accelerating.

The implication is straightforward. The deal flow we are seeing today is the leading edge of the wave. Most of the cycle’s opportunity is still in front of us. We are positioning for it now.

The combination of equity getting wiped out, scarce time on the clock, and more distressed deals than buyers prepared to close is creating a specific failure mode. Sellers and lenders need certainty of closing. Buyers need to credibly demonstrate they can fund. That match is rarely happening across the market right now. Deals are falling apart in diligence and getting re-traded at lower numbers.

Certainty gets you to the table. What happens after you close is a different question entirely. The operators who will do best from here are the ones who run every asset they own under the same discipline, the same standards, and the same system, so that one hard quarter at one property does not become a crisis across the portfolio. A well-constructed portfolio is not a collection of bets. It is a system that holds. This is not a new idea. Index funds have proven it for decades. The math works the same way in private real estate.

03 · PORTFOLIO UPDATE

Holding the Line: The Discipline Behind the Numbers

Rents are flat to negative under widespread concessions while operating expenses keep rising under inflation. When income compresses and expenses rise at the same time, the expense-to-income ratio blows out. That ratio is the single line that tells you whether a property is bleeding or holding. The DFW market now runs above 50%. Across our active portfolio it runs at approximately 46%. That gap is not a Q2 story. It is how we operate, every quarter, in every market.

There is no single lever for an expense ratio. It is the sum of decisions across dozens of line items, made one at a time, with the discipline to know which buckets to tighten and which to protect. Blanket cuts degrade the resident experience and end up costing more than they save. Knowing which is which is the entire job. We learned this discipline in our other businesses. Avacraft and Stonewiz both demanded daily attention to customer experience and vendor negotiation, and the operating muscle built there is the same muscle we run apartments with today. It is fundamental to running any business well, not a response to a difficult market.

Three examples of what this looks like in practice:

Long-term contracts

When we renegotiate service contracts, nothing closes on a single phone call. Each negotiation takes multiple meetings, structured proposals, and a clear read on what the vendor needs in return for moving on price. Reductions have ranged from 17% to 50%. The savings compound monthly for the life of each agreement. The team runs these negotiations directly, with the discipline to walk away when the math does not work.

Drainage repair

A drainage issue at one property came back with outside vendor quotes between $3,000 and $5,000. Before authorizing, the team challenged itself to look at it. They solved it for $525 including materials, roughly 87% below the midpoint quote. The savings came from scheduling, not heroics, by redirecting a few hours of existing maintenance time between properties. This is the kind of decision the team makes every week without anyone needing to call it.

Unit turns

A typical unit turn handled by an outside small vendor in this market runs around $3,000. Our in-house team turns units for under $1,500. A 50% reduction on the most frequently occurring expense line in a multifamily operating budget. This is the standard the team runs at, not a special effort.

None of this comes at the cost of resident experience. Quality of living and capital protection are not in tension when the operation is run right.

The team is the business

The expense ratio holds because we have a team that runs at this standard whether we are in the room or not. We have built systems and SOPs that document how every line item gets evaluated, every vendor gets selected, every unit gets turned. Many of the people on our team are smarter than us at specific parts of this work, which is exactly the design.

That is the goal, and that is what protects investor capital over the long arc. The strongest businesses are the ones where the founder can step away and the operation does not skip a beat. If one of us gets hit by a bus tomorrow, the systems, the team, and the SOPs hold. That is the downside protection we have built into how this business runs.

Brixton West — December to May

Discipline does not eliminate hard quarters. Brixton is the example.

After the March 2025 refinance, we started cash distributions in measured steps as the property stabilized, and we had been making real progress. Then December came. Arlington has been a contagion zone for the better part of two years with distressed neighbors pulling rents down on every block, and that pressure intensified going into year-end. Occupancy at Brixton slid to 84%. The team moved on leasing immediately and we closed December at 87.9%. By May we were back to 98.4%.

The team at Brixton takes challenges by the horns. The Arlington submarket has handed them one of the hardest operating environments in DFW for two straight years, and they have not flinched. The recovery from 84% to 98.4% in five months is theirs.

We made the call to pause the distributions we had started, to rebuild the reserves we used during the recovery. It was not an easy decision. We walked our investors through the logic and they understood it: protect the capital first, restart distributions the moment the reserves are whole.

We do not point at the submarket. We chose to own here. We will operate through it. The plan is to bounce Brixton back regardless of what Arlington does around us, and the numbers since December show exactly that trajectory.

Property snapshot

 EXITED

 

OPERATING PORTFOLIO · Q2 2026

Total units under management: 500+, including KP interests in additional assets not owned by Starcore Capital.

Adopting AI on our terms

We deploy AI where it creates efficiency and saves cost without compromising quality. Vendor invoice triage, lease abstraction, maintenance ticket routing, market scouting, and underwriting input automation. This is stepwise, strategic, and reviewed every quarter. Where human judgment, resident experience, or investor trust is involved, the human stays. AI runs in the background, not the front office.

What’s next

Same focus as last quarter. Every property at or above plan, the expense ratio held, Brixton’s reserves rebuilt, consistent communication with the investors whose capital is at work in these buildings.

04 · DEAL FLOW PERSPECTIVE

Why We’re Saying No More Often Than Yes

Over the last two months we have reviewed 30+ multifamily opportunities across DFW. Most of them, we passed on. A few remain active in negotiation. One or two may close.

That ratio is not an accident. It is the design.

The flood described earlier in this issue is just beginning. Broker BOV inflows tripled year over year. Many of the deals coming our way look attractive on paper. Reset basis. Motivated sellers. Good bones. The temptation to chase basis alone has not been this strong in fifteen years.

Discipline is what separates the operators who survive this market from the ones who arrive too early and run out of capital before the cycle turns.

The framework

Every opportunity that crosses our desk runs through our investment framework. Four layers. Each one is a binary gate. An opportunity that fails any single layer does not move forward.

Over the last seven years, every acquisition, every challenge, every successful exit, and every deal we chose not to pursue contributed to a growing body of lessons and pattern recognition. We recently formalized those lessons into what we now call the Starcore Capital Investment Framework.

Each layer earned its place through a real outcome. Every sub-criterion under each layer is there because something went right or something went wrong on a previous deal. The only way a framework like this becomes useful is by building it by hand, in the market, over time.

When you see how layered the analysis is, the rejection rate stops being surprising. It starts being the only honest outcome.

Why this matters now

We believe we are entering one of the most opportunity-rich acquisition environments of the past decade. What this market also produces in equal measure is the chance to make a permanent capital mistake: confusing cheap with valuable, confusing motivated with workable, confusing a problem dressed as an opportunity with an actual opportunity.

The buyer who wins in this market is not the one with the most capital. It is the one who can move decisively when an asset passes every layer, and refuse decisively when it does not.

What’s next

Our next webinar is coming soon. As always, raw and real data, ground-level perspective, and no fluff. If you are on our list, the details will reach you directly.

05 · PRACTICAL INSIGHT

Five Deals Is Not Five Investments

From the early 2010s through 2021, multifamily syndications produced real returns for a generation of passive investors. That history is real, and nothing in this section is a critique of how investors got here.

What the next cycle exposed is that the deals that performed in those years shared more than they appeared to. Many were underwritten on the same zero-rate assumptions, used the same floating-rate bridge debt, targeted the same Sun Belt markets, and were sponsored by operators trained in the same programs. When the Fed moved in 2022, what looked like five independent investments behaved like one. Distributions paused, capital calls arrived, and refinance windows closed across the same months. Significant capital has been lost on positions that looked diversified on paper but were not.

This is the diversification illusion.

To be clear, a single well-underwritten deal with the right operator is a legitimate investment. The illusion is not the deal itself. It is the belief that owning five of them, across five different sponsors, automatically creates diversification when the underlying risks are all the same.

The variable that determined which portfolios held together was not the count of deals owned. It was the underwriting discipline of the operator running them.

The hidden concentration

The dominant capital stack across the 2020 to 2022 vintage was floating-rate bridge debt. It allowed faster closings, higher leverage, and quick refinances. When rates rose, that single shared exposure unraveled deal after deal across hundreds of independent sponsors. The buildings still stood. The submarkets still had renters. What broke was a capital structure choice almost everyone made the same way.

A disciplined operator refuses the dominant choice when the math does not support it, even when every peer is making the opposite call. That refusal is what separated the portfolios that survived from the ones that did not.

What we learned operating through the cycle

Our own portfolio is structured as individual syndications. Operating those properties through both the strongest market in fifteen years and the hardest stretch of the cycle that followed, we have seen the advantages compound the moment multiple properties operate under shared discipline. Vendor pricing improves. Team allocation between properties unlocks savings. Reserves at the portfolio level absorb hard quarters without forcing capital calls. The same investment discipline described in the previous section compounds when it is applied consistently across multiple properties.

Interestingly, the same pattern appeared repeatedly among the owner-operators we respect most. Not the best at marketing. The best by the only measure that matters: long-term risk-adjusted returns across full cycles. Every one of them has built a portfolio anchored in shared operational architecture, not just in owning multiple assets. A single standard applied across every acquisition. Reserves at the portfolio level. A documented system.

The public-market parallel is instructive. Index funds and well-constructed ETFs outperform the average actively traded stock portfolio over long stretches because diversified vehicles capture the structural advantage of breadth and lower idiosyncratic risk. The same logic applies to private real estate.

The architecture works in both directions

In a strong market, shared underwriting, reserves, vendor relationships, team allocation, and accountability add basis points of return on every property, every year. Across a multi-year hold they compound into materially better outcomes than the same capital spread across unrelated deals.

In a hard market, the same architecture becomes downside protection. One hard quarter at one property does not become a capital call across the portfolio. No single risky choice gets stacked across every acquisition. The playbook for a hard quarter is not theoretical because the team has already written it.

The real advantage is not owning more properties. It is applying the same disciplined system across every property you own.

That is the entire point.

06 · PERSONAL NOTE

Vivek Kangralkar  · Founder & CEO, Starcore Capital Group

Q1 and Q2 have been the most analytically intense quarters of our seven years in this business. Apart from operating our portfolio, Asha and I have spent these months underwriting deals, talking with brokers, lenders, and other operators, and stress-testing every assumption we hold about what comes next.

One conclusion has come back to me again and again. We are positioned correctly for our investors. I know what we need to do, and I know how to do it.

The devil is in the details, not in the headlines. Data on its own is a thin signal. Ground-level reality on its own is anecdote. The two combined do not lie. This market is producing real opportunity. It is also producing real ways to lose money. Both are true at the same time.

There were several deals this year I could have closed. I kept asking the same question every time: is this what actually creates risk mitigation and returns, or is this what looks like it does? Cycles teach you, through the macros, that protecting downside requires more precision than chasing upside ever does. That precision is what we have been refining for seven years and what we have sharpened further in these two quarters.

What excites me heading into the second half of 2026 is the alignment between what we have built, what the market is producing, and what we owe the investors who trust us with their capital.

There is real fear in this market right now. There is also a hidden greed, capital rushing to acquire distressed deals on basis alone, without the discipline to run them through what comes next. That is what we are watching. Prepared capital, paired with discipline, risk architecture, and operational leverage, has an opening here that will not appear again for a long time.

---

Thank you for reading The Starcore Signal 2Q 2026. If something here sparked a question, my inbox is always open. If you found value, the greatest compliment is forwarding it to one person in your network whose capital is working less hard than they are.

With gratitude and forward momentum,

Vivek

Welcome to The Starcore Signal — a quarterly newsletter from Starcore Capital Group. Each issue covers what we’re seeing on the ground in multifamily real estate: market reality, portfolio updates, deal flow, and one practical insight to help you build wealth smarter. Raw, real, and earned.

01 · THE STORY

The Last Day I Built My Life Around Someone Else’s Paycheck

It was November 2012. My daughters had just written their letters to Santa. I couldn’t buy a single thing on those lists.

I had been laid off right before Thanksgiving. We had just bought a house. Almost no money left. Asha had stepped away from her engineering career to raise our girls — a choice we made together, proudly. But that holiday season broke something in me. Asha looked at our daughters and said: “Dad is going through an exam. When he passes, we’ll celebrate with ice cream.” They believed her. I sat with that.

What kind of life is this — where one company’s decision takes away your ability to give your kids Christmas?

We started a stone slab import business from scratch. No customers. No track record. No safety net. A loan on our 401K. Six months of brutal door-to-door sales later, we landed a wholesaler. In North Houston. 257 miles away.

Here’s what each trip looked like. 4:30am — wake up, cook breakfast, pack lunch boxes. 5:00am — wake the girls. Still half asleep, eyes barely open. They never complained. 5:45am — drop them at our friends Mukul and Nish’s house. Every week, without hesitation, they took our girls to school with their own kids. 6:00am — Asha and I drive. 9:45am — arrive, gather ourselves. 10:00am — meeting. 11:00am — done. Drive back. 2:45pm — pick up our daughters. Not a minute late.

We did this every week. Sometimes twice a week. For three years straight.

When I worked at Texas Instruments, I flew to Houston because driving felt like too much. But when you have nothing — and you’re building something for your family — 257 miles each way becomes nothing. You don’t feel the drive. You don’t feel the exhaustion. You only feel the hunger.

That same hunger built Avacraft — recognized by Forbes, Amazon, and GMA. That same hunger built Starcore Capital. And it’s the same hunger that gets me up every morning when I walk a distressed property at 7am or underwrite a deal at midnight that doesn’t pencil at the seller’s price.

This is not a story I tell for sympathy. It is the story that explains exactly how Asha and I are wired — permanently. The way we treat investor capital is not a policy or a promise we made on a slide deck. It is ingrained in our DNA. We know what it feels like when financial security is taken away in a moment. That experience lives in us every single day. It is why we protect capital the way we do, why we will never be reckless with what you’ve entrusted to us.

02 · MARKET REALITY CHECK

What the Headlines Are Missing About DFW Multifamily Right Now

Most market publications are focused on one story: oversupply. And they’re not wrong — DFW saw a record 38,640 new units delivered in 2024, flooding a market that could absorb roughly 28,000. That’s the headline. But if you’re only tracking supply versus absorption, you’re missing the deeper force that will define this market through 2026.

Here’s what we’re actually watching on the ground.

Across DFW, billions of dollars in distressed multifamily loans have reset — properties where debt was originated in the zero-rate era of 2020 to 2022, floating rate, that has now repriced materially higher. These loans are maturing. Properties have drained their cash reserves. In many cases, lenders have already stepped in. Occupancies at these properties have collapsed — some well below 80%, a few below 60%.

The only tool these properties have left is price. Deep concessions. One to two months free rent. Move-in specials that gut effective rents. And here’s the part that directly affects every well-run property in their submarket — including ours: when a distressed neighbor offers a 2-bedroom at $900 effective rent after concessions, a stabilized property at $1,500 faces real competitive pressure even if its operations are excellent. That’s the ripple effect most analysts don’t model. Oversupply is the macro story. Distressed-neighbor contagion is the ground-level reality.

The compounding problem: these distressed properties aren’t selling quickly. True market value sits materially below the outstanding loan balance, putting lenders in an uncomfortable position — extend and pretend, or sell at a loss. Either path takes time. Which means rent suppression continues well into 2026 even as the new supply pipeline collapses.

What this market is revealing — loudly — is that operations matter more than they have in fifteen years. During the euphoria of 2020 to 2022, almost any operator could look good. Rising rents covered a multitude of mistakes. That era is over. The market is now a filter, and what it’s filtering for is exactly what we’ve spent six years building: boots-on-ground execution, disciplined expense management, resident retention, and the ability to push NOI when every macro force is working against you. This is not a market to observe from the sidelines. It is a market that rewards the operators who lean in, get their hands dirty, and run the playbook with precision. That is a challenge we welcome. It is the environment we were built for.

In tech, when a production system goes down, you don’t panic and you don’t guess. You roll up your sleeves, open the code, and debug. Methodically. Without emotion. One variable at a time. That’s exactly how we approach this market — and it’s why our net effective income grew 8.5% in a market that was flat to negative.

Here’s the contrarian take: this is exactly where the opportunity lives. When a capital structure breaks, the real estate doesn’t disappear — ownership changes. Properties with good bones, good locations, and bad balance sheets are becoming available at reset pricing that simply didn’t exist 18 months ago. Prepared capital has leverage in this environment that it has not had in years.

The numbers above are from DFW — our market. But this dynamic is playing out across Sun Belt markets and beyond. DFW simply illustrates it most clearly.

If you want to go deeper on everything covered in this section — we recently hosted a live webinar titled “Multifamily 2026: The Reset. The Opportunity.” It filled to capacity and has since been watched by hundreds, many in groups. We walked through exactly what happened in this market, why, what’s playing out on the ground in DFW right now, and what it means for investors heading into 2026. No fluff. No projections. Just the raw reality of this cycle. Reply to this email and I’ll send you the recording directly.

03 · PORTFOLIO UPDATE

Where We Stand: Honest Numbers, No Cheerleading

Our portfolio spans four properties — one successful exit and three operating assets — with close to 500 units across DFW. In addition to our wholly owned properties, we serve as a key principal and co-sponsor on a joint venture acquisition, reflecting our conviction that the right fundamentals, the right basis, and the right operational approach open doors beyond traditional ownership structures.

We have grown deliberately — one asset at a time, each acquisition earned through the performance of the last. In a market that punished speed over discipline, that approach has made all the difference. Here’s the real picture on our directly operated portfolio.

Red Oak On A — Denton, TX [EXITED]

Denton, TX · 24 Units · Class C/B · Built 1982

Acquired: June 2021

Sold: August 2022

ROI: 111% (2.1x Equity Multiple)

IRR: 65.4%

Brixton West Apartment Homes

Arlington, TX · 66 Units · Class C · Built 1970

Avg Occupancy: 94%

Income Increase: +37%

NOI Increase: +50%

Status: Operating | Cash Distributing

Maxton West Apartment Homes

Irving, TX · 160 Units · Class C · Built 1974

Avg Occupancy: 95%

Income Increase: +52%

NOI Increase: +45%

Status: Operating | Cash Distributing

Rolling Hills Apartments

Irving, TX · 180 Units · Class B · Built 1984

Avg Occupancy: 94%

Acquired: September 2025

Cash Distribution: 6.85% annualized within first 90 days of acquisition

Status: Operating | Cash Distributing

Across our active portfolio, net effective income — accounting for vacancies, concessions, and actual collected rent — grew 8.5% over the past year. The DFW market during the same period ranged from negative to flat at best. That gap is not accidental. It is the direct result of operational discipline in a market that has punished operators who got lazy when times were good.

Rolling Hills deserves a specific callout. We acquired it in September 2025 and began cash distributions within the first quarter of ownership. In a market where many operators are suspending distributions and issuing capital calls, that is the standard we hold ourselves to.

The honest challenge across the portfolio is the same one every operator in DFW is navigating: distressed neighbors offering deep concessions create competitive pressure even when your own operations are strong. We are managing this through disciplined income management, resident retention, and expense control — without racing distressed properties to the bottom on price. We compete on quality.

What we are focused on next quarter: our current portfolio comes first — ensuring every property is operating at or above expectations and that we continue pushing NOI across all three assets. Once that foundation is solid, we are actively evaluating the next acquisition at the right basis and the right time.

04 · DEAL FLOW PERSPECTIVE

Why We’re Saying No to Almost Everything Right Now

I have never seen deals like the ones crossing our desk right now. Here’s a real example — details slightly generalized to protect confidentiality.

DEAL SNAPSHOT — DFW SUBMARKET, Q1 2026

Size: 250 units

Location: Strong DFW suburb

Physical occupancy: 85%

Economic vacancy: 34% — bad debt, concessions, loss-to-lease

Seller’s asking price: $26,000,000

Required capital injection: ~$3,750,000 deferred maintenance

Our underwritten fair value: ~$18,000,000

Gap: $8,000,000

The asset has real merit. Good location. Solid bones. The kind of turnaround we know how to execute — we’ve done it before. But our underwriting, grounded in current income, realistic stabilization timelines of 12 to 18 months, and required capital injection, puts fair value at $18M. The seller wants $26M. That $8M gap isn’t a negotiation — it’s a fundamental disagreement about what this market is worth right now.

We are actively negotiating deals like this one. Great locations, solid assets, reset opportunities — but getting to the right number requires patience, persistence, and the willingness to walk away. We have had multiple conversations on this property alone. That is the reality of this market. The deals worth owning don’t come easy and they don’t close fast. But we stay at the table because the right basis on the right asset is worth every round of back and forth.

Before underwriting, I called a friend who operates a similar vintage property 1.5 miles away — over 90% occupancy, well-controlled economic vacancy. His read on the submarket’s challenges confirmed what our numbers were telling us. Ground-level intelligence matters as much as the spreadsheet.

We are patient — because the last thing we want to do is buy someone else’s problem. We are here to buy an opportunity. The difference matters. A problem is an asset where the distress lives in the real estate itself — deferred maintenance beyond repair, a submarket in structural decline, fundamentals that don’t support stabilization. An opportunity is where the distress lives entirely in the capital structure — sound building, strong location, broken balance sheet. That is what we are looking for. And we are beginning to see it.

Sellers are slowly coming to a realization that the market has moved on from 2022. The conversations are changing. Deals we walked away from are coming back to the table at different numbers. We expect the back half of 2026 to produce the kind of entry points that disciplined operators have been building toward. We will be ready.

05 · PRACTICAL INSIGHT

The Wealth Advantage Your W-2 Is Hiding From You

A mentor shared this with me years ago. It permanently changed how I think about money and wealth building. I want to share it with you.

Take $1. Double it every year for 20 years with no taxes — you have $1,048,576. Over one million dollars. From one dollar.

Now apply 30% tax on your gains every year. Same dollar. Same doubling. Same 20 years.

You have $40,642.

The gap — $1,007,933 — is what taxes cost you over a lifetime of compounding. On a single dollar. Scale that to your actual income and the number is staggering.

Now think about your stock portfolio. Every dividend, every realized gain, every rebalance triggers a tax event. You are running closer to that second scenario than you think — even when returns look good on paper. And you have lived through 2001, 2008, 2020, and 2022. The returns are real. So is the volatility.

Nobody is saying abandon your stocks. If you have built wealth through equity compensation at Texas Instruments, Google, Amazon, or Microsoft — keep it. But concentration in a single asset class that moves on sentiment and quarterly earnings is a risk that compounds quietly until it doesn’t.

Real estate compounds differently. Through cost segregation and depreciation, real estate investors can significantly defer and reduce the tax burden on their gains — keeping more money working, year after year. Tax treatment varies by state and individual situation, which is exactly why the right guidance matters.

This is why real estate has produced more millionaires than any other asset class — not just the cash flow or appreciation, but the tax architecture underneath. For a high-income W-2 earner, allocating even a portion to real estate isn’t a retreat from returns. It is an upgrade to how those returns are taxed and protected.

The most important relationship you can build as a wealth-building investor is with a CPA who specializes in real estate tax planning. Not a generalist. A specialist who understands cost segregation, passive activity rules, and how to build a multi-year tax strategy around your investments. Build that relationship before you invest, not after.

06 · PERSONAL NOTE

Vivek Kangralkar · Founder & CEO, Starcore Capital Group

Entering 2026, I am more energized than I have been in three years — and I want to tell you exactly why.

The past three years in this market have been genuinely hard. Watching operators across the industry face capital calls, lender takeovers, and distressed sales has been a sobering reminder of what happens when discipline is optional. We kept our heads down, ran our properties hard, and waited. We made our own mistakes and owned them. We came out stronger.

That period is ending. Our own portfolio — 93 to 95% occupancy while the DFW market average sits at 88%, net effective income growing 8.5% while the market is flat to negative — and the deals crossing our desk at reset pricing tell us the same thing: the cycle is bottoming. As Warren Buffett said, invest when there is fear. There is fear in this market right now. Prepared capital has leverage in that environment.

What excites me most heading into Q2 is not a specific deal — it’s the team, the systems, and the infrastructure we have built to move decisively when the right opportunity arrives.

Thank you for reading The Starcore Signal 1Q 2026. If it sparked a question or a conversation — my inbox is always open. And if you found value here, the greatest compliment is forwarding it to one person in your network whose W-2 is working harder than their capital.

With gratitude and forward momentum,

Vivek