Forestar Group Inc · NYSE:FOR
Forestar — JMP Securities Financial Services & Real Estate Conference 2012
19 slides from Forestar's conference presentation, Sep 13, 2012
Slide 1: Accelerating Value Realization, Growing Through Strategic Investments
JMP Securities Financial Services & Real Estate Conference September 13, 2012 Accelerating Value Realization, Growing Through Strategic Investments and Delivering the Greatest Value from Every Acre
Slide 2: Notice to Investors
Notice to Investors This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are typically identified by words or phrases such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,”
Slide 3: Our Strategy – The Dimensional Land Model
Forestar is a real estate and natural resources company with a strategy focused on maximizing the value of its assets by: Recognizing and responsibly delivering the greatest value from every acre Growing through strategic and disciplined investments 5 7 3 Our Strategy – The Dimensional Land Model TM
Slide 4: Focused on Value Creation and Realization
Focused on Value Creation and Realization 4 Recognizing and responsibly delivering the greatest value from every acre Growing through strategic and disciplined investments REAL ESTATE GREATEST VALUE OIL AND GAS GREATEST VALUE Maximizing Long Term Shareholder Value
Slide 5: Delivering The Greatest Value From Every Acre
594,000 net mineral acres principally located in 5 basins and 7 states 1,600,000 acres of water interest*** 17,800 acres of groundwater leases in central Texas 145,000 acres of low-basis real estate Real estate acres generating fiber growth and sales* 89 residential and mixed-used communities in 7 s
Slide 6: Real Estate Greatest Value
Real Estate Greatest Value Development Entitled Entitle Timberland Pipeline (Acres) 1 Activity – Uses Financials 2 2,000 63 projects 1,375 acres – 2,881 lots 510 commercial acres $50K per lot $90K per acre (avg sales price) 14,000 18 projects Approved uses, ready for development High Value Creation
Slide 7: Real Estate Assets Located in Stronger Markets
Note: MSA performance based on Employment, Gross Metropolitan Product (GMP) and House Price Index Source: Brookings Institute- June 2012 Salt Lake City 1 - $0.4 Oakland 1 - $8.9 Strongest Quartile Weakest Quartile Los Angeles 2 - $14.8 Kansas City 1 - $2.9 Tampa 2 - $3.3 Atlanta 33 - $86.7 San Anton
Slide 8: Impending Shortage of Quality Lots Driving Demand
Impending Shortage of Quality Lots Driving Demand In Good Locations 8 Note: Includes ventures Forestar Residential Lot Sales & Margin / Lot U.S. Housing Markets Vacant Developed Lot Classification Source: MetroStudy Top 40 U.S. Housing Markets Class Starts / Month A +4 B 3 – 4 C 2 – 3 D 1 – 2 F < 1
Slide 9: Community Development - Creating a Sense of Place
9 9 Community Development - Creating a Sense of Place Video: http://forestargroup.com/watch/8002
Slide 10: Real Estate Investments Generating Cash Flow & Earnings
Discovery at Spring Trails Acquired non-performing bank loan for $21mm in Q2 2011 Secured by first lien on Discovery at Spring Trails community Previous owner investment - $49mm Q2 2012 Earnings = $1.1 million Barrington Kingwood Acquired 180 developed lots (Q3 2011) for $9 million, including $4 mil
Slide 11: Developing a Low Capital - High Return Multifamily Business
Timely Developing a Low Capital - High Return Multifamily Business 11 Multifamily Projects Ownership Units June 2012 Occupancy NOI * Cap Rates Stabilized Assets Broadstone - Houston, TX 100% 401 98% Sold - $57 million 5.8% Las Brisas - Austin, TX 59% 414 95% $2.4 million 6.0% - 7.0% Under Constructi
Slide 12: Minerals Greatest Value
Minerals Greatest Value Pipeline (Acres) 1 Terms – Activity Financials 35,000 20% - 27% Royalty and Working Interest 541 Wells 2 Cash Flow = $134mm3 45,000 3 – 5 year term Delay rentals Drilling requirements $250 - $1,500 per acre lease rate 58,000 Seismic, Ventures and Prospects Up to $100 per acre
Slide 13: Strategy Execution Driving Increased Oil Production
Note: Includes ventures; wells operated by third party lessees / operators 13 Forestar’s Share of Annual Oil Production 2008 – 2012 Strategy Execution Driving Increased Oil Production * Excludes any benefit from Credo acquisition 30% CAGR **PV-10 represents present value of estimated future oil and
Slide 14: Targeting 160,000 Acres For Oil and Gas Prospects
Rodessa ~24,000 acres Oil / NGL’s / Natural Gas Target Specific Zones and Formations For Prospect Generation Pettet ~2,000 acres Oil / NGL’s / Natural Gas Glen Rose ~33,000 acres Oil / NGL’s / Natural Gas Bossier ~10,700 acres Natural Gas Tuscaloosa Marine Shale ~17,500 acres Oil / NGL’s / Natural G
Slide 15: Credo: Compelling Combination Value Drivers
Credo: Compelling Combination Value Drivers Combination creates meaningful scale through production and reserve growth, additional ownership and operations in strategic basins and improves transparency and disclosures Value Drivers 2011 Metrics* ($ in millions) CRED FOR Combined Increased Scale / Do
Slide 16: Our Focus: Triple In FOR Initiatives
Our Focus: Triple In FOR Initiatives Q2 - 2012 Activity Focus on Accelerating Value Realization Triple Residential Lot Sales Lot sales up over 50% from Q2 2011 levels Oil production up over 120% from Q2 2011 Total segment earnings up over 150% from Q2 2011 Triple Oil & Gas Production (Mcfe) Triple T
Slide 17: Continuing to Strengthen Balance Sheet and Liquidity
Continuing to Strengthen Balance Sheet and Liquidity 17 ($ in millions) Aug 2012 Q2 2012 Q2 2011 Cash and Cash Equivalents $59 $45 $6 Total Debt $179 $202 $261 Total Debt / Total Capital 25% 28% 34% Liquidity* $205 $189 $115 2012 Significant Transactions: ($ in millions) Timing Cash Debt Reduction P
Slide 18: Accelerating Value Realization
Accelerating Value Realization Building momentum by increasing oil production and proven reserves Growing lot sales and increasing market share Realizing value from stabilized commercial assets Capitalizing on growth opportunities and investments to generate near-term cash flow and earnings Building
Slide 19: Anna Torma, SVP Corporate Affairs
Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com 19
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