Forestar Group Inc · NYSE:FOR
Forestar — Investor Day (December 2012)
174 slides from Forestar's investor day presentation, Dec 11, 2012
Slide 1: Forestar Investor Conference December 11, 2012
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value
Slide 2: Notice To Investors
Fore_logo.epsCommunityDevHeader.jpgNotice To Investors This presentation contains “forward-looking statements” within the meaning of the federal securities laws. These statements reflect management’s current views with respect to future events and are subject to risk and uncertainties. We note that
Slide 3: Investor Conference Agenda
Fore_logo.epsHeaderBackground.jpgForestar Investor Conference visionLogoRev.pngJim DeCosmo – President & Chief Executive Officer Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 3 SevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_00
Slide 4: Short History
Fore_logo.epsRedheadedOilpump.jpgShort History Focused on Strengthening Balance Sheet and Positioning Business For Growth Year Strategic Initiative Accomplishments 2008 Became a public company following spin-off from Temple-Inland 2009 Announced Strategic Initiatives: •Sell 175,000 acres of Timberla
Slide 5: $150 Million Debt Reduction Initiative Positioned Forestar for Growth
Fore_logo.epsRedheadedOilpump.jpg$150 Million Debt Reduction Initiative Positioned Forestar for Growth ($ in millions) Q1 2009 Q2 2012 Total Assets $834 $778 Total Consolidated Debt $349 $202 Total Debt/Capital 44% 28% Total Liquidity* $176 $189 * Represents cash plus available liquidity under senio
Slide 6: Execution of Initiatives and Strategic Acquisitions Positions Forestar With Stronger Portfolio
Fore_logo.epsRedheadedOilpump.jpgExecution of Initiatives and Strategic Acquisitions Positions Forestar With Stronger Portfolio of Assets Assets and Resources at Q3 2012 Real Estate •Land - 143,000 acres of low basis land •Projects - 96 (8 states and 12 markets) •Significant Commercial Assets – 4 Mi
Slide 7: Triple in FOR Initiatives
Fore_logo.epsRedheadedOilpump.jpgTriple in FOR Initiatives Focused on Accelerating Value Realization and Growing Net Asset Value Focus on Accelerating Value Realization Triple Total Segment EBITDA - Residential Lot Sales and Oil & Gas Production Optimize Transparency & Disclosure Expand Reported Dis
Slide 8: Accelerating Value Realization Through Increased Residential Lot Sales
Fore_logo.epsCommunityDevHeader.jpgAccelerating Value Realization Through Increased Residential Lot Sales 804 2,200 2008 2009 2010 2011 2012 Est. Triple in FOR Avg. Forestar Lot Sales Avg. Lot Margin U.S. Single-Family Starts Residential Lot Sales & Average Margin FOR Peak Annual Lot Sales = 3,600 C
Slide 9: Growing Total Segment EBITDA Through Triple in FOR Initiatives
Fore_logo.eps($20) $0 $20 $40 $60 $80 $100 $120 $140 2008 2009 2010 2011 2012 Est. Total Segment EBITDA ($ in millions) Working Interests Royalty Interests Lease Bonus Multifamily Income Producing Commercial Tract Residential Tract Residential Lots RedheadedOilpump.jpgGrowing Total Segment EBITDA Th
Slide 10: Optimize Transparency Through Disclosure of Oil and Gas Resource Potential
Fore_logo.epsRedheadedOilpump.jpgOptimize Transparency Through Disclosure of Oil and Gas Resource Potential Proved Developed Proved Behind Pipe Proved Undeveloped Probable Possible Resource Proven Reserves Forestar YE 2011 Reserves (MMboe) Credo Fiscal YE 2011 Reserves (MMboe) 3.0 1.7 ? 0.3 ? 2.1 ?
Slide 11: Expand Reported Disclosure of Water Resources
Fore_logo.epsWaterDroplet.jpgExpand Reported Disclosure of Water Resources •Forestar has interests in almost 1.6 million acres of water rights •Focused on improving transparency and disclosures •Acres by aquifer •Sustainable production levels (acre feet of annual production) •Other water resource sa
Slide 12: Invest in Growth Opportunities Which Prove Up Net Asset Value
Fore_logo.epsRedheadedOilpump.jpgInvest in Growth Opportunities Which Prove Up Net Asset Value and Exceed Return Requirements Single_Family.aiGrowth Strategy Founded on Disciplined Financial Management and Maintaining Balance Sheet Flexibility Single-Family / Community Development •Strategic acquisi
Slide 13: Forestar Well Positioned To Accelerate Value Realization
Fore_logo.epsTimberlandHeader.jpgForestar Well Positioned To Accelerate Value Realization, Optimize Transparency and Grow NAV Increasing oil production and proven reserves Growing lot sales and increasing market share Realizing value from stabilized commercial assets Capitalizing on growth opportuni
Slide 14: Oil & Gas
HeaderBackground.jpgOil & Gas visionLogoRev.png6_a.jpgFlavious Smith - Chief Oil & Gas Officer Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 17
Slide 15: Oil & Gas Presentation Outline
Fore_logo.epsRedheadedOilpump.jpg Oil & Gas Presentation Outline •Oil & Gas Market Conditions •Forestar Minerals – Leveraging our ownership in East Texas & Louisiana •Becoming an Operator – Credo Acquisition Benefits •Credo Acquisition – “Pulling Back the Curtain” •Bakken / Three Forks •Kansas & Neb
Slide 16: Crude Oil Pricing Torn Between Weakening Demand and Geopolitical Risk
RedheadedOilpump.jpgCrude Oil Pricing Torn Between Weakening Demand Fundamentals and Geopolitical Risk •Limited OPEC spare capacity and moderate inventory levels •North American supply growth •Shale resource developments provide strong growth in supply •US production set to almost double from 2009 -
Slide 17: U.S. Natural Gas Markets Saturated, But Positioned For Rebound
RedheadedOilpump.jpgU.S. Natural Gas Markets Saturated, But Positioned For Rebound •Natural gas inventories and production levels remain high •Weak supply response to depressed prices driven by highly productive resource plays •However, current natural gas inventory returning to balance •Demand leve
Slide 18: Forestar Minerals – Leveraging Our Ownership in East Texas & Louisiana
HeaderBackground.jpgForestar Minerals – Leveraging Our Ownership in East Texas & Louisiana visionLogoRev.png6_a.jpgFlavious Smith - Chief Oil & Gas Officer Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 21
Slide 19: Recognize and Deliver the Greatest Value from Every Mineral Acre
RedheadedOilpump.jpgVALUE CREATION & REALIZATION Minerals Greatest Value Production - Reserves Lease - Bonus Explore / Seismic Market - Promote Recognizing and Responsibly Delivering the Greatest Value From Our Mineral Resources Recognize and Deliver the Greatest Value from Every Mineral Acre Acres*
Slide 20: Strategic Initiatives Focused on Realizing the Greatest Value From Minerals
RedheadedOilpump.jpgStrategic Initiatives Focused on Realizing the Greatest Value From Minerals Strategy Initiatives Growing Production, Reserves and Value .Establish operating and investment platform .Increasing transparency and disclosure •Marketing and promoting prospects •Maximizing lease bonus,
Slide 21: Accelerating Value Realization of Minerals Through Production and Reserve Growth
RedheadedOilpump.jpgAccelerating Value Realization of Minerals Through Production and Reserve Growth 0 50,000 100,000 150,000 200,000 250,000 2010 2011 Est. 2012 Oil Production (Bbls) 45% CAGR Forestar Share of Annual Oil Production 2010 – 2012 Forestar Reserves PV-10* 2009 - 2011 ($ in millions) *P
Slide 22: Mineral Activity (2010 - Q3 2012)
Mineral Activity (2010 - Q3 2012) RedheadedOilpump.jpgNote: Wells owned by third-party lessee / operator Leasing: .28,900 acres leased .$479 / acre Seismic Agreements: .33,600 acres .> 26,000 acres of 3-D seismic received to generate prospects Exploration Agreements: .18,000 net mineral acres Lease
Slide 23: Acquisition of Credo Petroleum
HeaderBackground.jpgAcquisition of Credo Petroleum visionLogoRev.png6_a.jpgFlavious Smith - Chief Oil & Gas Officer Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 28
Slide 24: Strategic Acquisition to Accelerate Value Realization
•Acquisition of CREDO Petroleum (NASDAQ:CRED) for $14.50 per share •Oil focused E&P operator headquartered in Denver, CO •Total equity value $146 million - all cash •Consistent with Strategy and Triple in FOR initiatives Strategic acquisition consistent with Triple in FOR initiatives - accelerate va
Slide 25: Acquisition Provides Meaningful Scale and Solid Platform For Future Growth
* Note: Includes approximately 8,000 net mineral acres located in various states related to overriding royalty interests 30 Credo Acquisition Benefits Increased Scale Doubles Production & Reserves Meaningful Interests In Prolific Basins 142,000 net acres in oil-rich basins* •6,000 net acres / 77,000
Slide 26: Credo Oil Production Growth Accelerating
RedheadedOilpump.jpg 20,000 40,000 60,000 80,000 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Barrels CREDO PV-10* Fiscal 2008 –2011 ($ in millions) Credo Oil Production Growth Accelerating Timely acquisition as production and reserve growth increasing $0.0
Slide 27: Combined Mineral Interests
Combined Mineral Interests* State Owned Leased Total Texas 252,000 3,000 255,000 Georgia / Alabama 195,000 - 195,000 Louisiana 144,000 - 144,000 Nebraska / Kansas - 101,000 101,000 North Dakota - 6,000 6,000 Other** 2,000 32,000 34,000 Total 593,000 142,000 735,000 * Note: As of third quarter 2012;
Slide 28: Optimize Transparency Through Disclosure of Oil and Gas Resource Potential
Fore_logo.epsRedheadedOilpump.jpgOptimize Transparency Through Disclosure of Oil and Gas Resource Potential Proved Developed Proved Behind Pipe Proved Undeveloped Probable Possible Resource Proven Reserves Forestar YE 2011 Reserves (MMboe) Credo Fiscal YE 2011 Reserves (MMboe) 3.0 1.7 ? 0.3 ? 2.1 ?
Slide 29: Credo Acquisition – Pulling Back The Curtain
HeaderBackground.jpgCredo Acquisition – “Pulling Back The Curtain” visionLogoRev.png6_a.jpgFlavious Smith - Chief Oil & Gas Officer Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 35
Slide 30: Credo Leasehold Interests Acquired – Q3 2012
Credo Leasehold Interests Acquired – Q3 2012 State Net Acres Net Acres HBP* Basins Formations North Dakota 6,000 2,000 Williston Bakken & Three Forks Kansas 46,000 3,000 Central Uplift Lansing – Kansas City Nebraska 55,000 2,000 Denver – Julesburg Central Uplift Lansing – Kansas City Oklahoma 17,000
Slide 31: Bakken / Three Forks Formations Represent Significant Driver of Future Value
RedheadedOilpump.jpgBakken / Three Forks Formations Represent Significant Driver of Future Value Realization Bakken Shale Formation: •Principally located in Western North Dakota and Eastern Montana in the Williston Basin •Continuous oil field of significant magnitude •~14,700 square miles •Largest e
Slide 32: Bakken: The Crude of Choice
RedheadedOilpump.jpg Bakken: The Crude of Choice •True Oil Play – 85% Crude Oil •Over-pressured, basin centered oil field •Premium crude - refiner’s crude oil of choice •Superior in quality to benchmark WTI •Lighter weight and lower sulfur content •Requires less downstream processing Natural Gas 15%
Slide 33: Williston Basin – Stacked Oil Plays
RedheadedOilpump.jpg Williston Basin – Stacked Oil Plays Type Log Middle Bakken Three Forks 40 •Dual-zone operator development plan •Additional Three Forks potential Bakken & Three Forks Development Plan Source: Data from public oil and gas operators
Slide 34: Bakken Production Growth Accelerating
RedheadedOilpump.jpgBakken Production Growth Accelerating •Activity continues to increase •>4,100 horizontal wells, up over 65% vs. 2011 •>200 active rigs •Deeper intervals and tighter spacing Bakken Shale Production Growth Illustration 41 Source: Energy Information Administration RedheadedOilpump.j
Slide 35: Bakken Provides Significant Value Creation Potential
McKenzie RedheadedOilpump.jpgBakken Provides Significant Value Creation Potential USGS general Williston slide.tiffFORT BERTHOLD RESERVATION PARSHALL FIELD Bakken / Three Forks Locator Map Leasehold Mineral Interests Locations 43 NORTH DAKOTA Forestar owns leasehold interests in approximately 6,000
Slide 36: Bakken Provides Significant Value Creation Potential
Leasehold Interests Drilling Locations Units Bakken Vertical Wells Historical Production Three Forks Vertical Well Bakken Horizontal Well Three Forks Horizontal Well Bakken Base.tifLeasehold Mineral Interests Locations Drilling Rig.bmpRedheadedOilpump.jpgBakken Provides Significant Value Creation Po
Slide 37: Illustrative Bakken Well Economics
RedheadedOilpump.jpg Illustrative Bakken Well Economics Bakken Single-Well Economics Completed Well Cost $10.0 Well Production > 500 Mboe Total Well Revenues* $39.0 Net Well Cash Flow* $19.9 Well PV-10* $11.1 FOR Share of Bakken Well Economics Avg. Working Interest 8% Well Cost $0.8 Well Revenues* $
Slide 38: Forestar Participation in Bakken Drilling Activity Accelerating
RedheadedOilpump.jpgForestar Participation in Bakken Drilling Activity Accelerating 0 5 10 15 20 25 30 35 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Wells Bakken / Three Forks Drilling Activity Accelerating Production and Re
Slide 39: Forestar's Bakken Resource Potential
RedheadedOilpump.jpg Forestar’s Bakken Resource Potential Note: Data is for illustrative purposes only and is based on management assumptions. EUR refers to management’s internal estimates of reserves potentially recoverable from successful drilling of wells. Actual results may vary from illustratio
Slide 40: Kansas and Nebraska Represent Scalable Exploration Model
RedheadedOilpump.jpgKansas and Nebraska Represent Scalable Exploration Model with Solid Returns Kansas & Nebraska Leasehold Mineral Interests •101,000 net acres of leasehold interest •Nebraska – 55,000 net acres •Kansas – 46,000 net acres •Target formation: Lansing - Kansas City •Lower acreage acqui
Slide 41: Leveraging Seismic and Engineering in Kansas and Nebraska
RedheadedOilpump.jpgLeveraging Seismic and Engineering in Kansas and Nebraska to Create Value 49 Stacking of Shoals Results in Multiple Pay Zones Seaward Landward Pay Zone Seismic Bump Shale Cycles Separate Pay Zones Stacking of Shoals Results in Multiple Pay Zones Source: B. Jackson, 2012 Source: A
Slide 42: Illustrative Kansas / Nebraska Well Economics
RedheadedOilpump.jpgIllustrative Kansas / Nebraska Well Economics Single-Well Economics Risked Completed Well Cost* $0.8 Well Production (BOE) 40,000 - 50,000 Total Well Revenues** $3.1 Net Well Cash Flow $1.6 PV-10 $1.1 Returns > 100% ($ in millions) * Represents 1.5 dry hole costs @ $200,000 + 1.0
Slide 43: Credo Acquisition Well Positioned to Accelerate Value Realization
RedheadedOilpump.jpgCredo Acquisition Well Positioned to Accelerate Value Realization, Optimize Transparency and Grow Net Asset Value # of Wells Per Well FOR Net State Formation Low - High Avg. EUR Avg. WI Mboe ND Bakken – Three Forks 200 - 400 500,000 8% 8.0 – 22.4 NB & KS Lansing – Kansas City 90
Slide 44: Oil & Gas Operating & Investment Strategy
HeaderBackground.jpgOil & Gas Operating & Investment Strategy visionLogoRev.png6_a.jpgFlavious Smith- Chief Oil & Gas Officer Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 52
Slide 45: Oil & Gas Investment Guidelines and Operating Principles
RedheadedOilpump.jpgOil & Gas Investment Guidelines and Operating Principles Generate the greatest value from every acre and resource by economically increasing production and reserves focusing on oil and liquid rich natural gas 53
Slide 46: Operating Principles Focused on Leveraging Experienced Team
RedheadedOilpump.jpgOperating Principles Focused on Leveraging Experienced Team and Low-Basis Mineral Ownership Keys to Success: •Experienced oil and gas team with proven track record •Grow and expand knowledge through collaborative ventures •Leader in smaller, lower profile conventional plays •High
Slide 47: Dynamic and Experienced Oil and Gas Team
RedheadedOilpump.jpgOver 200 years of combined oil and gas experience Dynamic and Experienced Oil and Gas Team Over 200 years of combined oil and gas experience 55 Sarah Deering Director Geophysics & Operations Geology Tony Gossett Operations and Production Mgr Flavious Smith Chief Oil and Gas Offic
Slide 48: Oil & Gas Investment Guidelines
RedheadedOilpump.jpgOil & Gas Investment Guidelines Principally Focused on Lower-Cost, Lower-Risk Opportunities Manage risk through a disciplined and balanced approach to exploration and development investments: •Diversity of prospects across basins and hydrocarbons •Focused on developing low to mod
Slide 49: Oil & Gas Investments - Prospect Generation
Fore_logo.epsRedheadedOilpump.jpgOil & Gas Investments - Prospect Generation Parameter Target Prospect Generation = 80% internally generated Working Interest 50% - 100% Well Costs = $5MM gross / = $2MM net Geographic Focus Kansas, Nebraska, Texas, Louisiana Geological Focus 70% oil / 30% gas Long-li
Slide 50: Credo Acquisition Provides Net Resource Potential of 10 - 26 MMBOE
Credo Acquisition Well Positioned to Accelerate Value Realization, Optimize Transparency and Grow Net Asset Value Credo Acquisition Provides Forestar Net Resource Potential of 10 - 26 MMBOE # of Wells Per Well FOR Net State Formation Low - High Avg. EUR Avg. WI MMboe ND Bakken – Three Forks 200 - 40
Slide 51: Drilling Activity Accelerating Following Acquisition
Fore_logo.epsRedheadedOilpump.jpgDrilling Activity Accelerating Following Acquisition State Formation Operation Wells Q4 2012 Investment North Dakota Bakken / Three Forks Non-Operated 13 $8.1 Kansas Lansing – Kansas City Operated & Non-Operated 8 1.5 Nebraska Lansing – Kansas City Operated 4 0.6 Tex
Slide 52: Bakken / Three Forks Production and Reserve Growth Accelerating
Fore_logo.epsRedheadedOilpump.jpgBakken / Three Forks Production and Reserve Growth Accelerating - 9 30 40 0 25 50 YE 2010 YE 2011 Q3 2012 YE 2012 Est. Wells Bakken / Three Forks PDP Wells in Reserves * Note: 2008 – 2011 pricing based upon SEC reporting guidelines. Est. Q3 2012 based upon internal r
Slide 53: Preliminary 2013 Capital Investment and Drilling Program
Fore_logo.epsRedheadedOilpump.jpgPreliminary 2013 Capital Investment and Drilling Program Type State Formation Operation Wells Capital Exploration & Development North Dakota Bakken / Three Forks Non-Operated 19 $21.0 Kansas Lansing – Kansas City Operated & Non-Operated 31 5.8 Nebraska Lansing – Kans
Slide 54: Drilling Activity Driving Increased Production and Reserves
Fore_logo.eps2.4 3.0 FY 2010 FY 2011 Combined MMBOE Forestar Proven Reserves* (MMBOE) RedheadedOilpump.jpgDrilling Activity Driving Increased Production and Reserves - 9 30 40 YE 2010 YE 2011 Q3 2012 YE 2012 Est. YE 2013 Est. Wells Bakken / Three Forks PDP Wells 62 *Note: Combined includes acquisiti
Slide 55: Accelerating Value Realization and Growing Net Asset Value
Fore_logo.epsRedheadedOilpump.jpgAccelerating Value Realization and Growing Net Asset Value Building Momentum By Accelerating Value Realization and Growing Net Asset Value Increasing oil production and proven reserves Focused on integration and execution of Credo acquisition Capitalizing on investme
Slide 56: Oil & Gas
Fore_logo.epsHeaderBackground.jpgOil & Gas visionLogoRev.png6_a.jpgFlavious Smith - Chief Oil & Gas Officer Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 64
Slide 57: Horizontal Drilling Animation
Fore_logo.epshttp://static1.businessinsider.com/image/4f578607eab8eab65500009d-900/recent-advancements-in-fracking-allow-operators-to-go-deeper-more-precisely-than-ever-before.jpgRedheadedOilpump.jpg Horizontal Drilling Animation 65 INSERT NEW PICTURE Video Forthcoming! Horizontal Drilling Animation
Slide 58: Real Estate
HeaderBackground.jpgCCA_0308.jpgReal Estate visionLogoRev.pngBruce Dickson - Chief Real Estate Officer Building Momentum By Accelerating Lot Sales and Growing Net Asset Value through Strategic and Disciplined Investments 66
Slide 59: Housing Market Conditions
Fore_logo.epsCommunityDevHeader.jpgHousing Market Conditions Despite renewed macro concerns, housing and land development data indicate steady improvement in housing •Declining inventory levels support home price appreciation •Builder appetite for land growing amid impending lot shortage •Housing st
Slide 60: New Home Inventories Declining
Fore_logo.eps0.00.51.01.52.02.53.03.54.0 - 20,000 40,000 60,000 80,000 100,000 120,000 140,0004Q023Q032Q041Q054Q053Q062Q071Q084Q083Q092Q101Q114Q113Q12NATIONAL DETACHED HOUSING MARKETFinished Vacant Inventory & Months of SupplyFinished VacantFV MOSMonths of SupplyInventoryCommunityDevHeader.jpg68 New
Slide 61: Housing Starts Exceeding Lot Deliveries
Fore_logo.epsStarts Exceeding Deliveries 020,00040,00060,00080,000100,000120,000140,000160,000180,000200,0004Q023Q032Q041Q054Q053Q062Q071Q084Q083Q092Q101Q114Q113Q12NATINAL DETACHED HOUSING MARKET Quarterly Lot Delivery & Quarterly Starts HistoryQuarterly Lot DeliveryQuarterly StartsCommunityDevHeade
Slide 62: Decline in Distressed Sales Activity Beginning To Benefit Home Prices
Fore_logo.epsCommunityDevHeader.jpgSource: NAR Decline in Distressed Sales Activity Beginning To Benefit Home Prices 70 Distressed Sales Down Significantly From Peak 49% 24% 20% 30% 40% 50% Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-1
Slide 63: The Distressing Gap
Fore_logo.epsCommunityDevHeader.jpg“The Distressing Gap” 71 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 New Home Share of Total Single Family
Slide 64: Texas Markets and High Quality Lots Dominate U.S. Housing Markets
Fore_logo.epsCommunityDevHeader.jpgTexas Markets and High Quality Lots Dominate U.S. Housing Markets Vacant Developed Lot Classification Sources: MetroStudy Top 40 U.S. Housing Markets; John Burns Real Estate Annual Ranking of Master Planned Communities, 2012 Class Starts /Month A 4+ B 3 – 4 C 2 – 3
Slide 65: Texas Markets Represent Over 70% of our Investment in Real Estate
Fore_logo.epsCommunityDevHeader.jpgNote: MSA performance based on Employment, Gross Metropolitan Product (GMP) and House Price Index Source: Brookings Institute- September 2012 Salt Lake City 1 - $1 Oakland 1 - $9 Strongest Quartile Weakest Quartile Los Angeles 2 - $15 Kansas City 1 - $3 Tampa 3 - $
Slide 66: Entitlement & Development
Fore_logo.epsCommunityDevHeader.jpgEntitlement & Development Entitlement - value creation process required to obtain approvals to develop property according to a plan •Annexation •Zoning •Density / use permits •Access to roads and utilities •Creation of financing districts Our Objectives: •Flexible
Slide 67: Dynamic and Experienced Real Estate Team
Fore_logo.epsCommunityDevHeader.jpgDynamic and Experienced Real Estate Team Over 125 years of combined real estate experience Mary Cowser Senior Vice President – Real Estate Market Research and Investment Tom Burleson Executive Vice President – Real Estate West Region Bruce Dickson Chief Real Estate
Slide 68: Development Example: 288 Acres, 819 Lots
Fore_logo.epsCommunityDevHeader.jpgNote: For illustrative purposes only and not a guarantee of future performance. ($ in millions) Total Per Acre Per Lot Revenues Lot Sales $38.6 $134,000 $47,100 Costs Land Costs $4.4 $15,300 $5,400 Development: Lot development $17.0 Amenities 2.5 Lot selling costs
Slide 69: Accelerating Real Estate Value Realization Through Community Development Initiatives
Fore_logo.epsCommunityDevHeader.jpgGrow Market Share •Increase lot sales •Capitalize on residential tract sales •Increase commercial sales Reposition Non-Core, Non-Performing Assets Invest In Opportunities That: •Focus on well-located, right-scale communities •Generate near-term cash flow and earnin
Slide 70: Forestar Real Estate Sales Activity
Fore_logo.epsCommunityDevHeader.jpgNote: Includes consolidated ventures Forestar Real Estate Sales Activity (Excluding Timberland Sales) $10 $12 $14 $16 $18 $20 $0 $30 $60 $90 $120 $150 2010 2011 Est. 2012 Est. 2013 Average Lot Margin ($ in 000’s) Total Revenues ($ in millions) Residential Lots Inco
Slide 71: Fore_logo.epsCommunityDevHeader.jpghttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local…
Fore_logo.epsCommunityDevHeader.jpghttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blan
Slide 72: Willow Creek Farms II
Fore_logo.epsCommunityDevHeader.jpgWillow Creek Farms II 202 acre tract located in west Katy, near Houston 558 planned single-family lots on a phased basis Projected average revenue of $50,000 per lot Projected margin of $28,000 per lot* Expected return exceeds target Cumulative potential cash flow
Slide 73: 2011 - 2012 Strategic and Disciplined Investments
Fore_logo.epsCommunityDevHeader.jpg2011 - 2012 Strategic and Disciplined Investments ($ in millions) Year 1 Community Ownership Market Original Invest. Cash Flow Earnings Galo Tract 100% San Antonio $7.9 $7.9 $1.4 Discovery Spring Trails 100% Houston 21.1 4.6 3.3 Barrington-Kingwood 100% Houston 9.0
Slide 74: Maximizing Long-Term Shareholder Value
Fore_logo.epsCommunityDevHeader.jpgMaximizing Long-Term Shareholder Value Growing real estate revenues and increasing market share Reposition non-core and non-earning assets Capitalizing on growth opportunities and investments to generate near-term cash flow and earnings Focused on Accelerating Valu
Slide 75: Real Estate
HeaderBackground.jpgCCA_0308.jpgReal Estate visionLogoRev.pngBruce Dickson - Chief Real Estate Officer Building Momentum By Accelerating Lot Sales and Growing Net Asset Value through Strategic and Disciplined Investments 86
Slide 76: Real Estate – Community Development
HeaderBackground.jpgSevenHills912-345.jpgReal Estate – Community Development visionLogoRev.pngMichael Quinley - Executive Vice President, Eastern Region Real Estate Investment and Development Building Momentum By Accelerating Lot Sales and Growing Net Asset Value through Strategic and Disciplined In
Slide 77: Atlanta Housing Distress Continues
Fore_logo.epsCommunityDevHeader.jpgAtlanta Housing Distress Continues Atlanta New Home Market – Vital Signs Housing distress continues in Atlanta, but improving from market trough Atlanta Year-over-Year Percent Change in Job Growth -7% -5% -3% -1% 1% 3% 5% Jan-02 Sep-02 May-03 Jan-04 Sep-04 May-05 J
Slide 78: But Atlanta Building Base for Recovery
Fore_logo.epsCommunityDevHeader.jpgBut Atlanta Building Base for Recovery 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 4Q00 3Q01 2Q02 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 3Q10 2Q11 1Q12 AnnDeliv AnnStarts AnnClosings 0 1 2 3 4 5 6 7 8 9 10 0 5000 10000 15000 20000 25000 4Q00
Slide 79: Generating The Greatest Value From Every Acre
Fore_logo.epsCommunityDevHeader.jpgCREATION REALIZATION Real Estate Greatest Value Development Entitled Entitle Timberland Georgia Pipeline (Acres) 1 Activity – Uses Financials 2 1,000 6 projects 900 residential acres - 680 lots 113 commercial acres $50K per lot $90K per acre (avg sales price) 6,000
Slide 80: Generating The Greatest Value From Every Acre – Atlanta
Fore_logo.epsCommunityDevHeader.jpgGenerating The Greatest Value From Every Acre Atlanta, GA •9th largest metropolitan statistical area in U.S. •Population of 5 million, will double from 2005 to 2025 •A historical leader in new building permit activity •Home to 12 Fortune 500 companies •Top 5 in cen
Slide 81: Pine Hills Entitlement and Towne West
Fore_logo.epsCommunityDevHeader.jpgPine Hills Entitlement (formerly known as Wolf Creek) Focused On Recruiting The Right Economic Anchor •12,230 acres strategically located 23 miles west of Atlanta’s International airport •Engaged with the Governor’s Office and the State’s Economic Development Offic
Slide 82: Key Forestar Developments Surrounding Atlanta
Fore_logo.epsCommunityDevHeader.jpgKey Forestar Developments Surrounding Atlanta 96
Slide 83: Bentwater – A Success Story
Fore_logo.epsCommunityDevHeader.jpgBentwater – A Success Story •Award-winning, master planned community with golf, pool and tennis •Entry, 1st and 2nd move-up and custom homes •1,676 planned lots •Home prices ranged $190,000 - $1 million •Majority of community sold out by 2006 Bentwater – Project Su
Slide 84: Bentwater Virtual Tour
Fore_logo.epsBENTWATER VIRTUAL TOUR 11 98 CommunityDevHeader.jpgBentwater Virtual Tour
Slide 85: Bel-Aire: Opportunistic Acquisition
Fore_logo.epsCommunityDevHeader.jpgBel-Aire: Opportunistic Acquisition •Acquired from lender in Q2 2012 for $545,000 •38 acre active adult community •78 residential lots -10 sold* •68 remaining lots - 26 developed •Average lot prices $39,000 / lot Plus 16% of home price > $243,000 •Expected lot marg
Slide 86: Bel-Aire Virtual Tour
Fore_logo.epsCommunityDevHeader.jpgBel-Aire Virtual Tour Virtual Tour Bel-Aire bell-air siteplan.jpg100
Slide 87: Atlanta Housing Distress Continues
Fore_logo.epsCommunityDevHeader.jpgAtlanta Housing Distress Continues Atlanta New Home Market – Vital Signs Housing distress continues in Atlanta, but improving from market trough Atlanta Year-over-Year Percent Change in Job Growth -7% -5% -3% -1% 1% 3% 5% Jan-02 Sep-02 May-03 Jan-04 Sep-04 May-05 J
Slide 88: But Atlanta Building Base for Recovery
Fore_logo.epsCommunityDevHeader.jpgBut Atlanta Building Base for Recovery 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 4Q00 3Q01 2Q02 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 3Q10 2Q11 1Q12 AnnDeliv AnnStarts AnnClosings 0 1 2 3 4 5 6 7 8 9 10 0 5000 10000 15000 20000 25000 4Q00
Slide 89: Generating The Greatest Value From Every Acre
Fore_logo.epsCommunityDevHeader.jpgCREATION REALIZATION Real Estate Greatest Value Development Entitled Entitle Timberland Georgia Pipeline (Acres) 1 Activity – Uses Financials 2 1,000 6 projects 900 residential acres - 680 lots 113 commercial acres $50K per lot $90K per acre (avg sales price) 6,000
Slide 90: Generating The Greatest Value From Every Acre – Atlanta
Fore_logo.epsCommunityDevHeader.jpgGenerating The Greatest Value From Every Acre Atlanta, GA •9th largest metropolitan statistical area in U.S. •Population of 5 million, will double from 2005 to 2025 •A historical leader in new building permit activity •Home to 12 Fortune 500 companies •Top 5 in cen
Slide 91: Pine Hills Entitlement and Towne West
Fore_logo.epsCommunityDevHeader.jpgPine Hills Entitlement (formerly known as Wolf Creek) Focused On Recruiting The Right Economic Anchor •12,230 acres strategically located 23 miles west of Atlanta’s International airport •Engaged with the Governor’s Office and the State’s Economic Development Offic
Slide 92: Key Forestar Developments Surrounding Atlanta
Fore_logo.epsCommunityDevHeader.jpgKey Forestar Developments Surrounding Atlanta 96
Slide 93: Bentwater – A Success Story
Fore_logo.epsCommunityDevHeader.jpgBentwater – A Success Story •Award-winning, master planned community with golf, pool and tennis •Entry, 1st and 2nd move-up and custom homes •1,676 planned lots •Home prices ranged $190,000 - $1 million •Majority of community sold out by 2006 Bentwater – Project Su
Slide 94: Bentwater Virtual Tour
Fore_logo.epsBENTWATER VIRTUAL TOUR 11 98 CommunityDevHeader.jpgBentwater Virtual Tour
Slide 95: Bel-Aire: Opportunistic Acquisition
Fore_logo.epsCommunityDevHeader.jpgBel-Aire: Opportunistic Acquisition •Acquired from lender in Q2 2012 for $545,000 •38 acre active adult community •78 residential lots -10 sold* •68 remaining lots - 26 developed •Average lot prices $39,000 / lot Plus 16% of home price > $243,000 •Expected lot marg
Slide 96: Bel-Aire Virtual Tour
Fore_logo.epsCommunityDevHeader.jpgBel-Aire Virtual Tour Virtual Tour Bel-Aire bell-air siteplan.jpg100
Slide 97: Bentwater Virtual Tour
Fore_logo.epsBENTWATER VIRTUAL TOUR 11 98 CommunityDevHeader.jpgBentwater Virtual Tour
Slide 98: Bel-Aire: Opportunistic Acquisition
Fore_logo.epsCommunityDevHeader.jpgBel-Aire: Opportunistic Acquisition •Acquired from lender in Q2 2012 for $545,000 •38 acre active adult community •78 residential lots -10 sold* •68 remaining lots - 26 developed •Average lot prices $39,000 / lot Plus 16% of home price > $243,000 •Expected lot marg
Slide 99: Bel-Aire Virtual Tour
Fore_logo.epsCommunityDevHeader.jpgBel-Aire Virtual Tour Virtual Tour Bel-Aire bell-air siteplan.jpg100
Slide 100: Seven Hills - A Destination of a Lifetime
Fore_logo.epsCommunityDevHeader.jpgSeven Hills - A Destination of a Lifetime •1,950 acre master planned community –1,087 residential lots - 646 sold –139 commercial acres - 26 sold –441 remaining lots - 258 developed –113 remaining commercial acres •Entry, 1st & 2nd move-up, custom & active adult ho
Slide 101: Seven Hills Virtual Tour
Fore_logo.epsCommunityDevHeader.jpgSeven Hills Virtual Tour Virtual Tour Seven Hills 102
Slide 102: Forestar Well Positioned For Atlanta Recovery
Fore_logo.epsCommunityDevHeader.jpgForestar Well Positioned For Atlanta Recovery •Low basis land •Recurring cash flow from fiber •Retail sales of higher better use tracts •Desirable master planned communities •Opportunistic acquisitions generating near-term cash flow and earnings image001Retail Land
Slide 103: Real Estate – Community Development
Fore_logo.epsHeaderBackground.jpgSevenHills912-345.jpgReal Estate – Community Development visionLogoRev.pngMichael Quinley - Executive Vice President, Eastern Region Real Estate Investment and Development Building Momentum By Accelerating Lot Sales and Growing Net Asset Value through Strategic and D
Slide 104: Real Estate – Community Development, Western Region
HeaderBackground.jpgValero2012_149.jpgReal Estate – Community Development visionLogoRev.pngTom Burleson - Executive Vice President, Western Region Real Estate Investment and Development Building Momentum By Accelerating Lot Sales and Growing Net Asset Value through Strategic and Disciplined Investme
Slide 105: Forestar Houston Projects / Houston Employment Well Above U.S. Average
Fore_logo.epsCommunityDevHeader.jpgForestar Houston Projects Note: Includes ventures and excludes commercial projects 108 Fore_logo.epsCommunityDevHeader.jpgHouston Employment Well Above U.S. Average Houston vs. U.S. Year-over-Year Percent Change in Job Growth Source: Bureau of Labor Statistics Hous
Slide 106: Houston Housing Markets Recovering
Fore_logo.epsCommunityDevHeader.jpgHouston Housing Markets Recovering Houston Starts and Lot Deliveries Houston Finished Vacant Housing Inventory and MoS Months of supply declining below equilibrium levels 0 10000 20000 30000 40000 50000 60000 4Q00 3Q01 2Q02 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1
Slide 107: Harper's Preserve - Well Located Near The Woodlands
Fore_logo.epsCommunityDevHeader.jpgHarper’s Preserve - Well Located Near The Woodlands •Opportunistic acquisition from lender, project facing significant environmental permitting hurdles •842 acre master planned community –1,725 planned residential lots – 176 sold –1,549 remaining lots - 29 develope
Slide 108: Harper's Preserve Virtual Tour
Fore_logo.epsCommunityDevHeader.jpgHarper’s Preserve Virtual Tour Virtual Tour Harper’s Preserve 112
Slide 109: Forestar Dallas / Fort Worth Development Projects
Fore_logo.epsCommunityDevHeader.jpgForestar Dallas / Fort Worth Development Projects Note: Includes ventures, excludes commercial projects 113
Slide 110: DFW Employment Well Above U.S. Average
Fore_logo.epsCommunityDevHeader.jpgDFW Employment Well Above U.S. Average DFW vs. U.S. Year-over-Year Percent Change in Job Growth Source: Bureau of Labor Statistics DFW #4 market in U.S. for new job growth +66,300 jobs created in last 12 months Housing starts rank #2 in U.S. Vacant developed lot in
Slide 111: DFW Housing Markets Early In Recovery
Fore_logo.epsCommunityDevHeader.jpgDFW Housing Markets Early In Recovery DFW Starts and Lot Deliveries DFW Finished Vacant Housing Inventory and MoS Months of supply below equilibrium levels Finished home inventory at lowest level since Q4 2000 Housing starts exceeding lot deliveries further reducin
Slide 112: Lantana - Award Winning Top Selling DFW Community
Fore_logo.epsCommunityDevHeader.jpgLantana - Award Winning Top Selling DFW Community •~1,700 acre master planned community –4,226 planned residential lots – 2,817 lots sold –1,409 residential lots remaining – 227 developed –72 planned commercial acres – 30 acres sold –42 commercial acres remaining •
Slide 113: Lantana Virtual Tour / San Antonio Job Growth Accelerating
Fore_logo.epsCommunityDevHeader.jpgLantana Virtual Tour Virtual Tour Lantana 117 Fore_logo.epsCommunityDevHeader.jpgSan Antonio Job Growth Accelerating San Antonio vs. U.S. Year-over-Year Percent Change in Job Growth Source: Bureau of Labor Statistics Housing starts improving Lot supply near equilib
Slide 114: San Antonio Markets Improving
Fore_logo.epsCommunityDevHeader.jpgSan Antonio Markets Improving San Antonio Starts and Lot Deliveries San Antonio Finished Vacant Housing Inventory and MoS Months of supply below equilibrium levels 0 5000 10000 15000 20000 25000 30000 4Q00 3Q01 2Q02 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09
Slide 115: Cibolo Canyons – Generating the Greatest Value From Every Acre
Fore_logo.epsCommunityDevHeader.jpgCibolo Canyons – Generating the Greatest Value From Every Acre Cibolo Canyons - Lot Sales Velocity 0 50 100 150 200 2005 2006 2007 2008 2009 2010 2011 2012E 2013E •2,800 acre master planned community •762 residential lots remaining – 153 developed •82 remaining com
Slide 116: Cash Flows Stabilizing From Resort To Cibolo Canyons Special Improvement District
Fore_logo.epsCommunityDevHeader.jpgCash Flows Stabilizing From Resort To Cibolo Canyons Special Improvement District Cibolo Canyons Special Improvement District Payments to Forestar 2009 – Q3 2012 Total Receipts ($ in millions) Ad Valorem Tax $23.1 HOT & Sales / Use Tax 9.8 $32.9 Note: Forestar Inve
Slide 117: Fore_logo.epsCommunityDevHeader.jpghttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local…
Fore_logo.epsCommunityDevHeader.jpghttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blank.gifhttp://forestarsp.real.local/_layouts/images/blan
Slide 118: Forestar Well Positioned For Texas Recovery
Fore_logo.epsCommunityDevHeader.jpgForestar Well Positioned For Texas Recovery Developments well located in areas of favorable job growth and housing demand Lot supplies continue to decline, creating favorable inventory imbalance for well capitalized developers Actively developing existing projects
Slide 119: Real Estate - Multifamily
HeaderBackground.jpgValero2012_149.jpgReal Estate – Community Development visionLogoRev.pngTom Burleson - Executive Vice President, Western Region Real Estate Investment and Development Building Momentum By Accelerating Lot Sales and Growing Net Asset Value through Strategic and Disciplined Investme
Slide 120: Multifamily Markets Leading Recovery
multifamilyHeader.jpgMultifamily Markets Leading Recovery Key Drivers of Multifamily Markets -Demographics -Propensity to rent -Limited supply -Employment and income growth 126
Slide 121: Several Drivers Supporting Multifamily Growth
Fore_logo.epsmultifamilyHeader.jpgSeveral Drivers Supporting Multifamily Growth 127 Multifamily Starts: Historical and Projected (Units in Thousands) -Multifamily supply below long-term average due to capital constraints -Single family inventory and vacant and foreclosed homes located in more remote
Slide 122: Demographics Support Multifamily Demand
Fore_logo.epsmultifamilyHeader.jpgDemographics Support Multifamily Demand 128 54 56 58 60 62 64 66 68 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Population 20-34 (millions) Echo Boomers Population Growth -Strong demand from echo-boomers with high propensity to rent -Pent-up dem
Slide 123: Favorable Job Growth in Target Markets
Fore_logo.epsmultifamilyHeader.jpgFavorable Job Growth in Target Markets 129 Source: Bureau of Labor Statistics Metro Year Over Year Job Growth % – October 2012 Focused on Urban Infill Markets with Favorable Job Growth 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% St. Louis Philly Charlotte Chicago T
Slide 124: Occupancy Rates Remain High / Developing A Low Capital, High-Return Multifamily Business
Fore_logo.epsmultifamilyHeader.jpgOccupancy Rates Remain High Source: Witten and Associates, Q3 2012 US Occupancy and Rent Growth -5% 0% 5% 10% 85% 90% 95% 100% 1Q 1995 4Q 1995 3Q 1996 2Q 1997 1Q 1998 4Q 1998 3Q 1999 2Q 2000 1Q 2001 4Q 2001 3Q 2002 2Q 2003 1Q 2004 4Q2004 3Q2005 2Q2006 1Q 2007 4Q 200
Slide 125: Executing Multifamily Plan
Fore_logo.epsSelling 2 stabilized assets: .Broadstone – Houston, TX .Las Brisas – Round Rock, TX Developing 4 new communities: .Promesa – Austin, TX .Eleven – Austin, TX .360° – Denver, CO •Cedar Hill – Dallas, TX Acquiring 3 development sites: .Nashville, TN .Charlotte, NC •Three sites in due dilig
Slide 126: Accelerating Value Realization of Stabilized Multifamily Communities
Fore_logo.epsmultifamilyHeader.jpgAccelerating Value Realization of Stabilized Multifamily Communities 2012 Multifamily Sales Key Metrics ($ in millions) Development Cost $87 FOR Equity $31 Project Debt $55 Net Operating Income (NOI)* $5.7 Sales Price @ 5.9% cap rate $97 Forestar Cash From Sales $40
Slide 127: Promesa - Leasing Activity Building Momentum
Fore_logo.epsmultifamilyHeader.jpgC:\Users\cnines\Desktop\Promesa Pics\PRO_1143.jpgPromesa - Leasing Activity Building Momentum 289-unit Class A multifamily property located in Northwest Austin Development completed; received certificate of occupancy Nov 2012 70% leased; 60% occupied Total investmen
Slide 128: Promesa Video
Fore_logo.epsmultifamilyHeader.jpgPromesa Video 136 136
Slide 129: Eleven - Multifamily Venture with Canyon-Johnson
Fore_logo.epsmultifamilyHeader.jpgEleven - Multifamily Venture with Canyon-Johnson 137 137 257-unit Class A multifamily property Designed for certification under Austin Energy Green Building program Construction commenced in June FOR investment = $4.1 million 25% ownership Developer fees Promoted in
Slide 130: Eleven - Premier Location in Strong Market
Fore_logo.epsmultifamilyHeader.jpgEleven - Premier Location in Strong Market Located adjacent to downtown Austin Austin multifamily market remains strong: Occupancy rates: 95.6% Annual Rent Growth: 6.1% Job Growth: 3.3% Preferred Location: Close proximity to 30,000 jobs in downtown Austin, 24,000 jo
Slide 131: 360° - Multifamily Venture with Guggenheim Real Estate
Fore_logo.epsmultifamilyHeader.jpgG:\Forestar\Asset Management\360 - Denver\Photos\Peakview_final_site_opt.c.jpg304-unit Class A multifamily property Designed to obtain Energy Star certification Construction commenced in July FOR investment = $2.1 million 20% ownership Developer fees Promoted intere
Slide 132: 360° - Excellent Location in Strong Multifamily Market
Fore_logo.epsmultifamilyHeader.jpgDenver Tech Center submarket Multifamily market remains strong: Occupancy rates: 95.4% Rent Growth: 5.7% Job Growth: 2.0% Preferred Location Close proximity to 30 million sq.ft. of office space and 150,000 employees Convenient access to I-25 and Arapahoe Light Rail
Slide 133: Multifamily Initiatives
Fore_logo.epsmultifamilyHeader.jpgMultifamily Initiatives Developing Long-Term, Sustainable Business Model to Take Advantage of Multifamily Markets •Stabilize and monetize Promesa •Developing Eleven and 360° •Establish ventures and begin construction in Nashville and Charlotte •Continue to acquire w
Slide 134: Real Estate - Multifamily
Fore_logo.epsHeaderBackground.jpgPRO_1714.jpgReal Estate - Multifamily visionLogoRev.pngPhil Weber - Executive Vice President, Real Estate Building Momentum By Delivering Multifamily Communities that Allow Residents to “Live with Purpose” 143
Slide 135: Water – Texas Faces a Significant Water Challenge
HeaderBackground.jpgextended waterdrop.jpgWater visionLogoRev.pngPhil Weber- EVP Real Estate Building Momentum By Delivering Economic and Sustainable Water Solutions 144 Fore_logo.epsWaterDroplet.jpgTexas Faces a Significant Water Challenge Source: Texas Water Development Board chart.jpg Drought of
Slide 136: Texas Surface Water Facts
Fore_logo.epsWaterDroplet.jpgTexas Surface Water Facts Texas Surface Water Key Facts •188 Reservoirs •15 major river basins •Provides 40% annual water in TX http://www.hydrosphere.com/projects/planning_mgmt/images/water_mansfield.jpgLake Travis – June 2006 Mansfield Dam Lake Travis – October 2011 Mi
Slide 137: Delivering Value with Water Resources Requires Withdrawal Permits
Fore_logo.epsWaterDroplet.jpgRecharge How A Recharging Aquifer Works 149 Fore_logo.epsWaterDroplet.jpgDelivering Value with Water Resources Requires Withdrawal Permits, Transportation and Demand Buyer Permits Transportation Water Districts/Authorities Entitlements Infrastructure Municipalities Susta
Slide 138: Targeted Withdrawal Permits
Fore_logo.epsWaterDroplet.jpgTargeted Withdrawal Permits Forestar Water Districts Central Texas Lost Pines (50) East Texas Anderson County UWCD (1) Pineywoods GCD (68) Neches/Trinity Valley GCD (60) Southeast Texas GCD (85) Lower Trinity GCD (51) Permit Requirements: •Reputation •Credibility •Sustai
Slide 139: Significant Water Initiatives & Resources
Fore_logo.epsWaterDroplet.jpgSignificant Water Initiatives & Resources Estimated FOR Water Resources (Acres & Acre Feet in 000’s) Forestar Water Initiatives (Acres & Acre Feet in 000’s) Market Surface Acres Production Acre Feet / Yr Target Buyer Acre Feet Amount Potential Terms Central Texas 18 45 W
Slide 140: Central Texas Water Opportunity
Fore_logo.epsWaterDroplet.jpgCentral Texas Water Opportunity Initiative Sell 45,000 acre feet annual production Target •Water Districts •Municipalities Projected Economics •45,000 acre feet •Reservation fee •Annual price escalator Central Texas Water Authority Service Area 153
Slide 141: East Texas Water Initiatives
Fore_logo.epsWaterDroplet.jpgEast Texas Water Initiatives Initiative Sell 50,000 – 150,000 acre feet annual production from 75,000 – 275,000 acres of land Targets Municipalities – 50,000 acre feet Industrial Users – 150,000 acre feet Potential Economics 50,000 - 150,000 acre feet Reservation fee Ann
Slide 142: Forestar Committed to Providing Economic Solutions
Fore_logo.epsWaterDroplet.jpgForestar Committed to Providing Economic Solutions Cost Per Acre-Foot per Year $0 $500 $1,000 $1,500 $2,000 $2,500 Houston (Allens Creek Reservoir) Navajo-Gallup Water Supply Project (NM) Forestar (Phase 1) Orange County, CA Dallas (Toledo Bend) Metropolitan Water Distri
Slide 143: Water Resources Lease Transactions
Fore_logo.epsWaterDroplet.jpgWater Resources Lease Transactions $0 $100 $200 $300 $400 $500 $600 $700 NM OR CA UT WA AZ TX ID CO WY NV MT ($ / acre foot) TX Reservation Fees = $25 – 75 / ac ft •Sabine River Authority •Brazos River Authority •Lower Colorado River Authority •Canadian Resources Lease R
Slide 144: Experienced Water Team
Fore_logo.epsWaterDroplet.jpgExperienced Water Team Forestar Fully Engaged in Water Resource Initiatives Bill Goodrum Vice President – Water Resources Tavia McCuean Vice President – Stewardship and Conservation Brent Covert Senior Vice President – Water Resources Phil Weber Executive Vice President
Slide 145: Forestar Water Resources - Timely and Well Positioned
Fore_logo.epsWaterDroplet.jpgDemand and potential value of water expected to grow Significant Forestar Water Resources - Gaining Recognition Capitalizing on water will require leadership, creativity, patience and ultimately capital Forestar Water Resources - Timely and Well Positioned http://foresta
Slide 146: Water
Fore_logo.epsHeaderBackground.jpgextended waterdrop.jpgWater visionLogoRev.pngPhil Weber - EVP Real Estate Building Momentum By Delivering Economic and Sustainable Water Solutions 159
Slide 147: Financial Review
HeaderBackground.jpgPRO_1714.jpgFinancial Review visionLogoRev.pngChris Nines - Chief Financial Officer Building Momentum By Maintaining Financial Flexibility and Ample Liquidity While Managing Growth 160
Slide 148: Generating Significant Free Cash Flow and Debt Reduction
CommunityDevHeader.jpgGenerating Significant Free Cash Flow and Debt Reduction By Accelerating Real Estate Value Realization Generating Significant Free Cash Flow and Debt Reduction By Accelerating Real Estate Value Realization YTD 2012 Significant Transactions: ($ in millions) Timing Cash Debt Pali
Slide 149: Maintain Financial Strength and Ample Liquidity While Managing Growth
RedheadedOilpump.jpgMaintain Financial Strength and Ample Liquidity While Managing Growth •Maintain balance sheet strength with target leverage of 30-35%* •Increase senior credit facility borrowing base through acquisitions and reserve additions to maximize liquidity •Reposition non-core real estate
Slide 150: Capital Allocation Driven By Rates of Return
RedheadedOilpump.jpgCapital Allocation Driven By Rates of Return Across Investment Opportunities Opportunity Investment Focus Target Returns Oil & Gas Exploration and development of existing mineral acreage > 20% Return on Capital Investments focused on high-return, oil / liquid rich basins Communit
Slide 151: Optimizing Transparency & Disclosure
RedheadedOilpump.jpgOptimizing Transparency & Disclosure Initiative Accomplishments Optimize Transparency & Disclosure .Quarterly conference calls and webcasts .New corporate web site Q2 2012 •Excel based quarterly financials and key performance metrics available for download on website at YE 2012 •
Slide 152: Optimizing Transparency – Timberland and Land In Entitlement
RedheadedOilpump.jpgOptimizing Transparency – Timberland and Land In Entitlement Historical Sales Activity 2008 - 2012 Q3 2012 Sales Activity (2008 – Q3 2012) State County Market Ownership Acres Investment ($ in millions) Low High ($ per acre) Timberland Georgia & Alabama Various Various 100% 64,300
Slide 153: Optimizing Transparency – Residential Real Estate
RedheadedOilpump.jpgOptimizing Transparency – Residential Real Estate Historical Sales Activity 2008 - 2012 (2008 – 2012) YE 2012 Lot Sales Activity State Market Ownership Total Acres Investment Basis VDL’s* Lots To Be Developed Low High Wholly-Owned Colorado Denver 100% 802 $21.5 Texas Austin 100%
Slide 154: Optimizing Transparency – Commercial and Income Producing Properties
RedheadedOilpump.jpgOptimizing Transparency – Commercial and Income Producing Properties Multifamily Projects & Ventures YE 2012 Market Ownership Status Units Q3 2012 FOR Investment Basis Leased Trailing 12 Month NOI Remaining FOR Capital Commit. Total Project Budget Total Project Debt at Completion
Slide 155: Optimizing Transparency – Oil & Gas Properties
RedheadedOilpump.jpgYE 2011 Reserves* Oil (MBO) Gas (Bcf) MBOE ($ in millions) PV-10** Proven Reserves Proved Developed Producing 1,650 18.2 4,680 $114.7 Proved Developed Non-Producing 120 1.1 299 7.2 Proved Undeveloped 1,258 5.0 2,094 22.3 Total Proven Reserves 3,028 24.3 7,073 $144.2 *Note: Based
Slide 156: Financial Summary
RedheadedOilpump.jpgFinancial Summary Balance sheet well positioned with ample liquidity for strategic growth opportunities and investment Triple in FOR initiatives will improve earnings, cash flow, and grow net asset value Transparency and disclosure initiatives focused on providing additional segm
Slide 157: Forestar Investor Conference December 11, 2012
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 170
Slide 158: Forestar Well Positioned To Maximize Long-Term Value For Shareholders
TimberlandHeader.jpgForestar Well Positioned To Maximize Long-Term Value For Shareholders Executing Triple in FOR Strategic Initiatives To Accelerate Value Realization, Improve Transparency and Disclosure and Grow Net Asset Value Dynamic and experienced leadership team committed to maximizing long-t
Slide 159: Forestar Investor Conference December 11, 2012
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 172
Slide 160: Forestar Investor Conference Appendix
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference Appendix December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 173
Slide 161: Non-GAAP Financial Measures Notice
TimberlandHeader.jpg174 In our full year and fourth quarter 2011 earnings release and conference call presentation materials furnished to the Securities and Exchange Commission on Form 8-K on February 22, 2012, we used certain non-GAAP financial measures. The non-GAAP financial measures should not b
Slide 162: Reconciliation of Non-GAAP Financial Measures – Credo PV-10
TimberlandHeader.jpg175 Reconciliation of Non-GAAP Financial Measures As Presented In Credo’s Historical Form 10-K’s (Unaudited) The following table shows a reconciliation of PV-10 (discounted future net cash flows before income taxes) to the standardized measure of discounted future net cash flows
Slide 163: Reconciliation of Non-GAAP Financial Measures – Total Segment EBITDA
TimberlandHeader.jpgReconciliation of Non-GAAP Financial Measures Forestar Group Total Segment EBITDA (Unaudited) 176 Forestar’s Total Segment EBITDA for the years 2008 through estimated 2012 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission
Slide 164: Forestar Investor Conference December 11, 2012
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 177
Slide 165: Optimizing Transparency – Commercial and Income Producing Properties
RedheadedOilpump.jpgOptimizing Transparency – Commercial and Income Producing Properties Multifamily Projects & Ventures YE 2012 Market Ownership Status Units Q3 2012 FOR Investment Basis Leased Trailing 12 Month NOI Remaining FOR Capital Commit. Total Project Budget Total Project Debt at Completion
Slide 166: Optimizing Transparency – Oil & Gas Properties
RedheadedOilpump.jpgYE 2011 Reserves* Oil (MBO) Gas (Bcf) MBOE ($ in millions) PV-10** Proven Reserves Proved Developed Producing 1,650 18.2 4,680 $114.7 Proved Developed Non-Producing 120 1.1 299 7.2 Proved Undeveloped 1,258 5.0 2,094 22.3 Total Proven Reserves 3,028 24.3 7,073 $144.2 *Note: Based
Slide 167: Forestar Investor Conference December 11, 2012
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 170
Slide 168: Forestar Well Positioned To Maximize Long-Term Value For Shareholders
TimberlandHeader.jpgForestar Well Positioned To Maximize Long-Term Value For Shareholders Executing Triple in FOR Strategic Initiatives To Accelerate Value Realization, Improve Transparency and Disclosure and Grow Net Asset Value Dynamic and experienced leadership team committed to maximizing long-t
Slide 169: Forestar Investor Conference December 11, 2012
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 172
Slide 170: Forestar Investor Conference Appendix
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference Appendix December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 173
Slide 171: Non-GAAP Financial Measures Notice
TimberlandHeader.jpg174 In our full year and fourth quarter 2011 earnings release and conference call presentation materials furnished to the Securities and Exchange Commission on Form 8-K on February 22, 2012, we used certain non-GAAP financial measures. The non-GAAP financial measures should not b
Slide 172: Reconciliation of Non-GAAP Financial Measures – Credo PV-10
TimberlandHeader.jpg175 Reconciliation of Non-GAAP Financial Measures As Presented In Credo’s Historical Form 10-K’s (Unaudited) The following table shows a reconciliation of PV-10 (discounted future net cash flows before income taxes) to the standardized measure of discounted future net cash flows
Slide 173: Reconciliation of Non-GAAP Financial Measures – Total Segment EBITDA
TimberlandHeader.jpgReconciliation of Non-GAAP Financial Measures Forestar Group Total Segment EBITDA (Unaudited) 176 Forestar’s Total Segment EBITDA for the years 2008 through estimated 2012 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission
Slide 174: Forestar Investor Conference December 11, 2012
HeaderBackground.jpgvisionLogoRev.pngSevenHills912-334.jpgPRO_1714.jpgextended waterdrop.jpgiStock_000013707527_Large.jpgForestar Investor Conference December 11, 2012 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 177