Slide 1: Investor Presentation June 2015
Investor Presentation June 2015
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: Focused On Growing Core Real Estate Business Following Strategic Review
• Acquiring, Entitling and Developing Residential and Mixed-Use Communities • Investing in Multifamily Opportunities, Including Projects That Provide Additional Recurring Cash Flow • Harvesting Cash Flow From Oil and Gas By Significantly Lowering Capital Investments and Operating Costs • Transitioni
Slide 4: Strategy Focused On Growing Net Asset Value
Strategy Focused On Growing Net Asset Value 4 FOCUSED ON GROWING NET ASSET VALUE
Slide 5: Q1 2015 Portfolio of Assets and Resources
Q1 2015 Portfolio of Assets and Resources 5 Real Estate • Land - 36,000 acres - Real Estate Development • Residential & Mixed-Use Communities – 85 (11 states and 14 markets) • Commercial Properties • Radisson Hotel – Austin, TX • 6 multifamily projects stabilized or under construction (> 1,900 units
Slide 6: Focused On Maintaining Financial Flexibility and Adequate Liquidity
$47 $32 $1 $125 $250 2015 2016 2017 2018 2019 2020 2021 2022 Focused On Maintaining Financial Flexibility and Adequate Liquidity Providing Solid Platform For Real Estate Growth and Investment 6 ($ in Millions) Q1 2015 Actual YE 2014 Actual 8.5% Senior Secured Notes $250 $250 Convertible Debt 1 104 1
Slide 7: Real Estate
Real Estate Morgan Farms - Tennessee
Slide 8: Real Estate Assets Located in Stronger Housing Markets
Real Estate Assets Located in Stronger Housing Markets With >70% of Investment in Residential and Mixed-Use Communities in Texas 8 Salt Lake City 1 - $- Oakland 1 - $9 Los Angeles 2 - $22 Denver 6 - $36 Kansas City 1 - $3 Nashville 5 - $24 Atlanta 27- $35 Austin 14 - $162 Dallas/Ft. Worth 15 - $109
Slide 9: Texas Real Estate Markets – Low Residential Lot and New Home Inventories
Texas Real Estate Markets – Low Residential Lot and New Home Inventories 9 Texas Housing Inventory* 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 0 5,000 10,000 15,000 20,000 25,000 30,000 Housing Inventory Months of Supply Equilibrium M on th s of S up pl y N ew H om e In ve nt or ie s Vacant New Home In
Slide 10: First Quarter 2015 Real Estate Pipeline
First Quarter 2015 Real Estate Pipeline 10 Real Estate Undeveloped In Entitlement Entitled Developed & Under Development Total Acres Undeveloped Land Owned 71,910 76,449 Ventures 4,539 Residential Owned 21,762 7,670 512 30,990 Ventures 847 199 Commercial Owned 2,668 1,088 536 4,646 Ventures 237 117
Slide 11: Community Development Growth Initiatives
11 Community Development Growth Initiatives Initiatives Objectives Financial Targets Entitlement & Development Entitlement and development of residential and mixed- use communities Maximize lot profits and tract sales from core assets Reposition non-core assets Secure entitlements 35% Retu
Slide 12: Annual Lot Sales and Average Lot Margin
1,707 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Est.Bulk Lot Sales Lot Sales Average Lot Margin Average Lot Margin Excl. Bulk Sales Delivering The Greatest Value From Every Acre By Driving Higher Lot
Slide 13: Favorable Demographic Trends Expected To Drive Demand For Multifamily Units
Favorable Demographic Trends Expected To Drive Demand For Multifamily Units In Our Target Markets 13 Focused On Increasing Net Asset Value By Growing and Investing In Multifamily Properties 54,000 56,000 58,000 60,000 62,000 64,000 66,000 68,000 1990 1995 2000 2005 2010 2015E 2020E P o p u la ti o n
Slide 14: Investing In Multifamily Opportunities
14 Investing In Multifamily Opportunities, Including Projects That Provide Additional Recurring Cash Flow Strategy Initiatives Recurring Cash Flow Eleven – Austin, TX (257 units) – Q1 2015 Annualized NOI = $3.0 Million In Development Midtown – Dallas, TX (354 units) 360 – Denver, CO (304 units
Slide 15: Multifamily Development Projects and Pipeline
Delivering Well Located Multifamily Projects and Building Pipeline of Future Development Opportunities Multifamily Development Projects Project Market % Complete** Units FOR Ownership Projected Total Development Cost Projected Total FOR Contribution Eleven Austin 100% 257 100% $40 $25 Midtown Dallas
Slide 16: Developing Portfolio of Class A Multifamily Projects
Developing Portfolio of Class A Multifamily Projects 16 Eleven – Austin, Texas 360 – Denver, Colorado HiLine – Denver, ColoradoAcklen – Nashville, Tennessee • 257 Units – Located by downtown Austin near new medical school • 100% completed; 95% leased; 93% occupied • 304 Units – Located near Denver T
Slide 17: Realizing Multifamily Value in 2015
17 Realizing Multifamily Value in 2015 Midtown Project – Dallas • 354-unit project in Cedar Hill, near Dallas • 100% owned by Forestar • ~99% complete (73% leased / 66% occupied)* • First units delivered in Q4 2015 • Leasing activity and rental rates well above underwriting Midtown Illustrative Metr
Slide 18: Growing Net Asset Value Through Community Development and Multifamily
Growing Net Asset Value Through Community Development and Multifamily 18 Stabilized Multifamily Property Illustrative Example ~250 units ($ in millions) Estimated 2015 NOI $3 Assumed Cap Rate 5% Estimated Value $60 Less: Debt (25) Net Asset Value $35 FOR Equity Investment $17 NAV / Book Value at 5%
Slide 19: Real Estate Focused On Growing Net Asset Value
Real Estate Focused On Growing Net Asset Value Real Estate Strategic Initiatives: • Experienced team capitalizing on strong portfolio and housing recovery by maximizing margins from lot and residential tract sales • Growing residential and multifamily development portfolio through strategic and disc
Slide 20: The Bakken
The Bakken - N
Slide 21: Harvesting Cash Flow From Non-Core Oil and Gas Operating Assets
Harvesting Cash Flow From Non-Core Oil and Gas Operating Assets By Significantly Lowering Investments and Reducing Costs 21 Oil and Gas Strategic Initiatives: Planned 50% reduction in operating expenses vs 2014* Closed Fort Worth office and reduced headcount by ~50% 2015 capital investments planne
Slide 22: Oil and Gas Assets Located In Attractive Basins
Location Owned / Leased Net Mineral Acres** Net Acres Held By Production** Production BOE / Day** YE 2014 Proved Reserves MMBOE Bakken / Three Forks Leased 9,000 5,000 2,109 5.3 Lansing – Kansas City Leased 284,000 19,000 672 1.6 Other* Leased 77,000 24,000 569 1.6 Texas, Louisiana, Georgia & Alabam
Slide 23: Forestar Bakken / Three Forks Position
Forestar Bakken / Three Forks Position Located Principally In Core of Fort Berthold Reservation 23Note: EUR’s represents estimated ultimate recoveries Source: ITG and Drilling Info, Inc. Forestar Bakken / Three Forks Position Located In Core of Basin 592 649 714 0 100 200 300 400 500 600 700 800 Fo
Slide 24: Harvesting Cash Flow From Non-Core Oil and Gas Assets
Harvesting Cash Flow From Non-Core Oil and Gas Assets By Significantly Lowering Investments and Operating Costs Oil and Gas Strategic Initiatives: • 2015 capital investments expected to be down significantly vs. $110 million in 2014 • Significant future opportunity remains in non-core Bakken/Three F
Slide 25: Resources
|’Resources Georgia
Slide 26: Transitioning Timberland Into Real Estate Properties
26 Transitioning Timberland Into Real Estate Properties ($ in millions) Multifamily Metrics Timberland Development or Acquisition Assets 70,000 acres 6-7 properties 4-5 properties Debt -- $225 $175 Equity $50 125 125 Investment $50 $350 $300 Annual Cash Flow $4 $25 $15 Annual Earnings $2 $6 - 7 $4 -
Slide 27: Strategic Review Update
FORESTAR Strategic Review Update We FoRestar
Slide 28: Operation Initiatives
Operation Initiatives Community Development Strategic and Disciplined Investment in residential and mixed-use communities Secure entitlements and reposition non-core assets Multifamily Development Investing in multifamily properties that generate recurring cash flow Disciplined acquisition of new de
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Slide 30: Financial Tools and Additional Disclosures Available on our Website
Financial Tools and Additional Disclosures Available on our Website 30 www.ForestarGroup.com • Historical Financials • Segment Disclosures • At-A-Glance • Corporate • Real Estate • Multifamily • Water • Videos • 101 Learning Tools 2008-Q 4 2014 2008-Q 4 2014 Assets State Market Ownership Total Remai
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (Unaudited) Forestar’s Segment EBITDA is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Acco
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (Unaudited) Forestar’s Oil and Gas Segment EBITDAX is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally
Slide 33: Delivering Reserve Growth
Delivering Reserve Growth 2.4 3.0 5.6 8.5 10.1 2010 2011 2012 2013 2014 Year-End Proved Reserves (MMBOE) Note: MMBOE = million barrels of oil equivalent *PV-10 represents present value of estimated future oil and gas revenues, net of estimated direct expenses, discounted at an annual discount rate o
Slide 34: Reserve Growth Driven By Bakken / Three Forks
Reserve Growth Driven By Bakken / Three Forks Reserve Growth (MMBOE) Production Replaced (MMBOE) Net Reserve Increase (MMBOE) % Oil* 2.9 1.3 1.6 76% 4.0 1.1 2.9 69% 3.3 0.7 2.6 57% 1.0 0.4 0.6 36% 0.7 0.4 0.3 25% Proved Reserves (MMBOE) 2010 2011 2012 2013 2014 North Dakota Texas & Louisiana Other K
Slide 35: Proved Reserves Summary
Proved Reserves Summary ($ in millions) 2014 2013 2012 2013-2014 % Change 2012-2013 % Change Proved Developed Producing Reserves1 Oil and NGL Reserves MBBL 4,588.4 3,224.6 2,105.2 42% 53% Gas Reserves BCF 12.2 13.3 12.2 (8%) 9% Future Net Revenues* $282.5 $222.6 $162.2 27% 37% PV-10 3* $174.6 $140.5
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (Unaudited) In our full year and fourth quarter 2014 earnings release and conference call presentation materials furnished to the Securities and Exchange Commission on Form 8-K on March 5, 2015, we used certain non-GAAP financial measures. The non-GAAP f
Slide 37: For questions, please contact
For questions, please contact: Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite SOO Austin, TX 78746 512-433-5312 annatorma@forestargroup.com FORESTAR Pay FORESTAR