Slide 1: Fourth Quarter and Full Year 2010 Financial Results
1 Fourth Quarter and Full Year 2010 Financial Results February 2, 2011
Slide 2: Forward Looking Statements
2 Forward Looking Statements 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 a variety of factors and u
Slide 3: Strategy and Initiative Execution Have Forestar Well Positioned
3 3 Strategy and Initiative Execution Have Forestar Well Positioned Financials2010 HighlightsBusiness Performance Positioned For The Future
Slide 4: Fourth Quarter and Full Year 2010 Results
4 Fourth Quarter and Full Year 2010 Results Fourth Quarter and Full Year 2010 Results 4th Qtr. 2010 results include pre-tax gain of $13.2 million from sale of 9,800 acres of timberlandFull year 2010 results include pre-tax gain of $28.6 million from sale of 24,000 acres of timberlandFull year 2009 r
Slide 5: Segment Earnings (Loss)
5 Segment Earnings (Loss) 4th Qtr. 2010 real estate earnings include non-cash impairment charges of $10.4 million compared with $2.7 million in 4th Qtr. 20094th Qtr. 2009 real estate earnings include $3.6 million charge for environmental remediation activities Full year 2010 real estate earnings inc
Slide 6: Recognize and Responsibly Deliver the Greatest Value From Every Acre
Recognize and Responsibly Deliver the Greatest Value From Every Acre 6
Slide 7: Full Year 2010 Investment Highlights
Full Year 2010 Investment Highlights Repurchasing over 1.0 million shares of our common stockAcquiring multifamily project in Houston, Texas with tax deferred 1031 timberland sales proceeds and non-recourse borrowingsAcquiring water resources company focused on providing sustainable ground water sol
Slide 8: Full Year 2010 Operating Highlights
Full Year 2010 Operating Highlights Selling 29,800 acres of timberland for $58.9 million at > $1,975 / acre 24,000 acres for $38.8 million in accordance with strategic initiatives5,800 acres for $20.1 million under our retail sales programLeasing over 16,900 net mineral acres to oil and gas companie
Slide 9: U.S. Housing Market Conditions Are Mixed
U.S. Housing Market Conditions Are Mixed Issue Metric Comment U.S. Housing Affordability 1.72 1 Prices return to 2003 levels 30-Yr Fixed Rate Mortg. ~4.875% Trending up, but remains historically low New Home Inventory 8.2 MoS 197,000 units - Lowest level since September 1968 Consumer Confidence 60.6
Slide 10: Texas Markets Healthier Than U.S. Average
Texas Markets Healthier Than U.S. Average Texas Market ConditionsLower New Home Inventory - 29k units / 6.3 MoSLess Foreclosure Activity - 1.82% of Loans 2Improved Housing Affordability - 1.88 3Lower Unemployment - 8.2% Last 12 mos - Texas created >190k new jobsConsumer / Buyer Sentiment Impacted by
Slide 11: Real Estate Segment KPI's
11 Real Estate Segment KPI's Real Estate Segment KPI's Note: 4th Qtr. and full year 2010 real estate segment earnings include non-cash impairment charges of $10.4 million and $11.3 million respectively. 4th Qtr. and full year 2009 real estate segment earnings include non-cash impairment charges of a
Slide 12: Forestar Residential Lot Sales
Forestar Residential Lot Sales 12 Note: Includes ventures * Excludes bulk sale of 117 lots in 2008 at project located near Fort Worth, Texas (CHART) Annual Lot Sales Lot Sales ActivityHomebuilders building through lot inventoriesTexas prices holding up well compared to other marketsHomebuilders "ree
Slide 13: Declining Texas Residential Inventory
Declining Texas Residential Inventory Declining Texas Residential Inventory 13 Forestar Residential Lot Inventory* * Includes developed and under development inventory Residential Lot InventoryTexas real estate markets low on quality residential lot inventoryMinimal lot development since 2007Low lev
Slide 14: YE 2010 Real Estate Pipeline
Real Estate Real Estate Undeveloped In Entitlement Process Entitled Developed and Under Development Total Acres* Undeveloped Land Undeveloped Land Owned Owned 167,478 174,455 Ventures Ventures 6,977 174,455 Residential Residential Owned Owned 26,869 7,889 617 40,539 Ventures Ventures --- 4,532 632 4
Slide 15: Multifamily Acquisition - 4th Qtr. 2010
Multifamily Acquisition - 4th Qtr. 2010 15 Forestar is well positioned to take advantage of multifamily opportunity Acquired 401 unit multifamily project in Houston, Texas utilizing tax deferred 1031 timberland sales proceeds and 4.9% fixed-rate non-recourse debtMonetizing low return timberland asse
Slide 16: Compelling Short & Long-Term Multifamily Opportunity
Compelling Short & Long-Term Multifamily Opportunity 16 Forestar is well positioned to take advantage of multifamily opportunity * Includes ventures Multifamily investment is consistent with experience and focus on housing marketsLeverage value of Forestar resources to generate recurring cash flow,
Slide 17: 4th Qtr 2010 Georgia Mitigation Activity
4th Qtr 2010 Georgia Mitigation Activity 17 Entitlement Process 900 acre mitigation bank principally located in north east growth corridorBank planned to include up to 250,000 stream credits when completedExecuted six year contract for sale of ~130,000 credits; avg. price = $30 / credit~120,000 addi
Slide 18: Value Creation Through Mitigation
Value Creation Through Mitigation 18 Value Chain YE 2010 Bank Acres Wetland Credits Stream Credits Capital Required Entitled / Permitted 50 - 50k Low In Entitlement 900 40 250k Low Mitigation Tracts 7,750 3,230 2,615k Low Potential Future Mitigation 13,900 Total 22,600 3,270 2,915k Note: Table inclu
Slide 19: Summer Creek Ranch
Summer Creek Ranch Forestar venture project located near Fort Worth, TX 19 Recognizing and Responsibly Delivering the Greatest Value From Every Acre * 636 acres leased in 2005 and extended for over $0.6 million, and 241 acres leased in 2008 for almost $1.6 million Note: Wells owned by third-party le
Slide 20: Mineral Activity at Forestar Real Estate Projects
Mineral Activity at Forestar Real Estate Projects Recognizing and Responsibly Delivering the Greatest Value From Every Acre 20 Community Forestar Ownership Market Net Mineral Acres Acres Leased Acres HBP* Existing Wells Status Summer Creek 50% 877 877 877 23 Held by Production Fannin Farms 50% 81 81
Slide 21: Oil & Gas Market Conditions
Oil & Gas Market Conditions 21 Oil prices remain firm in anticipation of global demand growthNatural gas prices pressured by elevated inventories and supplyRecent inventory drawdowns due to cold tempsE&P companies allocating capital for drilling to hold leases and prove reserves vs. lease activity F
Slide 22: Mineral Resources Segment KPI's
22 Mineral Resources Segment KPI's Mineral Resources Segment KPI's Note: Wells owned and drilled by third-party lessees and operators * Includes our share of venture production: 4th Qtr 2010 = 227 MMcf; 4th Qtr 2009 = 61 MMcf; FY 2010 = 573 MMcf; FY 2009 = 82 MMcf
Slide 23: Q4 2010 East Texas Bossier-Haynesville Drilling Activity
Q4 2010 East Texas Bossier-Haynesville Drilling Activity 23 Note: Wells owned by third-party lessee / operator 36 rigs in the area35 rigs drilling Bossier - Haynesville wells56 wells drilled in Q499 wells waiting on completion Acres LeasedAvailable for LeaseHeld by ProductionHaynesville Well Permits
Slide 24: East Texas 2011 Mineral Lease Expiration Schedule
24 Lease Acres County Lease ContinuationDrilling Requirement Lease Expiration 3,800 San Augustine 1 well prior to expiration1 well prior to expiration1 well prior to expiration1 well prior to expiration 5/1/2011 11,200 San Augustine 1 well prior to expiration1 well prior to expiration1 well prior to
Slide 25: Fiber Resources Segment KPI's
25 Fiber Resources Segment KPI's Fiber Resources Segment KPI's
Slide 26: Strategy: Growing Through Strategic and Disciplined Investments
26 26 Strategy:Recognizing and Responsibly Delivering the Greatest Value From Every AcreGrowing Through Strategic and Disciplined Investments Forestar A Real Estate and Natural Resources Company With a Vision For Every Acre The Forestar DifferenceExperienced TeamRight Strategy & InitiativesStrong Ba
Slide 27: Forestar
oi FORESTAR