Slide 1: Investor Presentation September 2011
Investor Presentation September 2011
Slide 2: Notice To Investors
2 Notice 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 a variety of factors and uncertai
Slide 3: I. Forestar Overview
3 I. Forestar Overview
Slide 4: The Forestar Difference
Strategically located in key growth regions and active oil and gas basinsFocused strategy to deliver the greatest value from real estate and natural resourcesExperienced management team with proven ability to deliverStrong balance sheetDisciplined investment approach; well positioned to capitalize o
Slide 5: Our Strategy - The Dimensional Land Model
Our Strategy - The Dimensional Land Modeltm 5 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 acreGrowing through strategic and disciplined investments
Slide 6: Delivering The Greatest Value From...
603,000 net mineral acres principally located in TX, LA, AL, and GA 30,000 acres held by oil and natural gas production 64,000 acres leased 509,000 acres available for lease1,600,000 acres of water interest (includes a 45% non-participating royalty interest from approximately 1.4 million acres in TX
Slide 7: Delivering the Greatest Value from Every Acre: Real Estate
CREATION REALIZATION Real EstateGreatest Value Development Entitled Entitle Timberland Pipeline (Acres) 1 Activity - Uses Financials 2 2,00062 projects 1,062 acres - 3,105 lots 775 commercial acres $50K per lot$90K per acre(avg sales price) 14,00018 projects Approved uses, ready for development High
Slide 8: Delivering the Greatest Value from Every Acre: Minerals
MineralsGreatest Value Pipeline(Acres) 1 Terms - Activity Financials 30,000 25% - 27% Royalty and Working Interest 501 Wells 2 Cash Flow = $77mm3 64,000 3 - 5 year termDelay rentalsDrilling requirements $250 - $1,500 per acre lease rate 68,000 Seismic, Ventures and Prospects Up to $100 per acreKnowl
Slide 9: Fiber & Recreational Leasing: Recurring Cash Flows
9 Fiber & Recreational Leasing: Recurring Cash Flows Forestar manages 151,000* acres of timberHarvests and sells pulpwood and sawtimberPrimarily to Temple-Inland's Rome, Georgia mill complex, at market prices537,000 tons harvested during 2010Leases timberland for recreational purposes1 year term; ca
Slide 10: Compelling Opportunity: Ground Water
Forestar owns 1.6 mm acres of water interestsIncludes a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes or sold from approximately 1.4 mm acres in Texas, Louisiana, Georgia and AlabamaIn 2010, Forestar acquired water resources company with central T
Slide 11: II. Key Investment Highlights
11 II. Key Investment Highlights
Slide 12: Low-Basis Assets Well Located In Key Growth Regions
Low-Basis Assets Well Located In Key Growth Regions 12 Strategically located in some of the healthiest U.S. markets & economies Los Angeles 2 - $13.7 Tampa 3 - $4.0 Atlanta 32 - $107.1* Oakland 1 - $8.8 Kansas City 1 - $2.9 Dallas/Ft. Worth 17 - $95.9 Austin 16 - $117.1 San Antonio 4 - $101.8 Housto
Slide 13: Texas Markets Outperforming
(CHART) (CHART) Texas Markets Outperforming Over 70% of Real Estate Investment Located in Texas >12% 13 Source: Moody's Economy.com and Zelman & Associates, data as of Q2 2011 Texas forecasted job growth almost 2x national average Texas voted #1 state for businesses:Taxes and regulationQuality of li
Slide 14: Texas Markets Outperforming (housing)
(CHART) Texas Markets Outperforming Over 70% of Real Estate Investment Located in Texas (CHART) >16% >25.0 14 Source: Moody's Economy.com , Zelman & Associates, and Metrostudy data as of Q2 2011 Texas house prices didn't get overheatedMinimal supply constraintsLimited equity withdrawal New home inve
Slide 15: Retaining Value Through the Downturn
Retaining Value Through the Downturn (CHART) Note: Includes ventures. 15 15
Slide 16: Creating Value: Cibolo Canyons, San Antonio
16 Creating Value: Cibolo Canyons, San Antonio Residential Commercial Resort and Golf Course Project Economics Mitigation 1,400 planned lots - 679 Sold1Multiple builders 1st and 2nd move-up, custom Empty nester / active adult / condo 220 acres - 68 sold1Multifamily and retail JW Marriott's largest r
Slide 17: Delivering the Greatest Value: Cibolo Canyons
~ 736 lots remaining ~ 153 acres remaining Investment of $50-55 million in future development Delivering the Greatest Value: Cibolo Canyons *Excludes interest. **Actual results may vary. 679 lots sold @ > $65,000/lot 68 acres sold @ $95,700/acre Invested $43 million in resortReceived $20.8 million i
Slide 18: Atlanta: Low-Basis Assets with Long-Term Value
Undeveloped Land83,500 acres In Entitlement:12 projects & 23,000 acresEntitled:16 projects & 6,400 acres that include: 4,100 residential lots 750 commercial acres 165,000 net mineral acres 6,000 potential mitigation acres Note: Information as of Q2 2011 and excludes 50,000 acres of timberland sold t
Slide 19: Real Estate Pipeline Well Positioned For Recovery
Real Estate Pipeline Well Positioned For Recovery 19 * Excludes 50,000 acres of undeveloped land which were sold to Plum Creek in August 2011** Includes 5 commercial and income producing properties. EXCEL SOURCE range $C$6:$H$26 copied at 05- Jun-11 11:59:54: STARACRE\Roadshow\Back up\02 Real Estate
Slide 20: Forestar Minerals Located in Active Basins
Texas and Louisiana represent 36% of total oil and gas reserves and resource volume in the Continental U.S.Forestar mineral ownership (net mineral acres) as of Q2 20111: Texas: 252,000 Georgia: 165,000 Louisiana : 144,000 Alabama: 40,000 Forestar Minerals Located in Active Basins 20 Target Formation
Slide 21: East Texas Bossier-Haynesville Drilling Activity
Note: Wells owned by third-party lessee / operator Acres LeasedAvailable for LeaseHeld by ProductionHaynesville Well PermitsHaynesville Drilling ActivityProducing Bssr-Hysv WellsWaiting on CompletionForestar Royalty Interest Note: Shaded area represents the total area of Bossier-Haynesville formatio
Slide 22: 2011 Louisiana Minerals Activity - Oil Focused
2011 Louisiana Minerals Activity - Oil Focused Note: Wells owned by third-party lessee / operator Leasing: 7,400 acres leased (including Texas) $289 / acreSeismic & Exploration Agreements:60,000 net mineral acres YTD Q2 2011 Activity Acres Leased Q2 2011Acres Leased Prior to Q1Available for LeaseHel
Slide 23: III. Growth Opportunities
23 III. Growth Opportunities
Slide 24: Near-Term Growth Opportunities
Near-Term Growth Opportunities BUSINESS OPPORTUNITY Leverage Forestar's experience, assets, and resources to generate fees, returns, and promoted interests from value created and realized. Well-positioned to capitalize on growth opportunities created by housing market dislocation and distress Focus
Slide 25: Strategic Markets and Underwriting Criteria
Source: Woods & Poole Forestar Target MarketsAtlantaCharlotteRaleighDallasAustinSan AntonioHoustonForestar Market Underwriting CriteriaEconomic health and vitalityBusiness climateJob growthQuality of lifeEducation / talentPopulation growthInventory condition Strategic Markets and Underwriting Criter
Slide 26: Disciplined Investing
Disciplined Investing 26 1 Costs include pro forma interest carry.Note: For illustrative purposes only and not a guarantee of future performance. Real estate acquisition and development activity is driven by Return on Cost (ROC) discipline, targeted at 35% (including imputed interest) Market underwr
Slide 27: Market Conditions Expected to Create Significant Growth Opportunities
Market Conditions Expected to Create Significant Growth Opportunities 27 U.S. Housing Starts (SAAR, Thousand Units) Multifamily well-positioned to benefit from economic recovery Source: IHS Global Insight. EXCEL SOURCE copied at 29-May-11 12:36:34: STARACRE\Roadshow\Back up\01 Housing Starts.xlsx (C
Slide 28: Recognizing and Creating Value Through Multifamily
Recognizing and Creating Value Through Multifamily Financing(60 - 70% LTV) Multifamily business model is to leverage our existing sites and investments with capital from our partners to create and realize value Multifamily Development Ribelin Ranch - Austin, Texas Insert Site Map Units 289 units Tot
Slide 29: Strategic and Disciplined Investment in Our Business
Strategic and Disciplined Investment in Our Business Houston, Texas Houston, TX MSASolid market fundamentals: 7.1 months of supply - New Home 7.9 months of supply - Existing Home Foreclosure Inv. - 1.2% of mortgages Positive Job Growth 54,300 jobs created since Q2 2010Increased housing affordability
Slide 30: Key Investment Highlights
Key Investment Highlights 30 30 Low-basis portfolio of assets well located in key growth regions Recurring cash flows from real estate and natural resourcesStrong balance sheet Focused development strategy and disciplined investment criteriaWell positioned to take advantage of growth opportunitiesEx
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