Forestar : Investor Presentation

FORWARD ‐ LOOKING STATEMENTS

This presentation may include "forward‐looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Although Forestar believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Factors that may cause the actual results to be materially different from the future results expressed by the forward‐looking statements include, but are not limited to: general economic, market or business conditions where our real estate activities are concentrated; the conditions of the capital markets and our ability to raise capital to fund expected growth; our ability to achieve our strategic initiatives; the opportunities (or lack thereof) that may be presented to us and that we may pursue; our ability to hire and retain key personnel; our ability to obtain future entitlement and development approvals; obtaining reimbursements and other payments from special improvement districts and other agencies and timing of such payments; accuracy of estimates and other assumptions related to investment in and development of real estate, the expected timing and pricing of land and lot sales and related cost of real estate sales; the levels of resale housing inventory in our mixed‐use development projects and the regions in which they are located; fluctuations in costs and expenses, including impacts from shortages in materials or labor; demand for new housing, which can be affected by a number of factors including the availability of mortgage credit, job growth and fluctuations in interest rates; competitive actions by other companies; changes in governmental policies, laws or regulations and actions or restrictions of regulatory agencies; our partners' ability to fund their capital commitments and otherwise fulfill their operating and financial obligations; our ability to comply with our debt covenants, restrictions and limitations; the strength of our information technology systems and the risk of cybersecurity breaches; the effect of D.R. Horton's controlling level of ownership on us and our stockholders; our ability to realize the potential benefits of the strategic relationship with D.R. Horton; and the effect of our strategic relationship with D.R. Horton on our ability to maintain relationships with our vendors and customers. Additional information about issues that could lead to material changes in performance is contained in Forestar's annual report on Form 10‐KT, which is filed with the Securities and Exchange Commission (SEC).

FORESTAR INVESTMENT HIGHLIGHTS

NYSE: FOR

TRANSFORMATION OF FORESTAR ("FOR")

FOR has transformed its business into a highly differentiated, returns-focused lot manufacturer

FORESTAR TRANSFORMATION 2015‐2018

Return to Core Business

Monetized non‐core assets

Sold non‐strategic legacy projects

Implementing Strategy

Strategic relationship with DHI

Supplemented executive and operational leadershipInvested in return‐focused lot development opportunities

FORESTAR TODAY

Differentiated Finished Lot Manufacturer

Strategy

• • Simplified business plan focused on residential lot development

• • Phased development of short duration, fully‐entitled projects

• • High turnover, lower risk lot manufacturing strategy

• • Ability to pursue opportunistic strategic investments

Results

• • Access to lower cost of capital

• • National scale with geographic diversification

• • Profitable today and expect consistent long‐term profits and returns

UNIQUE LOT MANUFACTURER BUSINESS MODEL

FOR's business model will achieve scale and consistent returns, while minimizing risk

• • Well‐capitalized, geographically diverse lot developer focused on short duration, fully‐entitled lot development opportunities

• • High turnover, lower risk "lot manufacturing" strategy generates returns similar to an efficient, production‐oriented homebuilder

  • - Expect 15% return on inventory (ROI)(1) and initial cash payback within 36 months on new lot development investments

  • - Projects typically generate lot sale revenue within 12 months

  • - Phased projects in which future development is largely discretionary

• • Flexibility to pursue opportunistic strategic investments

• • Control operating and overhead costs while ensuring infrastructure supports planned growth

• • Consistently profitable today and targeting annual pre‐tax profit margins of at least 10% by FYE 2021

(1) ROI is calculated as pre‐tax income divided by average inventory over the life of a project