Forestar : Q3 FY 2021 Investor Presentation

Investor Presentation

3Q 2021

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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: the effect of D.R. Horton's controlling level of ownership on us and the holders of our securities; our ability to realize the potential benefits of the strategic relationship with D.R. Horton; the effect of our strategic relationship with D.R. Horton on our ability to maintain relationships with our customers; the impact of COVID-19 on the economy and our business; the cyclical nature of the homebuilding and lot development industries and changes in economic, real estate and other conditions; competitive conditions in our industry; changes in our business strategy and our ability to achieve our strategic initiatives; continuing liabilities related to assets that have been sold; the impact of governmental policies, laws or regulations and actions or restrictions of regulatory agencies; the cost and availability of property suitable for residential lot development; general economic, market or business conditions where our real estate activities are concentrated; our dependence on relationships with national, regional and local homebuilders; our ability to obtain or the availability of surety bonds to secure our performance related to construction and development activities and the pricing of bonds; obtaining reimbursements and other payments from governmental districts and other agencies and timing of such payments; our ability to succeed in new markets; the conditions of the capital markets and our ability to raise capital to fund expected growth; our ability to manage and service our debt and comply with our debt covenants, restrictions and limitations; the volatility of the market price and trading volume of our common stock; our ability to hire and retain key personnel; and the strength of our information technology systems and the risk of cybersecurity breaches and our ability to satisfy privacy and data protection laws and regulations. Additional information about factors that could lead to material changes in performance is contained in Forestar's annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange

Commission (SEC).

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FORESTAR OVERVIEW

Forestar Group Inc. ("Forestar" or "FOR") is a national, highly differentiated residential lot developer for the affordable single-family home market

• Develop and sell lots for single-family homes to D.R. Horton and other local, regional and national homebuilders
• • Focused on phased development of short duration, fully-entitled lot development projects
  • High-turnover,lower-risk lot manufacturing strategy with an intense focus on returns
• Favorably positioned to benefit from the finished residential lot supply shortage with a diverse portfolio of 96,600 owned and controlled lots
• Conservative leverage position and strong liquidity profile
• Strong track record of growth and profitability
• • Four consecutive quarters of pre-tax profit margin improvement(2)
  • Five consecutive quarters of return on equity (ROE) improvement(3)
• Majority-ownedby D.R. Horton, Inc. ("D.R. Horton" or "DHI"), the nation's largest builder by volume; DHI owns 64% of Forestar
• • Highly strategic relationship with DHI supports and de-risks Forestar's significant growth ramp

Operations in 55 markets across 22 states(1)

/	FOR markets / states

Current Snapshot(1)

LTM Revenues	~$1.25bn
LTM Pre-Tax Profit Margin(2)	11%
Liquidity (4)	~$470mm
Owned and Controlled Lot Position	96,600
Owned Lots Under Contract or Subject	39,400
to Right of First Offer to DHI

1. As of or for the LTM period ended 6/30/21, unless otherwise noted
2. Excludes the pre-tax loss on extinguishment of debt of $18.1 million related to the 3Q FY 21 refinancing of our 8.00% senior notes due 2024

(3)	ROE is calculated as net income attributable to Forestar for the trailing twelve months divided by average stockholders' equity, where average	3
	stockholders' equity is the sum of ending stockholders' equity balances of the trailing five quarters divided by five
(4)	Liquidity defined as unrestricted cash and cash equivalents plus revolving credit facility availability as governed by the borrowing base

THE FORESTAR VALUE PROPOSITION

DIFFERENTIATED BUSINESS

MODEL DESIGNED TO

ADDRESS A MARKET NEED

LONG-TERM GROWTH

OPPORTUNITY

INTENSE FOCUS ON RISK

MITIGATION

HIGHLY STRATEGIC

RELATIONSHIP WITH DHI

• Return focused residential lot development business model
• Higher turnover, lower risk lot manufacturing strategy focused on returns
• Under-servedlot development market with lack of well-capitalized and/or national participants
• Opportunity for increased scale within existing markets and entrance into new markets
• Portfolio and platform expansion designed to increase returns and margins
• Roadmap for market share gains through housing and economic cycles
• Short duration, fully-entitled projects
• Phased development and largely discretionary cash spend
• Geographic diversification
• Maintain strong liquidity and conservative leverage with balance between debt and equity
• Strategic alignment and access to DHI network of markets, experienced team and relationships
• Aligned cultures with manufacturing-like approach and conservative operating strategies
• Built-indemand for lots - D.R. Horton has a strong appetite for finished lots that continues even during potential downturns
• Supports existing operating platform and provides enhanced access to capital markets

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FORESTAR INVESTMENT HIGHLIGHTS

Unique Return-

Focused Lot

Manufacturing

Business Model

Strong Balance

Sheet and Liquidity

Position

Proven / Seasoned

Management Team

With Decades of

Real Estate

Experience

Homebuilders'

Preference to Buy

Finished Lots

Primary Focus on

Attractive Entry-

Level Segment

Strategic

Relationship With

D.R. Horton

Long-Term Market

Share Gains

Geographic

Diversification and

Growing Lot

Position

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