About Forestar Group

Forestar Group Inc. operates as a national, well-capitalized residential lot development company focused primarily on making investments in land acquisition and development to sell finished single-family residential lots to homebuilders. The company is a subsidiary of D.R. Horton, Inc. The company conducts a wide range of project planning and management activities related to the entitlement, acquisition, community development and sale of residential lots. The company generally secures entitlements while the land is under contract by creating plans that meet the needs of the markets where the company operates, and the company intends to have all entitlements secured before closing on the investment. Moving land through the entitlement and development process creates significant value. The company primarily invests in entitled short-duration projects that can be developed in phases, enabling the company to complete and sell lots at a pace that matches market demand, consistent with the company's focus on maximizing capital efficiency and returns. This strategy is a unique, lower-risk business model that the company expects will produce more consistent returns than other public and private land developers. The company also makes short-term strategic investments in finished lots (lot banking) and undeveloped land (land banking) with the intent to sell these assets within a short time period to utilize available capital prior to its deployment into longer-term lot development projects. For the year ended September 30, 2023, the company sold 14,040 lots. As of September 30, 2023, the company's lot position consisted of 79,200 residential lots, of which approximately 52,400 were owned and 26,800 were controlled through purchase contracts. Of the company's 52,400 owned lots, approximately 15,000 lots are under contract to be sold. The company has expanded and diversified its lot development operations across 54 markets in 22 states by investing available capital into the company's existing markets and by entering new markets. The company's geographically diverse operations provide a strong platform for the company to consolidate market share in the highly fragmented lot development industry. The company's customers are primarily local, regional and national homebuilders. The lots the company delivers in its communities are primarily for entry-level, first-time move-up and active adult homes. Entry-level and first-time move-up homebuyers are the largest segments of the new home market. The company also markets some of its communities towards build-to-rent operators. The company manages its operations through its real estate segment. Business Operations The majority of the company's real estate projects are single-family residential communities. The company primarily purchases land in the open market and install the necessary infrastructure to develop the land into finished residential lots for single-family homes. The company's customers are primarily local, regional and national homebuilders. The company's managers are responsible for the following activities related to the company's land and lot acquisition and development activities: site selection, which involves a feasibility study, soil and environmental reviews, review of existing zoning and other governmental requirements, review of the need for and extent of offsite work required to obtain project entitlements and to complete necessary infrastructure, and financial analysis of the potential project; negotiating land acquisition, lot purchase and related contracts; obtaining all necessary land development approvals; selecting land development subcontractors and ensuring their work meets the company's contracted scopes; planning and managing land development schedules; determining the sales pricing for each lot in a given project; developing and implementing marketing and sales plans; and coordinating all interactions with customers throughout the lot sale process. The company has a shared services agreement with D.R. Horton whereby D.R. Horton provides the company with certain administrative, compliance, operational and procurement services. The company has a master supply agreement with D.R. Horton, which establishes the company's business relationship with D.R. Horton as both companies identify residential real estate opportunities. Land/Lot Acquisition and Inventory Management The company acquires land for use in its development operations after the company has completed due diligence and obtained the development rights (known as entitlements). Before the company acquires lots or tracts of land, the company completes a feasibility study, which includes soil tests, independent environmental studies, other engineering work and financial analysis. The company also evaluates the status of necessary zoning and other governmental entitlements required to develop the property for home construction. Although the company purchases and develops land primarily to sell finished lots to homebuilders, the company may sell land where it has excess land positions or for other strategic reasons. The company also enters into land purchase contracts, whereby the company obtains the right, but generally not the obligation, to buy land at predetermined prices on a defined schedule commensurate with planned development. Land Development Substantially all of the company's land development work is performed by subcontractors. The company monitors land development activities, participate in major decisions, coordinate the activities of subcontractors and suppliers, review the work of subcontractors for quality and cost controls and monitor compliance with building codes or other regulations. In select situations, the company contracts with D.R. Horton for land development services, generally in geographic markets where the company does not have established development teams and capabilities. Lot/Land Banking In addition to the company's residential lot development activities, the company makes strategic short-term investments in finished lots (lot banking) and undeveloped land (land banking) with the intent to sell these assets within a short time period, primarily to D.R. Horton, utilizing available capital prior to its deployment into longer term lot development projects. The company manages its level of lot/land banking relative to short-term liquidity and expected future cash requirements for lot development projects. History Forestar Group Inc. was incorporated in 2005.