Forestar Provides Additional Information on Execution of Key Initiatives and Reports Full Year and Fourth Quarter 2015 Results

Forestar Group Inc. (NYSE: FOR) today reported full year 2015 net loss
of approximately ($213.0) million, or ($6.22) per share outstanding,
compared with full year 2014 net income of approximately $16.6 million,
or $0.38 per diluted share outstanding. Full year 2015 results include
charges of approximately ($205.2) million, or ($5.99) per share
outstanding, after tax, related to impairment of proved properties and
unproved leasehold interests associated with non-core oil and gas
assets, a deferred tax asset valuation allowance, and severance related
charges. Full year 2014 results include non-cash charges and other
special items of approximately ($24.5) million, or ($0.56) per share
outstanding, after tax, principally related to impairment of unproved
leasehold interests and proved properties in the oil and gas segment. To
the extent the Company generates sufficient future taxable income, the
Company may utilize historic losses as an offset against taxes payable.

Excluding special items, full year 2015 net loss was ($7.8) million, or
($0.23) per share outstanding, compared with net income of $41.1
million, or $0.94 per share outstanding in 2014.

Reducing Costs, Exiting Non-Core Assets, and Maximizing
Shareholder Value

“We have made significant progress in executing our key initiatives to
reduce costs, exit non-core assets and focus on maximizing shareholder
value. To date, we have taken actions to eliminate over $30.0 million in
annual expenses as compared with 2015 actuals. As we exit non-core
assets and fully implement our initiatives, we expect further cost
reductions to be implemented and are targeting an annual SG&A run rate
over 50% lower than 2015 actuals,” said Phil Weber, Chief Executive
Officer of Forestar.

“Key accomplishments include the execution of an agreement to sell the
Radisson Hotel & Suites in Austin for $130.0 million and sale of the
Kansas and Nebraska oil and gas assets for $21.0 million. In addition,
we recently announced that Forestar is opportunistically exiting its
portfolio of multifamily assets. Sale of the Midtown Cedar Hill
multifamily community was completed in fourth quarter 2015 for
approximately $42.9 million, generating $9.3 million in earnings and
reducing debt by $24.2 million. Multifamily properties in Austin,
Nashville and Charlotte are being marketed, as are two multifamily sites
in Austin. We are also pursuing an exit of up to 89,000 acres of
non-core timberland and undeveloped land. We are focused on executing
our key initiatives and delivering value for shareholders,” continued
Mr. Weber.

Weather-Related Delays Impact Lot Sales; Market Conditions Remain
Favorable

“Weather-related delays and labor shortages primarily contributed to
2015 residential lot sales declining by 25%, excluding bulk sales, from
2014 levels. In Texas, Austin, Dallas and San Antonio finished 2015 with
overall job growth well above the U.S. average of 1.9%, despite the drop
in oil prices, reflecting the benefit of market diversification.
Although new home sales in Houston are slowing, our 2015 Houston lot
sales revenue was up over 6% and per lot margin was up 15% from year-ago
levels primarily due to product mix and steady contributions from
well-established communities. We ended the year with over 1,300 lots
under option contract, supporting steady demand in our communities,”
said Michael Quinley, President of Community Development.

2015 Significant Highlights (Includes Ventures)

Real Estate

• Sold 1,472 developed residential lots; average gross profit of
  approximately $34,400 per lot
• Sold 13,862 acres of undeveloped land for almost $2,300 per acre
• Sold 63 commercial acres for approximately $248,300 per acre
• Sold 1,062 residential tract acres for almost $10,600 per acre
• Sold Midtown Cedar Hill, a stabilized multifamily community, for $42.9
  million, generating segment earnings of $9.3 million and reducing debt
  by $24.2 million

Oil and Gas

• Incurred non-cash impairment charges of $164.8 million associated with
  unproved leasehold interests and proved properties principally due to
  significant decline in oil prices and likelihood these non-core assets
  will be sold
• Sold approximately 109,000 net leasehold mineral acres and 39 gross/7
  net producing wells for $17.8 million, primarily in Nebraska, Texas
  and North Dakota

Other Natural Resources

• Sold nearly 227,000 tons of fiber for $13.50 per ton

Fourth Quarter 2015 Financial Results

Forestar reported fourth quarter 2015 net loss of approximately ($6.2)
million, or ($0.18) per share, compared with a fourth quarter 2014 net
loss of approximately ($11.8) million, or ($0.34) per share outstanding.
Fourth quarter 2015 results include non-cash impairment charges and
changes in deferred tax asset valuation allowance of approximately
($21.5) million or ($0.63) per share outstanding, after tax, principally
related to proved properties and unproved leasehold interest impairments
in the oil and gas segment due to declining oil prices and likelihood
these non-core assets will be sold. Fourth quarter 2014 results include
non-cash impairments and other special items of approximately ($23.2)
million, or ($0.66) per share outstanding, after tax, principally
related to impairment of proved properties and unproved leasehold
interests in the oil and gas segment.

Excluding special items, fourth quarter 2015 net income was $15.3
million or $0.45 per share outstanding, compared with fourth quarter
2014 net income of $11.4 million or $0.32 per share outstanding.

Fourth Quarter 2015 Significant Highlights (Includes Ventures)

Real Estate

• Sold 363 developed residential lots; average gross profit of
  approximately $35,000 per lot
• Sold 59 residential tract acres for $110,500 per acre
• Sold 7 commercial acres for over $491,700 per acre
• Sold 7,270 acres of undeveloped land for $2,200 per acre (includes
  6,900 acre bulk sale for $14.9 million)

Oil and Gas

• Incurred non-cash impairment charges of $37.6 million associated with
  unproved leasehold interests and proved properties primarily related
  to our Bakken/Three Forks assets principally due to significant
  decline in oil prices and likelihood these non-core assets will be sold
• Sold approximately 81,600 net leasehold mineral acres and 10 gross/2
  net producing wells in Nebraska and North Dakota for $4.7 million

Other Natural Resources

• Sold over 63,800 tons of timber for $13.98 per ton

Fourth Quarter and Full Year 2015 Segment Financial Results (Includes
Ventures)

Real Estate

Full year 2015 real estate segment earnings were lower compared with
full year 2014 principally due to gain on sale of assets of $26.0
million in 2014 compared with $1.6 million in 2015, lower undeveloped
land sales and decreased residential lot sales activity. This activity
was partially offset by higher commercial and residential tract sales
which generated segment earnings of $8.8 million and sale of the Midtown
Cedar Hill multifamily community which generated segment earnings of
nearly $9.3 million. Fourth quarter 2015 real estate segment earnings
were higher compared with fourth quarter 2014 principally due to sale of
Midtown Cedar Hill and higher residential tract sales. Full year 2014
includes $10.5 million gain associated with the exchange of 10,000 acres
of timberland, $7.6 million gain associated with acquisition of our
partner's interest in Eleven and $6.6 million gain associated with bonds
proceeds received from Cibolo Canyons Special Improvement District.

Oil and Gas

Oil and gas segment loss increased in full year 2015 compared with full
year 2014 principally due to non-cash impairment charges of $164.8
million related to unproved leasehold interests and proved properties
driven by lower current and projected oil and gas prices and our plans
not to drill or participate in new wells other than to preserve value
and optionality for our ultimate sale of these non-core assets. In
addition, segment loss was negatively impacted by lower realized oil and
gas prices despite a 19% year over year increase in production volumes.
Fourth quarter 2015 results include non-cash impairment charges of $37.6
million compared with $30.6 million in fourth quarter 2014 related to
unproved leasehold interests and proved properties due to continued low
oil prices and the likelihood these non-core assets will be sold.
Excluding non-cash impairment charges, fourth quarter 2015 segment loss
was lower compared with fourth quarter 2014 due to lower exploration and
production costs, lower operating expenses, and higher production
volumes, which partially offset decline in realized prices.

Other Natural Resources

Fourth quarter and full year 2015 other natural resources segment
earnings declined compared with fourth quarter and full year 2014
principally due to lower fiber sales and due to a $2.7 million and $3.4
million gain in fourth quarter and full year 2014 associated with
termination of a timber lease in connection with the sale of land from
the Ironstob venture near Atlanta. Full year 2014 other natural
resources segment results also includes $1.1 million of revenues
generated from a groundwater reservation agreement and almost $0.2
million gain associated with the sale of water rights from a real estate
community near Denver.

OUTLOOK

Fundamentals Stable in Forestar's Community Development Markets

“New and existing home inventories in Texas remain below equilibrium
levels, vacant developed lot supply remains low, and housing costs
remain affordable relative to other markets. Our communities in the
major markets of Texas are well located in areas of favorable job and
population growth, which are the principal drivers of future housing
demand. We expect 2016 residential lot sales volume to be in the range
of 1,600 - 1,800 lots," said Michael Quinley.

Executing Key Initiatives

“Forestar has made significant progress executing our key initiatives.
We remain focused on selling non-core assets and further reducing both
segment and general and administrative costs," said Phil Weber.

Changes in Board of Directors

"In February 2016, two new Directors, Ashton Hudson and Richard Squires,
were elected to the Board. Both will provide additional real estate
expertise to the Board as we focus on executing our key initiatives. I
would like to thank Kathleen Brown and Charles Matthews, both of whom
retired from the Board, for their dedication and contributions to our
Company. Going forward, Forestar is well positioned with an experienced
Board and management team committed to maximizing value for all
shareholders,” concluded Mr. Weber.

The Company will host a conference call on March 2, 2016 at 10:00 am ET
to provide additional information on execution of key initiatives and
discuss results of full year and fourth quarter 2015. The meeting may be
accessed through webcast or by conference call. The webcast may be
accessed through Forestar’s Internet site at www.forestargroup.com.
To access the conference call, listeners calling from North America
should dial 1-855-546-9555 at least 15 minutes prior to the start of the
call. Those wishing to access the call from outside North America should
dial 1-412-455-6094. The password is Forestar. Replays of the call will
be available for two weeks following the completion of the live call and
can be accessed at 1-855-859-2056 in North America and at 1-404-537-3406
outside North America. The password for the replay is 56791336.

About Forestar Group

Forestar is a residential and mixed-use real estate development company.
We own directly or through ventures interests in 58 residential and
mixed-use projects comprised of approximately 7,000 acres of real estate
located in 11 states and 15 markets. We also own approximately 590,000
net acres of oil and gas fee minerals located in Texas, Louisiana,
Georgia and Alabama. In addition, we own interests in various other
assets that have been identified as non-core that the company will exit
opportunistically over time. Our non-core assets include our investment
in oil and gas working interests, about 89,000 acres of undeveloped
land, and commercial and income producing properties which consist of
one hotel, seven multifamily projects and two multifamily sites.
Forestar operates in three business segments: real estate, oil and gas
and other natural resources. Forestar’s address on the World Wide Web is www.forestargroup.com.

Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of
the federal securities laws. Forward-looking statements are typically
identified by words or phrases such as “will,” “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,”
and other words and terms of similar meaning. 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
uncertainties could cause our actual results to differ significantly
from the results discussed in the forward-looking statements, including
but not limited to: general economic, market, or business conditions;
market demand for our non-core assets; changes in commodity prices;
opportunities (or lack thereof) that may be presented to us and that we
may pursue; fluctuations in costs and expenses including development
costs; demand for new housing, including impacts from mortgage credit
rates or availability; lengthy and uncertain entitlement processes;
cyclicality of our businesses; accuracy of accounting assumptions;
competitive actions by other companies; changes in laws or regulations;
and other factors, many of which are beyond our control. Except as
required by law, we expressly disclaim any obligation to publicly revise
any forward-looking statements contained in this news release to reflect
the occurrence of events after the date of this news release.

FORESTAR GROUP INC.
PROJECTS IN ENTITLEMENT

A summary of our real estate projects in the entitlement process ^(a) at
year-end 2015 follows:

UNDEVELOPED LAND

A summary of our undeveloped land at year-end 2015 follows:

FORESTAR GROUP INC.
REAL ESTATE PROJECTS

A summary of activity within our projects in the development process,
which includes entitled, developed and under development real estate
projects, at year-end 2015 follows:

FORESTAR GROUP INC.
CALCULATION OF NON-GAAP FINANCIAL
MEASURES
(UNAUDITED)

In our full year and fourth quarter 2015 earnings release and conference
call presentation materials furnished to the Securities and Exchange
Commission on Form 8-K on March 2, 2016, we used certain non-GAAP
financial measures. The non-GAAP financial measures should not be relied
upon to the exclusion of GAAP financial measures. These non-GAAP
financial measures reflect an additional way of viewing aspects of our
operations that, when viewed with our GAAP financial statements and the
accompanying reconciliations to corresponding GAAP financial measures,
may provide a more complete understanding of our business. We strongly
encourage investors to review our consolidated financial statements and
publicly filed reports in their entirety.

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

The following table shows a reconciliation of net income excluding
special items and earnings per share excluding special items to net
income and earnings per share (the most directly comparable measure
calculated and presented in accordance with generally accepted
accounting principles, or GAAP). Net income excluding special items and
earnings per share excluding special items are useful to evaluate the
performance of the company because it excludes non-cash impairments and
other costs, which management believes are not indicative of the ongoing
operating results of the business. A reconciliation of net income and
earnings per share excluding special items to net income and earnings
per share as computed under GAAP is illustrated below:

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