Forestar Group Inc. (FOR): Business Model Canvas [Dec-2025 Updated]

You're digging into the engine room of Forestar Group Inc., and honestly, what you find is a highly specialized, capital-intensive land developer whose success is fundamentally tied to its majority owner, D.R. Horton, Inc. As a former head analyst, I see a clear model: they turn raw ground into finished lots-controlling nearly 99,800 as of September 30, 2025-to feed one of the nation's largest homebuilders, generating $1.7 billion in revenue in fiscal year 2025. This isn't just about buying dirt; it's about disciplined entitlement and development risk transfer, which you can map out completely in the Business Model Canvas below to see exactly where the $2.1 billion in contracted future revenue sits.

Forestar Group Inc. (FOR) - Canvas Business Model: Key Partnerships

You're looking at the core engine of Forestar Group Inc. (FOR)'s business, which is fundamentally built around its relationship with its majority owner. This isn't a typical supplier-customer setup; it's an integrated development pipeline.

D.R. Horton, Inc. (DHI) as majority owner and primary customer

D.R. Horton, Inc. (DHI), which has been the largest homebuilder by volume in the United States since 2002, owns a majority stake in Forestar Group Inc. (FOR). This relationship is the bedrock of Forestar Group Inc.'s high-volume model. For the fiscal year ended September 30, 2025, Forestar Group Inc. sold a total of 14,240 lots. Of that total, approximately 11,751 lots were sold directly to D.R. Horton, Inc. (DHI). This concentration provides significant revenue visibility, which is crucial for capital deployment decisions.

The strategic alignment is further evidenced by inventory control mechanisms. As of September 30, 2025, 17,600 of Forestar Group Inc.'s owned lots were subject to a right of first offer based on executed purchase and sale agreements with D.R. Horton, Inc. (DHI), representing about 27% of the owned lot position at that date. For context, D.R. Horton, Inc. (DHI) closed 85,142 homes in its homebuilding operations during the twelve-month period ended June 30, 2025.

Here's the quick math on customer concentration for fiscal year 2025:

Strategic relationship provides a stable, high-volume lot pipeline

The relationship ensures Forestar Group Inc. operates at scale, focusing on asset turns rather than long-term land holding. The company's total liquidity at the end of fiscal 2025 was robust at $968.1 million. This scale is evident in the overall inventory: Forestar Group Inc. owned and controlled 99,800 residential lots across 64 markets in 23 states as of September 30, 2025. Furthermore, the company had 23,800 owned lots under contract for future sale at that date, which represented approximately $2.1 billion in remaining sales revenue. Over the last five years, Forestar Group Inc. invested more than $7.3 billion in land acquisition and development and delivered more than 75,000 finished lots to builders. That's national scale, fast.

Landowners for raw land acquisition and development agreements

Forestar Group Inc.'s ability to maintain its pipeline relies on securing raw land. The company planned to invest approximately $2.0 billion in land acquisition and development for fiscal 2025, though the final five-year investment figure stands at over $7.3 billion. The total lot position at September 30, 2025, was 99,800 lots, split between owned lots of 65,100 and lots controlled through land and lot purchase contracts of 34,700. This structure allows Forestar Group Inc. to manage capital deployment efficiently with landowners.

Lot bankers for interim lot sales and financing arrangements

Forestar Group Inc. uses lot bankers strategically to manage sales velocity and potentially smooth out delivery timing, especially for lots that are not immediately needed by its primary customer. For the full fiscal year 2025, 927 lots were sold to lot bankers who expect to sell those lots to D.R. Horton, Inc. (DHI) at a future date. To be fair, this is a growing segment of their non-DHI sales.

• Lots sold to lot bankers in FY 2025: 927 lots.
• Lots sold to lot bankers in the nine months ended June 30, 2025: 693 lots.
• Lots sold to lot bankers in the six months ended March 31, 2025: 362 lots.

Local and regional contractors for land development and infrastructure

The actual physical transformation of raw land into finished lots requires a network of specialized third-party contractors. While specific contract values aren't public, the output of this partnership network is measurable in the volume of finished product. As of March 31, 2025, Forestar Group Inc. had 9,500 owned lots that were fully developed. By June 30, 2025, this figure was 10,000 fully developed lots. The development work results in the delivery of finished lots to the market, which totaled 14,240 in fiscal 2025, generating consolidated revenues of $1.7 billion.

Forestar Group Inc. (FOR) - Canvas Business Model: Key Activities

You're looking at the core engine of Forestar Group Inc., the machinery that turns raw land into the foundations for new homes. This is where the real work happens, and the numbers from fiscal year 2025 tell a clear story of scale and execution.

Land acquisition and securing necessary entitlements

The activity here is about securing the future pipeline, which is a massive, multi-year commitment. Over the last five years, Forestar Group Inc. invested more than $7.3 billion in land acquisition and development. That scale helps them maintain a substantial asset base, reporting $2.6 billion in real estate as of September 30, 2025. This activity feeds directly into their total inventory, which stood at 99,800 lots owned and controlled at the end of fiscal 2025.

The current inventory breakdown shows the balance between immediate product and future potential:

• Owned lots at September 30, 2025: 65,100 lots
• Lots controlled under land and lot purchase contracts: 34,700 lots

Development of raw land into finished residential lots

This is the conversion process, moving from controlled land to shovel-ready product. Forestar Group Inc. is focused on efficiency here, aiming to deliver lots at a pace that matches builder demand. For the full fiscal year ended September 30, 2025, the company delivered more than 14,240 residential lots. That delivery volume translated into $1.7 billion in consolidated revenues for the year.

Here's a look at the development status as of the end of fiscal 2025:

That contracted backlog of 23,800 lots represents approximately $2.1 billion of future revenue locked in.

Project planning and community management in 64 markets

Forestar Group Inc. manages a geographically diverse portfolio, which requires sophisticated, localized project planning. As of late 2025, the company maintained active projects across 64 markets. This decentralized yet coordinated approach is key to serving a broad base of homebuilders.

For instance, in the fourth quarter of fiscal 2025, the company sold 4,891 lots. The pricing power in these markets was evident, as the average sales price per lot in that quarter jumped 24% year-over-year to $115,700. This pricing strength helped drive Q4 revenue up 22% year-over-year to $670.5 million, even as total lots sold for the quarter decreased 9%.

Capital allocation and financing, including debt management

Managing capital is critical for a land developer, balancing inventory investment with liquidity. Forestar Group Inc. ended the fiscal year with a strong liquidity position totaling $968.1 million. This was composed of $379.2 million in unrestricted cash and $588.9 million in available borrowing capacity on their senior unsecured revolving credit facility.

The company actively manages its debt profile. In March 2025, they issued $500 million of 6.50% senior unsecured notes due 2033 and used part of that to buy back $329.4 million of existing 3.85% notes due 2026. By September 30, 2025, they redeemed the remaining $70.6 million of those 2026 notes. This activity resulted in a conservative net debt to total capital ratio of 19.3% at year-end, with no senior note maturities until fiscal 2028.

Here's the capital structure snapshot:

Maintaining the national operating platform across 23 states

The platform supports operations across 23 states. This geographic diversification is a deliberate strategy to mitigate regional housing market risks. The scale of their operations has grown significantly; over the last five years, they delivered more than 75,000 finished lots. This consistent output helps them aggregate market share, as they project delivering between 14,000 and 15,000 lots in fiscal 2026, targeting revenue between $1.6 billion and $1.7 billion.

The platform's efficiency is reflected in the return metrics:

• Book value per share increased 11% to $34.78 by September 30, 2025.
• Pre-tax profit margin for the full fiscal year 2025 was 13.2%.

Finance: draft 13-week cash view by Friday.

Forestar Group Inc. (FOR) - Canvas Business Model: Key Resources

You're looking at the core assets that make Forestar Group Inc. tick as of late 2025. These aren't just line items; they're the physical and financial engines driving the business.

The sheer scale of the land bank is a primary resource. As of September 30, 2025, Forestar Group Inc. held an owned and controlled lot position totaling 99,800 lots. This inventory represents significant future revenue potential and operational runway. The real estate inventory value on the balance sheet at that same date stood at $2.6 billion.

Here's the quick math on that lot position:

Still, not all owned lots are ready for immediate sale. A substantial portion is already committed. As of September 30, 2025, 23,800 lots, which is 37% of the owned position, were under contract to be sold, representing approximately $2.1 billion of future revenue. That's a good chunk of committed business right there.

The strategic relationship with D.R. Horton is formalized through key rights. Another 17,600 lots, or 27% of the owned lots, were subject to an exclusive right of first offer to D.R. Horton based on executed purchase and sale agreements at September 30, 2025. This relationship, given D.R. Horton is the majority owner, is a foundational resource.

Financial strength is another key pillar. Forestar Group Inc. reported a strong total liquidity position of $968.1 million as of September 30, 2025. This liquidity gives them flexibility, which is defintely important in real estate development.

That total liquidity breaks down into tangible components:

• Unrestricted cash: $379.2 million
• Available borrowing capacity on the senior unsecured revolving credit facility: $588.9 million

The operational backbone is its national footprint. Forestar Group Inc. has a national operating platform supported by local market expertise, operating in 64 markets across 23 states. This geographic diversification is a deliberate strategy to mitigate local economic cycle risks, so you aren't betting the whole farm on one region.

Forestar Group Inc. (FOR) - Canvas Business Model: Value Propositions

Forestar Group Inc. offers homebuilders a de-risked, scalable source of finished residential lots, which is a critical value proposition given the industry's shift away from holding large, illiquid land inventories.

Consistent, high-volume supply of finished lots for homebuilders

Forestar Group Inc. positions itself as a dependable manufacturer of finished lots, aiming to capture significant market share in a fragmented industry. The company targets a specific volume to meet this need.

• Forestar Group Inc. aims to capture 5% market share in the U.S. single-family residential lot development industry, up from 2.1% in FY 2024.
• Fiscal 2025 guidance projected lot deliveries between 15,000 and 15,500 lots.
• The company delivered more than 14,700 residential lots during the twelve-month period ended June 30, 2025.
• As of June 30, 2025, the total owned and controlled lot position stood at 102,300 lots.
• Forestar Group Inc. develops approximately 1 in every 50 single-family homesites in the U.S..

Reduced land development risk for primary customer D.R. Horton

The deep relationship with D.R. Horton, its majority shareholder, provides Forestar Group Inc. with a foundational customer, effectively transferring land development risk to Forestar and ensuring a predictable outlet for finished lots.

• D.R. Horton owns 62% of Forestar Group Inc.'s outstanding shares.
• The mutually stated goal is for one out of every three homes D.R. Horton sells to be on a Forestar-developed lot.
• In the third quarter of fiscal 2025, 23% of D.R. Horton's finished lot purchases came from Forestar-developed lots.
• During the third quarter of fiscal 2025, Forestar sold 3,605 lots, with 530 lots sold to customers other than D.R. Horton.

Diversified geographic presence across high-growth U.S. markets

Forestar Group Inc. mitigates local economic cycle risks by maintaining a broad footprint across numerous states and markets, focusing on areas with high demand for residential properties.

Here's a look at the scale of their operations as of mid-2025:

The company has operations spanning states including Maryland, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Tennessee, Texas, and Washington.

Finished lots suitable for entry-level and first-time move-up homes

Forestar Group Inc. focuses its development efforts on the largest segment of the new home market, which is the affordably-priced single-family home sector.

• The primary product is finished single-family residential lots.
• Lots are used for entry-level, first-time move-up, and active adult homes.
• Forestar Group Inc. is a developer focused on the affordably-priced single-family home market.

Disciplined land investment model targeting double-digit returns

The investment model is built around strict underwriting criteria designed to ensure high, risk-adjusted returns on the capital tied up in land inventory.

• Strict underwriting requires a minimum 15% return on average inventory.
• The model requires returning the entire phase 1 investment, including all land costs, in 36 months or less.
• Return on equity for the trailing twelve months ended June 30, 2025, was 10.1%.
• Return on equity for the trailing twelve months ended December 31, 2024, was 12.0%.
• Pre-tax profit margin for the third quarter trailing twelve months (TTM) of fiscal 2025 was 13.9%.

The company plans to invest approximately $2.0 billion in land acquisition and development in fiscal 2025.

Forestar Group Inc. (FOR) - Canvas Business Model: Customer Relationships

You're looking at the core of Forestar Group Inc.'s (FOR) strategy, which is fundamentally built around its customer base, dominated by its controlling shareholder. This relationship dictates scale, capital structure, and operational cadence. Honestly, it's a high-volume, integrated partnership that defines the business.

Highly integrated, strategic relationship with majority owner D.R. Horton

Forestar Group Inc. operates as a majority-owned subsidiary of D.R. Horton, Inc., which has been the largest U.S. homebuilder by volume since 2002. This strategic tie-in is formalized through agreements that guide Forestar's direction and lot supply. For the fiscal year ended September 30, 2025, Forestar Group Inc. delivered more than 14,200 residential lots. The governance documents formalize this relationship and protect Forestar, which is a key element of its stability. The company's disciplined land strategy and integration with D.R. Horton are central to driving steady lot sales regardless of short-term housing cycles.

Dedicated sales and support for high-volume, long-term contracts

The relationship with D.R. Horton provides significant revenue visibility. For the fiscal year ended September 30, 2025, Forestar Group Inc. sold a total of 14,240 lots. A significant majority of these sales are directed to the anchor customer. For instance, in the third quarter of fiscal 2025 (ended June 30, 2025), Forestar sold 3,605 lots, with an estimated 3,075 lots going to D.R. Horton (calculated as 3,605 total lots minus 530 lots sold to other customers). Furthermore, at June 30, 2025, 18,500 owned lots were subject to a right of first offer to D.R. Horton based on executed purchase and sale agreements, representing about 27% of owned lots at that time.

Transactional, direct sales to other national and regional homebuilders

While D.R. Horton is the primary customer, Forestar Group Inc. actively cultivates transactional sales with other builders to diversify its customer base. This segment is a focus for growth. For the full fiscal year 2025, the lots sold to customers other than D.R. Horton accounted for an estimated 17.5% of the total volume, or approximately 2,489 lots. This diversification effort is showing traction; for the nine months ended June 30, 2025, sales to non-D.R. Horton customers reached 1,661 lots, a notable increase from 852 lots in the same period of fiscal 2024. Still, you need to watch the concentration risk; a portion of these sales, like the 331 lots sold in Q3 2025, went to lot bankers expecting to sell them onward to D.R. Horton.

Here's the quick math on Forestar Group Inc.'s lot sales for the fiscal year ended September 30, 2025:

Relationship management with build-to-rent operators

Forestar Group Inc. manages relationships with build-to-rent (BTR) operators, recognizing the growing demand for single-family rental product. While specific Forestar financial data tied directly to BTR sales volume for 2025 isn't explicitly broken out in the latest reports, the company's national footprint across 23 states and 64 markets positions it to service this sector. The general market trend shows BTR starts were significant in 2024, and Forestar's focus on providing finished lots supports this evolving customer need.

Investor relations for publicly traded stock (NYSE: FOR)

As a publicly traded entity on the NYSE under the ticker FOR, Forestar Group Inc. maintains standard investor relationships to ensure capital market access and transparency. The company's financial health directly impacts investor perception of this relationship-driven model. Key metrics as of September 30, 2025, include:

• Book value per share increased 11% to $34.78.
• Total liquidity stood at $968.1 million.
• Net debt to total capital ratio was 19.3%.
• Pre-tax profit margin for fiscal 2025 was 13.2% on $1.7 billion in consolidated revenues.

The stock performance and valuation reflect the market's view of the D.R. Horton integration. Finance: draft 13-week cash view by Friday.

Forestar Group Inc. (FOR) - Canvas Business Model: Channels

You're looking at how Forestar Group Inc. gets its finished lots into the hands of homebuilders as of late 2025. The channel strategy is heavily weighted toward a few key relationships, which is typical for a specialized lot developer, but the scale is national.

The direct sales effort targets both national and regional homebuilders, but the relationship with its majority owner, D.R. Horton, is the central pillar of volume. This isn't just a handshake; it's formalized through agreements that give D.R. Horton a first look at inventory.

Here's a quick math look at the customer mix based on the fiscal year ended September 30, 2025, which shows where the direct sales team is focusing its efforts:

The long-term master supply agreement with D.R. Horton is key to managing asset turns. As of September 30, 2025, Forestar Group Inc. had a total lot position of 99,800 lots owned and controlled. Of the owned lots, 27% were subject to a right of first offer to D.R. Horton, meaning the largest homebuilder in the U.S. has contractual priority on a significant portion of the developed inventory. This relationship underpins the $1.7 billion in consolidated revenues reported for fiscal 2025.

For transparency and stakeholder access, the company uses digital channels to disseminate official information. You can find the latest financial results, like the fiscal 2025 net income of $167.9 million and the book value per share of $34.78, on the company website. The dedicated portal for this data is investor.forestar.com.

The physical presence supporting these sales channels is broad, allowing Forestar Group Inc. to serve diverse regional demands. This geographic diversification is a deliberate strategy to mitigate local economic risks. As of September 30, 2025, the company's physical footprint included:

• Active projects in 64 markets.
• Operations spanning 23 states.
• A total owned and controlled lot position of 99,800 lots.

Finance: draft 13-week cash view by Friday.

Forestar Group Inc. (FOR) - Canvas Business Model: Customer Segments

You're looking at the core of Forestar Group Inc.'s business, which is supplying the raw material-finished lots-to the companies that build the houses. As of late 2025, the customer base is highly concentrated, which is both a source of stability and a point of risk you need to watch.

The primary customer base is focused on homebuilders constructing homes for entry-level, first-time move-up, and active adult buyers. Forestar Group Inc. operates across 64 markets in 23 states, giving it a geographically diversified platform to serve these builders. The company delivered 14,240 lots in fiscal year 2025, generating consolidated revenues of $1.7 billion.

D.R. Horton, Inc., the largest U.S. homebuilder by volume

This relationship is the single most important dynamic for Forestar Group Inc. D.R. Horton, Inc. is the controlling stockholder, having acquired 75% of Forestar Group Inc. back on October 5, 2017. This integration means D.R. Horton is the anchor customer, providing a baseline for lot demand. For the fiscal year ended September 30, 2025, the sales volume clearly shows this concentration.

Other national and regional homebuilders seeking lot supply

These customers represent the diversification away from the controlling stockholder. Forestar Group Inc. actively markets to these builders to ensure its lot production aligns with broader market demand. Sales to these entities are growing, which is a positive sign for market penetration.

Local homebuilders in specific high-growth metropolitan areas

While Forestar Group Inc. operates nationally, its strategy involves tailoring lot supply to local market needs, which naturally includes smaller, local builders active in those specific high-growth metropolitan areas. These builders rely on Forestar Group Inc. to efficiently control lot positions and takedown schedules.

Build-to-rent operators for single-family rental communities

Forestar Group Inc. markets some of its communities toward build-to-rent (BTR) operators. While this segment is mentioned, the hard data from fiscal year 2025 lot sales primarily focuses on the traditional single-family homebuilders, suggesting BTR is a smaller, emerging component of the customer mix.

Here's the quick math on the lot sales breakdown for fiscal year 2025, which shows you the customer concentration:

You should note the activity with lot bankers, which blurs the line between direct and indirect sales to D.R. Horton. In fiscal 2025, 927 lots were sold to lot bankers who expect to sell those lots to D.R. Horton later, up significantly from 124 lots in fiscal 2024. This suggests a strategic pipeline management involving D.R. Horton's future needs.

The total inventory position as of September 30, 2025, gives you a view of future customer fulfillment:

• Owned and controlled lots: 99,800 lots.
• Owned lots: 65,100 lots.
• Lots controlled through purchase contracts: 34,700 lots.
• Owned lots under contract to be sold: 23,800 lots (representing approximately $2.1 billion of future revenue).

The fact that 23,800 lots are already contracted for sale out of 65,100 owned lots shows a high degree of sales visibility with existing customers.

Finance: draft 13-week cash view by Friday.

Forestar Group Inc. (FOR) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive Forestar Group Inc.'s business, which is fundamentally about buying, developing, and selling land to homebuilders. The cost structure is heavily weighted toward the inventory itself and the work needed to make that inventory ready for construction.

Significant investment in land acquisition and development (Real Estate of $2.8 billion at 6/30/2025)

The single largest asset category, representing the raw material and work-in-progress, is the Real Estate held for development and sale. As of the end of the third fiscal quarter, June 30, 2025, the balance sheet showed $2.8 billion in Real Estate assets. By the close of the full fiscal year 2025, September 30, 2025, this figure settled at $2.6 billion. This massive investment underpins the entire operation.

Cost of lots sold, which is the largest component of revenue

When Forestar Group Inc. recognizes revenue, the corresponding cost-the cost of the developed lot-is the biggest expense. For the full fiscal year ended September 30, 2025, Revenues were $1.7 billion (or $1,662.4 million). The corresponding Cost of Sales for that same period was $1,298.9 million. This means the Cost of Sales consumed approximately 78.13% of the total revenue for fiscal year 2025.

Here is a look at the primary cost components relative to the full fiscal year 2025 performance:

Interest expense on debt, including 6.50% senior unsecured notes

Financing the land inventory requires debt, which results in interest expense. Forestar Group Inc. is active in the debt markets; for instance, in March 2025, the company completed a $500 million offering of 6.500% senior unsecured notes due 2033. Total Debt on the balance sheet at June 30, 2025, stood at $872.8 million. While the exact total interest expense for the full year 2025 isn't explicitly broken out in the summary results, the cost of servicing this debt is a definite, ongoing cash outflow.

General and administrative expenses for national operations

Managing operations across 64 markets in 23 states requires overhead. Selling, General and Administrative (SG&A) expense for the entire fiscal year 2025 was $154.4 million. This represented 9.3% of total revenues for the year. For context, the fourth quarter of fiscal 2025 alone saw SG&A of $37.4 million.

Development costs for infrastructure (roads, utilities, entitlements)

These costs are embedded within the Real Estate asset value and ultimately flow through Cost of Sales upon lot delivery. These are the costs of entitlement, grading, and installing roads and utilities. The scale of investment planned for this area shows its significance to the cost base. For the full fiscal year 2025, Forestar Group Inc. planned to invest approximately $2.0 billion in land acquisition and development. The nine months ended June 30, 2025, saw land acquisition and development investments totaling $684.4 million in the first quarter alone.

The cost structure is dominated by inventory acquisition and the associated development spend required to create the finished lot.

• Land and Lot Purchase Contracts (Owned and Controlled Lots): 102,300 lots as of June 30, 2025.
• Lots Under Contract to be Sold (Future Revenue): 25,700 lots, representing approximately $2.3 billion of future revenue as of June 30, 2025.
• Debt Interest Rate on New Notes: 6.500%.

Finance: draft 13-week cash view by Friday.

Forestar Group Inc. (FOR) - Canvas Business Model: Revenue Streams

The primary revenue stream for Forestar Group Inc. is the Sale of finished residential lots to homebuilders. This is the core of the business, where Forestar acquires, develops, and services land, delivering fully developed lots ready for vertical construction to builders.

For the full fiscal year 2025, Forestar Group Inc. achieved consolidated revenues of approximately $1.7 billion, based on the sale of 14,240 lots sold. The average sales price per lot for the year ended September 30, 2025, was $108,400. This revenue generation is supported by a significant contracted backlog.

As of September 30, 2025, the contracted future revenue, secured by lots under contract for sale, stood at approximately $2.1 billion. This figure is backed by 23,800 lots under contract for sale, representing 37% of the company's owned lot position at that date.

The overall financial performance for the fiscal year 2025 included a net income that totaled $167.9 million.

A notable trend within the revenue streams is the growth in Revenue from lot sales to customers other than D.R. Horton, which is a growing segment, indicating diversification away from its primary relationship. For the full fiscal year 2025, lots sold to customers other than D.R. Horton reached 2,489 lots, a clear increase from the 1,801 lots sold to these customers in fiscal 2024. This trend of increasing sales to third-party builders was evident throughout the year, with 530 lots sold to non-D.R. Horton customers in the third quarter of 2025, up from 352 lots in the third quarter of 2024.

You can see the key year-end 2025 figures laid out here:

The revenue stream is also supported by the company's total lot position, which stood at 99,800 lots (owned and controlled) at the end of fiscal 2025. This inventory scale is what allows Forestar Group Inc. to consistently supply finished lots.

• Lots owned at September 30, 2025: 65,100
• Lots controlled through purchase contracts: 34,700
• Owned lots that were fully developed: 8,900

Also, remember that 27% of Forestar Group Inc.'s owned lots were subject to a right of first offer to D.R. Horton based on existing agreements as of September 30, 2025.

Finance: review the Q1 2026 revenue guidance against the $268.3 million analyst estimate by next Tuesday.