Austin’s Forestar Group selling assets in $232 million deal

Feb 08, 2018
  • By Staff
  • American-Statesman staff

Less than a year after it made a bid to take over Austin-based Forestar Group, Connecticut-based investment firm Starwood Capital Group is now buying a chunk of assets from the Austin real estate development company.

Starwood Capital Group said Thursday that is teaming with an affiliate of Land Strategies Management to purchase 20 community development projects from Forestar Group. The deal is valued at $232 million, Forestar Group said in a filing with the U.S. Securities and Exchange Commission.

The 20 projects consist of about 750 lots that are either already developed or under development, along with nd more than 4,000 undeveloped lots, 730 unentitled acres and an interest in another multifamily operating property, Forestar Group said in a news release.

“We are excited about this transaction with Starwood that generates significant cash flow,” Donald J. Tomnitz, executive chairman of the Forestar board, said in a written statement. “Divesting these legacy projects will help streamline our business and provide capital for future growth. We plan to invest this capital primarily into new land development projects to improve returns and enhance value for our shareholders.”

The asset sale comes less than a year after Starwood initiated a takeover bid for Forestar Group. That bid failed when Dallas-based D.R. Horton Inc. issued a competing offer, and eventually outbid Starwood.

Forestar Group shareholders approved the D.R. Horton offer in October, agreeing to accept $17.75 per share in a deal worth about $560 million. Before the transaction, Forestar Group said it would remain a public company to retain access to public capital markets and secure funds for new land deals and other transactions. It also said it would continue to run its residential and mixed-use real estate development operations from Austin.

Forestar Group was spun off from the former Temple-Inland Inc. in 2007. Through the years Forestar Group has operated in real estate, oil and gas and other natural resources. It currently operates as a residential and mixed-use real estate development company.