Forestar (FOR) 8-K Forestar Real Estate Group Inc. Reports Fourth Quarter and Full Year 2007 Results

Exhibit 99.1

NEWS

RELEASE

FOR IMMEDIATE RELEASE
CONTACT: Chris L. Nines
                      (512) 433-5210

FORESTAR REAL ESTATE GROUP INC. REPORTS
FOURTH QUARTER AND FULL YEAR 2007 RESULTS

     AUSTIN, TEXAS, February 6, 2008—Forestar Real Estate Group Inc. (NYSE: FOR) today reported essentially break-even results in fourth quarter 2007. Net income for full year 2007 was $24.8 million, or $0.69 per proforma diluted share.

     “The spin-off of Forestar Real Estate Group Inc. as an independent company from Temple-Inland Inc. was completed December 28, 2007,” said Jim DeCosmo, president and chief executive officer of Forestar Real Estate Group. “Forestar is focused on maximizing long-term shareholder value through entitlement and development of real estate, realization of value from natural resources and accelerated growth through strategic and disciplined investment.

     “Results for Forestar Real Estate Group are reported in two business segments: real estate and natural resources. Forestar real estate includes about 373,000 acres of land owned directly or through ventures located in ten states and thirteen markets. Forestar natural resources includes 622,000 net acres of oil and gas mineral interests. In addition, Forestar sells wood fiber from its land primarily located in Georgia.

     “Our 2007 value creation activities include:

- Entitling approximately 1,700 acres, representing over 900 residential lots, and moving nearly 4,300 acres into the entitlement process

- Negotiating 58% ownership interest in Ironstob, LLC venture with the Jones Company which includes 17,000 acres of undeveloped land

- Entering into an agreement with Marriott, TPC, and Miller Global for the development of a Marriott resort hotel, spa and two TPC golf facilities at our Cibolo Canyons mixed-use development near San Antonio, Texas

- Acquiring nearly 3,700 acres, representing 5,500 estimated residential lots and 140 commercial acres

- Leasing to oil and gas companies approximately 30,000 net mineral acres for exploration and production activities

Real Estate

	4th Qtr.			4th Qtr.		3rd Qtr.		Year		Year
Segment Earnings	2007			2006		2007		2007		2006
($ in Millions)		($0.2	)	$	15.4	$	13.0	$	39.5	$	70.3

     Fourth quarter 2007 segment earnings were negatively impacted by $3.9 million impairment expense principally associated with a commercial golf club operation in Granbury, Texas.

Sales Activity

	Q4 2007		Full Year 2007
	Sales	Price	Sales	Price
Undeveloped Land	693 acres	$5,900 / acre	2,617 acres	$6,700 / acre
Residential Lots	309 lots	$45,900 / lot	1,707 lots	$52,900 / lot
Commercial Acres	23 acres	$390,600 / acre	198 acres	$261,200 / acre

     Including joint-venture activity, 693 acres of undeveloped land were sold during fourth quarter 2007 at an average sales price of approximately $5,900 per acre.

     Residential development activity for all wholly and partially-owned projects during fourth quarter 2007 included the sale of 309 lots at an average price of approximately $45,900 per lot.

     Commercial activity for all wholly and partially-owned projects during fourth quarter 2007 included the sale of 23 acres at an average price of $390,600 per acre.

Real Estate Pipeline

     Forestar’s real estate segment includes about 373,000 acres of land owned directly or through ventures located in ten states and thirteen markets.

			In				Developed &
			Entitlement				Under		Total
Real Estate	Undeveloped		Process		Entitled		Development		Acres*
Undeveloped Land
Owned		320,458								327,821
Ventures		7,363
Residential
Owned				24,814		7,885		445		40,282
Ventures				870		4,905		1,363
Commercial
Owned				2,906		658		324		4,761
Ventures						585		288
Total Acres		327,821		28,590		14,033		2,420		372,864
Estimated Residential Lots						24,760		5,090		29,850

* Total acres excludes Forestar’s 58% ownership interest in Ironstob, LLC venture with Jones Company which controls approximately 17,000 acres of undeveloped land.

2 

Entitlement Activity

     At year end 2007, Forestar has 24 real estate projects representing over 28,000 acres in the entitlement process, including ventures. During fourth quarter 2007, two projects, representing 741 acres were entitled, which include over 290 residential lots.

     “Our real estate operation continues to focus on maximizing long-term shareholder value through the entitlement process,” said Mr. DeCosmo. “During 2007, nearly 4,300 acres of undeveloped land were moved into entitlement. In addition, seven projects, comprising approximately 1,700 acres were entitled in 2007, which represent over 900 residential lots.”

     Including venture activity, Forestar currently has approximately 14,033 acres of entitled land, representing approximately 24,760 residential lots and 1,243 commercial acres.

Development Activity

     Forestar has 2,420 acres developed and under development directly or through ventures, which represent 5,090 lots and 612 commercial acres.

     In 2007, Forestar entered into an agreement with Marriott, TPC, and Miller Global for the development of a 1,002 room Marriott resort hotel, spa and two TPC golf facilities at our 2,800 acre Cibolo Canyons mixed-use development near San Antonio, Texas

     “Forestar is focused on investment in development where market conditions support lot sales to homebuilders,” said Mr. DeCosmo.

Venture Activity

     During fourth quarter 2007, the company entered into the Ironstob, LLC venture with The Jones Company, Ltd. of Dallas, Georgia. The venture controls approximately 17,000 acres of undeveloped land in Georgia owned by The Jones Company. This land is located principally in Paulding County, and is subject to a long-term timber lease with Forestar Real Estate Group. Forestar is the venture’s managing member with 58% ownership and Atlanta-based Bullock-Mannelly Partners will serve as the local operating manager. “This venture further improves our company’s strategic land positions in Georgia, and provides significant long-term value for our shareholders,” said Mr. DeCosmo.

Investment Activity

     During 2007, Forestar invested $54.4 million in nine real estate projects, which include 3,600 acres of residential and 140 acres of commercial property. Seven of the nine projects acquired were in the major markets of Texas.

     “Forestar continues to examine opportunities to acquire discounted real estate assets,” said Mr. DeCosmo.

3 

Natural Resources

	4th Qtr.		4th Qtr.		3rd Qtr.		Year		Year
Segment Earnings	2007		2006		2007		2007		2006
($ in Millions)	$	7.5	$	2.8	$	8.3	$	26.5	$	33.0

     Fourth quarter 2007 segment earnings include a $2.2 million gain from the partial termination of a timber lease with the Jones Company in connection with the formation of the Ironstob venture.

Mineral Activity

     Forestar owns 622,000 net acres of oil and gas mineral interests in Texas, Louisiana, Alabama and Georgia.

Mineral Value Chain	YE 2007 Net Acres		2007 Revenues
Royalty Interest		25,000	$13.1 million
Leased		77,000	$7.7 million
Available for Lease*		520,000
Total		622,000	$20.8 million

* Includes approximately 46,000 net acres subject to a lease option.

     During 2007, Forestar leased 30,000 net mineral acres generating $7.7 million from lease bonuses and delay rental payments. In addition, Forestar received royalty interest revenues from 331 producing wells owned and operated by third parties on its mineral acres, up from 294 active wells at year end 2006. During 2007, our share of oil and gas produced related to our royalty interests was over 87,000 barrels of oil and approximately 500,000 MCF of natural gas.

     “Forestar continues to benefit from high oil and gas prices,” said Mr. DeCosmo.

Fiber Sales Activity

     During 2007 Forestar generated $13.7 million in revenues from the sale of approximately 1.2 million tons of fiber, the majority of which was sold to Temple-Inland Inc. at market prices.

Comments

     In announcing fourth quarter and full year 2007 results, Mr. DeCosmo said, “Despite challenging market conditions for our real estate segment, we remain committed to maximizing long-term shareholder value through entitlement and development of real estate and realization of value from natural resources.

     “In addition, we are also committed to increasing the value of our land through economic development activities. During 2007, we hired Glenn Cornell, former Commissioner of the Georgia Department of Economic Development, as senior vice president of economic development in Georgia. Glenn brings more than 40 years of statewide business and economic

4

development experience, including leadership positions in government, banking, and real estate. We believe his unique qualifications will assist in the execution of Forestar’s strategy to maximize and grow long-term shareholder value.”

     “Forestar’s management team is excited about our spin-off from Temple-Inland, and is committed to executing our strategy to deliver long-term value for shareholders,” concluded Mr. DeCosmo.

     The Company will host a conference call on February 6, 2008 at 11:00 am EDT to discuss results of fourth quarter and full year 2007. 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 1-800-638-5439 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-614-3945. 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 1-888-286-8010 in North America and at 1-617-801-6888 outside North America. The password for the replay is 88089998.

About Forestar Real Estate Group

     Forestar Real Estate Group Inc. operates in two business segments: real estate and natural resources. The real estate segment owns directly or through ventures about 373,000 acres of real estate located in ten states and thirteen markets in the U.S. The real estate segment has 24 real estate projects representing over 28,000 acres currently in the entitlement process and over 75 active development projects in eight states and 12 markets encompassing approximately 16,000 acres, comprised of about 30,000 residential lots and approximately 1,900 commercial acres. The natural resources segment manages about 622,000 net acres of oil and gas mineral interests, sells wood fiber from its land primarily located in Georgia, and leases land for recreational uses. Forestar’s address on the World Wide Web iswww. forestargroup.com.

Forward-looking Statements

This release contains “forward-looking statements” within the meaning of the federal securities laws. 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. Factors and uncertainties that might cause such differences include, but are not limited to: general economic, market, or business conditions; the 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 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.

5

FORESTAR REAL ESTATE GROUP
UNAUDITED

Business Segments

	Fourth Quarter						Full Year
	2007			2006			2007			2006
	(In thousands,						(In thousands,
	Except per share)						except per share)
Revenues
Real estate	$	27,462		$	35,154		$	142,729		$	180,151
Natural resources		8,151			6,958			35,257			45,409
Total revenues	$	35,613		$	42,112		$	177,986		$	225,560
Segment earnings
Real estate	$	(223	)	$	15,439		$	39,507		$	70,271
Natural resources		7,481			2,784			26,531			33,016
Total segment earnings		7,258			18,223			66,038			103,287
Expenses not allocated to segments
General and administrative		(5,158	)		(3,675	)		(17,413	)		(14,048	)
Share-based compensation		481			(361	)		(1,397	)		(1,275	)
Interest expense		(2,768	)		(1,549	)		(9,229	)		(6,229	)
Other non-operating income (expense)		251			71			705			79
Income before taxes		64			12,709			38,704			81,814
Income (taxes) benefit		42			(4,774	)		(13,909	)		(29,970	)
Net income	$	106		$	7,935		$	24,795		$	51,844
Proforma diluted earnings per share:
Net income	$	—		$	n/a		$	0.69		$	n/a
Proforma average diluted shares outstanding		36.0			n/a			36.1			n/a
Reconciliation of Non-GAAP Financial Measures:
Weighted avg. shares outstanding — basic		35.4						35.4
Proforma dilutive effect of stock options		0.6						0.7
Proforma weighted avg. shares outstanding — diluted		36.0						36.1

	Full Year
Supplemental Financial Information	2007		2006
($ in thousands)
Borrowings under credit facility	$	175,000	$	110,506
Other debt*		91,015		50,611
Total Debt	$	266,015	$	161,117

* Consists principally of consolidated venture non-recourse debt.

6

A summary of projects in the entitlement process^(a) at year-end 2007 follows:

		Project
Project	County	Acres(b)
California
Hidden Creek Estates	Los Angeles	700
Terrace at Hidden Hills	Los Angeles	30
Georgia
Ball Ground	Cherokee	500
Burt Creek	Dawson	970
Corinth Landing	Coweta	850
Crossing	Coweta	230
Fincher Road	Cherokee	1,060
Fox Hall	Coweta	930
Garland Mountain	Cherokee/Bartow	350
Genesee	Coweta	720
Grove Park	Coweta	150
Home Place	Coweta	1,500
Jackson Park	Jackson	690
Lithia Springs	Haralson	120
Mill Creek	Coweta	770
Pickens School	Pickens	420
Serenity	Carroll	440
Waleska	Cherokee	150
Wolf Creek	Carroll	12,230
Yellow Creek	Cherokee	1,060
Texas
Lake Houston	Harris/Liberty	3,700
San Jacinto	Montgomery	150
Entrada(c)	Travis	240
Woodlake Village(c)	Montgomery	630
Total		28,590

(a)	A project is deemed to be in the entitlement process when customary steps necessary for the preparation and submittal of an application, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining, and there is no assurance that entitlements ultimately will be received.
(b)	Project acres, which are the total for the project regardless of our ownership interest, are approximate. The actual number of acres entitled may vary.
(c)	We own a 50% interest in these projects.

7

     A summary of activity within our entitled,^(a) developed and under development projects at year-end 2007 follows:

			Residential Lots(c)				Commercial Acres(d)
			Lots Sold				Acres Sold
		Interest	Since		Lots		Since		Acres
Project	County	Owned(b)	Inception		Remaining		Inception		Remaining
Projects we own
California
San Joaquin River	Contra Costa	100%		—		—		—		285
Colorado
Buffalo Highlands	Weld	100%		—		164		—		—
Johnstown Farms	Weld	100%		115		699		—		—
Pinery West	Douglas	100%		—		—		—		115
Stonebraker	Weld	100%		—		603		—		13
Westlake Highlands	Jefferson	100%		—		21		—		—
Texas
Arrowhead Ranch	Hays	100%		—		232		—		5
Caruth Lakes	Rockwall	100%		245		404		—		—
Cibolo Canyons	Bexar	100%		466		1,283		64		81
Harbor Lakes	Hood	100%		197		252		—		14
Harbor Mist	Calhoun	100%		—		1,393		—		36
Hunter’s Crossing	Bastrop	100%		308		183		23		83
Katy Freeway	Harris	100%		—		—		38		—
La Conterra	Williamson	100%		—		509		—		60
Maxwell Creek	Collin	100%		594		429		—		—
Oak Creek Estates	Comal	100%		—		648		13		—
The Colony	Bastrop	100%		380		1,045		22		50
The Gables at North Hill	Collin	100%		193		90		—		—
The Preserve at Pecan Creek	Denton	100%		156		663		—		9
The Ridge at Ribelin Ranch	Travis	100%		—		—		179		22
Westside at Buttercup Creek	Williamson	100%		1,239		289		66		—
Other projects (10)	Various	100%		2,879		128		233		48
Georgia
Towne West	Bartow	100%		—		2,674		—		121
Other projects (9)	Various	100%		—		1,777		—		40
Missouri and Utah
Other projects (3)	Various	100%		775		242		—		—
				7,547		13,728		638		982
Projects in entities we consolidate
Texas
City Park	Harris	75%		873		438		50		115
Lantana	Denton	55%(e)		346		2,004		—		—
Light Farms	Collin	65%		—		2,501		—		—
Stoney Creek	Dallas	90%		1		753		—		—
Timber Creek	Collin	88%		—		654		—		—
Other projects (6)	Various	Various		997		387		24		23
Tennessee
Youngs Lane	Davidson	60%		—		—		—		16
				2,217		6,737		74		154
Total owned and consolidated				9,764		20,465		712		1,136
Projects in ventures that we account for using the equity method
Georgia
Seven Hills	Paulding	50%		627		453		26		—
The Georgian	Paulding	38%		287		1,098		—		—
Other projects (5)	Various	Various		1,844		188		3		—
Texas
Bar C Ranch	Tarrant	50%		175		1,006		—		—
Fannin Farms West	Tarrant	50%		236		207		—		—
Lantana	Denton	Various(e)		1,764		84		3		77
Long Meadow Farms	Fort Bend	19%		598		1,508		24		186
Southern Trails	Brazoria	40%		250		812		—		—
Stonewall Estates	Bexar	25%		114		138		—		—
Summer Creek Ranch	Tarrant	50%		793		1,695		—		374
Summer Lakes	Fort Bend	50%		294		850		48		3
Village Park	Collin	50%		335		234		—		5
Waterford Park	Fort Bend	50%		—		493		—		37
Other projects (3)	Various	Various		282		247		—		37
Florida
Other projects (3)	Various	Various		473		372		—		—
Total in ventures				8,072		9,385		104		719
Combined Total				17,836		29,850		816		1,855

8

(a)	A project is deemed entitled when all major discretionary land-use approvals have been received. Some projects may require additional permits for development.
(b)	Interest owned reflects our equity interest in the project, whether owned directly or indirectly. There are some projects that have multiple ownership structures within them. Accordingly, portions of these projects may appear as owned, consolidated and/or accounted for using the equity method.
(c)	Lots are for the total project, regardless of our ownership interest.
(d)	Commercial acres are for the total project, regardless of our ownership interest and are net developable acres, which may be fewer than the gross acres available in the project.
(e)	The Lantana project consists of a series of 21 partnerships in which our voting interests range from 25% to 55%. We account for eight of these partnerships using the equity method and we consolidate the remaining partnerships.

9