8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: February 4, 2009
(Date of earliest event reported)

FORESTAR GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware	Commission File Number	26-1336998
(State or other jurisdiction of incorporation or organization)	001-33662	(I.R.S. Employer Identification No.)

6300 Bee Cave Road, Building Two, Suite 500
Austin, Texas 78746
(Address of principal executive offices) (zip code)

(512) 433-5200
(Registrant’s telephone number, including area code)

1300 MoPac Expressway South, Suite 3S
Austin, Texas 78746
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On February 4, 2009, Forestar Group Inc. issued a press release announcing the company’s earnings for the quarter and year ended December 31, 2008. A copy of the press release is furnished as exhibit 99.1 of this report.

Item 7.01. Regulation FD Disclosure.

     On February 4, 2009, management of Forestar Group Inc. participated in a conference call discussing the Company’s earnings for the quarter and year ended December 31, 2008. A copy of the presentation materials used in the call is furnished as exhibit 99.2 of this report.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press release issued by Forestar Group Inc. on February 4, 2009, announcing the company’s earnings for the quarter and year ended December 31, 2008.
99.2	Presentation materials used by management in a conference call on February 4, 2009, discussing the company’s earnings for the quarter and year ended December 31, 2008.

SIGNATURE

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FORESTAR GROUP INC.
Date: February 4, 2009	By:	/s/ Christopher L. Nines
		Name:	Christopher L. Nines
		Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description	Page
99.1	Press release issued by Forestar Group Inc. on February 4, 2009, announcing the company’s earnings for the quarter and year ended December 31, 2008		4
99.2	Presentation materials used by management in a conference call on February 4, 2009, discussing the company’s earnings for the quarter and year ended December 31, 2008

EX-99.1

Exhibit 99.1

NEWS
RELEASE ________________________________________________________________________________________________

FOR IMMEDIATE RELEASE
CONTACT: Chris L. Nines

 (512) 433-5210

FORESTAR GROUP INC. REPORTS FOURTH
QUARTER AND FULL YEAR 2008 RESULTS

     AUSTIN, TEXAS, February 4, 2009—Forestar Group Inc. (NYSE: FOR) today reported fourth quarter 2008 net income of $1.7 million, or $0.05 per diluted share, compared with essentially break-even results in fourth quarter 2007. Net income for full year 2008 was $12.0 million, or $0.33 per diluted share, compared with full year 2007 net income of $24.8 million, or $0.70 per diluted share.

     “Despite unprecedented market conditions that are negatively affecting the economy and those segments that we serve, we were able to report a profitable fourth quarter and full year 2008 primarily because of our success in executing a sound, long-term business plan. Our results reflect the benefit of leasing and royalty income related to our oil and gas minerals, a low cost operation and executing our value creation strategy for real estate and natural resources assets,” said Jim DeCosmo, president and chief executive officer of Forestar Group. “Our near term strategic initiatives are focused on increasing free cash flow by generating sales across all lines of business, continued reduction of investment in development activity and lowering our costs. We remain committed to maximizing long-term shareholder value.”

     Mr. DeCosmo noted that the company’s 2008 value creation activities included:

• Leasing 61,500 net mineral acres to oil and gas companies for exploration and production activities

• Recruiting new minerals team to accelerate maximizing value of Forestar’s 622,000 net mineral acres through leasing, royalties and additional participation in production revenues

• Actively pursuing entitlement on additional 7,300 acres

• Entitling five projects which include over 2,500 acres, representing over 1,050 residential lots and 580 commercial acres

• Investing $34.9 million in our Cibolo Canyons mixed-use development in San Antonio, Texas which includes the 1,002 room J.W. Marriott hotel and golf resort (expected to open in early 2010). When the hotel opens, Forestar will receive revenues related to the hotel’s occupancy and sales taxes each year through 2034.

     Forestar Group manages its operations through three business segments:

• Real estate,

• Mineral resources, and

• Fiber resources

     Our real estate segment includes over 365,000 acres of land owned directly or through ventures located in ten states and thirteen markets. Mineral resources include about 622,000 net acres of oil and gas mineral interests located in Texas, Louisiana, Alabama and Georgia. Mineral resources also include a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.38 million acres in Texas, Louisiana, Georgia and Alabama. Fiber resources include the sale of wood fiber, primarily in Georgia, and manages our recreational leases.

REAL ESTATE

	Quarterly Results							Annual Results
	4th Qtr.		4th Qtr.			3rd Qtr.		Year		Year
($ in Millions)	2008		2007			2008		2008		2007
Segment Earnings	$	3.0		($0.2	)	$	1.7	$	9.1	$	39.5

     Segment earnings were negatively impacted by impairment expenses of $3.3 million in fourth quarter 2008 and $3.9 million in fourth quarter 2007.

Fourth Quarter 2008
Real Estate Sales Activity

	Q4 2008		Q4 2007
	Sales	Price	Sales	Price
Undeveloped Land*	2,436 acres	$4,600 / acre	693 acres	$5,900 / acre
Residential Lots*	259 lots	$37,600 / lot	309 lots	$45,900 / lot
Commercial Acres*	28 acres	$265,900 / acre	23 acres	$390,600 / acre

* Includes venture activity

     Including venture activity, over 2,400 acres of undeveloped land were sold during fourth quarter 2008 at an average sales price of approximately $4,600 per acre. During fourth quarter 2008, 469 acres of undeveloped land were sold for $10,650 per acre for conservation uses.

     Residential sales activity for all wholly and partially-owned projects during fourth quarter 2008 included the sale of 259 lots at an average price of approximately $37,600 per lot, including a bulk sale of our remaining 117 residential lots for $11,100 per lot at our Parks of Deer Creek project located near Fort Worth, Texas. Excluding this bulk sale, average residential lot prices in fourth quarter 2008 would have been $59,500 per lot, compared with $45,900 per lot in fourth quarter 2007.

2

     Commercial activity for all wholly and partially-owned projects during fourth quarter 2008 included the sale of 28 acres at an average price of approximately $265,900 per acre.

Full Year 2008
Real Estate Sales Activity

	Full Year 2008		Full Year 2007
	Sales	Price	Sales	Price
Undeveloped Land*	6,063 acres	$4,800 / acre	2,617 acres	$6,700 / acre
Residential Lots*	1,060 lots	$48,500 / lot	1,707 lots	$52,900 / lot
Commercial Acres*	120 acres	$232,400 / acre	198 acres	$261,200 / acre

* Includes venture activity

     Including venture activity, over 6,000 acres of undeveloped land were sold during 2008 at an average sales price of approximately $4,800 per acre.

     Residential sales activity for all wholly and partially-owned projects during 2008 included the sale of 1,060 residential lots at an average price of approximately $48,500 per lot. Excluding the bulk sale during fourth quarter 2008 at our Parks of Deer Creek Project located near Fort Worth, Texas, average residential lot prices for 2008 would have been $53,200 per lot.

     Commercial activity for all wholly and partially-owned projects during 2008 included the sale of 120 acres at an average price of approximately $232,400 per acre.

Real Estate Pipeline

     At year end 2008, Forestar’s real estate segment includes over 365,000 acres of land owned directly or through ventures located in ten states and thirteen markets.

YE 2008 Real Estate Pipeline

			In Entitlement				Developed & Under
Real Estate	Undeveloped		Process		Entitled		Development		Total Acres*
Undeveloped Land
Owned		307,996
Ventures		6,877								314,873
Residential
Owned				28,578		7,939		753
Ventures				1,080		4,641		1,258		44,249
Commercial
Owned				4,062		1,002		494
Ventures				—		520		256		6,334
Total Acres		314,873		33,720		14,102		2,761		365,456
Estimated Residential Lots						25,488		4,421		29,909

* Total acres excludes Forestar’s 58% ownership interest in the Ironstob, LLC venture which controls over 16,000 acres of undeveloped land located in Georgia.

3

Entitlement Activity

     Forestar has 25 real estate projects representing over 33,700 acres in the entitlement process, including ventures. During 2008, Forestar is actively pursuing entitlement on an additional 7,300 acres and has entitled five projects including over 2,500 acres, representing over 1,050 residential lots, and 580 commercial acres.

     Including venture activity, Forestar has over 14,100 acres of entitled land, representing almost 25,500 residential lots and over 1,500 commercial acres.

Development and Investment Activity

     Forestar has almost 2,800 acres developed and under development owned directly or through ventures.

     During fourth quarter 2008, Forestar did not acquire additional real estate projects. However, the company invested $12.3 million in development of our existing owned and consolidated projects, and an additional $10.5 million in our Cibolo Canyons mixed-used development located near San Antonio, Texas.

     For the year 2008, the company invested $64.3 million in development of our existing owned and consolidated projects, and an additional $34.9 million in Cibolo Canyons. In addition, we contributed approximately $17.8 million to unconsolidated ventures, principally related to Palisades West, a commercial office venture with Cousins Properties and Dimensional Fund Advisors located in Austin, Texas.

     “During fourth quarter and full year 2008, our investment activity was focused on our contractual commitments to Cibolo Canyons and Palisades West, and our remaining investment in development was located principally in the major markets of Texas, where we continue to generate sales activity,” said Mr. DeCosmo.

MINERAL RESOURCES

	Quarterly Results						Annual Results
	4th Qtr.		4th Qtr.		3rd Qtr.		Year		Year
Segment Earnings	2008		2007		2008		2008		2007
($ in Millions)	$	6.1	$	3.7	$	8.2	$	44.1	$	18.6

     Full year 2008 mineral resources segment earnings include $24.9 million in bonus payments associated with leasing over 61,500 net mineral acres.

4

Mineral Activity
Fourth Quarter 2008

	Revenues	Activity
Royalties	$5.4 million	Natural Gas Production (MMCF)		393.4
		Average Price / MCF	$	8.65
		Oil Production (Barrels)		21,413
		Average Price / Barrel	$	90.65
Other Lease Revenues	$2.1 million	Acres Leased		5,687
		Bonus / Acre	$	300
Total Revenues	$7.5 million

     During fourth quarter 2008, over 5,600 net mineral acres were leased, and our share of oil and gas production related to our royalty interests was over 21,400 barrels of oil and approximately 393.4 MMCF of natural gas.

Mineral Activity
Full Year 2008

	Revenues	Activity*
Royalties	$21.6 million	Natural Gas Production (MMCF)		1,363.4
		Average Price / MCF	$	8.76
		Oil Production (Barrels)		87,895
		Average Price / Barrel	$	106.66
Other Lease Revenues	$26.1 million	Acres Leased*		61,583
		Bonus / Acre*	$	405
Total Revenues	$47.7 million

* Includes venture activity

     For the year 2008, including venture activity, over 61,500 net mineral acres were leased, generating $24.9 million in bonus revenues. This leasing activity was located principally in East Texas and driven by activity associated with the Cotton Valley, James Lime and Haynesville natural gas formations. In addition, approximately $2.0 million in delay rental payments were received in 2008.

     For the year 2008, our share of oil and gas production related to our royalty interest was almost 88,000 barrels of oil and approximately 1,363.4 MMCF of natural gas.

5

Minerals Activity

     Forestar’s mineral resources segment includes approximately 622,000 net mineral acres located in Texas, Louisiana, Alabama and Georgia.

YE 2008 Minerals Activity

	Available				Held by
State	for Lease*		Leased		Production		Total
Texas		118,000		108,000		18,000		244,000
Louisiana		110,000		4,000		7,000		121,000
Alabama		48,000		9,000		—		57,000
Georgia		200,000		—		—		200,000
		476,000		121,000		25,000		622,000

* Includes approximately 11,200 net acres subject to lease option.

FIBER RESOURCES

	Quarterly Results						Annual Results
	4th Qtr.		4th Qtr.		3rd Qtr.		Year		Year
Segment Earnings	2008		2007		2008		2008		2007
($ in Millions)	$	2.7	$	3.8	$	1.9	$	8.9	$	7.9

Fiber Sales Activity

     During fourth quarter 2008 Forestar generated almost $3.5 million in revenues from the sale of about 312,000 tons of fiber. For the year 2008, Forestar generated $11.0 million in revenues from the sale of approximately 1.1 million tons of fiber, the majority of which was sold to Temple-Inland Inc. at market prices.

2008 Summary

     “Despite challenging market conditions, total segment earnings in 2008 were $62 million, down only slightly compared with $66 million in 2007, which can be attributed to our focus on maximizing long-term shareholder value and the hard work of our team,” concluded Mr. DeCosmo.

     The Company will host a conference call on February 4, 2009 at 10:00 am EDT to discuss results of fourth quarter and full year 2008. 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 1-800-510-9691 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-614-3453. The password is Forestar. Replays of the call will be available for two weeks following 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 76049455.

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About Forestar Group

     Forestar Group Inc. operates in three business segments: real estate, mineral resources and fiber resources. The real estate segment owns directly or through ventures over 365,000 acres of real estate located in ten states and thirteen markets in the U.S. The real estate segment has 25 real estate projects representing almost 34,000 acres currently in the entitlement process, and 78 entitled, developed and under development projects in eight states and twelve markets encompassing almost 17,000 acres, comprised of almost 30,000 residential lots and over 2,200 commercial acres. The mineral resources segment manages about 622,000 net acres of oil and gas mineral interests. The fiber resources segment sells wood fiber from its land primarily located in Georgia, and leases land for recreational uses. The company also has a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.38 million acres in Texas, Louisiana, Georgia and Alabama. 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. 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 availability of loans and fluctuations in the credit markets; 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; changes in federal energy policies; demand for oil and gas; 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 release.

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FORESTAR GROUP INC.
(UNAUDITED)

Business Segments

	Fourth Quarter						Full Year
	2008			2007			2008			2007
	(In thousands,						(In thousands,
	except per share)						except per share)
Revenues
Real estate	$	25,368		$	27,462		$	98,859		$	142,729
Mineral resources		7,478			4,561			47,671			20,818
Fiber resources		4,113			3,590			13,192			14,439
Total revenues	$	36,959		$	35,613		$	159,722		$	177,986
Segment earnings
Real estate	$	3,002		$	(223	)	$	9,075		$	39,507
Mineral resources		6,142			3,708			44,076			18,581
Fiber resources		2,707			3,773			8,896			7,950
Total segment earnings		11,851			7,258			62,047			66,038
Expenses not allocated to segments
General and administrative		(4,510	)		(5,158	)		(19,318	)		(17,413	)
Share-based compensation		142			481			(4,516	)		(1,397	)
Interest expense		(5,536	)		(2,768	)		(21,283	)		(9,229	)
Other non-operating income		46			251			279			705
Income before taxes		1,993			64			17,209			38,704
Income tax expense		(249	)		42			(5,235	)		(13,909	)
Net income	$	1,744		$	106		$	11,974		$	24,795
Diluted earnings per share:
Net income	$	0.05		$	—		$	0.33		$	0.70
Average diluted shares outstanding		35.6			36.0			35.9			35.4
(shares in millions)

	Year End
Supplemental Financial Information	2008		2007
	(In thousands)
Borrowings under credit facility	$	234,900	$	175,000
Other debt*		102,502		91,015
Total Debt	$	337,402	$	266,015

* Consists principally of consolidated venture non-recourse debt.

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Information about our real estate projects and our ventures for year end 2008 follows:

	Year End
	2008		2007
Owned & Consolidated Ventures:
Entitled, developed and under development land
Number of projects		57		56
Residential lots remaining		20,561		20,465
Commercial acres remaining		1,624		1,136
Undeveloped land
Number of projects		23		22
Acres in entitlement process		32,640		27,720
Acres sold (full year)		5,577		2,486
Acres undeveloped		309,232		321,694
Ventures accounted for using the equity method:
Ventures’ lot sales (for the year)
Lots sold		248		631
Revenue per lot sold	$	57,750	$	55,877
Ventures’ entitled, developed, and under development land
Number of projects		21		22
Residential lots remaining		9,348		9,385
Commercial acres remaining		648		719
Ventures’ undeveloped land
Number of Projects		2		2
Acres in entitlement process		1,080		870
Acres sold (for the year)		486		131
Acres undeveloped		5,641		6,127

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A summary of projects in the entitlement process^(a) at year end 2008 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
Creekview	Troup		470
Crossing	Coweta		230
Dallas Highway	Haralson		1,060
Fincher Road	Cherokee		3,950
Fox Hall	Coweta		960
Garland Mountain	Cherokee/Bartow		350
Home Place	Coweta		1,510
Hutchinson Mill	Troup		880
Jackson Park	Jackson		700
Martin’s Bridge	Banks		970
Mill Creek	Coweta		770
Ridgeview	Haralson		120
Serenity	Carroll		440
Three Creeks	Troup		740
Waleska	Cherokee		150
Wolf Creek	Carroll/Douglas		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		840
Total			33,720

(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.

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A summary of activity within our entitled,^(a) developed and under development projects at year end 2008 follows:

					Residential Lots (c)				Commercial Acres (d)
					Lots Sold
		Interest			Since		Lots		Acres Sold		Acres
Project	County	Owned(b)			Inception		Remaining		Since Inception		Remaining
Projects we own
California
San Joaquin River	Contra Costa/Sacramento		100	%		—		—		—		288
Colorado
Buffalo Highlands	Weld		100	%		—		164		—		—
Johnstown Farms	Weld		100	%		115		493		2		8
Pinery West	Douglas		100	%		—		—		—		115
Stonebraker	Weld		100	%		—		603		—		13
Westlake Highlands	Jefferson		100	%		—		21		—		—
Texas
Arrowhead Ranch	Hays		100	%		—		232		—		6
Caruth Lakes	Rockwall		100	%		245		404		—		—
Cibolo Canyons	Bexar		100	%		537		1,210		64		81
Harbor Lakes	Hood		100	%		199		250		—		14
Harbor Mist	Calhoun		100	%		—		200		—		—
Hunter’s Crossing	Bastrop		100	%		308		183		38		68
La Conterra	Williamson		100	%		32		477		—		60
Maxwell Creek	Collin		100	%		642		381		—		—
Oak Creek Estates	Comal		100	%		9		639		13		—
The Colony	Bastrop		100	%		408		2,237		22		49
The Gables at North Hill	Collin		100	%		195		88		—		—
The Preserve at Pecan Creek	Denton		100	%		204		615		—		9
The Ridge at Ribelin Ranch	Travis		100	%		—		—		179		16
Westside at Buttercup Creek	Williamson		100	%		1,276		245		66		—
Other projects (9)	Various		100	%		2,654		27		245		23
Georgia
Towne West	Bartow		100	%		—		2,674		—		121
Other projects (13)	Various		100	%		—		2,836		—		625
Missouri and Utah
Other projects (3)	Various		100	%		793		365		—		—
						7,617		14,344		629		1,496
Projects in entities we consolidate
Texas
City Park	Harris		75	%		1,096		215		50		105
Lantana	Denton		55	% (e)		448		1,902		—		—
Light Farms	Collin		65	%		—		2,517		—		—
Stoney Creek	Dallas		90	%		59		695		—		—
Timber Creek	Collin		88	%		—		614		—		—
Other projects (5)	Various	Various				1,002		274		24		23
Tennessee
Youngs Lane	Davidson		60	%		—		—		16		—
						2,605		6,217		90		128
Total owned and consolidated						10,222		20,561		719		1,624
Projects in ventures that we account for using the equity method
Georgia
Seven Hills	Paulding		50	%		634		446		26		—
The Georgian	Paulding		38	%		288		1,097		—		—
Other projects (5)	Various	Various				1,845		249		3		—
Texas
Bar C Ranch	Tarrant		50	%		176		1,023		—		—
Fannin Farms West	Tarrant		50	%		261		119		—		15
Lantana	Denton	Various		(e)		1,801		47		14		75
Long Meadow Farms	Fort Bend		19	%		603		1,503		72		138
Southern Trails	Brazoria		40	%		320		742		—		—
Stonewall Estates	Bexar		25	%		168		213		—		—
Summer Creek Ranch	Tarrant		50	%		796		1,772		—		363
Summer Lakes	Fort Bend		50	%		325		819		52		3
Village Park	Collin		50	%		339		221		3		2
Waterford Park	Fort Bend		50	%		—		493		—		37
Other projects (2)	Various	Various				292		232		—		15
Florida
Other projects (3)	Various	Various				473		372		—		—
Total in ventures						8,321		9,348		170		648
Combined Total						18,543		29,909		889		2,272

^(a) A project is deemed entitled when all major discretionary land-use approvals have been received. Some projects may require additional permits for development.

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(b)	Interest owned reflects our net 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 22 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.

A summary of our commercial operating properties and commercial and condominium projects at year end 2008 follows:

			Interest
Project	County	Market	Owned (a)			Type	Description
Radisson Hotel	Travis	Austin		100	%	Hotel	413 guest rooms and suites
Palisades West	Travis	Austin		25	%	Office	375,000 square feet
Las Brisas	Williamson	Austin		49	%	Multi-Family	414 unit luxury apartment
Gulf Coast Apartments	Various	Various		2	%	Multi-Family	9 apartment communities
Harbor Lakes Golf Club	Hood	Dallas/Fort Worth		100	%	Golf Club	18-hole golf course and club
Presidio at Judge’s Hill	Travis	Austin		60	%	Condo	45 units

^(a) Interest owned reflects our net equity interest in the project, whether owned directly or indirectly.

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EX-99.2

Exhibit 99.2

Fourth Quarter and Full Year 2008 Financial Results February 4, 2009

Forward Looking Statements This presentation 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 availability of loans and fluctuations in the credit markets; 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; changes in federal energy policies; demand for oil and gas; 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 presentation to reflect the occurrence of events after the date of this presentation.

Maximize and Grow Long-Term Shareholder Value Entitlement and Development of Real Estate Continued reductions in development reflective of housing market decline Realization of Value from Natural Resources Increased leasing activity and production volume Accelerated Growth through Strategic and Disciplined Investment in Real Estate No new real estate project acquisitions Our Focus: Maximizing Long-Term Shareholder Value - Cash Flow - Balance Sheet

2008 Real Estate Value Creation Developed and Under Development Sold 1,060 residential lots - $48,500 / lot Sold 120 commercial acres - $232,400 / acre Invested $34.9 million in Cibolo Canyons mixed-use development located in San Antonio, Texas Entitlement Entitled five projects with over 2,500 acres, representing over 1,050 residential lots and 580 commercial acres Entitling 25 projects representing over 33,700 acres Actively pursuing entitlement on an additional 7,300 acres Undeveloped Sold over 6,000 acres - $4,800 / acre Note: Includes 100% of venture activity Value

Cibolo Canyons Residential 1,747 lots - 537 sold* Multiple builders 1st and 2nd move-up, custom Empty nester / active adult, condo Commercial 145 acres - 64 sold* Multi-family and retail Resort and Golf Course JW Marriot's Largest Resort 1,002 rooms 140,000 sq. ft. meeting space 42,000 sq. ft. clubhouse 26,000 sq. ft. spa Two TPC championship golf courses Project Economics Forestar contributes 700 acres + $38 million Economic development agreement includes Receipt of 9% hotel room revenues and 1.5% sales tax from resort through 2034 Utility district reimbursements ($49.5 million submitted at YE 2008) *Lot and acre sales as of 4th Qtr 2008

2008 Mineral Resources Value Creation Royalty Interest Generated royalties: 1,363 mmcf of natural gas - $11.9 million Generated royalties: 88,000 barrels of oil - $9.4 million Leased Leased 61,500 acres - $24.9 million Optioned 17,000 acres - $1.6 million Delay rental payments - $2.0 million Available for Lease Marketing for lease / exploration - 476,000 acres Note: Includes 100% of venture activity New minerals team has extensive experience and a proven track record of creating value through mineral leasing, royalties and additional participation in production revenues Value

2008 Fiber Resources Value Creation Sawtimber Harvesting 162,850 tons of sawtimber - $19.51 / ton - approximately 75% chip-n-saw Maximize and grow sawtimber values by reducing harvest levels given current market prices Pulpwood Harvesting 917,000 tons of pulpwood - $8.52 / ton Timber Assets Growing fiber on 340,000 acres Leased over 296,000 acres for recreational purposes Value

Fourth Quarter and Full Year 2008 Results ($ in Millions, except per share data) 4th Qtr 2008 4th Qtr 2007 Full Year 2008 Full Year 2007 Net Income $1.7 $0.1 $12.0 $24.8 Diluted EPS $0.05 - $0.33 $0.70 Full year 2008 average diluted shares outstanding were 35.9 million

Segment Earnings Real estate segment earnings negatively impacted by impairment expense of $3.3 million in 4th Qtr. 2008 and $3.9 million in 4th Qtr. 2007 2008 Mineral Resources segment earnings include $24.9 million in bonus payments associated with leasing over 61,500 net mineral acres ($ in Millions) 4th Qtr 2008 4th Qtr 2007 Full Year 2008 Full Year 2007 Real Estate $3.0 ($0.2) $9.1 $39.5 Mineral Resources 6.1 3.7 44.1 18.6 Fiber Resources 2.7 3.8 8.9 7.9 Total $11.8 $7.3 $62.1 $66.0

4th Qtr 2008 Pipeline Status and Key Performance Indicators

Real Estate Pipeline - 4th Qtr 2008 Real Estate Undeveloped In Entitlement Process Entitled Developed and Under Development Total Acres* Undeveloped Land Owned 307,996 314,873 Ventures 6,877 314,873 Residential Owned 28,578 7,939 753 44,249 Ventures 1,080 4,641 1,258 44,249 Commercial Owned 4,062 1,002 494 6,334 Ventures - 520 256 6,334 Total Acres 314,873 33,720 14,102 2,761 365,456 Estimated Residential Lots Estimated Residential Lots Estimated Residential Lots 25,488 4,421 29,909 Note: Estimated acres and lots may vary *Excludes Forestar's 58% ownership interest in the Ironstob Venture which controls over 16,000 acres of undeveloped land in Georgia

Real Estate Segment KPI's 4th Qtr 2008 4th Qtr 2007 Full Year 2008 Full Year 2007 Residential Lot Sales * Lots Sold 259 309 1,060 1,707 Average Price / Lot $37,600 $45,900 $48,500 $52,900 Gross Profit / Lot $9,200 $12,600 $15,300 $19,400 Commercial Tract Sales * Acres Sold 28 23 120 198 Average Price / Acre $265,900 $390,600 $232,400 $261,200 Land Sales * Acres Sold 2,436 693 6,063 2,617 Average Price / Acre $4,600 $5,900 $4,800 $6,700 Segment Revenues ($ in Millions) $25.4 $27.5 $98.9 $142.7 Segment Earnings ($ in Millions) $3.0 ($0.2) $9.1 $39.5 * Includes 100% of joint venture activity

Residential Lot Sales Activity Historical residential lot sales activity have been principally located in major markets of Texas, resulting in steadily improving residential lot prices since 2004 * Excludes bulk sale of 117 lots at Parks of Deer Creek project located near Fort Worth, Texas during 2008 2004 2005 2006 2007 2008 Average Lot Price 43500 45200 48200 52853 53200 2004 2005 2006 2007 2008 Texas Market 2118 2514 2509 1579 917 Other Markets 723 1079 1030 128 26 Total Residential Lots Sold* Average Residential Lot Price* * *

2008 Undeveloped Land Sales Louisiana Georgia Alabama Texas Georgia - Ironstob Georgia - TEMCO 6,000 Acres - $4,800 per Acre - $29 Million

Enhanced Retail Land Sales Website Updated retail land sales website launched February 2, 2009 landforsale.forestargroup.com Website Attributes User-Friendly Navigation Seven property categories from homepage Advanced Search Capabilities Search/sort by location, property type and features, size, price Extensive Property Information Interactive Visitor registration, email updates, and email friends Synergistic Links to other Forestar sites

Entitlement Performance Note: Acres and lots are estimates and may vary Atlanta, GA Activity Entitlement Activity 17 Projects Entitled YE 2008 - - 6,420 acres - - 5,510 residential lots - - 746 commercial acres 5 Projects Entitled in 2008 - - 2,500 acres - - 1,050 residential lots - - 500 commercial acres 19 Projects in Entitlement YE 2008 28,060 acres currently in entitlement 5 Projects Started Entitlement in 2008 7,300 acres moved into entitlement in 2008 Ownership About 300,000 acres available (wholly-owned and ventures)

South Coweta Industrial Park Significant commercial value creation on low basis lands Industrial Park Attributes 195-Acre Commercial Development 2.0 mm sq. ft. industrial / distribution development Located Off I-85 in Coweta County, 35 Miles from Airport 35 miles north of Kia manufacturing plant in Troup County Kia plant to open 1st Qtr 2009 and employ 2,700 people CSX Railroad Frontage

Pickens School Pickens School Attributes 770 Acres Mixed-Use Development Located in Northeast Atlanta - Pickens County Entitlements Acres Use 177 Residential 414 Commercial 179 Green Space Commercial Zoned as "Highway Business" Includes office, retail, multi- family "Highway Business" zoning provides for flexibility in commercial uses

Mineral Resources Segment KPI's 4th Qtr 2008 4th Qtr 2007 Full Year 2008 Full Year 2007 Minerals Net Acres Leased 5,687 549 61,583 30,114 Avg. Bonus / Acre $300 $350 $405 $222 Natural Gas Produced (MMCF) 393.4 296.2 1,363.4 967.3 Average Price / MCF $8.65 $6.03 $8.76 $6.69 Oil Produced (Barrels) 21,413 21,438 87,895 94,909 Average Price / Barrel $90.65 $76.82 $106.66 $65.24 Segment Revenues ($ in Millions) $7.5 $4.6 $47.7 $20.8 Segment Earnings ($ in Millions) $6.1 $3.7 $44.1 $18.6

Fiber Resources Segment KPI's 4th Qtr 2008 4th Qtr 2007 Full Year 2008 Full Year 2007 Fiber Sales Tons Sold 311,900 317,100 1,079,900 1,215,500 Average Price / Ton $11.19 $10.70 $10.17 $11.29 Recreational Leases (acres) 296,300 287,200 296,300 287,200 Segment Revenues ($ in Millions) $4.1 $3.6 $13.2 $14.4 Segment Earnings ($ in Millions) $2.7 $3.8 $8.9 $7.9 4th Qtr 2007 fiber resources segment earnings include $2.2 million gain from partial termination of a timber lease with the Jones Company in connection with the formation of the Ironstob venture

2008 Year End Snapshot Real Estate 365,000 acres of low basis land owned directly or through ventures 108 total projects located in 10 states and 13 markets 25 projects, over 33,000 acres, currently in entitlement process 5 commercial & condo projects Radisson Hotel (Austin, TX) Palisades West - Commercial Office (Austin, TX) Las Brisas - Multi-family (Austin, TX) Harbor Lakes - Golf Club (Dallas, TX) Presidio at Judges Hill - Condo (Austin, TX) Natural Resources 622,000 net acres of oil and gas interests in TX, LA, AL and GA 25,000 acres held by production 121,000 acres leased 476,000 acres available for lease 340,000 acres generating fiber growth and sales 1,400,000 acres of water interest

Near Term Strategic Initiatives Generate sales across all lines of business (-) Reduce investment in development (-) Lower operating expenses ^ Increase free cash flow Our Focus: Maximizing Long-Term Shareholder Value - Cash Flow - Balance Sheet