Forestar to sell about 50,000 acres of timberland in Georgia, Alabama, to Plum Creek for US$75M, reserving mineral rights; deal expected to close in Q3

AUSTIN, Texas , July 7, 2011 (press release) – Pursuant to previously announced strategic initiatives, Forestar Group Inc. (NYSE:FOR - News) today announced that it entered into a definitive agreement with Plum Creek Timber Company, Inc. to sell approximately 50,000 acres of timberland for approximately $75 million in a cash transaction. The timberlands are located in Georgia and Alabama and the sale is expected to close in third quarter 2011. Forestar will reserve mineral rights and will retain an option to acquire the mitigation rights to approximately 1,000 acres for use in mitigation banks.

“This sale represents a significant step toward completing our strategic initiatives to enhance shareholder value. We have executed definitive agreements for the sale of approximately 166,000 acres of timberland in Georgia, Alabama and Texas for approximately $270 million. Since announcing the initiatives, we have reduced debt by over $120 million and repurchased over one million shares of common stock,” said Jim DeCosmo, president and chief executive officer.

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 approximately 219,000 acres of real estate located in nine states and twelve markets in the U.S. The real estate segment has 18 real estate projects representing over 29,600 acres currently in the entitlement process, and 73 entitled, developed and under development projects in seven states and eleven markets encompassing almost 15,800 acres, comprised of over 27,200 planned residential lots and over 2,300 commercial acres. The mineral resources segment manages about 604,000 net acres of oil and gas mineral interests. The fiber resources segment includes the sale of wood fiber and management of our recreational leases. The company also has a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.4 million acres in Texas, Louisiana, Georgia and Alabama and about 17,800 acres of ground water leases in Central Texas. Forestar’s address on the World Wide Web is www.forestargroup.com.

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