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FORESTAR RE GROUP Reports Operating Results (10-Q)

August 06, 2009 | About:

FORESTAR RE GROUP (FOR) filed Quarterly Report for the period ended 2009-06-30.

Forestar Group Inc. formerly known as Forestar Real Estate Group Inc. operates in two business segments: real estate and natural resources. The real estate segment owns directly or through ventures real estate. The natural resources segment manages acres of oil and gas mineral interests. In addition the company also sells wood fiber from its land primarily located in Georgia and leases land for recreational uses. FORESTAR RE GROUP has a market cap of $502 million; its shares were traded at around $14 with a P/E ratio of 60.9 and P/S ratio of 3.1.

Highlight of Business Operations:

In accordance with our strategic initiatives, in second quarter 2009, we sold about 75,000 acres of timber and timberland in Georgia and Alabama for $119,702,000 to Hancock Timber Resource Group, which acquired the assets on behalf of its investor clients. The transaction generated net proceeds of $116,116,000, which were principally used to reduce our outstanding debt, and resulted in a gain on sale of $79,214,000. In addition, in second quarter 2009, we entered into a definitive agreement with Holland M. Ware to sell about 20,000 acres of HBU timberland in Georgia for approximately $39,500,000 in a cash transaction. The sale closed August 4, 2009. We intend to use the after-tax cash proceeds from this sale to reduce our outstanding debt.

Net income was $50,917,000, or $1.42 per basic share and $1.41 per diluted share, in second quarter 2009, compared with $9,596,000, or $0.27 per basic and diluted share, in second quarter 2008. Net income for first six months 2009 was $47,025,000, or $1.32 per basic share and $1.31 per diluted share, compared with $9,358,000, or $0.26 per basic and diluted share, in first six months 2008.

In second quarter 2009, operating expenses principally consist of $2,682,000 in property taxes, $1,281,000 in employee compensation and benefits, $577,000 in professional services, $510,000 in depreciation, $509,000 in community maintenance and $378,000 in marketing and

advertising. In second quarter 2008, operating expenses principally consist of a $3,500,000 charge principally related to environmental remediation activities, $2,287,000 in property taxes, $2,174,000 in employee compensation and benefits, $523,000 in depreciation, $476,000 in marketing and advertising, $405,000 in professional services and $135,000 in community maintenance.

In first six months 2009, operating expenses principally consist of $5,508,000 in property taxes, $3,083,000 in employee compensation and benefits, $1,076,000 in professional services, $1,038,000 in depreciation, $628,000 in community maintenance and $569,000 in marketing and advertising. In first six months 2008, operating expenses principally consist of a $3,500,000 charge principally related to environmental remediation activities, $5,020,000 in property taxes, $4,140,000 in employee compensation and benefits, $1,275,000 in professional services, $982,000 in depreciation, $893,000 in marketing and advertising and $219,000 in community maintenance.

In first six months 2009, we sold 9,652 acres of undeveloped land from our owned and consolidated ventures at an average price of $2,605 per acre, generating $25,144,000 in revenues. In first six months 2008, we sold 1,853 acres of undeveloped land from our owned and consolidated ventures at an average price of $4,978 per acre, generating $9,228,000 in revenues.

Read the The complete ReportFOR is in the portfolios of John Keeley of Keeley Fund Management.

Rating: 3.5/5 (2 votes)

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