<PAGE>
SUPPLEMENT TO PROSPECTUS
DATED APRIL 30, 1997
The Prospectus of American Real Estate Investment Corporation dated
April 30, 1997 is supplemented to correct the name of two of the Selling
Shareholders as follows:
<TABLE>
<CAPTION>
TOTAL NUMBER
SHARES OF
BENEFICIALLY SHARES TO BE
OWNED PRIOR OFFERED FOR
NAME OF SELLING TO SELLING
CORRECTED NAME OF SHAREHOLDER THIS SHAREHOLDERS'
SELLING SHAREHOLDER AS LISTED OFFERING ACCOUNT
- ------------------- --------------- ------------ --------------
<S> <C> <C> <C>
John Dell Jedco Property 39,599 39,599
Partnership, L.P.
JKP Family Associates Joseph Pagano 53,624 53,624
</TABLE>
THE DATE OF THIS SUPPLEMENT IS OCTOBER 31, 1997