AMERICAN REAL ESTATE INVESTMENT CORP
S-3, 1998-07-13
REAL ESTATE INVESTMENT TRUSTS
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As filed with the Securities and Exchange Commission on July 10, 1998
                                                          Registration No. 333-

                         SECURITIES AND EXCHANGE COMMISSION
                                  Washington, D.C.  20549
                    
                                          FORM S-3

                              REGISTRATION STATEMENT
                                          Under
                           The Securities Act of 1933
                    
                 AMERICAN REAL ESTATE INVESTMENT CORPORATION
         (Exact name of registrant as specified in its charter)
              Maryland                                            84-1246585
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                     Identification No.)
                         620 W. Germantown Pike, Suite 200
                         Plymouth Meeting, Pennsylvania 19462
                                  (610) 834-7950
                 (Address, including zip code, and telephone number,
         including area code, of registrant's principal executive offices)
                         _______________________
                            Jeffrey E. Kelter
                                  President
                 American Real Estate Investment Corporation
                     620 W. Germantown Pike, Suite 200
                 Plymouth Meeting, Pennsylvania 19462
                          (610) 834-7950
       (Name, address, including zip code, and telephone number,
              including area code, of agent for service)
                         _______________________                   
                                  Copies to:
                           Robert E. King, Jr.
                           Rogers & Wells LLP
                            200 Park Avenue
                       New York, New York  10166

     Approximate date of commencement of proposed sale to the public:  From 
time to time or at one time after the effective date of this Registration 
Statement as determined by market conditions.

     Approximate date of commencement of proposed sale to public: From time to 
time or at one time after the effective date of the Registration Statement as 
determined by market conditions.
                         _______________________                   

     If the only securities being registered on this Form are being offered 
pursuant to dividend or interest reinvestment plans, please check the following
 box.
<square>;
     If any of the securities being registered on this Form are to be offered 
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act 
of 1933, other than securities offered only in connection with dividend or 
interest reinvestment plans, check the following box. <checked-box>
     If this Form is filed to register additional securities for an offering 
pursuant to Rule 462(b) under the Securities Act, check the following box and 
list the Securities Act registration statement number of earlier effective 
registration statement for the same offering.  <square>
     If this Form is a post-effective amendment filed pursuant to Rule 462(c) 
under the Securities Act, check the following box and list the Securities Act 
registration statement number of the earlier effective registration statement 
for the same offering.  <square>
     If delivery of the prospectus is expected to be made pursuant to Rule 
434, please check the following box.  <square>
                         _______________________                              

                     CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
Title of Each Class of Securities to be Registered Proposed Maximum Offering
 Price Amount of Registration
Fee
- -------------------------------------------------  -------------------------------
- --------------------------
<S>                                                                        <C>                              
<C>
Common Stock, Preferred Stock and                           $500,000,000(2)               $151,515.16(3)
Depositary Shares Representing Preferred Stock(1)
</TABLE>

(1)Includes shares of Common Stock which may be issued upon conversion of 
   Preferred Stock or Depositary Shares which are being registered hereunder.
(2)Estimated solely for the purpose of calculating the registration fee.
(3)Calculated pursuant to Rule 457(o) of the rules and regulations under the 
   Securities Act of 1933, as amended.

          The Registrant hereby amends this Registration Statement on such 
date or dates as may be necessary to delay its effective date until the 
Registrant shall file a further amendment which specifically states that this 
Registration Statement shall thereafter become effective in accordance with 
Section 8(a) of the Securities Act of 1933 or until this Registration 
Statement shall become effective on such date as the Commission, acting 
pursuant to said Section 8(a), may determine.
<PAGE>
                         Subject to completion, dated July 10, 1998
PROSPECTUS
                         AMERICAN REAL ESTATE INVESTMENT CORPORATION

                                          $500,000,000
                                         Common Stock
                                       Preferred Stock
                                              and
                                       Depositary Shares
                                ___________________

          We may from time to time offer our Common Stock, Preferred Stock 
(which may be issued in one or more series), or depositary shares representing 
shares of Preferred Stock ("Depositary Shares")(together, "Securities") at an 
aggregate initial offering price which will not exceed $500,000,000.  We may 
offer Securities from time to time in amounts, at prices and on terms which 
will be determined at the time of sale.  Offerings may be of particular 
Securities or of units consisting of two or more types of Securities.  We may 
sell Securities to or through underwriters, through agents or directly to 
purchasers.

          The terms of particular Securities will be described in a Prospectus 
Supplement which will accompany this Prospectus, and may be described in a 
term sheet which precedes the Prospectus Supplement.  A Prospectus Supplement 
relating to a series of Preferred Stock will describe, to the extent 
applicable, its title, the maximum number of shares, the liquidation 
preference per share, dividend rights (which may be fixed or participating and 
may be cumulative or non-cumulative), voting rights, conversion rights, 
redemption provisions and sinking fund or purchase fund requirements, as well 
as any other material terms.  A Prospectus Supplement relating to Depositary 
Shares will describe, to the extent applicable, the fractional share of 
Preferred Stock represented by each Depositary Share.  In addition, such 
specific terms may include limitations on direct or beneficial ownership and 
restrictions on transfer of the Securities, in each case as may be appropriate 
to preserve our status as a real estate investment trust ("REIT") for federal 
income tax purposes.  The applicable Prospectus Supplement will also contain 
information, where applicable, about all material federal income tax 
considerations relating to, and any listing on a securities exchange of, the 
Securities covered by such Prospectus Supplement.

          Each Prospectus Supplement will also contain the names of the 
underwriters or agents, if any, through which the Securities to which it 
relates will be sold, the proposed amounts, if any, to be purchased by 
underwriters, and the compensation, if any, of those underwriters or agents, 
the initial public offering price, information about securities exchanges or 
automated quotation systems on which the Securities will be listed or traded 
and any other material information about the offering and sale of the 
Securities.  We may not sell any Securities without delivering the applicable 
Prospectus Supplement describing the method and terms of the offering of such 
series of Securities.

          See "Risk Factors" beginning on page 4 for a discussion of certain 
factors you should consider before you invest in our Securities.

    Neither the Securities and Exchange Commission nor any state securities 
    commission has approved or disapproved of these Securities, and they have
 not determined if this Prospectus is truthful or complete.  Any
 representation to the contrary is a criminal offense.

                               ___________________
               The date of this Prospectus is          , 1998
<PAGE>     

The information contained in this Prospectus is not complete and may be 
changed.  We have filed a registration statement relating to these securities 
with the Securities and Exchange Commission.  We may not sell these securities 
nor may we accept any offers to buy these securities prior to the time the 
Registration Statement becomes effective.  This Prospectus is not an offer to 
sell or an offer to buy these securities in any State where such offer or sale 
is not permitted.
<PAGE>


No dealer, salesperson or other person is authorized to give any 
information or to make any representation not contained or incorporated by 
reference in this Prospectus or the applicable Prospectus Supplement.  If 
given or made, that information or representation must not be relied upon as 
having been authorized by us or by any agent, underwriter or dealer.  This 
Prospectus does not, and no Prospectus Supplement will, constitute an offer to 
sell, or a solicitation of an offer to buy, by any person in any jurisdiction 
in which it is unlawful for that person to make such an offer or 
solicitation.  Neither the delivery of this Prospectus or any Prospectus 
Supplement nor any sale of Securities will, under any circumstances, imply 
that the information in this Prospectus or any Prospectus Supplement is 
correct at any time after its date.

                          --------------------------
                    WHERE YOU CAN FIND MORE INFORMATION

     We are subject to the informational requirements of the Securities 
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance 
therewith we file reports, proxy statements and other information with the 
Securities and Exchange Commission (the "SEC").  You may read and copy those 
reports, proxy statements and other information which we file with the SEC at 
the public reference facilities maintained by the SEC at Room 1024, Judiciary 
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional 
Offices of the SEC located at 7 World Trade Center, New York, New York 10048 
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 
60661.  You may also obtain copies of that information from the Public 
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 
20549, at prescribed rates.  Please call the Commission at 1-800-SEC-0330 for 
further information on the public reference rooms.  The SEC maintains a web 
site that contains reports, proxy and information statements and other 
information regarding registrants, including American Real Estate Investment 
Corporation, that file electronically with the SEC.  You may access the SEC's 
web site at http://www.sec.gov.  Our Common Stock is listed on the American 
Stock Exchange.  You may also read our reports, proxy statements and other 
information which we file at the offices of the American Stock Exchange, 86 
Trinity Place, New York, New York 10006.

     We have filed with the SEC a Registration Statement on Form S-3 (together 
with any amendments or supplements, the "Registration Statement") under the 
Securities Act of 1933, as amended (the "Securities Act").  This Prospectus is 
a part of the Registration Statement.  This Prospectus does not contain all 
the information contained in the Registration Statement, because we have 
omitted certain parts of the Registration Statement in accordance with the 
rules and regulations of the SEC.  For further information, we refer you to 
the Registration Statement, which you may read and copy at, or obtain from, 
the SEC or the American Stock Exchange in the manner described above.


                    INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     We incorporate by reference into this Prospectus the following documents 
which we previously filed with the Commission under the File Number 1-12514:

     (a)     our Annual Report on Form 10-KSB for the fiscal year ended 
December 31, 1997;

     (b)     our Quarterly Report on Form 10-Q for the calendar quarter ended 
March 31, 1998;

     (c)     our Current Report on Form 8-K dated January 23, 1998, our 
Current Report on Form 8-K/A dated February 24, 1998, our Current Reports on 
Form 8-K dated April 10, 1998 and May 15, 1998, our Current Report on Form 
8-K/A dated June 10, 1998 and our Current Report on Form 8-K dated July 7, 
1998;
                                          2
<PAGE>

     (d)     the description of our Common Stock contained in our Registration 
Statement on Form 8-A filed on August 24, 1994 (including any amendments or 
reports filed for the purpose of updating such description); and

     (e)     all other reports we have filed pursuant to Section 13(a), 13(c), 
14 or 15(d) of the Exchange Act since December 31, 1997.

     When we file documents in accordance with Sections 13(a), 13(c), 14 and 
15(d) of the Exchange Act between the date of this Prospectus and the time we 
file a post-effective amendment to the Registration Statement of which this 
Prospectus is a part saying all the securities which are the subject of that 
Registration Statement have been sold or deregistering any securities which 
have not been sold, the documents we file will be incorporated into this 
Prospectus and will be a part of it beginning on the date the documents are 
filed.  If any document which we file changes anything said in this Prospectus 
or in an earlier document which is incorporated into this Prospectus, the 
later document will modify or supersede what is said in this Prospectus or the 
earlier document.

     We will provide, without charge, at the written or oral request of anyone 
to whom this Prospectus is delivered, copies of the documents incorporated by 
reference in this Prospectus, other than exhibits to those documents which are 
not specifically incorporated by reference.  Requests should be directed to:  
American Real Estate Investment Corporation, 620 W. Germantown Pike, Suite 
200, Plymouth Meeting, Pennsylvania 19462, Attention:  Investor Relations 
(Telephone: (610) 834-7950).


                         FORWARD-LOOKING INFORMATION

     Certain information both included and incorporated by reference in this 
Prospectus may contain forward-looking statements within the meaning of 
Section 27A of the Securities Act and Section 21E of the Exchange Act, and as 
such may involve known and unknown risks, uncertainties and other factors 
which may cause the actual results, performance or achievements of our company 
to be materially different from future results, performance or achievements 
expressed or implied by such forward-looking statements.  Forward-looking 
statements, which are based on certain assumptions and describe our future 
plans, strategies and expectations are generally identifiable by use of the 
words "may," "will," "should," "expect," "anticipate," estimate," "believe," 
"intend" or "project" or the negative thereof or other variations thereon or 
comparable terminology.  Factors which could have a material adverse effect on 
the operations and future prospects of our company include, but are not 
limited to, changes in: economic conditions generally and the real estate 
market specifically, legislative/regulatory changes (including changes to laws 
governing the taxation of REITs), availability of capital, interest rates, 
competition, supply and demand for properties in our current and proposed 
market areas and general accounting principles, policies and guidelines 
applicable to REITs.  These risks and uncertainties should be considered in 
evaluating any forward-looking statements contained or incorporated by 
reference herein.


                                          3

<PAGE>
                                 RISK FACTORS

     Before you invest in our Securities, you should be aware that there are 
various risks, including those described below and any that we may describe in 
a Prospectus Supplement.  You should consider carefully these risk factors 
(and any in the applicable Prospectus Supplement) together with all of the other
 information included or incorporated by reference in this Prospectus and in 
the applicable Prospectus Supplement before you decide to purchase our 
Securities.  This section includes or refers to certain forward-looking 
statements; you should refer to the explanation of the qualifications and 
limitations on such forward-looking statements discussed on page 3.

There are Risks Associated with the Acquisition of New Properties, Which May 
Adversely Affect the Value of Our Securities and Our Ability to Pay Dividends 
to Our Stockholders

     We have recently experienced and we may continue to experience rapid 
growth through the acquisition of additional office and industrial 
properties.  Our ability to manage our growth effectively requires us to 
integrate successfully our new acquisitions into our existing management 
structure.  Properties which we acquire typically have no operating history 
under our management and such properties may have characteristics or 
deficiencies unknown to us which affect their valuation or revenue potential.  
The operating performance of these properties may decline under our 
management.  A decline in the operating performance of these properties will 
adversely affect our operating results and funds from operations, which could 
adversely impact the price of our Securities and the amount of dividends we 
will be able to pay.

     We currently plan to continue acquiring properties to the extent we 
consider appropriate.  Our success in this area depends on many factors, 
including the ability to successfully (i) identify properties which meet our 
criteria, (ii) negotiate acceptable price and terms with the seller and (iii)
close on such properties.  Also, we plan to finance our future acquisitions
through debt offerings, equity offerings, other debt financing or any
combination thereof.  By using existing credit facilities or other short-term
debt for such activities, we may not be able to secure financing in the future
or financing on equally favorable terms.  By using other debt to finance such
activities, we will be subject to risks normally associated with debt financing.
See "─Our Financial Performance and Value are Subject to Risks Associated
with the Real Estate Industry That Could Adversely Affect Our Financial
Condition─Debt financing may have an adverse effect on our cash flow and
dividends" below.  By using equity to finance such activities, we may dilute
your current interest in our company.  Accordingly, our acquisition activities
may have an adverse effect on our financial performance and ability to pay
dividends to our stockholders.

There are Risks Associated with Our Entry Into New Markets

     We currently intend to continue to seek expansion of our operations into 
additional new markets other than Northern New Jersey, Eastern Pennsylvania 
and Upstate New York.  In determining whether to enter a new market, we 
consider, among other factors, demographics, job growth, employment, real estate
fundamentals, competition and other related matters.  We cannot assure you 
that we will be successful in our efforts to identify new markets, or that 
once we identify new markets, that we will be able to successfully acquire 
properties in those markets and achieve favorable operating results from 
properties acquired in those markets.

We Depend on the Performance of Our Primary Markets, and Changes in Such 
Markets May Adversely Affect Our Financial Condition

     Most of our properties are currently located in Northern New Jersey, 
Eastern Pennsylvania and Upstate New York.  Like other real estate markets, 
these commercial real estate markets have experienced economic downturns in 
the past, and future declines in any of these economies or real estate markets 

                                          4
<PAGE>


could adversely affect our operations or cash available for dividends.  Our 
financial performance and our ability to pay dividends to our stockholders 
will be particularly sensitive to the economic conditions in those markets.  
Our revenues and the value of our properties may be adversely affected by a 
number of factors, including the local economic climate (which may be 
adversely impacted by business layoffs, industry slowdowns, changing
demographics and other factors) and local real estate conditions (such as
oversupply of or reduced demand for office and industrial properties.  These
factors, when and if they occur in the area in which our properties are located,
would adversely affect our ability to pay dividends to our stockholders.

Our Stockholders' Ability to Affect a Change in Control of Our Company is 
Limited, Which May Not Be in Our Stockholders' Best Interests

     Our ownership limit may not be in our stockholders' best interests.  For 
us to maintain our qualification as a REIT for federal income tax purposes, 
not more than 50% of the value of our outstanding capital stock may be owned, 
directly or indirectly, by five or fewer individuals (as defined for federal 
income tax purposes to include certain entities) during the last half of each 
taxable year after 1993.  Our Amended and Restated Articles of Incorporation 
(the "Charter") includes certain restrictions regarding transfers of shares of 
our capital stock and ownership limits that are intended to assist us in 
satisfying such limitations.  Such restrictions and limits may not be adequate 
in all cases, however, to prevent the transfer of shares of our capital stock 
in violation of the ownership limitations.  The ownership limit discussed 
above may have the effect of delaying, deferring or preventing someone from 
taking control of our company, even though such a change of control could 
involve a premium price for your shares of Common Stock or otherwise be in our 
stockholders' best interests.  See "Description of Capital 
Stock─Restrictions on Transfer" on page 17.

     Our staggered board may not be in our stockholders' best interests.  Our 
Board of Directors is divided into three classes, with the members of each 
class serving a three-year term.  The staggered terms for directors may reduce 
the possibility of a tender offer or an attempt to affect a change in control 
of our company, even if such a tender offer or change of control would be in 
our stockholders' best interests.

     Future issuances of Common Stock or securities convertible into Common 
Stock may dilute your interest in our company.  Our Charter authorizes our 
Board of Directors to issue additional shares of Common Stock without 
stockholder approval.  Additionally, each limited partnership interest (the 
"OP Units") in American Real Estate Investment, L.P. (the "Operating 
Partnership") may be redeemed by the holder for one share of Common Stock 
(subject to certain anti-dilution provisions), or, at our option, the cash 
value of one share of Common Stock.  Such an issuance of, or redemption for, 
Common Stock could have the effect of diluting your existing interest in our 
company.

     Issuances of preferred stock may prevent a change of control that would 
be in our stockholders' best interest.  The Board of Directors is authorized 
by our Charter to establish and issue one or more series of preferred stock 
without stockholder approval.  Establishing a series of preferred stock could 
make more difficult a change of control of our company that would be in your 
best interest.

     The concentration of ownership of our capital stock may not be in our 
stockholders' best interest.  Our officers and directors as a group currently 
beneficially own 37.8% of our company (assuming the conversion to Common Stock 
of all OP Units and the conversion of outstanding warrants to purchase OP 
Units and Common Stock).  In addition, certain other investors currently own a 
significant amount of our capital stock.  Although we feel this ownership is
beneficial in aligning the interest of officers and directors with that of the 
other shareholders, this may enable the officers and directors to exercise
substantial influence over the management of our company and on the outcome of
any matters submitted to a vote of our stockholders.  The concentration of
beneficial ownership of our company may have the effect of delaying, deferring
or preventing a change in control of our company, may discourage bids for our
capital stock at a premium over the market price of our capital stock and may
adversely affect the market price of our capital stock.

                                          5
<PAGE>


Certain Directors and Officers Who Own OP Units May Be Affected Differently 
Than Our Stockholders as a Result of the Sale of, or Reduction of Mortgage 
Debt on, Certain of the Properties.  
     Certain of our directors and officers own OP Units and as such, may face 
different and more adverse tax consequences than will you if we sell or reduce 
our mortgage indebtedness on certain of our properties.  Those individuals 
may, therefore, have different objectives than you regarding the appropriate 
pricing and timing of any sale of such properties or reduction of mortgage 
debt.  Accordingly, there may be instances in which we may not sell a property 
or pay down the debt on a property even though doing so would be advantageous 
to you.

We Have Agreed Not to Sell Certain of Our Properties.

     We have agreed with the sellers of certain of our properties not to sell 
certain properties for a period of time ranging from one to ten years in any 
transaction that would trigger taxable income, subject to certain exceptions.  
Some of these agreements are with current officers and directors of our 
company.  In addition, we may enter into similar agreements with future 
sellers of properties.  These agreements generally provide that we may dispose
of these properties in transactions that qualify as tax-free exchanges under
Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code").
Therefore, we may be precluded from selling certain properties other than in
transactions that would qualify as tax-free exchanges for federal income tax
purposes, even if it would be in your best interest to do so.
 
Our Financial Performance and Value are Subject to Risks Associated with the 
Real Estate Industry That Could Adversely Affect Our Financial Condition

     General.  Real property investments are subject to varying degrees of 
risk.  The yields available from equity investments in real estate depend upon 
the amount of income generated and expenses incurred.  If properties do not 
generate income sufficient to meet operating expenses, including debt service 
and capital expenditures, the owner's income and ability to pay dividends will 
be adversely affected.  An owner's income from properties may be adversely 
affected by a variety of factors, including the general economic climate, 
local conditions, such as oversupply of the particular category of real estate 
owned or controlled by the owner, or reduction in demand for any such 
properties, competition from properties owned by others, or the ability of the 
owner to provide adequate facilities maintenance, services and amenities.  
With respect to office and industrial properties, maintaining income at 
desired levels can be affected by a number of factors, including the ability 
to locate desirable replacements for key tenants at attractive rent levels 
following expiration of leases, and the costs of reletting and providing 
tenant improvements required to attract and maintain attractive tenants at 
desirable rentals.

     Often, increased operating costs, including real estate taxes, insurance 
and maintenance costs, do not decline when circumstances cause a reduction in 
income from a property.  If a property is mortgaged to secure payment of 
indebtedness, and the owner is unable to meet its mortgage payments, a loss 
could be sustained as a result of foreclosure on the property.  In addition, 
income from properties and real estate values are also affected by such 
factors as applicable laws, including tax laws, interest rate levels and the 
availability of financing.

     We depend on our major tenants.   Substantially all of our income is and 
will continue to be derived from rental income on our properties and, 
consequently, our distributable cash flow and ability to pay expected 
dividends to stockholders would be adversely affected if a significant number 
of our tenants failed to meet their lease obligations.  At May 30, 1998, our 
ten largest tenants represented approximately 49.9% of our industrial and 
office properties' annualized rental income.  At any time, a tenant at any of 
our properties may seek the protection of the bankruptcy laws, which could 
result in delays in rental payments or in the rejection and termination of 
such tenant's lease and thereby cause a reduction in our cash flow and the 
amounts available for dividends to our stockholders.  We cannot assure you 
that tenants will not file for bankruptcy protection in the future or, if any 
tenants file, that they will affirm their leases and continue to make rental 
payments in a timely manner.  In addition, a tenant from time to time may 
experience a downturn in its business which may weaken its financial condition 
and result in the failure to make rental payments when due.  If tenant leases 
are not affirmed following bankruptcy or if a tenant's financial condition 

                                          6
<PAGE>


weakens, our cash flow and the amounts available for dividends to you may be 
adversely affected.

     We compete with other owners and operators of properties.  All of our 
properties are located in well-developed market areas.  There are numerous 
other office and industrial properties and real estate companies (including 
other REITs) within the market area of each of our properties which will 
compete with us for tenants and for development and acquisition 
opportunities.  The number of competitive properties and real estate companies 
in such areas could have a material effect on our operations, our ability to 
rent our properties and the rents which we charge, and our development and 
acquisition opportunities.  We compete for tenants and acquisitions with 
others who may have greater resources than us.  We will continue to experience 
strong competition in pursuing development and acquisition opportunities.

     Debt financing may have an adverse effect on our cash flow and our 
ability to pay dividends.  None of our Charter, By-laws or investment policies 
contain any limitation on the amount of aggregate indebtedness which we may 
incur and no stockholder approval is required for us to incur additional 
indebtedness.  Accordingly, our management and Board of Directors will have 
discretion to incur such amounts of aggregate indebtedness as they determine.  
We may seek additional debt financing to fund future acquisitions.  We will be 
subject to risks normally associated with debt financing, including the risk 
that our cash flow will be insufficient to pay dividends at expected levels 
and meet required payments of principal and interest, the risk that 
indebtedness on our properties (which will not have been fully amortized at 
maturity in all cases) will not be able to be refinanced or that the terms of 
such refinancing will not be as favorable as the terms of existing 
indebtedness.  Some of our properties are or may be mortgaged to secure 
payments on our indebtedness.  Certain other properties are secured by debt 
which is cross-collateralized and cross-defaulted.  As of the date of this 
Prospectus, our mortgage debt totaled approximately $144.7 million (or 97.5% 
of our total indebtedness), $38.8 million or approximately 26.8% of which 
constituted borrowings under our $150 million secured credit facility (the 
"Credit Facility") which currently bears interest at the London Interbank 
Offered Rate (LIBOR) plus 1.625%.  On July 10, 1998, there was $38.8 million 
outstanding under our Credit Facility.  In the future, we may increase our 
borrowings under the Credit Facility for new acquisitions, capital 
improvements, new development projects and for general working capital 
purposes.  Such variable rate debt creates higher debt service requirements if 
market interest rates increase, which could adversely affect our cash flow and 
the amounts of cash available for dividends to you.  

     When a property or properties are mortgaged to secure payment of 
indebtedness and we are unable to meet mortgage payments, including amounts 
due at maturity or on default, the property could be foreclosed upon by or 
otherwise transferred to the mortgagee resulting in a loss of income and asset 
value.  Based on the market price for our Common Stock at the close of 
business on July 9, 1998, our indebtedness is equal to approximately 41.0% of 
our total market capitalization on that date (assuming the conversion to 
Common Stock of all outstanding OP Units other than those which we own).  If 
principal payments due at maturity cannot be refinanced, extended or paid with 
proceeds of other capital transactions, such as the issuance of new equity or 
debt, we expect that our cash flow would not be sufficient in all years to pay 
dividends at expected levels and to repay all maturing debt.  Furthermore, if 
prevailing interest rates or other factors at the time of refinancing result 
in higher interest rates upon refinancing, the interest expense relating to 
such refinanced indebtedness would increase, which would adversely affect our 
cash flow and the amounts available for dividends to you.

     There are risks associated with our acquisition, redevelopment, 
development and construction activities.  We intend to acquire office and 
industrial properties to the extent that they can be acquired on advantageous 
terms and meet our investment criteria.  Acquisitions of office and industrial 
properties entail risks that investments will fail to perform in accordance 

                                          7
<PAGE>


with expectations.  Estimates of the costs of improvements to bring an 
acquired property up to standards established for the market position intended 
for that property may prove inaccurate.  In addition, there are general 
investment risks associated with any new real estate investment.

     We intend to consider future investments in the redevelopment, 
development and construction of office and industrial buildings in accordance 
with our growth policies.  Risks associated with our redevelopment, 
development and construction activities may include: abandonment of 
redevelopment or development opportunities; construction costs of a property 
exceeding original estimates, possibly making the property unprofitable; 
occupancy rates and rents at a newly renovated or completed property may not 
be sufficient to make the property profitable; financing may not be available 
on favorable terms for redevelopment or development of a property; and 
permanent financing may not be available on favorable terms to replace a 
short-term construction loan and construction and lease-up may not be 
completed on schedule, resulting in increased debt service expense and 
construction costs.  In addition, new redevelopment or development activities, 
regardless of whether they are ultimately successful, typically require a 
substantial portion of management's time and attention.  Redevelopment or 
development activities are also subject to risks relating to the inability to 
obtain, or delays in obtaining, all necessary zoning, land-use, building, 
occupancy and other required governmental permits and authorizations.

     We may not be able to renew leases or to relet space.  We are and will 
continue to be subject to the risk that upon expiration of leases for space 
located in our properties, the leases may not be renewed, the space may not be 
relet or the terms of renewal or reletting (including the cost of required 
renovations) may be less favorable than current lease terms.  We have 
estimated expenditures for 1998 and 1999 for renovation and reletting 
expenses, which are intended to take into consideration our views of both the 
current and expected business conditions in the appropriate markets, but we 
cannot assure you that these estimates will be accurate.  If we are unable to 
relet promptly or renew the leases for all or a substantial portion of any 
vacant space, if the rental rates upon such renewal or reletting were 
significantly lower than expected or if our cash available proves inadequate, 
then our cash flow and ability to pay expected dividends to you may be 
adversely affected.

     Liability for environmental matters could adversely affect our financial 
condition.  Under various federal, state, and local environmental laws, 
ordinances and regulations, a current or previous owner or operator of real 
property may be liable for the costs of removal or remediation of hazardous or 
toxic substances on, under or in such property.  Such laws often impose 
liability whether or not the owner or operator knew of, or was responsible 
for, the presence of such hazardous or toxic substances.  In addition, the 
presence of hazardous or toxic substances, or the failure to remediate such 
property properly, may adversely affect the owner's ability to borrow using 
such real property as collateral and to lease the property.  Persons who
arrange for the disposal or treatment of hazardous or toxic substances may also
be liable for the costs of removal or remediation of hazardous substances at
the disposal or treatment facility, whether or not such facility is or ever was
owned or operated by such person.  Certain environmental laws and common law
principles could be used to impose liability for release of and exposure to
hazardous substances, including asbestos-containing materials ("ACMs") into the
air, and third parties may seek recovery from owners or operators of real
properties for personal injury or property damage associated with exposure to
released hazardous substances, including ACMs.  As the owner of our properties,
we may be potentially liable for any such costs.  Phase I environmental site 
assessments ("ESAs") have been obtained on all of our properties.  The purpose 
of Phase I ESAs is to identify potential sources of contamination for which we 
may be responsible and to assess the status of environmental regulatory 
compliance.  For a number of the properties, the Phase I ESAs referenced prior 
Phase II ESAs obtained on such properties.  Phase II ESAs generally involve 
more invasive procedures than Phase I ESAs, such as soil sampling and testing 
or the installation and monitoring of groundwater wells.  The ESAs have not 
revealed any environmental condition, liability or compliance concern that we 
believe would have a material adverse affect on our business, assets or 
results of operations, nor are we aware of any such condition, liability or 
concern.  It is possible that the ESAs relating to any of the properties do 
not reveal all environmental conditions, liabilities or compliance concerns or 
that there are material environmental conditions, liabilities or compliance 
concerns that arose at a property after the related ESA report was completed 
of which we are otherwise unaware.  In addition, we cannot assure you that 
properties which we acquire in the future will not have any material 
environmental conditions.

                                          8
<PAGE>


Failure to Qualify as a REIT Would Cause Our Company to be Taxed as a 
Corporation

     We will be taxed as a corporation if we fail to qualify as a REIT.  We 
believe that, commencing with our taxable year ended December 31, 1993, we 
have been organized and operated in a manner that has enabled us to meet the 
requirements for qualification as a REIT for federal income tax purposes and 
we intend to continue to operate in such a manner.  We have not requested, and 
we do not plan to request, a ruling from the Internal Revenue Service ("IRS") 
that we qualify as a REIT.  However, we have received an opinion from the law 
firm of Rogers & Wells LLP that, based on certain assumptions and 
representations, we have been organized in a manner so as to qualify as a REIT 
under the Code and that our proposed method of operation will enable us to
continue so qualify.

     You should be aware that opinions of counsel are not binding on the IRS 
or any court.  Furthermore, the conclusions stated in the opinion are 
conditioned on, and our continued qualification as a REIT will depend on, our 
meeting various requirements imposed by the Code.  Such requirements are 
discussed in more detail in "Federal Income Tax Considerations -- Taxation of 
the Company" on page 22.  

     If we fail to qualify as a REIT, we would not be allowed a deduction for 
dividends paid to stockholders in computing our taxable income and would be 
subject to federal income tax at regular corporate rates.  We also could be 
subject to the federal alternative minimum tax.  Unless we are entitled to 
relief under specific statutory provisions, we could not elect to be taxed as 
a REIT for the four taxable years following the year during which we were 
disqualified.  Therefore, if we lost our REIT status, the funds available for 
dividends to you would be substantially reduced for each of the years 
involved.  In addition, we would no longer be required to pay dividends to 
you.

     Failure to meet minimum distribution requirements may adversely affect 
us.  To qualify as a REIT, we generally must distribute to our stockholders 
95% of our net taxable income.  Such annual distribution requirements limit 
the amount of cash we have available for other business purposes, including 
amounts to fund our growth and make payments on our debt.  If we fail to meet
these distribution requirements, we may be disqualified as a REIT and subject
to certain income and excise taxes.  In addition, we will be subject to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
we make with respect to any calendar year are less than the sum of (i) 85% of
our REIT ordinary income for that year, (ii) 95% of our REIT capital gain net
income for that year and (iii) any undistributed taxable income from prior
years.  We intend to make distributions to our stockholders to comply with the
95% distribution requirement and to avoid the nondeductible excise tax.  
Differences in timing between (i) the actual receipt of income and actual 
payment of deductible expenses and (ii) the inclusion of such income and 
deduction of such expenses in arriving at our taxable income could require us, 
directly or indirectly through the Operating Partnership, to borrow funds on a 
short-term or long-term basis to meet the 95% distribution requirement and to 
avoid the nondeductible excise tax.  See "Federal Income Tax Considerations -- 
Taxation of the Company -- Annual Distribution Requirements" on page 26.

     Potential Legislative Action Regarding REITs may adversely us.  On 
February 2, 1998, the Clinton Administration released a summary of its 
proposed budget plan which contained several proposals affecting REITs.  One 
such proposal, if enacted in its present form, would prohibit a REIT from 
holding securities representing more than 10% of the value of all classes of 
stock of a corporation, other than a qualified REIT subsidiary or another 
REIT.  If enacted in its present form, the proposal may limit the future 
activities and growth of American Real Estate Management Inc. (the "Management 
Company").  No prediction can be made as to whether such proposal or any other 
proposal affecting REITs will be enacted into legislation and the impact of 
any such legislation on our operations.  See "Federal Income Tax 
Considerations -- Other Tax Considerations" on page 30.

     We may be subject to other tax liabilities.  Even if we qualify as a 
REIT, we may be subject to certain federal, state and local taxes on our 
income and property that could reduce operating cash flow.  See "Federal 
Income Tax Considerations -- Other Tax Considerations" on page 30.

                                          9
<PAGE>


Future Sales of Our Common Stock May Adversely Affect the Price of Our Common 
Stock

     Future sales of a substantial number of shares of our Common Stock may 
occur as a result of option holders exercising their rights to purchase our 
shares or by resale availability from registration rights (including with 
respect to OP Units redeemed for shares) or exemptions from registration.  
Such sales could adversely affect the prevailing market price for shares of 
our Common Stock.

Transfer Restrictions May Make it More Difficult to Sell Our Capital Stock

     Our Charter contains limitations on the ownership of our capital stock 
which may make it more difficult for you to sell our capital stock.  See 
"Description of Capital Stock─Restrictions on Transfer" on page 17.
We Depend on Key Personnel, the Loss of Whom Might Adversely Affect Our 
Performance

     We depend on the efforts of our key personnel, particularly Jeffrey E. 
Kelter, our President, and David F. McBride, our Chairman, as well as certain 
other senior management.  While we believe that, if necessary, we could find 
replacements for these key personnel, the loss of their services could have a 
material adverse effect on our operations.  

                                          10


<PAGE>

                                  THE COMPANY

     We are a self-administered, self-managed REIT engaged in the ownership, 
acquisition and development of industrial and office properties.  At July 9, 
1998, we owned a portfolio of 49 properties comprised of 30 industrial 
properties and 18 office properties containing an aggregate of 5.7 million 
square feet (the "Properties"), and one non-core property comprised of a 
community shopping center (we refer to the non-core property in this 
Prospectus as the "Non-Core Property").  The Properties are located 
principally in the mid-Atlantic and Northeastern United States and are 98% 
leased to 163 tenants.

     We conduct substantially all of our activities through, and substantially 
all of the Properties are held directly or indirectly by, the Operating 
Partnership.  American Real Estate Investment Corporation is the sole general 
partner of the Operating Partnership and owns, at July 9, 1998, approximately 
55.7% of the OP Units.  The remaining OP Units are owned by limited partners 
of the Operating Partnership.  Our officers and directors own approximately 
38% of the outstanding OP Units as of July 9, 1998.  Each OP Unit may be 
redeemed by the holder for one share of Common Stock (subject to certain 
anti-dilution provisions), or, at our option, the cash value of one share of 
Common Stock.  With each such exchange, our percentage interest in the 
Operating Partnership will increase.

     Our Common Stock is listed on the American Stock Exchange under the 
symbol "REA."

     Our principal executive offices are located at 620 W. Germantown Pike, 
Suite 200, Plymouth Meeting, Pennsylvania 19462, Attention: Investor Relations 
(Telephone: (610) 834-7950).  We also maintain regional offices in Franklin 
Lakes, New Jersey, Albany, New York and Allentown, Pennsylvania.  Unless the 
context otherwise requires, all references to "we," "us" or "our company" 
refers to American Real Estate Investment Corporation and its subsidiaries, 
including the Operating Partnership.


                                  USE OF PROCEEDS

     Except as we may set forth in the applicable Prospectus Supplement, we 
intend to apply the net proceeds from the sale of Securities for the repayment 
of indebtedness outstanding from time to time, the financing of capital 
commitments, acquisitions and other general corporate purposes.


                                          11


<PAGE>

RATIO OF EARNINGS TO FIXED CHARGES

     The Company's ratio of earnings to fixed charges for the most recent 
interim period and for each of the last five fiscal years are presented below:

<TABLE>
<CAPTION>
                                                                                Alpine
                                                             Period           Affiliates
                                                              from         (Predecessor
                                                            Inception          Combined
                                                           November 10         Period
                                                              1993          from January 1
Three Months                                                   to                to
Ended                 Fiscal Years ended December 31       December 31,      November 9,
- ------------        ------------------------------        ------------     -------------
March 31, 1998      1997     1996    1995    1994             1993              1993
- --------------      ----     ----    ----   ----              ----             ----
<S>                 <C>       <C>     <C>    <C>               <C>              <C>
1.94               0.10(a)   1.09   0.96(b) 1.24              2.11             1.09

(a)Earnings in 1997 were not adequate to cover fixed charges. The coverage 
deficiency was $2,868,000.  Earnings included $3,203,000 of non-recurring 
charges associated with the buyout of certain employment agreements, options 
and warrants as a result of the reorganization of the Company on December 12, 
1997.  Had these charges not been incurred the ratio of earnings to fixed
charges would have been 1.11 for 1997.

(b)Earnings in 1995 were not adequate to cover fixed charges.  The coverage 
deficiency was $168,000.


The ratios of earnings to fixed charges were computed by dividing earnings by 
fixed charges.  For this purpose, earnings consist of income before gains on 
sales of property, outside partners' minority interests in the income of the 
Operating Partnership and equity in earnings (losses) from unconsolidated 
investments.  Fixed charges consist of interest expense, which include 
amortization of deferred financing costs.  Earnings and fixed charges are 
based on the Company's proportionate share of unconsolidated investments 
earnings and fixed charges.

     There was no Preferred Stock outstanding for any of the periods shown 
above.  Accordingly, the ratio of earnings to combined fixed charges and 
Preferred Stock dividends is identical to the ratio of earnings to fixed 
charges.  If we issue Preferred Stock, the ratios of earnings to fixed charges 
and the ratio of earnings to combined fixed charges and Preferred Stock 
dividends will be set forth in the applicable Prospectus Supplement.


                         DESCRIPTION OF CAPITAL STOCK

General

     Under our Charter, the total number of shares of all classes of stock 
that we have authority to issue is 65,000,000, all of which are initially 
classified as shares of Common Stock, $.001 par value.  Our Board of Directors 
may classify and reclassify any unissued shares of capital stock by setting or 
changing in any one or more respects the preferences, conversion or other 
rights, voting powers, restrictions, limitations as to dividends, 
qualifications or terms or conditions of redemption of such shares of capital 
stock.  No shares of Preferred Stock are outstanding or have been classified 
by our Board of Directors at the date of this Prospectus.

     The holders of Common Stock are entitled to one vote per share on all 
matters voted on by stockholders, including elections of Directors, and, 
except as otherwise required by law or provided in any Articles Supplementary 
adopted by the Board of Directors with respect to any series of Preferred 
Stock establishing the voting powers of such series, the holders of such 
shares exclusively possess all voting power.  The Charter does not provide for 
cumulative voting in the election of Directors.  Subject to any preferential 
rights of any outstanding series of Preferred Stock, the holders of shares of 
Common Stock are entitled to such dividends as may be declared from time to 
time by the Board of Directors from funds available therefor, and upon 
liquidation are entitled to receive pro rata all assets of our company 
available for distribution to such holders.  All shares of Common Stock 

                                          12
<PAGE>


outstanding are fully paid and non-assessable and the holders thereof have no 
preemptive rights.  The transfer agent and registrar for the Common Stock is 
American Stock Transfer & Trust Company.

Preferred Stock

     General.  No shares of Preferred Stock are outstanding at the date of 
this Prospectus.  However, under the Charter, the Board of Directors is 
authorized to provide for the issuance of shares of Preferred Stock in one or 
more series, to establish the number of shares in each series and to fix the 
terms thereof.  The Preferred Stock will, when issued, be fully paid and 
nonassessable and will have no preemptive rights.  The Board of Directors 
could authorize the issuance of shares of Preferred Stock with terms and 
conditions that could have the effect of discouraging a takeover or other 
transaction that holders of Common Stock might believe to be in their best 
interests or in which holders of some, or a majority, of the shares of Common 
Stock might receive a premium for their shares over the then market price of 
such shares of Common Stock.

     Terms of Preferred Stock that We May Offer.  The following description of 
the Preferred Stock sets forth certain general terms and provisions of the 
Preferred Stock to which any Prospectus Supplement may relate.  The statements 
below describing the Preferred Stock are in all respects subject to and 
qualified in their entirety by reference to the applicable provisions of the 
Charter and our By-laws and any articles supplementary to the Charter 
designating terms of a series of Preferred Stock (the "Articles 
Supplementary").

     Reference is made to the Prospectus Supplement relating to the Preferred 
Stock offered thereby for specific terms, including, to the extent applicable:

(1)the title of such Preferred Stock;

     (2)the number of shares of such Preferred Stock offered, the liquidation 
preference per share and the offering price of such Preferred Stock;

     (3)the dividend rate(s), period(s) and/or payment date(s) or method(s) of 
calculation thereof applicable to such Preferred Stock;

     (4)the date from which dividends on such Preferred Stock shall 
accumulate, if applicable;

     (5)the provision for a sinking fund, if any, for such Preferred Stock;

     (6)the provision for redemption, if applicable, of such Preferred Stock;

     (7)any listing of such Preferred Stock on any securities exchange;

     (8)the terms and conditions, if applicable, upon which such Preferred 
Stock will be convertible into Common Stock or other capital stock, including 
the conversion price or rate (or manner of calculation thereof);

     (9)any other specific terms, preferences, rights, limitations or 
restrictions of such Preferred Stock, including voting rights, if any;

    (10)a discussion of federal income tax considerations applicable to such 
Preferred Stock;

     (11)the relative ranking and preference of such Preferred Stock as to 
dividend rights and rights upon liquidation, dissolution or winding up of the 
affairs of our company;

                                          13
<PAGE>

     (12)any limitations on issuance of any series of Preferred Stock ranking 
senior to or on a parity with such series of Preferred Stock as to dividend 
rights and rights upon liquidation, dissolution or winding up of the affairs 
of our company; and

     (13)any limitations on direct or beneficial ownership and restrictions on 
transfer, in each case as may be appropriate to preserve our status as a REIT.

     Rank.  Unless otherwise specified in the applicable Prospectus 
Supplement, the Preferred Stock will, with respect to dividend rights and 
rights upon liquidation, dissolution or winding up of our company, rank (i) 
senior to all classes or series of Common Stock and to all equity securities 
ranking junior to such Preferred Stock with respect to dividend rights or 
rights upon liquidation, dissolution or winding up of our company; (ii) on a 
parity with all of our equity securities, the terms of which specifically 
provide that such equity securities rank on a parity with the Preferred Stock 
with respect to dividend rights or rights upon liquidation, dissolution or 
winding up of our company; and (iii) junior to all of our equity securities, 
the terms of which specifically provide that such equity securities rank 
senior to the Preferred Stock with respect to dividend rights or rights upon 
liquidation, dissolution or winding up of our company.

     Dividends.  Holders of the Preferred Stock of each series will be 
entitled to receive, when, as and if declared by the Board of Directors, out 
of assets legally available for payment, cash dividends at such rates and on 
such dates as will be set forth in the applicable Prospectus Supplement.  Each 
such dividend shall be payable to holders of record as they appear on our 
share transfer books on such record dates as shall be fixed by the Board of 
Directors.

     Dividends on any series of the Preferred Stock may be cumulative or 
noncumulative, as provided in the applicable Prospectus Supplement.  
Dividends, if cumulative, will be cumulative from and after the date set forth 
in the applicable Prospectus Supplement.  If the Board of Directors fails to 
declare a dividend payable on a dividend payment date on any series of the 
Preferred Stock for which dividends are noncumulative, then the holders of 
such series of the Preferred Stock will have no right to receive a dividend in 
respect of the dividend period ending on such dividend payment date, and we 
will have no obligation to pay the dividend accrued for such period, whether 
or not dividends on such series are declared payable on any future dividend 
payment date.

     If Preferred Stock of any series is outstanding, no dividends will be 
declared or paid or set apart for payment on any of our capital stock of any 
other series ranking, as to dividends, on a parity with or junior to the 
Preferred Stock of such series for any period, unless (i) if such series of 
Preferred Stock has a cumulative dividend, full cumulative dividends have been 
or contemporaneously are declared and paid, or declared and a sum sufficient 
for the payment thereof is set apart for such payment on the Preferred Stock 
of such series for all past dividend periods and the then current dividend 
period, or (ii) if such series of Preferred Stock does not have a cumulative 
dividend, full dividends for the then current dividend period have been or 
contemporaneously are declared and paid, or declared and a sum sufficient for 
the payment thereof is set apart for such payment on the Preferred Stock of 
such series.  When dividends are not paid in full (or a sum sufficient for 
such full payment is not so set apart) upon Preferred Stock of any series and 
the shares of any other series of Preferred Stock ranking on a parity as to 
dividends with the Preferred Stock of such series, all dividends declared upon 
Preferred Stock of such series and any other series of Preferred Stock ranking 
on a parity as to dividends with such Preferred Stock shall be declared pro 
rata so that the amount of dividends declared per share of Preferred Stock of 
such series and such other series of Preferred Stock shall in all cases bear 
to each other the same ratio that accrued dividends per share on the Preferred 
Stock of such series (which shall not include any accumulation in respect of 
unpaid dividends for prior dividend periods if such Preferred Stock does not 
have a cumulative dividend) and such other series of Preferred Stock bear to 
each other.  No interest, or sum of money in lieu of interest, shall be 
payable in respect of any dividend payment or payments on Preferred Stock of 
such series that may be in arrears.

                                          14
<PAGE>


     Except as provided in the immediately preceding paragraph, unless (i) if 
such series of Preferred Stock has a cumulative dividend, full cumulative 
dividends on the Preferred Stock of such series have been or contemporaneously 
are declared and paid, or declared and a sum sufficient for the payment 
thereof is set apart for payment for all past dividend periods and the then 
current dividend period, or (ii) if such series of Preferred Stock does not 
have a cumulative dividend, full dividends on the Preferred Stock of such 
series have been or contemporaneously are declared and paid, or declared and a 
sum sufficient for the payment thereof is set apart for payment for the then 
current dividend period, no dividends (other than in shares of Common Stock or 
other shares of capital stock ranking junior to the Preferred Stock of such 
series as to dividends and upon liquidation) shall be declared or paid or set 
aside for payment nor shall any other dividend be declared or made upon the 
Common Stock or any other capital stock of our company ranking junior to or on 
a parity with the Preferred Stock of such series as to dividends or upon 
liquidation, nor shall any shares of Common Stock, or any other shares of 
capital stock of our company ranking junior to or on a parity with the 
Preferred Stock of such series as to dividends or upon liquidation, be 
redeemed, purchased or otherwise acquired for any consideration (or any moneys 
be paid to or made available for a sinking fund for the redemption of any such 
shares) by us (except by conversion into or exchange for other capital stock 
of our company ranking junior to the Preferred Stock of such series as to 
dividends and upon liquidation).

     Any dividend payment made on shares of a series of Preferred Stock shall 
first be credited against the earliest accrued but unpaid dividend due with 
respect to shares of such series that remain payable.

     Redemption.  If so provided in the applicable Prospectus Supplement, the 
Preferred Stock will be subject to mandatory redemption or redemption at our 
option, as a whole or in part, in each case upon the terms, at the times and 
at the redemption prices set forth in such Prospectus Supplement.

     The applicable Prospectus Supplement relating to a series of Preferred 
Stock that is subject to mandatory redemption will specify the number of 
shares of such Preferred Stock that we shall redeem in each year commencing 
after a date to be specified, at a redemption price per share to be specified, 
together with an amount equal to all accrued and unpaid dividends thereon 
(which shall not, if such Preferred Stock does not have a cumulative dividend, 
include any accumulation in respect of unpaid dividends for prior dividend 
periods) to the date of redemption.  The redemption price may be payable in 
cash or other property, as specified in the applicable Prospectus Supplement.  
If the redemption price for Preferred Stock of any series is payable only from 
the net proceeds of the issuance of shares of our capital stock, the terms of 
such Preferred Stock may provide that if no such shares of capital stock shall 
have been issued, or to the extent the net proceeds from any issuance are 
insufficient to pay in full the aggregate redemption price then due, such 
Preferred Stock shall automatically and mandatorily be converted into the 
applicable shares of our capital stock pursuant to conversion provisions 
specified in the applicable Prospectus Supplement.

     Notwithstanding the foregoing, unless (i) if a series of Preferred Stock 
has a cumulative dividend, full cumulative dividends on all shares of such 
series of Preferred Stock shall have been or contemporaneously are declared 
and paid, or declared and a sum sufficient for the payment thereof set apart 
for payment for all past dividend periods and the then current dividend 
period, or (ii) if a series of Preferred Stock does not have a cumulative 
dividend, full dividends on all shares of the Preferred Stock of such series 
have been or contemporaneously are declared and paid, or declared and a sum 
sufficient for the payment thereof set apart for payment for the then current 
dividend period, no shares of such series of Preferred Stock shall be redeemed 
unless all outstanding shares of Preferred Stock of such series are 
simultaneously redeemed; provided, however, that the foregoing shall not 
prevent the purchase or acquisition of Preferred Stock of such series to 
preserve our REIT status or pursuant to a purchase or exchange offer made on 
the same terms to holders of all outstanding shares of Preferred Stock of such 
series.  In addition, unless (i) if such series of Preferred Stock has a 
cumulative dividend, full cumulative dividends on all outstanding shares of 
such series of Preferred Stock have been or contemporaneously are declared and 
paid, or declared and a sum sufficient for the payment thereof set apart for 
payment for all past dividend periods and the then current dividend period, or 
(ii) if such series of Preferred Stock does not have a cumulative dividend, 
full dividends on the Preferred Stock of such series have been or 
contemporaneously are declared and paid, or declared and a sum sufficient for 
the payment thereof set apart for payment for the then current dividend 
period, we shall not purchase or otherwise acquire directly or indirectly any 

                                          15
<PAGE>


shares of such series of Preferred Stock (except by conversion into or 
exchange for our capital shares ranking junior to the Preferred Stock of such 
series as to dividends and upon liquidation); provided, however, that the 
foregoing shall not prevent the purchase or acquisition of shares of Preferred 
Stock of such series to preserve our REIT status or pursuant to a purchase or 
exchange offer made on the same terms to holders of all outstanding shares of 
Preferred Stock of such series.

     If fewer than all of the outstanding shares of Preferred Stock of any 
series are to be redeemed, we will determine the number of shares to be 
redeemed and we may redeem such shares pro rata from the holders of record of 
such shares in proportion to the number of such shares held or for which 
redemption is requested by such holder (with adjustments to avoid redemption 
of fractional shares) or by any other equitable manner which we decide.

     We will mail a notice of redemption at least 30 days but not more than 60 
days before the redemption date to each holder of record of Preferred Stock of 
any series to be redeemed at the address shown on our stock transfer books.  
Each notice shall state: (i) the redemption date; (ii) the number of shares 
and series of the Preferred Stock to be redeemed; (iii) the redemption price; 
(iv) the place or places where certificates for such Preferred Stock are to be 
surrendered for payment of the redemption price; (v) that dividends on the 
shares to be redeemed will cease to accrue on such redemption date; and (vi) 
the date upon which the holder's conversion rights, if any, as to such shares 
shall terminate.  If fewer than all the shares of Preferred Stock of any 
series are to be redeemed, the notice mailed to each such holder thereof shall 
also specify the number of shares of Preferred Stock to be redeemed from each 
such holder.  If we have given notice of redemption of any Preferred Stock and 
if we have set aside the funds necessary for such redemption in trust for the 
benefit of the holders of any Preferred Stock so called for redemption, then 
from and after the redemption date, dividends will cease to accrue on such 
Preferred Stock, and all rights of the holders of such shares will terminate, 
except the right to receive the redemption price.

     Liquidation Preference.  Upon any voluntary or involuntary liquidation, 
dissolution or winding up of the affairs of our company, then, before any 
distribution or payment shall be made to the holders of any Common Stock or 
any other class or series of our capital stock ranking junior to the Preferred 
Stock in the distribution of assets upon any liquidation, dissolution or 
winding up of our company, the holders of each series of Preferred Stock shall 
be entitled to receive out of our assets legally available for distribution to 
stockholders liquidating distributions in the amount of the liquidation 
preference per share, if any, set forth in the applicable Prospectus 
Supplement, plus an amount equal to all dividends accrued and unpaid thereon 
(which shall not include any accumulation in respect of unpaid noncumulative 
dividends for prior dividend periods).  After payment of the full amount of 
the liquidating distributions to which they are entitled, the holders of 
Preferred Stock will have no right or claim to any of our remaining assets.  
If, upon any such voluntary or involuntary liquidation, dissolution or winding 
up, our available assets are insufficient to pay the amount of the liquidating 
distributions on all outstanding shares of Preferred Stock and the 
corresponding amounts payable on all shares of other classes or series of our 
capital stock ranking on a parity with the Preferred Stock in the distribution 
of assets, then the holders of the Preferred Stock and all other such classes 
or series of capital stock ranking on parity with the Preferred Stock shall 
share ratably in any such distribution of assets in proportion to the full 
liquidating distributions to which they would otherwise be respectively 
entitled.

     If we have made liquidating distributions in full to all holders of 
Preferred Stock, our remaining assets shall be distributed among the holders 
of any other classes or series of capital stock ranking junior to the 
Preferred Stock upon liquidation, dissolution or winding up, according to 
their respective rights and preferences and in each case according to their 
respective number of shares.  For such purposes, the consolidation or merger 
of our company with or into any other corporation, trust or entity, or the 
sale, lease or conveyance of all or substantially all of our property or 
business, shall not be deemed to constitute a liquidation, dissolution or 
winding up of our company.

                                          16
<PAGE>


     Voting Rights.  Holders of the Preferred Stock will not have any voting 
rights, except as set forth below or as otherwise from time to time required 
by law or as indicated in the applicable Prospectus Supplement.

     Unless provided otherwise for any series of Preferred Stock, so long as 
any shares of Preferred Stock of a series remain outstanding, we will not, 
without the affirmative vote or consent of the holders of at least a majority 
of the shares of such series of Preferred Stock outstanding at the time, given 
in person or by proxy, either in writing or at a meeting (such series voting 
separately as a class), (i) authorize or create, or increase the authorized or 
issued amount of, any class or series of capital stock ranking senior to such 
series of Preferred Stock with respect to payment of dividends or the 
distribution of assets upon liquidation, dissolution or winding up or 
reclassify any authorized capital stock into such shares, or create, authorize 
or issue any obligation or security convertible into or evidencing the right 
to purchase any such shares, or (ii) amend, alter or repeal the provisions of 
the Charter or the Articles Supplementary for such series of Preferred Stock, 
whether by merger, consolidation or otherwise (an "Event"), so as to 
materially and adversely affect any right, preference, privilege or voting 
power of such series of Preferred Stock or the holders thereof; provided, 
however, with respect to the occurrence of any Event set forth in (ii) above, 
so long as the Preferred Stock remains outstanding with the terms thereof 
materially unchanged, taking into account that upon the occurrence of an Event 
we may not be the surviving entity, the occurrence of any such Event shall not 
be deemed to materially and adversely affect such rights, preferences, 
privileges or voting power of holders of Preferred Stock; and provided further 
that (a) any increase in the amount of the authorized Preferred Stock or the 
creation or issuance of any other series of Preferred Stock or (b) any 
increase in the amount of authorized shares of such series or any other series 
of Preferred Stock, in each case ranking on a parity with or junior to the 
Preferred Stock of such series with respect to payment of dividends or the 
distribution of assets upon liquidation, dissolution or winding up, shall not 
be deemed to materially and adversely affect such rights, preferences, 
privileges or voting powers.

     The foregoing voting provisions will not apply if, at or prior to the 
time when the act with respect to which such vote would otherwise be required 
shall be effected, all outstanding shares of such series of Preferred Stock 
shall have been redeemed or called for redemption and sufficient funds shall 
have been deposited in trust to effect such redemption.

     Conversion Rights.  The terms and conditions, if any, upon which any 
series of Preferred Stock is convertible into Common Stock will be set forth 
in the applicable Prospectus Supplement relating thereto.  Such terms will 
include the number of shares of Common Stock into which the shares of 
Preferred Stock are convertible, the conversion price or rate (or manner of 
calculation thereof), the conversion period, provisions as to whether 
conversion will be at the option of the holders of the Preferred Stock or at 
our option, the events requiring an adjustment of the conversion price and the 
provisions affecting conversion in the event of the redemption of such series 
of Preferred Stock.

     Transfer Agent.  The transfer agent and registrar for the Preferred Stock 
will be set forth in the applicable Prospectus Supplement.

Restrictions on Transfer

     For us to qualify as a REIT under the Code, not more than 50% in value of 
our outstanding shares of capital stock may be owned, directly or indirectly, 
by five or fewer individuals (as defined in the Code to include certain 
entities) during the last half of a taxable year, and the shares of capital 
stock must be beneficially owned by 100 or more persons during at least 335 
days of a taxable year of 12 months or during a proportionate part of a 
shorter taxable year; and certain percentages of our gross income must be from 
particular activities.  Because our Directors believe it is essential for us 
to continue to qualify as a REIT, the Charter, subject to certain exceptions, 
provides that no holder (other than the McBride Family (as defined in the 
Charter) and Hudson Bay Partners II, L.P., and any other person who the 
Directors approve, at their option and in their discretion, provided that such 
approval will not result in the termination of our status as a REIT) may own, 
or be deemed to own by virtue of the attribution provisions of the Code, more 

                                          17
<PAGE>


than the lesser of 4.9% and the percentage obtained by dividing (i) 49.5% 
minus the McBride Family Excepted Holder Limit (as defined in the Charter) by 
(ii) two (the "Ownership Limit"), of the outstanding shares of Common Stock 
(in value or number of shares, whichever is more restrictive) and with respect 
to any class or series of Preferred Stock, 9.9% (in value or number of shares, 
whichever is more restrictive) of the outstanding shares of such class or 
series of Preferred Stock.  The foregoing restrictions on transferability and 
ownership will not apply if the Directors determine that it is no longer in 
our best interests to attempt to qualify, or to continue to qualify, as a 
REIT.  If any purported transfer of shares would cause our shares to be 
beneficially owned by less than 100 persons, then such purported transfer 
shall be void ab initio and the intended transferee shall acquire no rights in 
such shares.  If any transfer of shares occurs which, if effected, would (i) 
create a direct or indirect ownership of shares in excess of the Ownership 
Limit, (ii) result in our company being "closely held" within the meaning of 
Section 856(h) of the Code, or (iii) otherwise result in our failure to 
qualify as a REIT, then the capital stock being transferred that would cause 
one or more of the restrictions on ownership or transfer to be violated will 
be automatically transferred to a trust for the benefit of a designated 
charitable beneficiary.  The purported transferee of such shares shall have no 
right to receive dividends or other distributions with respect to such shares 
and shall have no right to vote such shares.  Any dividends or other 
distributions paid to such purported transferee prior to our discovery that 
the shares have been transferred to a trust shall be paid upon demand to the 
trustee of the trust for the benefit of the charitable beneficiary.  The 
trustee of the trust will have all rights to dividends with respect to the 
shares of capital stock held in trust, which rights will be exercised for the 
exclusive benefit of the charitable beneficiary.  The trustee shall designate 
a transferee of such stock so long as such shares of stock would not violate 
the Ownership Limit in the hands of such designated transferee.  Upon the sale 
of such shares, the purported transferee shall receive the lesser of (A) (i) 
the price per share such purported transferee paid for the capital stock in 
the purported transfer that resulted in the transfer of shares of capital 
stock to the trust, or (ii) if the transfer or other event that resulted in 
the transfer of shares of capital stock gave full value for such shares, a 
price per share equal to the market price on the date of the purported 
transfer or other event that resulted in the transfer of the shares to the 
trust, and (B) the price per share received by the trustee from the sale or 
disposition of the shares held in the trust.

     All certificates representing capital stock will bear a legend referring 
to the restrictions described above.

     Every owner of more than 1% (or such other percentage as required by the 
Code or regulations thereunder) of the issued and outstanding shares of Common 
Stock will be required to file a written notice with us containing the 
information specified in the Charter no later than January 30 of each year.  
In addition, each stockholder shall upon demand be required to disclose to us 
in writing such information as we may request in good faith in order to 
determine our status as a REIT.

     These ownership limitations may have the effect of precluding acquisition 
of control of our company unless the Directors determine that maintenance of 
REIT status is no longer in our best interests.

Limitation of Liability of Directors

     The Charter provides that, to the fullest extent permitted by Maryland 
law, a Director or officer will not be personally liable for monetary damages 
to us or you. 

Indemnification of Directors and Officers

     The Charter provides that we shall indemnify (i) our Directors and 
officers to the fullest extent required or permitted by Maryland law, 
including the advance of expenses under the procedures and to the full extent 
permitted by law and (ii) other employees and agents to such extent as shall 
be authorized by our Board or our By-laws and be permitted by law.  The 
Charter provides that no amendment of the Charter or repeal of any of its 
provisions shall limit or eliminate the right to indemnification provided 
thereunder with respect to acts or omissions occurring prior to such amendment 
or repeal.  We have a director and officer liability insurance policy with a 
$5,000,000 limit of liability and a company retention of $75,000 in the 
aggregate for each claim.

                                          18
<PAGE>


                         DESCRIPTION OF DEPOSITARY SHARES

     We may issue receipts ("Depositary Receipts") representing fractional 
interests in shares of a particular series of Preferred Stock ("Depositary 
Shares").  We will deposit the Preferred Stock of a series which is the 
subject of Depositary Shares with a depositary (the "Depositary"), which will 
hold that Preferred Stock for the benefit of the holders of the Depositary 
Shares, in accordance with a deposit agreement (each, a "Deposit Agreement") 
between us and the Depositary.  The holders of Depositary Shares will be 
entitled to all the rights and preferences of the series of Preferred Stock to 
which the Depositary Shares relate, including dividend, voting, conversion, 
redemption and liquidation rights, to the extent of their interests in that 
Preferred Stock. 

     While the Deposit Agreement relating to a particular series of Preferred 
Stock may have provisions applicable solely to that series of Preferred Stock, 
all Deposit Agreements relating to our Preferred Stock will include the 
following provisions:

Dividends and Other Distributions

     Each time we pay a cash dividend or make any other type of cash 
distribution with regard to Preferred Stock of a series, the Depositary will 
distribute to the holder of record of each Depositary Share relating to that 
series of Preferred Stock an amount equal to the total dividend or other 
distribution received by the Depositary on the Preferred Stock of the series 
held by it divided by the total number of outstanding Depositary Shares 
relating to the series (which will be the same fraction of the dividend or 
other distribution paid per share of Preferred Stock that each Depositary 
Share is of a share of Preferred Stock).  If there is a distribution of 
property other than cash, the Depositary either will distribute the property 
to the record holders of Depositary Shares in proportion to the Depositary 
Shares held by each of them, or the Depositary will, with our approval, sell 
the property and distribute the net proceeds from the sale to the record 
holders of the Depositary Shares in proportion to the Depositary Shares held 
by them.

Withdrawal of Preferred Stock

     A holder of Depositary Shares will be entitled to receive, upon surrender 
of Depositary Receipts representing Depositary Shares, the number of whole or 
fractional shares of the applicable series of Preferred Stock, and any money 
or other property, to which the Depositary Shares relate.

Redemption of Depositary Shares

     Whenever we redeem shares of Preferred Stock held by a Depositary, the 
Depositary will be required to redeem, on the same redemption date, Depositary 
Shares constituting, in total, the number of shares of Preferred Stock held by 
the Depositary which are redeemed, subject to the Depositary's receiving the 
redemption price of those shares of Preferred Stock.  If fewer than all the 
Depositary Shares are to be redeemed, we will select the Depositary Shares to 
be redeemed pro rata or by another method which we determine to be equitable 
and which preserves our status as a REIT.

     From and after the date fixed for redemption, all dividends in respect of 
the shares of Preferred Stock so called for redemption will cease to accrue, 
the Depositary Shares so called for redemption will no longer be deemed to be 
outstanding and all rights of the holders of the Depositary Receipts 
evidencing the Depositary Shares so called for redemption will cease, except 
the right to receive any amounts payable upon such redemption and any money or 
other property to which the holders of such Depositary Receipts were entitled 
upon such redemption upon surrender thereof to the applicable Depositary.

                                          19
<PAGE>


Voting

     Any time we send the holders of a series of Preferred Stock to which 
Depositary Shares relate a notice of meeting or other materials relating to a 
meeting of the holders of that series of Preferred Stock, we will provide the 
Depositary with sufficient copies of those materials so they can be sent to 
all holders of record of the applicable Depositary Shares on the record date 
for the meeting, and the Depositary will send those materials to the holders 
of record of the Depositary Shares on that record date.  The Depositary will 
solicit voting instructions from holders of Depositary Shares and will vote or 
not vote the Preferred Stock to which the Depositary Shares relate in 
accordance with those instructions.  A Depositary will not be responsible for 
any failure to carry out any instruction to vote, or for the manner or effect 
of any such vote made, as long as such action or non-action is in good faith 
and does not result from negligence or willful misconduct of such Depositary.

Liquidation Preference

     Upon our liquidation, dissolution or winding up, whether voluntary or 
involuntary, the holder of each Depositary Share will be entitled to a 
fraction of the sum distributed to the holder of a share of the applicable 
series of Preferred Stock equal to the fraction of a share of that Preferred 
Stock represented by the Depositary Share.

Conversion

     If shares of a series of Preferred Stock are convertible into Common 
Stock or other securities or property of our company, holders of Depositary 
Shares relating to that series of Preferred Stock will, if they surrender 
Depositary Receipts representing Depositary Shares and give us appropriate 
instructions to convert them, receive the shares of Common Stock or other 
securities or property into which the number of shares (or fractions of 
shares) of Preferred Stock to which the Depositary Shares relate could at the 
time be converted.  

Amendment and Termination of a Deposit Agreement

     A Deposit Agreement may be amended by agreement between us and the 
Depositary, except that an amendment which materially and adversely affects 
the rights of holders of Depositary Shares or would be materially and 
adversely inconsistent with the rights granted to the holders of the Preferred 
Stock to which they relate, must be approved by holders of at least two-thirds 
of the outstanding Depositary Shares.  No amendment will impair the right of a 
holder of Depositary Shares to surrender the Depositary Receipts evidencing 
those Depositary Shares and receive the Preferred Stock to which they relate, 
except as required to comply with law.  Every holder of an outstanding 
Depositary Receipt at the time any such amendment becomes effective shall be 
deemed, by continuing to hold such Depositary Receipt, to consent and agree to 
such amendment and to be bound by the applicable Deposit Agreement as amended 
thereby.

     We may terminate a Deposit Agreement if such termination is necessary to 
preserve our REIT status or with the consent of holders of a majority of the 
Depositary Shares to which it relates.  Upon termination of a Deposit 
Agreement, the Depositary will make the whole or fractional shares of 
Preferred Stock to which the Depositary Shares issued under the Deposit 
Agreement relate available to the holders of those Depositary Shares.  We will 
agree that if a Deposit Agreement is terminated to preserve our REIT status, 
then we will use our best efforts to list the Preferred Stock issued upon 
surrender of the related Depositary Shares on a national securities exchange.  


                                          20
<PAGE>

A Deposit Agreement will automatically terminate if (i) all outstanding 
Depositary Shares to which it relates have been redeemed or converted or (ii) 
a final distribution upon liquidation, dissolution or winding up of our 
company has been made to the holders of the Depositary Shares issued under the 
Deposit Agreement.

Miscellaneous

     There will be provisions (i) requiring the Depositary to forward to 
holders of record of Depositary Shares any reports or communications from us 
which are received by the Depositary with respect to the Preferred Stock to 
which the Depositary Shares relate, (ii) regarding compensation of the 
Depositary, (iii) regarding the removal or resignation of the Depositary, (iv) 
limiting our liability and the liability of the Depositary under the Deposit 
Agreement (usually to failure to act in good faith, gross negligence or wilful 
misconduct) and (v) indemnifying the Depositary against certain possible 
liabilities.


                                  METHOD OF SALE

     We may sell Securities through underwriters or dealers, or we may sell 
Securities directly to one or more purchasers (including our executive 
officers or other persons that may be deemed to be our affiliates) or through 
agents or through a combination of any such methods of sale.  Any underwriter 
or agent involved in the offer and sale of Securities will be named in the 
applicable Prospectus Supplement.

     We may effect the distribution of the Common Stock from time to time in 
one or more transactions (which may involve block transactions) on the 
American Stock Exchange or otherwise pursuant to and in accordance with the 
applicable rules of the American Stock Exchange, in the over-the-counter 
market, in negotiated transactions, or through the issuance of Preferred Stock 
convertible into Common Stock (whether such Preferred Stock is listed on a 
securities exchange or otherwise), or a combination of such methods of 
distribution, at market prices prevailing at the time of the sale, at prices 
related to such prevailing market prices or at negotiated prices.

     In connection with the sale of Securities, underwriters or agents may 
receive compensation from us or from purchasers of the Securities, for whom 
they may act as agents, in the form of discounts, concessions or commissions.  
Underwriters may sell the Securities to or through dealers, and such dealers 
may receive compensation in the form of discounts, concessions or commissions 
from the underwriters and/or commissions from the purchasers for whom they may 
act as agents.  Underwriters, dealers and agents that participate in the 
distribution of the Securities may be deemed to be underwriters under the 
Securities Act, and any discounts or commissions they receive from us and any 
profit on the resale of the Securities they realize may be deemed to be 
underwriting discounts and commissions under the Securities Act.  Any such 
underwriter or agent will be identified, and any such compensation received 
from us will be described, in the applicable Prospectus Supplement.

     Unless we otherwise specify in the applicable Prospectus Supplement, each 
series of Securities will be a new issue with no established trading market, 
other than the Common Stock which is listed on the American Stock Exchange.  
Any shares of Common Stock sold pursuant to a Prospectus Supplement will be 
listed on the American Stock Exchange, subject to official notice of 
issuance.  We may elect to list any series of Preferred Stock on an exchange, 
but are not obligated to do so.  It is possible that one or more underwriters 
may make a market in a series of Securities, but will not be obligated to do 
so and may discontinue any market making at any time without notice.  
Therefore, no assurance can be given as to the liquidity of, or the trading 
market for, the Securities.

     Under agreements into which we may enter, underwriters, dealers and 
agents who participate in the distribution of the Securities may be entitled 
to indemnification against and contribution toward certain liabilities by us, 
including liabilities under the Securities Act.

     Underwriters, dealers and agents may be a tenant in one of our Properties 
and they may engage in transactions with us and they may perform services for 
us in the ordinary course of business.

                                          21
<PAGE>


     In order to comply with the securities laws of certain states, if 
applicable, the Securities will be sold in such jurisdictions only through 
registered or licensed brokers or dealers.  In addition, in certain states, 
the Securities may not be sold unless they have been registered or qualified 
for sale in the applicable state or an exemption from the registration or 
qualification requirement is available and is complied with.

     Under applicable rules and regulations under the Exchange Act, any person 
engaged in the distribution of the Securities may not simultaneously engage in 
market making activities with respect to the Securities for a period of two 
business days prior to the commencement of such distribution.


                         FEDERAL INCOME TAX CONSIDERATIONS

General

     The following discussion summarizes the material federal income tax 
considerations that may be relevant to a U.S. person who holds Common Stock, 
is based on current law, and is not intended and should not be construed as 
tax advice.  The following discussion, which is not exhaustive of all possible 
tax considerations, does not include a detailed discussion of any state, local 
or foreign tax considerations.  In addition, this discussion is intended to 
address only those federal income tax considerations that are generally 
applicable to all prospective U.S. stockholders and does not discuss all of 
the aspects of federal income taxation that may be relevant to a prospective 
U.S. stockholder in light of his or her particular circumstances or to certain 
types of stockholders (including insurance companies, tax-exempt entities, 
financial institutions or broker-dealers, foreign corporations and persons who 
are not citizens or residents of the United States) who are subject to special 
treatment under the federal income tax laws.

     The statements and opinions in this discussion are based on current 
provisions of the Code, existing, temporary and currently proposed Treasury 
Regulations under the Code, the legislative history of the Code, existing 
administrative rulings and practices of the IRS and judicial decisions.  No 
assurance can be given that legislative, judicial or administrative changes 
will not affect the accuracy of any statements in this Prospectus with respect 
to transactions entered into or contemplated prior to the effective date of 
such changes.  In addition, we have not requested and do not plan to request 
any rulings from the IRS concerning our tax treatment or the tax treatment of 
the Operating Partnership.  Accordingly, no assurance can be given that the 
statements set forth herein (which do not bind the IRS or the courts) will not 
be challenged by the IRS or sustained by the courts if so challenged.

     THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX 
PLANNING.  WE ADVISE EACH PROSPECTIVE PURCHASER OF COMMON STOCK TO CONSULT 
WITH HIS OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM 
OR HER OF THE PURCHASE, OWNERSHIP AND SALE OF COMMON STOCK IN AN ENTITY 
ELECTING TO BE TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN 
AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND 
OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

Taxation of the Company

     General.  We have elected to be taxed as a REIT under Sections 856 
through 860 of the Code, commencing with our taxable year ended December 31, 
1993.  We believe that we have been organized and operated in a manner so as 
to qualify for taxation as a REIT under the Code, and we intend to continue to 
operate in such a manner.  No assurance, however, can be given that we have 
operated in a manner so as to qualify as a REIT or will continue to operate in 
a manner so as to remain qualified as a REIT.  Qualification and taxation as a 
REIT depends upon our ability to meet, on a continuing basis, through periodic 

                                          22
<PAGE>


operating results, distribution levels, diversity of stock ownership and other 
qualification tests imposed under the Code on REITs, some of which are 
summarized below.  While we intend to operate so as to qualify as a REIT, 
given the highly complex nature of the rules governing REITs, the ongoing 
importance of factual determinations and the possibility of future changes in 
our circumstances, no assurance can be given that we will so qualify for any 
particular year.  See "--Failure to Qualify" on page 26.

     In the opinion of Rogers & Wells LLP, our counsel ("Counsel"), commencing 
with our taxable year ended December 31, 1993, we have been organized in 
conformity with the requirements for qualification as a REIT under the Code 
and our proposed method of operation and that of the Operating Partnership 
will enable us to meet the requirements for qualification as a REIT.  
Counsel's opinion is based on various assumptions and is conditioned upon 
certain of our representations and the representations of the Operating 
Partnership as to factual matters.  In addition, Counsel's opinion is based 
upon our factual representations concerning our business and properties, and 
the business and properties of the Operating Partnership.  Unlike a tax 
ruling, an opinion of counsel is not binding upon the IRS and no assurance can 
be given that the IRS will not challenge our status.  Moreover, such 
qualification and taxation as a REIT depends upon our ability to meet, through 
actual annual operating results, distribution levels, diversity of stock 
ownership and various other qualification tests imposed under the Code.  
Counsel will not review our compliance with the various REIT qualification 
tests on a periodic or continuing basis.  Accordingly, no assurance can be 
given that the actual results of our operation for any one taxable year will 
satisfy such requirements.  See "--Failure to Qualify" on page 26.

     The following is a general summary of the Code provisions that govern the 
federal income tax treatment of a REIT and its stockholders.  These provisions 
of the Code are highly technical and complex.  This summary is qualified in 
its entirety by the applicable Code provisions, Treasury Regulations and 
administrative and judicial interpretations thereof, all of which are subject 
to change, possibly with retroactive effect.

     So long as we qualify for taxation as a REIT, we generally will not be 
subject to federal corporate income tax on our net income that we distribute 
currently to our stockholders.  This treatment substantially eliminates the 
"double taxation" (taxation at both the corporate and stockholder levels) that 
generally results from an investment in a corporation.  If we do not qualify 
as a REIT, we would be taxed at rates applicable to corporations on all of our 
income, whether or not distributed to our stockholders.  Even if we qualify as 
a REIT, we will be subject to federal income or excise tax as follows: (i) we 
will be taxed at regular corporate rates on any undistributed REIT taxable 
income and undistributed net capital gains other than retained capital gains 
as discussed below; (ii) under certain circumstances, we may be subject to the 
"alternative minimum tax" on our items of tax preference, if any; (iii) if we 
have (1) net income from the sale or other disposition of "foreclosure 
property" (generally, property acquired by reason of a foreclosure or 
otherwise on default of a loan secured by the property) that is held primarily 
for sale to customers in the ordinary course of business or (2) other 
nonqualifying net income from foreclosure property, we will be subject to tax 
at the highest corporate rate on such income; (iv) if we have net income from 
prohibited transactions (which are, in general, certain sales or other 
dispositions of property (other than dispositions of foreclosure property and 
dispositions of property that occur due to involuntary conversion) held 
primarily for sale to customers in the ordinary course of business), such 
income will be subject to a 100% tax; (v) if we should fail to satisfy the 75% 
gross income test or the 95% gross income test (as discussed below), and 
nonetheless maintain our qualification as a REIT because certain other 
requirements are met, we will be subject to a 100% tax on the net income 
attributable to the greater of the amount by which we fail the 75% or 95% 
test, multiplied by a fraction intended to reflect our profitability; (vi) if 
we should fail to distribute with respect to each calendar year at least the 
sum of (1) 85% of our REIT ordinary income for such year, (2) 95% of our REIT 
capital gain net income for such year, and (3) any undistributed taxable 
income from prior years, we would be subject to a 4% excise tax on the excess 
of such required distribution over the amounts actually distributed; (vii) if 
we acquire any asset from a C corporation (i.e., generally a corporation 
subject to full corporate-level tax) in a transaction in which the basis of 
the asset in our hands is determined by reference to the basis of the asset 
(or any other property) in the hands of the C corporation and we subsequently 
recognize gain on the disposition of such asset in a taxable transaction during
the 10-year period (the "Recognition Period") beginning on the date on which we
acquired the asset (or we first qualified as a REIT), then pursuant to
guidelines issued by the IRS, the excess of (1) the fair market value of the
asset as of the beginning of 

                                          23
<PAGE>

the applicable Recognition Period, over (2) our adjusted basis in such asset 
as of the beginning of such Recognition Period will be subject to tax at the 
highest regular corporate rate.

     Requirements for Qualification.  The Code defines a REIT as a 
corporation, trust or association (i) that is managed by one or more trustees 
or directors; (ii) the beneficial ownership of which is evidenced by 
transferable shares, or by transferable certificates of beneficial interest; 
(iii) that would be taxable as a domestic corporation but for Sections 856 
through 859 of the Code; (iv) that is neither a financial institution nor an 
insurance company subject to certain provisions of the Code; (v) that has the 
calendar year as its taxable year; (vi) the beneficial ownership of which is 
held by 100 or more persons; (vii) during the last half of each taxable year 
not more than 50% in value of the outstanding stock of which is owned, 
directly or indirectly, by five or fewer individuals (as defined in the Code 
to include certain entities); and (viii) that meets certain other tests, 
described below, regarding the nature of its income and assets.  The Code 
provides that conditions (i) through (v), inclusive, must be met during the 
entire taxable year and that condition (vi) must be met during at least 335 
days of a taxable year of 12 months, or during a proportionate part of a 
taxable year of less than 12 months.  Conditions (vi) and (vii), however, will 
not apply until after the first taxable year for which an election is made to 
be taxed as a REIT.

     We believe that we currently satisfy all conditions.  In 
addition, our Charter includes restrictions regarding the transfer of our 
Common Stock that are intended to assist us in continuing to satisfy the share 
ownership requirements described in (vi) and (vii) above.  See "Description of 
Capital Stock--Restrictions on Transfer."  In rendering its opinion that we 
are organized in conformity with the requirements for qualification as a REIT, 
Counsel is relying on our representation that ownership of our stock satisfies 
condition (vii) and Counsel expresses no opinion as to whether the ownership 
restrictions contained in the Charter preclude us from failing to satisfy 
condition (vii) above.  In addition, we intend to continue to comply with the 
Treasury Regulations requiring us to ascertain and maintain records which 
disclose the actual ownership of our shares.  Although a failure to ascertain 
the actual ownership of our shares will not cause our disqualification as a 
REIT beginning with our taxable year ending December 31, 1998, a monetary fine 
may result.

     We may have one or more "qualified REIT subsidiaries."  A corporation 
that is a "qualified REIT subsidiary" is not treated as a separate corporation 
for federal income tax purposes, and all assets, liabilities and items of 
income, deduction and credit of a "qualified REIT subsidiary" are treated as 
assets, liabilities and items of the REIT.  In applying the requirements 
described herein, any "qualified REIT subsidiary" of ours will be ignored, and 
all assets, liabilities and items of income, deduction and credit of such 
subsidiary will be treated as our assets, liabilities and items of income, 
deduction and credit.  Any "qualified REIT subsidiary" of ours will therefore 
not be subject to federal corporate income taxation, although such "qualified 
REIT subsidiary" may be subject to state or local taxation.

     In the case of a REIT that is a partner in a partnership, the REIT is 
deemed to own its proportionate share of the assets of the partnership and is 
deemed to receive the income of the partnership attributable to such share.  
In addition, the character of the assets and gross income of the partnership 
shall retain the same character in the hands of the REIT.  Accordingly, our 
proportionate share of the assets, liabilities and items of income of the 
Operating Partnership are treated as assets, liabilities and items of income 
of ours for purposes of applying the requirements described herein, provided 
that the Operating Partnership is treated as a partnership for federal income 
tax purposes.  See "--Other Tax Considerations--Effect of Tax Status of the 
Operating Partnership on REIT Qualification" on page 30.

     Income Tests.  In order to qualify as a REIT, a company must satisfy 
three gross income requirements on an annual basis.  First, at least 75% of 
its gross income (excluding gross income from prohibited transactions) for 
each taxable year must be derived directly or indirectly from investments 
relating to real property or mortgages on real property (including "rents from 

                                          24
<PAGE>


real property" and, in certain circumstances, interest) or from certain types 
of temporary investments.  Second, at least 95% of its gross income (excluding 
gross income from prohibited transactions) for each taxable year must be 
derived from the same items which qualify under the 75% gross income test, and 
from dividends, interest and gain from the sale or disposition of stock or 
securities, or from any combination of the foregoing.  Third, short-term gain 
from the sale or other disposition of stock or securities, gain from 
prohibited transactions and gain on the sale or other disposition of real 
property held for less than four years (apart from involuntary conversions and 
sales of foreclosure property) must represent less than 30% of its gross 
income (including gross income from prohibited transactions) for each taxable 
year.  The Taxpayer Relief Act of 1997 (the "Taxpayer Relief Act") repealed 
the 30% gross income test for taxable years beginning after its enactment on 
August 5, 1997.  Accordingly, the 30% gross income test no longer applies 
beginning with our taxable year ending December 31, 1998.

     Rents received by a REIT will qualify as "rents from real property" in 
satisfying the gross income requirements described above only if several 
conditions are met.  First, the amount of rent must not be based in whole or 
in part on the income or profits of any person.  However, an amount received 
or accrued generally will not be excluded from the term "rents from real 
property" solely by reason of being based on a fixed percentage or percentages 
of gross receipts or sales.  Second, rents received from a tenant will not 
qualify as "rents from real property" in satisfying the gross income tests if 
the REIT, or a direct or indirect owner of 10% or more of the REIT, directly 
or constructively, owns 10% or more of such tenant (a "Related Party 
Tenant").  Third, if rent attributable to personal property, leased in 
connection with a lease of real property, is greater than 15% of the total 
rent received under the lease, then the portion of rent attributable to such 
personal property will not qualify as "rents from real property."  Finally, in 
order for rents received with respect to a property to qualify as "rents from 
real property," the REIT generally must not operate or manage the property or 
furnish or render services to tenants, except through an "independent 
contractor" who is adequately compensated and from whom the REIT derives no 
income.  The "independent contractor" requirement, however, does not apply to 
the extent the services provided by the REIT are "usually or customarily 
rendered" in connection with the rental of space for occupancy only and are 
not otherwise considered "rendered to the occupant."  The Taxpayer Relief Act 
provides a de minimis rule for non-customary services beginning with our 
taxable year ending December 31, 1998.  Specifically, if the value of the 
non-customary service income with respect to a property (valued at no less 
than 150% of the direct costs of performing such services) is 1% or less of 
the total income derived from the property, then all rental income except the 
non-customary service income will qualify as "rents from real property."

     We do not anticipate charging rent that is based in whole or in part on 
the income or profits of any person (except by reason of being based on a 
fixed percentage or percentages of gross receipts or sales consistent with the 
rules described above).  We do not anticipate receiving more than a de minimis 
amount of rents from any Related Party Tenant or rents attributable to 
personal property leased in connection with real property that will exceed 15% 
of the total rents received with respect to such property.

     We will provide certain services with respect to our Properties through 
the Operating Partnership, which is not an "independent contractor."  However, 
we believe (and have represented to Counsel) that all of such services will be 
considered "usually or customarily rendered" in connection with the rental of 
space for occupancy only so that the provision of such services will not 
jeopardize the qualification of rent from the Properties as "rents from real 
property."  In rendering its opinion on our ability to qualify as a REIT, 
Counsel is relying on such representations.  In the case of any services that 
are not "usual and customary" under the foregoing rules, we will employ an 
"independent contractor" to provide such services.

     The Operating Partnership may receive certain types of income that will 
not qualify under the 75% or 95% gross income tests.  In particular, dividends 
received from the Management Company will not qualify under the 75% test.  We 
believe, and have represented to Counsel, however, that the aggregate amount 
of such items and other non-qualifying income in any taxable year will not 
cause us to exceed the limits on non-qualifying income under the 75% and 95% 
gross income tests.

                                          25
<PAGE>


     If we fail to satisfy one or both of the 75% or the 95% gross income 
tests for any taxable year, we may nevertheless qualify as a REIT for such 
year if we are entitled to relief under certain provisions of the Code.  These 
relief provisions generally will be available if our failure to meet any such 
tests was due to reasonable cause and not due to willful neglect, we attach a 
schedule of the sources and nature of our income to our federal income tax 
return and any incorrect information on the schedule was not due to fraud with 
the intent to evade tax.  It is not possible, however, to state whether in all 
circumstances we would be entitled to the benefit of these relief provisions.  
As discussed above, even if these relief provisions were to apply, a tax would 
be imposed on certain excess net income.

     Asset Tests.  At the close of each quarter of its taxable year, a REIT 
must also satisfy three tests relating to the nature of its assets: (i) at 
least 75% of the value of its total assets must be represented by real estate 
assets (including (1) its allocable share of real estate assets held by 
partnerships in which it has an interest and (2) stock or debt instruments 
purchased with the proceeds of a stock offering or long-term (at least five 
years) debt offering of the REIT and held for not more than one year following 
the receipt of such proceeds), cash, cash items and government securities; 
(ii) not more than 25% of its total assets may be represented by securities 
other than those in the 75% asset class; and (iii) of the investments included 
in the 25% asset class, the value of any one issuer's securities (other than 
an interest in a partnership or shares of a "qualified REIT subsidiary" or 
another REIT) owned by a REIT may not exceed 5% of the value of its total 
assets, and it may not own more than 10% of any one issuer's outstanding 
voting securities (other than an interest in a partnership or securities of a 
"qualified REIT subsidiary" or another REIT).

     After initially meeting the asset tests at the close of any quarter, we 
will not lose our status as a REIT for failure to satisfy the asset tests at 
the end of a later quarter solely by reason of changes in asset values.  If a 
failure to satisfy the asset tests results from an acquisition of securities 
or other property during a quarter (including, for example, as a result of 
increasing our interest in the Operating Partnership as a result of a merger, 
the exercise of Redemption Rights or an additional capital contribution of 
proceeds of an offering of shares of our stock), such failure may be cured by 
a disposition of sufficient nonqualifying assets within 30 days following the 
close of that quarter.  We intend to maintain adequate records of the value of 
our assets to ensure compliance with the asset tests and plan to take such 
other action within 30 days following the close of any quarter as may be 
required to cure any noncompliance.  However, there can be no assurance that 
such action will always be successful.

     Annual Distribution Requirements.  In order to qualify as a REIT, a 
company is generally required to distribute to its stockholders at least 95% 
of its income each year.  In addition, it will be subject to regular capital 
gains and ordinary corporate tax rates on undistributed income, and also may be 
subject to a 4% excise tax on undistributed income in certain events.  We 
believe that we have made, and intend to continue to make, timely 
distributions sufficient to satisfy the annual distribution requirements.  
However, it is possible that, from time to time, we may not have sufficient 
cash or other liquid assets to meet the distribution requirements.  In such 
circumstances, we may cause the Operating Partnership to arrange for 
short-term, or possibly long-term, borrowings to permit the payment of 
required dividends.

     Under certain circumstances, we may be able to rectify a failure to meet 
the distribution requirement for a taxable year by paying "deficiency 
dividends" to stockholders in a later year that may be included in our 
deduction for dividends paid for the earlier year.  Thus, we may be able to 
avoid being taxed on amounts distributed as deficiency dividends.  However, we 
would be required to pay to the IRS interest based upon the amount of any 
deduction taken for deficiency dividends.

     Failure to Qualify.  If we fail to qualify for taxation as a REIT in any 
taxable year and special relief provisions do not apply, we will be subject to 
tax (including any applicable alternative minimum tax) on our taxable income 
at regular corporate rates.  Distributions to stockholders in any year in 
which we fail to qualify as a REIT will not be deductible, nor will they be 
required to be made.  In such event, to the extent of current and accumulated 

                                          26
<PAGE>


earnings and profits, all distributions to our stockholders will be taxable as 
ordinary income and, subject to certain limitations in the Code, corporate 
distributees may be eligible for the "dividends received deduction."  In 
addition, our failure to qualify as a REIT would also substantially reduce the 
cash available for distributions to stockholders.  Unless entitled to relief 
under specific statutory provisions, we also would be disqualified from 
taxation as a REIT for the four taxable years following the year during which 
qualification was lost.  It is not possible to state whether in all 
circumstances we would be entitled to such statutory relief.

Taxation of Stockholders

     Taxation of Taxable Domestic Stockholders.  As long as we qualify as a 
REIT, distributions made to our taxable domestic stockholders out of current 
or accumulated earnings and profits (and not designated as capital gain 
dividends) will constitute dividends taxable as ordinary income, and corporate 
stockholders will not be eligible for the dividends received deduction as to 
such amounts.  Distributions that are designated as capital gain dividends 
will be taxed as gains from the sale or exchange of a capital asset (to the 
extent they do not exceed our actual net capital gain for the taxable year) 
without regard to the period for which the stockholder has held its stock.  If 
we designate any portion of a dividend as a capital gain dividend, a 
stockholder's share of such capital gain dividend would be an amount which 
bears the same ratio to the total amount of dividends paid to such stockholder 
for the taxable year as the total amount of capital gain dividends bears to 
the total amount of all dividends paid on all classes of stock for the taxable 
year.  However, corporate stockholders may be required to treat up to 20% of 
certain capital gain dividends as ordinary income.  We may elect to retain and 
pay income tax on any net long-term capital gain, in which case our domestic 
stockholders would include in their income as long-term capital gain their 
proportionate share of such undistributed net long-term capital gain.  A 
domestic stockholder would also receive a refundable tax credit for such 
stockholder's proportionate share of the tax paid by us on such retained 
capital gains and an increase in its basis in our stock in an amount equal to 
the difference between the undistributed long-term capital gains and the 
amount of tax paid by us.  See "--Capital Gains and Losses" below.

     Distributions in excess of current and accumulated earnings and profits 
will not be taxable to a stockholder to the extent that they do not exceed the 
adjusted basis of the stockholder's Common Stock, but rather will reduce the 
adjusted basis of such Common Stock.  To the extent that such distributions 
exceed the adjusted basis of a stockholder's Common Stock, they will be 
included in income as short-term or long-term capital gain (depending on the 
length of time the shares have been held), assuming the Common Stock is a 
capital asset in the hands of the stockholder.  In addition, any dividend 
declared by us in October, November or December of any year and payable to a 
stockholder of record on a specific date in any such month shall be treated as 
both paid by us and received by the stockholder on December 31 of such year, 
provided that the dividend is actually paid by us during January of the 
following calendar year.  Stockholders may not include in their individual 
income tax returns any of our net operating losses or capital losses.

     In general, a domestic stockholder will realize capital gain or loss on 
the disposition of Common Stock equal to the difference between (i) the amount 
of cash and the fair market value of any property received on such 
disposition, and (ii) the stockholder's adjusted basis of such Common Stock.  
Such gain or loss generally will constitute short-term capital gain or loss if 
the stockholder has not held such shares for more than one year and long-term 
capital gain or loss if the stockholder has held such shares for more than one 
year.  See "--Capital Gains and Losses" below.  Loss upon a sale or exchange 
of Common Stock by a stockholder who has held such Common Stock for six months 
or less (after applying certain holding period rules) will be treated as a 
long-term capital loss to the extent of distributions from us required to be 
treated by such stockholder as long-term capital gain.

     Capital Gains and Losses.  The maximum marginal individual federal income 
tax rate is 39.6%.  The maximum tax rate on net capital gains applicable to 
individuals, trusts and estates from the sale or exchange of capital assets 
held for more than 18 months is 20%, and the maximum rate is reduced to 18% 
for assets acquired after December 31, 2000 and held for more than five 

                                          27
<PAGE>


years.  For individuals, trusts and estates who would be subject to a maximum 
tax rate of 15%, the rate on net capital gains is reduced to 10%, and, 
effective for taxable years commencing after December 31, 2000, the rate is 
reduced to 8% for assets held for more than five years.  The maximum rate for 
net capital gains attributable to the sale of depreciable real property held 
for more than 18 months is 25% to the extent of the deductions for 
depreciation (other than certain depreciation recapture taxable as ordinary 
income) with respect to such property.  The maximum rate of capital gains tax 
for capital assets held more than one year but not more than 18 months is 28%. 
Accordingly, the tax rate differential between capital gain and ordinary 
income for noncorporate taxpayers may be significant.  In addition, the 
characterization of income as capital or ordinary may affect the deductibility 
of capital losses.  Capital losses not offset by capital gains may be deducted 
against a noncorporate taxpayer's ordinary income only up to a maximum annual 
amount of $3,000.  Unused capital losses may be carried forward.  All net 
capital gain of a corporate taxpayer is subject to tax at ordinary corporate 
rates.  A corporate taxpayer can deduct capital losses only to the extent of 
capital gains, with unused losses being carried back three years and forward 
five years.

     IRS Notice 97-64 provides temporary guidance with respect to the taxation 
of distributions by REITs that are designated as capital gain dividends.  
Pursuant to Notice 97-64, forthcoming Treasury Regulations will provide that 
capital gains allocated to a stockholder by us may be designated as a 20% rate 
gain distribution, a 25% rate gain distribution, or a 28% rate gain 
distribution.  In determining the amounts which may be designated as each 
class of capital gains dividends, a REIT must calculate its net capital gains 
as if it were an individual subject to a marginal tax rate on oridinary income
of 28%. Unless specifically designated otherwise by us, a distribution
designated as a capital gain distribution is presumed to be a 28% rate gain
distribution.  If we elect to retain any net long-term capital gain, as
discussed above, the undistributed long-term capital gains are considered to be
designated as capital gain dividends for purposes of Notice 97-64.  Furthermore,
Notice 97-64 provides that designations of capital gain dividends made by us
will only be effective to the extent that the distributions with respect to our
different classes of stock are composed proportionately of ordinary and 
capital gain dividends.

     Backup Withholding.  We will report to our domestic stockholders and the 
IRS the amount of dividends paid during each calendar year and the amount of 
tax withheld, if any, with respect thereto.  Under the backup withholding 
rules, a stockholder may be subject to backup withholding at the rate of 31% 
with respect to dividends paid unless such holder (i) is a corporation or 
comes within certain other exempt categories and, when required, demonstrates 
this fact or (ii) provides a taxpayer identification number, certifies as to 
no loss of exemption and otherwise complies with the applicable requirements 
of the backup withholdings rules.  Any amount paid as backup withholding will 
be creditable against the stockholder's income tax liability.  The United 
States Treasury has issued final regulations on October 6, 1997 (the "Final 
Regulations") regarding the withholding and information reporting rules 
discussed above.  In general, the Final Regulations do not alter the 
substantive withholding and information reporting requirements but unify 
current certification procedures and forms and clarify and modify reliance 
standards.  The Final Regulations are generally effective for payments made on 
or after January 1, 2000, subject to certain transition rules.  Prospective 
investors should consult their own tax advisors concerning the adoption of the 
Final Regulations and the potential effect on their ownership of Common Stock.

     In addition, we may be required to withhold a portion of capital gain 
dividends made to any stockholders which fail to certify their non-foreign 
status to us.  See "--Taxation of Foreign Stockholders" below.

     Taxation of Tax-Exempt Stockholders.  Distributions that we make to a 
stockholder that is a tax-exempt entity will not constitute "unrelated 
business taxable income" ("UBTI"), provided that the tax-exempt entity has not 
financed the acquisition of Common Stock with "acquisition indebtedness" 
within the meaning of the Code and the Common Stock is not otherwise used in 
an unrelated trade or business of the tax-exempt entity.  In addition, under 
certain circumstances, qualified trusts that own more than 10% (by value) of 
our shares may be required to treat a certain percentage of dividends as 
UBTI.  This requirement will only apply if we are a "pension-held REIT."  The 
restrictions on ownership in our Charter should prevent us from being 
classified as a pension-held REIT.

                                          28
<PAGE>



     Taxation of Foreign Stockholders.  The rules governing the United States 
federal income taxation of the ownership and disposition of Common Stock by 
persons that are, for purposes of such taxation, nonresident alien 
individuals, foreign corporations, foreign partnerships and other foreign 
stockholders (collectively, "Non-U.S. Stockholders") are complex and no 
attempt will be made herein to provide more than a very limited summary of 
such rules.  PROSPECTIVE NON-U.S. STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN 
TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL, STATE, AND LOCAL INCOME TAX 
LAWS WITH REGARD TO AN INVESTMENT IN SHARES, INCLUDING  ANY REPORTING 
REQUIREMENTS, AS WELL AS THE TAX TREATMENT OF SUCH AN INVESTMENT UNDER THEIR 
HOME COUNTRY LAWS.

     Distributions that are not attributable to gain from sales or exchanges 
of U.S. real property interests and not designated by us as capital gain 
dividends will be treated as dividends and taxed as ordinary income to the 
extent that they are made out of our current or accumulated earnings and 
profits.  Such distributions are, generally, subject to a withholding tax 
equal to 30% of the gross amount of the distribution, unless an applicable tax 
treaty reduces that tax.  Distributions in excess of our current and 
accumulated earnings and profits will not be taxable to a Non-U.S. Stockholder 
to the extent that they do not exceed the adjusted basis of the Non-U.S. 
Stockholder's Common Stock, but rather will reduce the adjusted basis of such 
Common Stock.  To the extent that such distributions exceed the adjusted basis 
of a Non-U.S. Stockholder's Common Stock, they will give rise to tax liability 
if the Non-U.S. Stockholder otherwise would be subject to tax on any gain from 
the sale or disposition of his Common Stock as described below (in which case 
they also may be subject to a 30% branch profits tax if the stockholder is a 
foreign corporation).  

     For withholding tax purposes, we are currently required to treat all 
distributions as if made out of our current or accumulated earnings and 
profits and thus intend to withhold at the rate of 30% (or a reduced treaty 
rate if applicable) on the amount of any distribution (other than 
distributions designated as capital gain dividends) made to a Non-U.S. 
Stockholder.  Under the Final Regulations, generally effective for distributions
 on or after January 1, 2000, we would not be required to withhold at the 30% 
rate on distributions we reasonably estimate to be in excess of our current 
and accumulated earnings and profits.  If it cannot be determined at the time 
a distribution is made whether such distribution will be in excess of current 
and accumulated earnings and profits, the distribution will be subject to 
withholding at the rate applicable to ordinary dividends.  However, a Non-U.S. 
Stockholder may seek a refund of such amounts from the IRS if it is 
subsequently determined that such distribution was, in fact, in excess of our 
current or accumulated earnings and profits, and the amount withheld exceeded 
the Non-U.S. Stockholder's United States tax liability, if any, with respect 
to the distribution.

     For any year in which we qualify as a REIT, distributions that are 
attributable to gain from sales or exchanges of U.S. real property interests 
will be taxed to a Non-U.S. Stockholder under the provisions of the Foreign 
Investment in Real Property Tax Act of 1980 ("FIRPTA") at the normal capital 
gain rates applicable to U.S. stockholders (subject to applicable alternative 
minimum tax and a special alternative minimum tax in the case of nonresident 
alien individuals).  Also, distributions subject to FIRPTA may be subject to a 
30% branch profits tax in the hands of a corporate Non-U.S. Stockholder not 
entitled to treaty relief or exemption.  We are required by the Code to 
withhold 35% of any distribution that could be designated by us as a capital 
gain dividend.  This amount is creditable against the Non-U.S. Stockholder's 
FIRPTA tax liability.

     Gain recognized by a Non-U.S. Stockholder upon a sale of Common Stock 
will generally not be taxed under FIRPTA if we are a "domestically controlled 
REIT," defined generally as a REIT in which, at all times during a specified 
testing period, less than 50% in value of the stock was held directly or 
indirectly by foreign persons.  We believe that we are a "domestically 
controlled REIT" and, therefore, the sale of Common Stock will not be subject 
to taxation under FIRPTA.  However, because the Common Stock is publicly 

                                          29
<PAGE>


traded, no assurance can be given that we will continue to qualify as a 
"domestically controlled REIT."  If the gain on the sale of Common Stock were 
to be subject to tax under FIRPTA, the Non-U.S. Stockholder would be subject 
to the same treatment as U.S. stockholders with respect to such gain (subject 
to applicable alternative minimum tax, possible withholding tax and a special 
alternative minimum tax in the case of nonresident alien individuals), and the 
purchaser of the Common Stock would be required to withhold and remit to the 
IRS 10% of the purchase price.  In addition, if we are not a "domestically 
controlled REIT," distributions in excess of our current and accumulated 
earnings and profits would be subject to withholding at a rate of 10%.

Other Tax Considerations

     Effect of Tax Status of the Operating Partnership on REIT Qualification.  
All of our investments are through the Operating Partnership.  We believe that 
the Operating Partnership is properly treated as a partnership for tax 
purposes (and not as an association taxable as a corporation).  If, however, 
the Operating Partnership were to be treated as an association taxable as a 
corporation, we would cease to qualify as a REIT.  Furthermore, in such a 
situation, the Operating Partnership would be subject to corporate income 
taxes and we would not be able to deduct our share of any losses generated by 
the Operating Partnership in computing our taxable income.

     Tax Allocations with Respect to the Properties.  The Operating 
Partnership was formed by way of contributions of appreciated property 
(including certain of the Properties).  When property is contributed to a 
partnership in exchange for an interest in the partnership, the partnership 
generally takes a carryover basis in that property for tax purposes equal to 
the adjusted basis of the contributing partner in the property, rather than a 
basis equal to the fair market value of the property at the time of 
contribution (this difference is referred to as a "Book-Tax Difference").  The 
partnership agreement of the Operating Partnership requires allocations of 
income, gain, loss and deduction with respect to contributed Property to be 
made in a manner consistent with the special rules in Section 704(c) of the 
Code, and the regulations thereunder, which tend to eliminate the Book-Tax 
Differences with respect to the contributed Properties over the depreciable 
lives of the contributed Properties.  However, because of certain technical 
limitations, the special allocation rules of Section 704(c) may not always 
entirely eliminate the Book-Tax Difference on an annual basis or with respect 
to a specific taxable transaction such as a sale.  Thus, the carryover basis 
of the contributed Properties in the hands of the Operating Partnership could 
cause us to be allocated lower amounts of depreciation and other deductions 
for tax purposes than would be allocated to us if all Properties were to have 
a tax basis equal to their fair market value at the time of acquisition.  The 
foregoing principles also apply in determining our earnings and profits for 
purposes of determining the portion of distributions taxable as dividend 
income.  The application of these rules over time may result in a higher 
portion of distributions being taxed as dividends than would have occurred had 
we purchased our interests in the Properties at their agreed value.

     Treasury Regulations under Section 704(c) of the Code allow partnerships 
to use any reasonable method of accounting for Book-Tax Differences so that 
the contributing partner receives the tax benefits and burdens of any built-in 
gain or loss associated with the property.  The Operating Partnership has 
determined to use the "traditional method" (which is specifically approved in 
the Treasury Regulations) for accounting for Book-Tax Differences with respect 
to the contributed Properties.

     State and Local Taxes.  We and our stockholders may be subject to state 
or local taxation in various state or local jurisdictions, including those in 
which we or they transact business or reside.  The state and local tax 
treatment of us and our stockholders may not conform to the federal income tax 
consequences discussed above.  Consequently, prospective stockholders should 
consult with their own tax advisors regarding the effect of state, local and 
other tax laws of any investment in our Common Stock.

     Potential Legislative Action Regarding REITs.  On February 2, 1998, the 
Clinton Administration released a summary of its proposed budget plan which 
contained several proposals affecting REITs.  One such proposal, if enacted in 
its present form, would prohibit a REIT from holding securities representing 
more than 10% of the value of all classes of stock of a corporation, other 
than a qualified REIT subsidiary or another REIT.  Although our existing stock 
interest in the Management Company may be grandfathered under such proposal, 

                                          30
<PAGE>


the Management Company would be prohibited from acquiring substantial new 
assets or engaging in a new trade or business.  If enacted in its present 
form, the proposal may limit the future activities and growth of the 
Management Company.  No prediction can be made as to whether such proposal or 
any other proposal affecting REITs will be enacted into legislation and the 
impact of any such legislation on our operations.


                                  LEGAL MATTERS

     Rogers & Wells LLP, New York, New York will pass upon the validity of the 
Securities offered by this Prospectus, as well as certain legal matters 
described under "Federal Income Tax Considerations."  If the validity of any 
Securities is also passed upon by counsel for any underwriters, dealers or 
agents of an offering of those Securities, that counsel will be named in the 
Prospectus Supplement relating to that offering.  Rogers & Wells LLP will rely 
as to certain matters of Maryland law on the opinion of Piper & Marbury 
L.L.P., Baltimore, Maryland.

                                  EXPERTS

     The consolidated financial statements and the related financial statement 
schedules of American Real Estate Investment Corporation and subsidiaries 
incorporated by reference in this Prospectus have been audited by Arthur 
Andersen LLP, independent public accountants, to the extent and for the 
periods indicated in their reports and are incorporated by reference herein, 
and have been so incorporated in reliance upon the authority of said firm as 
experts in giving said reports.


                                          31


<PAGE>
No dealer, salesperson or other person is authorized to give any information 
or to make any representation not contained or incorporated by reference in 
this Prospectus or the applicable Prospectus Supplement.  If given or made, 
that information or representation must not be relied upon as having been 
authorized by us or by any agent, underwriter or dealer.  This Prospectus does 
not, and no Prospectus Supplement will, constitute an offer to sell, or a 
solicitation of an offer to buy, by any person in any jurisdiction in which it 
is unlawful for that person to make such an offer or solicitation.  Neither 
the delivery of this Prospectus or any Prospectus Supplement nor any sale of 
Securities will, under any circumstances, imply that the information in this 
Prospectus or any Prospectus Supplement is correct at any time after its date.

                                  _______________


                               TABLE OF CONTENTS

                                                                   Page

Where You Can Find More Information ........................   2
Incorporation of Certain Documents by Reference.............   2
Forward-Looking Information ................................   3
Risk Factors................................................   4
The Company.................................................   11
Use of Proceeds ............................................   11
Ratio of Earnings to Fixed Charges..........................   12
Description of Capital Stock................................   12
Description of Depositary Shares............................   19
Method of Sale .............................................   21
Federal Income Tax Considerations...........................   22
Legal Matters...............................................   31
Experts.....................................................   31
                              _______________


=====================================================
=============



                            $500,000,000




              American Real Estate Investment Corporation



                           Common Stock
                         Preferred Stock
                               and
                         Depositary Shares



                           _______________

                             PROSPECTUS
                           _______________






                                    , 1998

<PAGE>



             PART II.  INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.     Other Expenses of Issuance and Distribution

          The following table sets forth the estimated expenses in connection 
with the issuance and distribution of the securities being registered, other 
than underwriting discounts and commissions:

Registration fee -- Securities and Exchange Commission.$151,515.16
Accounting fees and expenses...........................  10,000.00(a)
Legal fees and expenses................................  30,000.00(a)
Printing and engraving expenses........................   5,000.00(a)
Miscellaneous..........................................  15,000.00(a)
                                                       --------------
Total                                                  $211,515.16
                                                       ==============
________________
(a)Does not include expenses of preparing prospectus supplements and other 
expenses relating to offerings of particular securities.

Item 15.     Indemnification of Directors and Officers

          As permitted by the Maryland General Corporation Law (the "MGCL"), 
our Charter provides that we shall indemnify (i) our directors and officers to 
the fullest extent required or permitted by Maryland law, including the 
advance of expenses under the procedures and to the full extent permitted by 
law and (ii) other employees and agents to such extent as shall be authorized 
by our Board or our By-laws and be permitted by law.  The MGCL permits a 
corporation to indemnify its present and former directors and officers, among 
others, against judgments, penalties, fines, settlements and reasonable 
expenses actually incurred by them in connection with any proceeding to which 
they may be made a party by reason of their service in those or other 
capacities, unless it is established that (a) the act or omission of the 
director or officer was material to the matter giving rise to the proceeding 
and (i) was committed in bad faith, or (ii) was the result of active and 
deliberate dishonesty, (b) the director or officer actually received an 
improper personal benefit in money, property or services or (c) in the case of 
any criminal proceeding, the director or officer had reasonable cause to 
believe that the act or omission was unlawful.

          The MGCL permits the Articles of Incorporation of a Maryland 
corporation to include a provision limiting the liability of its directors and 
officers to the corporation and its stockholders for money damages, except to 
the extent that (1) it is provided that the person actually received an 
improper benefit or profit in money, property or services or (2) a judgment or 
other final adjudication is entered in a proceeding based on a finding that 
the person's action, or failure to act, was the result of active and 
deliberate dishonesty and was material to the cause of action adjudicated in 
the proceeding.  Our Charter contains a provision providing for elimination of 
the liability of our directors or officers to us or our stockholders for money 
damages to the maximum extent permitted by Maryland law from time to time.  

     We have a director and officer liability insurance policy with a 
$5,000,000 limit of liability and a company retention of $75,000 in the 
aggregate for each claim. 

Item 16.     Exhibits

     1.1     Form of Underwriting Agreement (for Common Stock)*
     1.2     Form of Underwriting Agreement (for Preferred Stock)*
     3.1     Amended and Restated Articles of Incorporation of the Registrant**
     3.2     By-Laws of the Registrant**
     3.3     Form of Articles Supplementary of the Registrant*
     3.4     Amended and Restated Agreement of Limited Partnership of 
             the Operating Partnership**
     4.1     Specimen of Common Stock Certificate**

<PAGE>


     4.2     Form of Preferred Stock Certificate*
     4.3     Form of Deposit Agreement (for Preferred Stock)*
     5.1     Opinion of Rogers & Wells LLP (Counsel)
     5.2     Opinion of Piper & Marbury L.L.P. (Counsel)
     8       Opinion of Rogers & Wells LLP regarding tax matters
     12      Calculation of ratios of earnings to fixed charges
     23.1    Consent of Rogers & Wells LLP (included in Exhibits 5.1 and 8)
     23.2    Consent of Piper & Marbury L.L.P. (included in Exhibit 5.2)
     23.3    Consent of Arthur Andersen LLP
     24      Powers of Attorney (included on signature pages hereto)
     _____________________________
     *To be filed by amendment or by a Current Report on Form 8-K pursuant to 
      the Securities Exchange Act of 1934, as appropriate.
     **Previously filed.

Item 17.     Undertakings

     The undersigned registrant hereby undertakes:

     (1)     To file, during any period in which offers or sales are being 
made, a post-effective amendment to this Registration Statement:

          (i)          To include any prospectus required by Section 10(a)(3) 
of the Securities Act;

          (ii)          To reflect in the prospectus any facts or events 
arising after the effective date of this Registration Statement (or the most 
recent post-effective amendment thereof) which, individually or in the 
aggregate, represent a fundamental change in the information set forth in this 
Registration Statement.  Notwithstanding the foregoing, any increase or 
decrease in volume of securities offered (if the total dollar value of 
securities offered would not exceed that which was registered) and any 
deviation from the low or high end of the estimated maximum offering range may 
be reflected in the form of prospectus filed with the Commission pursuant to 
Rule 424(b) if, in the aggregate, the changes in volume and price represent no 
more than a 20% change in the maximum aggregate offering price set forth in 
the "Calculation of Registration Fee" table in the effective Registration 
Statement; and 

          (iii)            To include any material information with respect to 
the plan of distribution not previously disclosed in this Registration 
Statement or any material change to such information in the Registration 
Statement;

provided, however, that the undertakings set forth in paragraphs (i) and (ii) 
above shall not apply if the information required to be included in a 
post-effective amendment by those paragraphs is contained in periodic reports 
filed by the Registrant pursuant to Section 13 or Section 15(d) of the 
Exchange Act that are incorporated by reference in this Registration 
Statement.

     (2)     That, for the purpose of determining any liability under the 
Securities Act, each such post-effective amendment will be deemed to be a new 
registration statement relating to the securities offered therein, and the 
offering of such securities at that time will be deemed to be the initial bona 
fide offering thereof.

     (3)     To remove from registration by means of a post-effective 
amendment any of the securities being registered which remain unsold at the 
termination of the offering.

     (4)     That, for purposes of determining any liability under the 
Securities Act, each filing of the Registrant's annual report pursuant to 
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by 
reference in this Registration Statement will be deemed to be a new 

<PAGE>


registration statement relating to the securities offered herein, and the 
offering of such securities at that time will be deemed to be the initial bona 
fide offering thereof.

     (5)     That, (i) for purposes of determining any liability under the 
Securities Act, the information omitted from the form of prospectus filed as 
part of this Registration Statement in reliance upon Rule 430A and contained 
in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or 
(4) or 497(h) under the Securities Act shall be deemed to be part of this 
Registration Statement as of the time it was declared effective and (ii) for 
the purpose of determining any liability under the Securities Act, each 
post-effective amendment that contains a form of prospectus shall be deemed to 
be a new registration statement relating to the securities offered therein, 
and the offering of such securities at that time shall be deemed to be the 
initial bona fide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities 
Act may be permitted to directors, officers and controlling persons of the 
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant 
has been advised that in the opinion of the Commission such indemnification is 
against public policy as expressed in the Securities Act and is, therefore, 
unenforceable.  In the event that a claim for indemnification against such 
liabilities (other than the payment by the Registrant of expenses incurred or 
paid by a director, officer or controlling person of the Registrant in the 
successful defense of any action, suit or proceeding) is asserted by such 
director, officer or controlling person in connection with the securities 
being registered, the Registrant will, unless in the opinion of counsel for 
the Registrant the matter has been settled by controlling precedent, submit to 
a court of appropriate jurisdiction the question whether such indemnification 
by it is against public policy as expressed in the Securities Act and will be 
governed by the final adjudication of such issue.

<PAGE>


                                  SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the 
Registrant certifies that it has reasonable grounds to believe that it meets 
all of the requirements for filing on Form S-3 and has duly caused this 
Registration Statement to be signed on its behalf by the undersigned, 
thereunto duly authorized, in the City of New York and State of New York on 
July 10, 1998.

                              AMERICAN REAL ESTATE INVESTMENT CORPORATION


                              By:   /s/ Jeffrey E. Kelter                
                                 -----------------------------------
                                   Jeffrey E. Kelter
                                   President
          

                             POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears 
below hereby constitutes and appoints Jeffrey E. Kelter and Timothy E. 
McKenna, his true and lawful attorney-in-fact and agent, each acting alone, 
with full power of substitution and resubstitution, for him and in his name, 
place and stead, in any and all capacities, to sign any and all amendments, 
including any post-effective amendments, to this Registration Statement, and 
to file the same, with exhibits thereto, and other documents in connection 
therewith, with the Securities and Exchange Commission, granting unto said 
attorney-in-fact and agent, each acting alone, full power and authority to do 
and perform each and every act and thing requisite and necessary to be done in 
and about the premises, as fully to all intents and purposes as they might or 
could do in person, hereby ratifying and confirming all that said 
attorney-in-fact or agent, each acting alone, or his substitute may lawfully 
do or cause to be done by virtue hereof.

                         _________________

     Pursuant to the requirements of the Securities Act of 1933, this 
Registration Statement has been signed below by the following persons in the 
capacities and on the dates indicated.




</TABLE>
<TABLE>
<CAPTION>

         Name                             Title                    Date
<S>      <C>                                <C>                      <C>
    /s/ David F. McBride            
     David F. McBride             Chairman, Secretary and
                                   Director (Principal
                                   Executive Officer)              July 10, 1998    


    /s/ Jeffrey E. Kelter  
   -------------------------       
      Jeffrey E. Kelter           President and
                                   Director (Principal
                                   Executive Officer)              July 10, 1998


    /s/ Timothy E. McKenna                  
    -----------------------
         Timothy E. McKenna       Treasurer (Principal Financial
                                   and Accounting Officer)         July 10, 1998

    /s/ Timothy McBride     
   ------------------------            
         Timothy McBride          Director                         July 10, 1998

    /s/ Robert Branson     
   ------------------------                     
         Robert Branson           Director                         July 10, 1998


    /s/ James Mulvihill   
    -----------------------
         James Mulvihill          Director                         July 10, 1998


    /s/ Evan Zucker        
   ------------------------   
         Evan Zucker              Director                         July 10, 1998


    /s/ Francesco Galesi   
   -------------------------                    
         Francesco Galesi         Director                         July 10, 1998


    /s/ David Lesser        
   -------------------------                   
         David Lesser             Director                         July 10, 1998
</TABLE>




                                                       Exhibit 5.1

                                 Rogers & Wells LLP
                                  200 Park Avenue
                                 New York, NY 10166
                                Tel: (212) 878-8000
                                Fax: (212) 878-8375



July 10, 1998


American Real Estate Investment Corporation
Plymouth Meeting Executive Campus
620 W. Germantown Pike, Suite 200
Plymouth Meeting, PA  19462

Ladies and Gentlemen:


We have acted as special counsel to American Real Estate Investment 
Corporation, a Maryland corporation (the "Company"), in connection with the 
preparation and filing of the Company's Registration Statement on Form S-3 (as 
the same may be amended or supplemented from time to time, the "Registration 
Statement") with the Securities and Exchange Commission (the "Commission") 
under the Securities Act of 1933, as amended (the "Securities Act"), covering 
the offer and sale by the Company from time to time of up to $500,000,000 
of its (a) shares of common stock, par value $0.001 per share (the "Common
Stock"), and (b) shares or fractional shares of preferred stock, par value
$0.001 per share (the "Preferred Stock"), which may be issued in the form of
depositary shares (the "Depositary Shares") evidenced by depositary receipts
(the "Depositary Receipts").  The Common Stock, the Preferred Stock and the
Depositary Shares are collectively referred to as the "Securities."  The
Registration Statement provides that the Securities may be offered separately
or together, in separate series, in amounts, at prices and on terms to be set
forth in one or more supplements to the prospectus (the "Prospectus" and each,
a "Prospectus Supplement").  

The Depositary Shares will be issued under one or more deposit agreements 
(each, a "Deposit Agreement"), each to be between the Company and a financial 
institution identified therein as depositary (each, a "Depositary").
<PAGE>
<PAGE>
American Real Estate            2                       July 10, 1998
Investment Corporation


In rendering the opinions expressed herein, we have examined the Registration 
Statement, the Company's Amended and Restated Articles of Incorporation (the 
"Charter") and Amended and Restated Bylaws and such corporate proceedings 
of the Company and such other documents as we have deemed necessary.  As to 
questions of fact material to this opinion, we have relied on certificates of 
officers of the Company and have not independently verified the accuracy of 
the materials contained therein.

In such examination, we have assumed the genuineness of all signatures, the 
authenticity of all documents, certificates and instruments submitted to us as 
originals, the conformity with originals of all documents submitted to us as 
copies and the absence of any amendments or modifications to those items 
reviewed by us.

We understand that prior to offering for sale any Securities the Company will
advise us in writing of the terms of such offering and of such Securities, will
afford us an opportunity to review the operative documents (including the 
applicable Prospectus Supplement and any underwriting agreement) pursuant to 
which the Securities are to be offered, sold and issued, and will file as an 
exhibit to the Registration Statement such supplement or amendment to this 
opinion (if any) as we may reasonably consider necessary or appropriate by 
reason of the terms of such Securities or any changes in the Company's capital 
structure or other pertinent circumstances.

We assume that (i) prior to the issuance of any shares of Common Stock, 
Preferred Stock or Depository Shares (or Securities convertible into shares of 
Common Stock), there will exist, under the Charter, the requisite number of 
authorized but unissued shares of Common Stock or Preferred Stock, as the case 
may be; and (ii) appropriate certificates representing shares of Common Stock 
or Preferred Stock, as the case may be, or Depository Receipts evidencing 
Depository Shares, will be executed and delivered upon the issuance and sale of 
any such Securities, and that such certificates or Depository Receipts will
comply with all applicable requirements of Maryland law.

We assume that (i) the issuance, sale, amount and terms of the Securities to 
be offered from time to time will be authorized and determined by proper 
action of the Board of Directors of the Company in accordance with the 
parameters described in the Registration Statement (each, a "Board Action") 
and will be in accordance with the Charter and applicable Maryland law, (ii) 
the resolutions authorizing the Company to register, offer, sell, and issue 
the Securities will remain in effect and unchanged at all times during which 
the Securities are offered, sold, or issued by the Company, (iii) the 
Registration Statement, and any amendments thereto, will have become, and at 
the time of issuance of the Securities will continue to be effective, (iv) a 
Prospectus Supplement relating to the Securities offered pursuant to the 
Registration Statement will have been filed with the Commission, and (v) all 
Securities will be issued in compliance with applicable federal and state 
securities laws.  
<PAGE>
<PAGE>
American Real Estate            3                       July 10, 1998
Investment Corporation


To the extent that the obligations of the Company under a Deposit Agreement 
may be dependent upon such matters, we assume for purposes of this opinion 
that the Depositary is duly organized, validly existing and in good standing 
under the laws of its jurisdiction of organization; that the Depositary is 
duly qualified to engage in the activities contemplated by the Deposit 
Agreement; that the Deposit Agreement has been duly authorized, executed and 
delivered by the Depositary and constitutes the legally valid and binding 
obligation of the Depositary enforceable against the Depositary in accordance 
with its terms; that the Depositary is in compliance, generally, with respect 
to acting as Depositary under the Deposit Agreement, with all applicable laws 
and regulations; and that the Depositary has the requisite organizational and 
legal power and authority to perform its obligations under the Deposit 
Agreement.

Based upon the foregoing and such examination of law as we have deemed
necessary, and subject to the qualifications and exceptions set forth herein,
we are of the opinion that:

     1.When the Registration Statement has become effective under the 
Securities Act and a series of the Preferred Stock has been duly authorized 
and established in accordance with the applicable Board Action, the terms of 
the Charter and applicable Maryland law, such shares of Preferred Stock when 
issued and sold and delivered to the purchaser or purchasers thereof against 
receipt by the Company of lawful consideration therefor (a) in the manner 
contemplated by the applicable Board Action, the Registration Statement, the 
Prospectus or the applicable Prospectus Supplement and, if applicable, an 
underwriting agreement relating to the issuance of such Preferred Stock, or 
(b) pursuant to the exchange of validly issued and fully paid Depositary 
Shares in accordance with the terms of an applicable valid and binding Deposit 
Agreement, will be duly authorized, validly issued, fully paid and 
non-assessable by the Company.

     2.When the Registration Statement has become effective under the 
Securities Act, the Depositary Shares have been duly authorized and 
established in accordance with the applicable Board Action, and the Depositary 
Receipts in the form contemplated and authorized by a Deposit Agreement have 
been duly executed and delivered by the Depositary and delivered to the 
purchaser or purchasers thereof against receipt by the Company of lawful 
consideration therefor in the manner contemplated by such Board Action, the 
Registration Statement, the Prospectus or the applicable Prospectus Supplement 
and, if applicable, an underwriting agreement relating to the issuance of such 
Depositary Shares, such Depositary Shares will be validly issued and will 
entitle the holders thereof to the rights specified in the Depositary Receipts 
and such Deposit Agreement.
<PAGE>
<PAGE>
American Real Estate                    4               July 10, 1998
Investment Corporation


     3.When the Registration Statement has become effective under the 
Securities Act and such shares of Common Stock have been issued and sold and 
delivered to the purchaser or purchasers thereof against receipt by the 
Company of lawful consideration therefor (a) in the manner contemplated by the 
applicable Board Action, the Registration Statement, the Prospectus or the 
applicable Prospectus Supplement and, if applicable, an underwriting agreement 
relating to the issuance of such shares, or (b) pursuant to the conversion of 
validly issued and fully paid and non-assessable shares of Preferred Stock in 
accordance with the established terms of such Preferred Stock, such shares of 
Common Stock issued thereby will be duly authorized, validly issued, fully 
paid and non-assessable by the Company.
     
The opinions stated herein relating to the validity and binding nature of 
obligations of the Company are subject to (i) the effect of any applicable 
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting 
creditors' rights generally and (ii) the effect of general principles of 
equity (regardless of whether considered in a proceeding in equity or at 
law). 

The opinions stated herein are limited to the federal laws of the United 
States, the laws of the State of New York and the laws of the State of 
Maryland.  To the extent that any opinions set forth herein are dependent on 
the laws of the State of Maryland, we have relied on the opinion of Piper & 
Marbury L.L.P., dated the date hereof.  Our opinion, to the extent based upon 
such reliance, is limited by the qualifications, assumptions and conditions 
set forth in such opinion in addition to those set forth herein.  

We hereby consent to the filing of this opinion as an exhibit to the 
Registration Statement and the reference to this firm under the caption "Legal 
Matters" in the Prospectus.

Very truly yours,


/s/ Rogers & Wells LLP



                                                           EXHIBIT  5.2



                     PIPER & MARBURY

                        L. L. P.

                  CHARLES CENTER SOUTH
                 36 SOUTH CHARLES STREET                     WASHINGTON
             Baltimore, Maryland 21201-3018                   NEW YORK
                      410-539-2530                          PHILADELPHIA
                    FAX: 410-539-0489                          EASTON



                                      July 10, 1998

American Real Estate Investment Corporation
620 West Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462

REGISTRATION STATEMENT ON FORM S-3

Ladies and Gentlemen:

     We  have  acted  as  special  Maryland  counsel  to  American  Real Estate
Investment  Corporation,  a Maryland corporation (the "Company"), in connection
with the registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to a Registration Statement on Form S-3 of the Company, filed with the
Securities and Exchange Commission  (the  "Commission")  on July 10, 1998, (the
"Registration  Statement"), including the prospectus included  therein  at  the
time the Registration  Statement  is declared effective (the "Prospectus"), for
offering by the Company from time to  time  of  up  to  $500,000,000  aggregate
initial  offering  price  of:  (i) shares of Common Stock, par value $.001  per
share (the "Common Stock"); and  (ii)  shares or fractional shares of Preferred
Stock,  par  value  $.001  per  share (the "Preferred  Stock"),  including  the
Preferred Stock that is convertible  into  the  Common  Stock  or other capital
stock of the Company (the "Convertible Preferred Stock"), which Preferred Stock
may  be  issued  in  the  form  of depositary shares (the "Depositary  Shares")
evidenced by depositary receipts (the "Depositary Receipts"). The Common Stock,
the Preferred Stock, and the Depositary Shares, are collectively referred to as
the "Securities." The Registration  Statement  provides that the Securities may
be offered separately or together, in separate series,  in  amounts, at prices,
and on terms to be set forth in one or more supplements to the Prospectus (each
a "Prospectus Supplement").  This opinion is being provided at  your request in
connection with the filing of the Registration Statement.

     In  our  capacity  as  special  Maryland  counsel,  we  have reviewed  the
following documents:

<PAGE>

American Real Estate Investment Corporation       Piper & Marbury
July 10, 1998                                         L.L.P.
Page 2

     (a)   The Registration Statement.

     (b)   The  Charter  of  the  Company,  certified  by  the Department  of
     Assessments and Taxation of the State of Maryland (the "MSDAT"), and By-
     Laws of the Company, as amended and restated and in effect  on  the date
     hereof.

     (c)   Certified  resolutions  of  the  Board of Directors of the Company
     relating to the Company's organization and  to the Board's authorization
     of the filing of the Registration Statement.

     (d)   A short-form good standing certificate  for  the  Company, dated a
     recent date, issued by the MSDAT.

     (e)   A Certificate of Secretary of the Company, dated the  date  hereof
     (the "Certificate"), as to certain factual matters.

     (f)   Such  other  documents  as  we  have  considered  necessary to the
     rendering of the opinions expressed below.

      In  our examination of the aforesaid documents, we have assumed,  without
independent  investigation,  the  genuineness  of  all  signatures,  the  legal
capacity  of  all individuals who have executed any of the aforesaid documents,
the authenticity  of  all  documents  submitted  to  us  as  originals, the
conformity with originals of all documents submitted to us as  copies  (and the
authenticity   of   the  originals  of  such  copies),  and  the  accuracy  and
completeness of all public  records  reviewed by us.  In making our examination
of documents executed by parties other  than  the Company, we have assumed that
such parties had the power, corporate or other,  to  enter into and perform all
obligations thereunder, and we have also assumed the due  authorization  by all
requisite  action, corporate or other, and the valid execution and delivery  by
such  parties   of  such  documents  and  the  validity,  binding  effect,  and
enforceability thereof  with respect to such parties.  As to any facts material
to this opinion which we  did  not  independently  establish or verify, we have
relied solely upon the Certificate.

We further assume that:

     (a)   The  issuance, sale, amount, and terms of  the  Securities  to  be

<PAGE>

American Real Estate Investment Corporation       Piper & Marbury
July 10, 1998                                         L.L.P.
Page 3


     offered from  time  to  time  by  the  Company  will  be  authorized and
     determined  by  proper  action of the Board of Directors of the  Company
     (each, a "Board Action")  in  accordance  with the Company's Charter and
     By-Laws  and applicable law, in each case so  as  not  to  result  in  a
     default under  or breach of any agreement or instrument binding upon the
     Company and so as  to comply with any requirement or restriction imposed
     by any court or governmental or regulatory body having jurisdiction over
     the Company.

     (b)   Prior to the issuance  of  any  shares  of the Common Stock or the
     Preferred  Stock (including any Depositary Shares),  there  will  exist,
     under the Charter of the Company, the requisite number of authorized but
     unissued shares  of  the  Common  Stock  or  the  Preferred  Stock  (and
     securities   of  any  class  into  which  any  Preferred  Stock  may  be
     convertible),  as the case may be, and that all actions necessary to the
     creation of any  such  Preferred Stock (and securities of any class into
     which  any Preferred Stock  may  be  convertible),  whether  by  Charter
     amendment  or  by classification or reclassification of existing capital
     stock and the filing of Articles Supplementary, will have been taken.

     (c)   Appropriate  certificates  representing shares of the Common Stock
     or the Preferred Stock will be executed  and delivered upon issuance and
     sale of any shares of the Common Stock or the Preferred Stock (including
     any Depositary Shares), as the case may be,  and  will  comply  with the
     Company's Charter and By-Laws and all applicable requirements of law.

     (d)   Any  Depositary  Shares  will  be issued under a valid and legally
     binding deposit agreement (each, a "Deposit Agreement") that conforms to
     the description thereof set forth in the  Prospectus  or  the applicable
     Prospectus  Supplement,  and will comply with the Company's Charter  and
     By-Laws and all applicable requirements of law.

     (e)   Appropriate Depositary Receipts representing the Depositary Shares
     will be executed and delivered  upon issuance and sale of any Depositary
     Shares  and  will comply with the Company's  Charter  and  By-Laws,  the
     Deposit Agreement, and all applicable requirements of law.

<PAGE>

American Real Estate Investment Corporation       Piper & Marbury
July 10, 1998                                         L.L.P.
Page 4


     (f)   The underwriting  or  purchase  agreements  for  offerings  of the
     Securities  (each,  an  "Underwriting Agreement," and collectively,  the
     "Underwriting Agreements")  will  be valid and legally binding contracts
     that conform to the description thereof  set  forth in the Prospectus or
     the applicable Prospectus Supplement.

     (g)   To  the  extent  that  the obligations of the  Company  under  any
     Deposit Agreement may be dependent  upon  such  matters,  the  financial
     institution  to  be  identified  in such Deposit Agreement as depositary
     (the "Depositary") will be duly organized, validly existing, and in good
     standing  under  the  laws  of  its jurisdiction  of  organization;  the
     Depositary  will  be  duly  qualified   to   engage  in  the  activities
     contemplated by such Deposit Agreement; such Deposit Agreement will have
     been duly authorized, executed, and delivered by the Depositary and will
     constitute the legally valid and binding obligation  of  the  Depositary
     enforceable  against  the  Depositary in accordance with its terms;  the
     Depositary will be in compliance,  generally,  with respect to acting as
     Depositary under such Deposit Agreement, with all  applicable  laws  and
     regulations;  and  the Depositary will have the requisite organizational
     and legal power and  authority  to  perform  its  obligations under such
     Deposit Agreement.

Based upon the forgoing and having regard for such legal  consideration  as  we
deem relevant, we are of the opinion and advise you that:

           (1)  Upon due authorization by Board Action of an issuance of Common
           Stock,  and upon issuance and delivery of certificates for shares of
           such Common  Stock  against  payment therefor in accordance with the
           terms  and  provisions  of  such  Board   Action,  the  Registration
           Statement (as declared effective under the  Act),  the Prospectus or
           the   applicable  Prospectus  Supplement  and,  if  applicable,   an
           Underwriting   Agreement,   or   upon   issuance   and  delivery  of
           certificates  for  shares  of  such  Common  Stock pursuant  to  the
           conversion of one or more series of Preferred Stock convertible into
           Common  Stock,  the  shares  of  Common  Stock represented  by  such
           certificates will be duly authorized, validly  issued,  fully  paid,
           and non-assessable.

           (2)  When  a  series  of  the Preferred Stock (and securities of any

<PAGE>

American Real Estate Investment Corporation       Piper & Marbury
July 10, 1998                                         L.L.P.
Page 5

           class into which any Preferred  Stock  may  be convertible) has been
           duly authorized and established in accordance  with  the  applicable
           Board  Action,  the terms of the Company's Charter and By-Laws,  and
           applicable law, and,  upon issuance and delivery of certificates for
           shares  of  such  series of  the  Preferred  Stock  against  payment
           therefor in accordance  with  the terms and provisions of such Board
           Action, the Registration Statement  (as declared effective under the
           Act), the Prospectus or the applicable Prospectus Supplement and, if
           applicable, an Underwriting Agreement, or upon issuance and delivery
           of certificates for shares of such Preferred  Stock  pursuant to the
           conversion of one or more series of Preferred Stock convertible into
           Preferred  Stock,  the shares of the Preferred Stock represented  by
           such certificates will  be  duly  authorized,  validly issued, fully
           paid, and non-assessable.

           (3)    When  the  Depositary  Shares have been duly  authorized  and
           established in accordance with  the  applicable  Board  Action,  the
           terms  of the Company's Charter and By-Laws, and applicable law and,
           upon execution,  issuance.  and  delivery  of  the Depositary Shares
           against payment therefor in accordance with the terms and provisions
           of  such  Board  Action,  the  Deposit  Agreement, the  Registration
           Statement (as declared effective under the  Act), the Prospectus, or
           the  applicable  Prospectus  Supplement  and,  if   applicable,   an
           Underwriting   Agreement   (and   upon  the  taking  of  the  action
           contemplated in paragraph 2 above with  respect  to  the  underlying
           Preferred  Stock),  the Depositary Shares will constitute valid  and
           legally binding obligations of the Company.

     The opinion stated herein relating  to  the validity and binding nature of
the  Depositary  Shares  is  subject  to  (i)  the  effect  of  any  applicable
bankruptcy, insolvency (including, without limitation,  all  laws  relating  to
fraudulent  transfers),  reorganization,  moratorium, or similar laws affecting
creditors' rights generally and (ii) the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or at law).

     In addition to the qualifications set forth above, this opinion is subject
to  the  qualification  that  we express no opinion  as  to  the  laws  of  any
jurisdiction other than the State  of Maryland.  This opinion concerns only the


<PAGE>

American Real Estate Investment Corporation       Piper & Marbury
July 10, 1998                                         L.L.P.
Page 6


effect of the laws (exclusive of the  securities  or  "blue  sky"  laws and the
principles  of  conflict  of  laws)  of  the State of Maryland as currently  in
effect.  We assume no obligation to supplement  this  opinion if any applicable
laws change after the date hereof or if any facts or circumstances  come to our
attention after the date hereof that might change this opinion.

     We  hereby  consent  to  the  filing of this opinion as an exhibit to  the
Registration Statement.  In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is requited under Section 7 of the
Act or the rules and regulations of the Commission thereunder.

     We consent to the reliance on this  opinion  by  Rogers  &  Wells  LLP, in
rendering  their  opinion  to  the Company in connection with the filing of the
Registration Statement.  This opinion  is  limited  to  the  matters  set forth
herein,  and  no  other opinion should be inferred beyond the matters expressly
stated.

                                      Very truly yours



                                      /s/ Piper & Marbury L.L.P.


  

                                                  Exhibit
8

                           ROGERS & WELLS LLP
                             200 Park Avenue
                         New York, New York 10166
                           Tel:  (212) 878-8000
                           Fax:  (212) 878-8375


July 10, 1998

American Real Estate Investment Corporation
Plymouth Meeting Executive Campus
620 West Germantown Pike, Suite 200
Plymouth Meeting, PA 19462

Re:REIT Status of American Real Estate Investment
Corporation

Ladies and Gentlemen:

We have acted as special counsel to American Real Estate
Investment Corporation, a Maryland
corporation (the "Company") and the general partner of
American Real Estate Investment, L.P., a
Delaware limited partnership (the "Operating Partnership"),
in connection with the preparation and
filing of the Company's Registration Statement on Form S-3
(as the same may be amended or
supplemented from time to time, the "Registration
Statement") with the Securities and Exchange
Commission (the "Commission") under the Securities Act of
1933, as amended, covering the offer
and sale by the Company from time to time of up to
$500,000,000 aggregate initial offering price of
(a) shares of common stock, par value $0.001 per share (the
"Common Stock") and (b) shares or
fractional shares of preferred stock, par value $0.001 per
share (the "Preferred Stock"), which may
be issued in the form of depositary shares (the "Depositary
Shares") evidenced by depositary receipts
(the "Depositary Receipts").  The Common Stock, the
Preferred Stock and the Depositary Shares are
collectively referred to as the "Securities."  The
Registration Statement provides that the Securities
may be offered separately or together, in separate series,
in amounts, at prices and on terms to be set
forth in one or more supplements to the prospectus (the
"Prospectus" and each, a "Prospectus
Supplement").  This opinion is being provided at your
request in connection with the filing of the
Registration Statement.

In rendering the opinion expressed herein, we have examined
and relied on the following items:

              1.     The Registration Statement;

              2.     The Company's Charter;

              3.     The Amended and Restated Agreement of
Limited Partnership of the Operating
Partnership dated December 12, 1997; and

              4.     Such other documents, records and
instruments as we have deemed necessary
in order to enable us to render the opinion referred to in
this letter.
<PAGE>

American Real Estate Invesment Corporation               
Page 2
July 10, 1998


In our examination of the foregoing documents, we have
assumed, with your consent, that (i) all
documents reviewed by us are original documents, or true
and accurate copies of original documents,
and have not been subsequently amended, (ii) the signatures
of each original document are genuine,
(iii) each party who executed the document had proper
authority and capacity, (iv) all representations
and statements set forth in such documents are true and
correct, (v) all obligations imposed by any
such documents on the parties thereto have been or will be
performed or satisfied in accordance with
their terms and (vi) the Company and the Operating
Partnership at all times have been and will
continue to be organized and operated in accordance with
the terms of such documents.  We have
further assumed the accuracy of the statements and
descriptions of the Company's and the Operating
Partnership's intended activities as described in the
Registration Statement and that the Company and
the Operating Partnership have operated and will continue
to operate in accordance with the method
of operation described in the Registration Statement.

For purposes of rendering the opinion stated below, we have
also assumed, with your consent, the
accuracy of the representations contained in the
Certificate of Representations, dated July 10, 1998,
provided to us by the Company and the Operating
Partnership.  These representations generally relate
to the classification and operation of the Company as a
REIT and the organization and operation of
the Operating Partnership.

Based upon and subject to the foregoing, we are of the
opinion that:

       (1)  Commencing with its taxable year ended December
31, 1993, the Company was and is
organized in conformity with the requirements for
qualification as a REIT under the Code and that
the present and proposed method of operation of the Company
and the Operating Partnership, as
described in the Registration Statement and as represented
by the Company and the Operating
Partnership, will permit the Company to continue to so
qualify; and

<PAGE>

<PAGE>
American Real Estate Invesment Corporation               
Page 3
July 10, 1998

       (2)  The information in the Registration Statement
under the heading "Federal Income Tax
Considerations" has been reviewed by us and, to the extent
that it constitutes matters of law,
summaries of legal matters or documents, or legal
conclusions, is correct in all material respects.

The opinion stated above represents our conclusions as to
the application of the federal income tax
laws existing as of the date of this letter to the
transactions contemplated in the Registration Statement
and we can give no assurance that legislative enactments,
administrative changes or court decisions
may not be forthcoming that would modify or supersede our
opinion.  Moreover, there can be no
assurance that positions contrary to our opinion will not
be taken by the Internal Revenue Service, or
that a court considering the issues would not hold contrary
to such opinion.  Further, the opinion set
forth above represents our conclusions based upon the
documents, facts and representations referred
to above.  Any material amendments to such documents,
changes in any significant facts or inaccuracy
of such representations could affect the opinion referred
to herein.  Moreover, the Company's
qualification and taxation as a REIT depend upon the
Company's ability to meet, through actual
annual operating results, requirements under the Code
regarding income, assets, distributions and
diversity of stock ownership.  Because the Company's
satisfaction of these requirements will depend
on future events, no assurance can be given that the actual
results of the Company's operations for
any particular taxable year will satisfy the tests
necessary to qualify as or be taxed as a REIT under
the Code.  Although we have made such inquiries and
performed such investigations as we have
deemed necessary to fulfill our professional
responsibilities as counsel, we have not undertaken an
independent investigation of all of the facts referred to
in this letter and the Certificate of
Representations.

The opinion set forth in this letter: (i) is limited to
those matters expressly covered; no opinion is to
be implied in respect of any other matter; (ii) is as of
the date hereof; and (iii) is rendered by us solely
for your benefit and may not be provided to or relied upon
by any person or entity other than you
without our express consent.
                                           Very truly
yours, 

                                           /s/ Rogers &
Wells LLP


                                                                  
                                                          Exhibit 12
<TABLE>
<CAPTION>
                         AMERICAN REAL ESTATE INVESTMENT CORPORATION
                   COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
                                  (Dollars in Thousands)

                                                                                                   Alpine
                                                                                                 Affiliates  
                                                                                   Period       (Predecessor 
                                                                                    from           Combined) 
                                                                                 Inception          Period   
                                                                                (November 10  from January 1 
                        Three Months                                                1993)
                         Ended                                                       to              to
                         March 31,             Fiscal Years ended December 31    December 31,  November 9,
                         ------------          --------------------------------    
                           1998                1997       1996    1995     1994     1993            1993
                         --------------        ----       ----    ----     ----     ----            ----
  ----
<S>                  <C>              <C>        <C>     <C>      <C>              <C>              <C>
Earnings:
Income from continuing
  operations, before
  minority interest      $     1,630       $(2,489)(a)   $   682  $ 327  $  695    $   104          $  105


Adjustments:
Fixed charges, as below        1,915         3,174         3,953  4,232   2,171        94            1,162

Equity in (earnings)
  losses of unconsolidated
  investments                   162           (404)         (570)  (597)   (277)        --             --
                              ------         ------        ------  ------ ------     --------       ------

Distributions from
  unconsolidated
  investments                  --             25             230    102     107           --           --

Earnings, as adjusted         3,707          306           4,295  4,064   2,696          198        1,267
                              ------         ------        ------  ------ ------    --------        ------
Fixed Charges:
Interest on indebtedness      1,915          3,134         3,897  4,173   1,692           94        1,162
                              ------         ------        ------  ------ ------    --------       -------
Proportionate share 
  of interest for
  unconsolidated
  investments                   --             40             56     59     479       --             --

Total Fixed Charges          $1,915      $  3,174      $   3,953 $ 4,232 $2,171     $    94       $ 1,162
                              ------         ------        ------  ------ ------    --------       ------
Ratio of Earnings to 
  Fixed Charges                1.94         0.10(b)         1.09   0.96(c) 1.24        2.11         1.09
                              ------         ------        ------  ------ ------    --------       ------
</TABLE>

(a)Includes $3,203 of non-recurring charges associated with the buyout of 
certain employment agreements, options and warrants as a result of the 
reorganization of the Company which occurred on December 12, 1997.  Had these
charges not been incurred the ratio of earnings to fixed charges would have
been 1.11 for 1997.

(b)Earnings in 1997 were not adequate to cover fixed charges.  The coverage 
deficiency was $2,868.

(c)Earnings in 1995 were not adequate to cover fixed charges.  The coverage 
deficiency was $168.  
<PAGE>



                                                                  
                                                       Exhibit 23.3

                     Consent of Independent Public Accountants




As independent public accountants, we hereby consent to the incorporation by 
reference of our reports dated March 10, 1998 included in American Real Estate 
Investment Corporation's Form 10-K for the year ended December 31, 1997 (and 
to all references to our Firm) included in this Registration Statement on Form 
S-3 of American Real Estate Investment Corporation. 



                                    /s/ Arthur Andersen LLP   




Philadelphia, PA
July 10, 1998
<PAGE>



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