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AREP reports results

Three Months Ended March 31, 2007

For the first quarter of 2007, revenues increased by $1.2 million to $351.4 million from the first quarter of 2006. This increase was primarily due to increased Gaming sales of $26.9 million resulting from the inclusion of revenues from the Aquarius Casino Resort which was acquired on May 19, 2006, and increased revenues from Real Estate property development activities, substantially offset by reduced sales of $32.9 million from our Home Fashion segment. AREP reported an operating loss of $19.2 million for the first quarter of 2007 compared to operating loss of $27.0 million in the first quarter of 2006. The decrease in operating loss was primarily attributable to the inclusion of operating results from the Aquarius Casino Resort and a decrease in Holding Company expenses due largely to the impact of a compensation charge related to the cancellation of unit options in the first quarter of 2006.

Gaming

AREP's wholly owned subsidiary, American Casino & Entertainment Properties LLC, ("ACEP") owns three Las Vegas casinos: Stratosphere Casino Hotel and Tower, Arizona Charlie's Decatur and Arizona Charlie's Boulder, and one casino in Laughlin, Nevada: the Aquarius Casino Resort. On April 22, 2007, we entered into an agreement to sell ACEP and all of its assets (see Subsequent Events).

For the first quarter of 2007, AREP's Gaming segment, excluding the Aquarius, had net revenues of $84.1 million, a decrease of 2.2% from the first quarter of 2006, operating income of $17.8 million, a decrease of 4.4% from the first quarter of 2006. For the first quarter of 2007, depreciation and amortization was $8.6 million including $2.1 million for Aquarius.

Real Estate

AREP's Real Estate segment is comprised of three groups: rental real estate, property development and resort operations. For the first quarter of 2007, Real Estate operations had revenues of $27.9 million, an increase of 34.8% from the first quarter of 2006, operating income of $4.3 million, an increase of 22.9% from the first quarter of 2006, and depreciation and amortization of $1.6 million.

Home Fashion

WestPoint International, Inc. is engaged in the business of manufacturing, sourcing, marketing and distributing bed and bath home fashion products. For the first quarter of 2007, AREP's Home Fashion segment had revenues of $210.6 million, a decrease of 13.5% from the first quarter of 2006, an operating loss of $39.0 million, an increase of 2.6% from the first quarter of 2006, and depreciation and amortization of $5.1 million.

Holding Company Activity

Total general and administrative expenses incurred by the Holding Company was $7.7 million in the first quarter of 2007, a decrease of $3.4 million, or 31.1%, from $11.1 million incurred in the first quarter of 2006.

Discontinued Operations

On November 17, 2006, our indirect majority owned subsidiary, Atlantic Coast Entertainment Holdings, Inc. or Atlantic Coast, completed the sale to Pinnacle Entertainment, Inc., or Pinnacle, of the outstanding membership interests in ACE Gaming LLC or ACE, the owner of The Sands Hotel and Casino, or The Sands, in Atlantic City, New Jersey, and 100% of the equity interests in certain subsidiaries of American Real Estate Holdings, LP that owned parcels of real estate adjacent to The Sands, including the Traymore site, to Pinnacle.

On November 21, 2006, our indirect wholly owned subsidiary, AREP O & G Holdings LLC, consummated the sale of all of the issued and outstanding membership interests of NEG Oil & Gas LLC, or NEG Oil & Gas, to SandRidge Energy, Inc. or SandRidge, formerly Riata Energy, Inc.

Subsequent Events

On April 4, 2007, our subsidiaries signed agreements to sell their entire position in the common stock of SandRidge to a consortium of investors in a series of private transactions. The per share selling price was $18, and total cash consideration received at closing was approximately $243.2 million. In April 2007, we sold an aggregate of $600.0 million of Variable Rate Senior Convertible Notes due 2013, or the Notes. The Notes were sold in a private placement pursuant to Section 4(2) of the Securities Act. The Notes bear interest at a rate of three month LIBOR minus 125 points, but no less than 4.0% nor higher than 5.5%, and are convertible into depositary units of AREP at a conversion price of $132.595 per share, subject to adjustments in certain circumstances.

On April 22, 2007, American Entertainment Properties Corp. or AEP, a wholly owned indirect subsidiary of AREP, entered into a Membership Interest Purchase Agreement with W2007/ACEP Holdings, LLC, an affiliate of Whitehall Street Real Estate Funds, a series of real estate investment funds affiliated with Goldman, Sachs & Co., to sell all of the issued and outstanding membership interests of ACEP, which comprises our gaming operations, for $1.3 billion, plus or minus certain adjustments such as working capital, as more fully described in the agreement. Pursuant to the terms of the agreement, AEP is also responsible to pay off ACEP debt.

Quarterly Distribution

AREP's quarterly cash distribution of $0.15 per unit on its depositary units is payable on June 1, 2007 to depositary unitholders of record at the close of business on May 22, 2007. In addition to the cash distribution to unitholders, AREP will also make a $0.05 per depositary unit equivalent distribution to holders of its Variable Rate Senior Convertible Notes due 2013 based on a formula set forth in the Indenture governing the Notes. The payment of future distributions will be determined by the board of directors of AREP's general partner.

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