<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>2
<FILENAME>y99713a1exv5w1.txt
<DESCRIPTION>OPINION OF PIPER RUDNICK LLP
<TEXT>
<PAGE>
                                                                     EXHIBIT 5.1

[PIPER RUDNICK LLP LETTERHEAD]                       1251 Avenue of the Americas
                                                         New York, NY 10020-1104
                                              main 212.835.6000 fax 212.835.6001






                                   November 8, 2004


American Real Estate Partners, L.P.
American Real Estate Finance Corp.
100 South Bedford Road
Mt. Kisco, NY 10549

Ladies and Gentlemen:

         We have acted as counsel to each of American Real Estate Partners,
L.P., a Delaware limited partnership ("AREP"), and American Real Estate Finance
Corp., a Delaware corporation ("AREP Finance" and together with AREP, the
"Company"), in connection with the preparation and filing of a Registration
Statement on Form S-4 (File No. 333-118021) filed by the Company and American
Real Estate Holdings Limited Partnership ("AREH," or the "Subsidiary Guarantor")
with the Securities and Exchange Commission (the "Commission") on August 6,
2004, as amended by Amendment No. 1 to such Registration Statement to be filed
with the Commission as of the date hereof (as amended, the "Registration
Statement"), pursuant to which the Company is registering $353,000,000 aggregate
principal amount of its 8.125% Senior Notes due 2012 (the "New Notes"). The
Indenture, dated as of May 12, 2004 (the "Indenture"), by and among the Company,
AREH and Wilmington Trust Company, as trustee (the "Trustee"), provides for the
guarantee of the New Notes by AREH to the extent set forth in the Indenture (the
"Guarantee"). Pursuant to the Registration Statement and the Registration Rights
Agreement, dated as of May 12, 2004, by and among the Company, AREH and Bear,
Stearns & Co. Inc. (the "Registration Rights Agreement"), the Company is
offering to issue the New Notes in exchange for all of its outstanding 8.125%
Senior Notes due 2012 (the "Old Notes") (the "Exchange Offer").

         In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) an executed copy
of the Indenture; (ii) certain resolutions adopted by the Board of Directors of
the general partner of AREP, AREP Finance and the general partner of AREH
relating to the Exchange Offer, the issuance of the Old Notes and the New Notes,
the Indenture and related matters; and (iii) the form of the New Notes.

         We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate or comparable documents,
certificates of public officials and officers and representatives of the Company
and such other documents, records and instruments, and we have made such
inquiries of such officers and representatives of each of the general partner of
AREP, AREP Finance and the general partner of AREH, as we have deemed necessary
or appropriate as a basis for our opinion. In our examination, we have assumed
the


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                                             American Real Estate Partners, L.P.
                                              American Real Estate Finance Corp.
                                                                November 8, 2004
                                                                          Page 2


legal capacity of all natural persons, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents.

         Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that when the New Notes (in the form examined by us) have been duly
executed by the Company and authenticated by the Trustee in accordance with the
terms of the Indenture and have been delivered upon consummation of the Exchange
Offer against receipt of Old Notes surrendered in exchange therefor in
accordance with the terms of the Exchange Offer, (i) the New Notes will
constitute a valid and binding obligation of the Company and (ii) the Guarantee
will constitute a valid and binding obligation of the Subsidiary Guarantor.

         The foregoing opinion is limited to the laws of the State of New York
and the General Corporation Law and the Revised Uniform Limited Partnership Act
of Delaware. We do not express any opinion herein concerning the laws of any
other jurisdiction.

         We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the prospectus included in the
Registration Statement. In giving this consent, we do not thereby admit that we
are included in the category of persons whose consent is required under Section
7 of the Act or the rules and regulations of the Commission.


                                         Very truly yours,

                                         /s/ Piper Rudnick LLP

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