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TABLE OF CONTENTS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K


(Mark One)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-50689

BH/RE, L.L.C.
(Exact Name of Registrant as Specified in its Charter)


NEVADA (State or Other Jurisdiction of Incorporation or Organization)		84-1622334 (I.R.S. Employer Identification Number)
3667 Las Vegas Boulevard South Las Vegas, Nevada (Address of Principal Executive Offices)		89109 (Zip Code)
(702) 785-5555 (Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

VOTING MEMBERSHIP INTERESTS

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller Reporting Company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ý

As of June 30, 2008, the aggregate market value of the voting and nonvoting common equity held by nonaffiliates of the Registrant was $0. As of March 31, 2009, each of Robert Earl and Douglas P. Teitelbaum held 50% of the Registrant's voting membership interests, BH Casino and Hospitality LLC I held 43.27%, OCS Consultants, Inc. held 41.13% of the Registrant's equity membership, and BH Casino and Hospitality LLC II held the remaining 15.61% of the Registrant's equity membership interests.

TABLE OF CONTENTS


PART I
	ITEM 1.	BUSINESS	3
	ITEM 1A.	RISK FACTORS	15
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	21
	ITEM 2.	PROPERTIES	21
	ITEM 3.	LEGAL PROCEEDINGS	21
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	21
PART II
	ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	21
	ITEM 6.	SELECTED FINANCIAL DATA	22
	ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	38
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	40
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	65
	ITEM 9A (T).	CONTROLS AND PROCEDURES	65
	ITEM 9B.	OTHER INFORMATION	65
PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	66
	ITEM 11.	EXECUTIVE COMPENSATION	71
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	85
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	87
	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	89
PART IV
	ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	90
SIGNATURES			97

PART I

ITEM 1. BUSINESS

Unless the context indicates otherwise, all references to "BH/RE", the "Company", "we", "us", "our" and "ours" refer to BH/RE, L.L.C. and its consolidated subsidiaries.

Forward-looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this report and elsewhere by management from time to time, the words "believe", "anticipate", "expect", "intend", "estimate", "plan", "may", "seek", "will", and similar expressions are intended to identify forward-looking statements with respect to our financial condition, results of operations and our business including our planned and possible expansion plans, legal proceedings and employee matters. Certain important factors, including but not limited to, competition from other gaming operations, factors affecting our ability to complete acquisitions and dispositions of gaming properties, leverage, construction risks, the inherent uncertainty and costs associated with litigation and governmental and regulatory investigations, and licensing and other regulatory risks, could cause our actual results to differ materially from those expressed in or implied by our forward-looking statements. Further information on potential factors which could affect our financial condition, results of operations and business including, without limitation, the expansion, development and acquisition projects, legal proceedings and employee matters are included in "Item 1A—Risk Factors" of this Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date thereof. We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date hereof.

Organization

BH/RE is a holding company that owns 88.61% of EquityCo, L.L.C. ("EquityCo"). The remaining 11.39% of EquityCo is owned indirectly by Starwood Hotels & Resorts Worldwide, Inc. ("Starwood"). MezzCo, L.L.C. ("MezzCo") is a wholly-owned subsidiary of EquityCo and each of OpBiz, LLC ("OpBiz") and PH Mezz II LLC ("PH Mezz II") is a wholly owned subsidiary of MezzCo. PH Mezz I LLC ("PH Mezz I") is a wholly owned subsidiary of PH Mezz II. PH Fee Owner LLC ("PH Fee Owner") is a wholly owned subsidiary of PH Mezz I. TSP Owner LLC ("TSP Owner") is a wholly owned subsidiary of PH Fee Owner. PH Mezz II, PH Mezz I, PH Fee Owner and TSP Owner are Delaware limited liability companies structured as bankruptcy remote special purpose entities which, together with OpBiz, own and operate the Planet Hollywood Resort and Casino (the "PH Resort"). OpBiz is the licensed owner and operator of the gaming assets and leases the casino space and hotel space together with all hotel assets from PH Fee Owner. TSP Owner was formed to hold the parcel of land (the "Timeshare Parcel") that was sold to Westgate Resorts, LLP, a Florida limited partnership ("Westgate") subject to the Timeshare Purchase Agreement, dated December 10, 2004 and modified on September 10, 2007, between OpBiz and Westgate, as more fully described below. As of March 31, 2009, each of Robert Earl and Douglas P. Teitelbaum held 50% of BH/RE's voting membership interests. BH/RE's equity membership interests were held 43.27% by BH Casino and Hospitality LLC I ("BHCH I"), 15.61% by BH Casino and Hospitality LLC II ("BHCH II" and, together with BHCH I, "BHCH") and 41.13% by OCS Consultants, Inc. ("OCS").

an agreement with Planet Hollywood International, Inc. ("Planet Hollywood") and certain of its subsidiaries to, among other things, license Planet Hollywood's trademarks, memorabilia and other intellectual property. OpBiz has also entered into an agreement with Sheraton Operating Corporation ("Sheraton"), a subsidiary of Starwood, pursuant to which Sheraton will provide hotel management, marketing and reservation services for the hotel that comprises a portion of the PH Resort.

BH/RE is a Nevada limited liability company and was organized on March 31, 2003. BH/RE was formed by BHCH and OCS. BHCH is controlled by Douglas P. Teitelbaum, a managing principal of Bay Harbour Management, L.C., an investment management firm ("Bay Harbour Management"). BHCH was formed by Mr. Teitelbaum to allow funds managed by Bay Harbour Management to hold investments in BH/RE. OCS is wholly-owned and controlled by Robert Earl and holds Mr. Earl's investment in BH/RE. Mr. Earl is the founder, chairman and chief executive officer of Planet Hollywood and Mr. Teitelbaum is a director of Planet Hollywood. Mr. Earl, a trust for the benefit of Mr. Earl's children and certain affiliates of Bay Harbour Management, own substantially all of the equity of Planet Hollywood. Mr. Earl disclaims beneficial ownership of any equity of Planet Hollywood owned by the trust.

Acquisition of the PH Resort

OpBiz paid the purchase price for the Aladdin using the proceeds from the issuance of certain secured notes to the Aladdin's secured creditors which were subsequently repaid as more fully described below. OpBiz assumed various contracts and leases entered into by the Aladdin in connection with its operation of the property and certain of the Aladdin's liabilities, including an energy service obligation to the third party owner of the central utility plant that supplies hot and cold water and emergency power to the PH Resort. At the time of purchase, the energy service obligation was equal to $34 million.

On November 30, 2006, OpBiz and PH Fee Owner (collectively the "Borrower") entered into the Loan Agreement (the "Loan Agreement") with Column Financial, Inc. (the "Lender") for a mortgage loan in the principal amount of up to $820 million. The Loan Agreement provided for an initial disbursement in the amount of $759.7 million and a future funding facility in the amount of up to $60.3 million (together, the "Loan"). On July 17, 2007, the Borrower and the Lender entered into an amendment (the "Amendment") to the Loan Agreement. The Amendment provided for the immediate funding to Borrower of the balance of future funding that was available under the Loan Agreement and established an additional future funding facility in the amount of up to $40 million ("Future Funding Tranche B"). Future Funding Tranche B has the same terms as the Loan Agreement for maturity and extension. The Loan Agreement, as amended by the Amendment, is referred to as the Loan. The Loan is secured by a deed of trust on the PH Resort and a pledge, subject to approval by the Nevada gaming authorities, by MezzCo of its membership interest in OpBiz.

Using the proceeds from the Loan, all amounts outstanding under the Credit Agreement, dated August 31, 2004, among OpBiz, the lenders named therein (the "Lenders") and The Bank of New York, Asset Solution Division (the "Senior Agent") were paid in full. Pursuant to the terms of the Credit Agreement, upon repayment of all amounts due, the warrant to purchase 2.5% of the equity in EquityCo issued to the Lenders at the closing of the Credit Agreement became exercisable. The Company compensated the holders of all unexercised warrants in accordance with the terms of a letter agreement between the parties and the warrants were canceled.

In order to permit the Lender to foreclose on the Hotel and Casino separately and to allow OpBiz to continue to operate the Casino after such a foreclosure (should the Lender choose to do so), title to the real property comprising the Hotel and Casino (the "Property") was transferred from OpBiz to PH Fee Owner. OpBiz and PH Fee Owner then entered into a lease pursuant to which OpBiz agreed to continue to operate the Hotel in the manner it had been and to pay monthly rent of approximately

$916,000. OpBiz and PH Fee Owner also entered into a lease pursuant to which OpBiz agreed to continue to operate the Casino in the manner it had been and to pay monthly rent of approximately $1,160,000.

In connection with the Loan, the Lender required that Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd. and Bay Harbour Master Ltd., which are affiliates of Bay Harbour Management, execute and deliver a certain Guaranty (as described below). In exchange for Trophy Hunter Investments, Ltd., Bay Harbor 90-1, Ltd. and Bay Harbour Master Ltd. (the "Guarantors") executing the Guaranty, OpBiz and PH Fee Owner agreed to pay to Trophy Hunter Investments, Ltd. and Bay Harbour Master Ltd. a fee equal to $1,500,000 per year. The fee is accrued and only payable once OpBiz hits certain debt service coverage ratios defined in the Loan Agreement.

In connection with the Loan, the Guarantors entered into a Guaranty, dated November 30, 2006 (the "Guaranty"), pursuant to which the Guarantors agreed to indemnify the Lender against losses related to certain prohibited actions of the Borrower and guarantied full repayment of the Loan in the case of a voluntary or collusive bankruptcy of the Borrower, a transfer of the Property or interests in the Borrower in violation of the Loan Agreement and if the Borrower fails to maintain its status as a bankruptcy remote entity and as a result sees its assets consolidated with those of an affiliate in a bankruptcy. The liability of the Guarantors is capped at $15,000,000 per entity and $30,000,000 in the aggregate, however this cap does not apply to (i) liability arising from events, acts or circumstances actually committed or brought about by the willful acts of any of the Guarantors and (ii) the extent of any benefit received by any of the Guarantors as a result of the acts giving rise to the liability under the Guaranty. Each of Douglas Teitelbaum and Robert Earl executed and delivered guaranties substantially the same as that delivered by the Guarantors, however the liability of each of them was limited to (i) liability arising from events, acts or circumstances actually committed or brought about by willful acts by him and (ii) the extent of any benefit received by him as a result of the acts giving rise to the liability under the Guaranty.

In connection with the Loan, the Guarantors and Robert Earl executed and delivered a Completion Guaranty, dated November 30, 2006, pursuant to which they jointly and severally guarantied the completion of the renovation of the Property and payment of all costs associated therewith. The liability under the Completion Guaranty is capped at the greater of (a) $35,000,000 and (b) only in the case that cost overruns for the renovation exceed $15,000,000, 24% of the then unpaid costs of the completion of the renovation.

Additionally, in connection with the Loan Agreement, we effected a refinancing of the Securities Purchase Agreement, dated August 9, 2004 (the "Securities Purchase Agreement"), among MezzCo and the investors named therein (the "Investors"), pursuant to which MezzCo issued to the Investors (i) 16% senior subordinated secured notes (the "Notes") in the original aggregate principal amount of $87 million, and (ii) warrants (the "Warrants") for the purchase (subject to certain adjustments as provided for therein) of membership interests of MezzCo, representing 17.5% of its fully diluted equity. The proceeds from the Loan were used to redeem the Notes in full.

In connection with the refinancing of the Securities Purchase Agreement and redemption of the Notes, MezzCo, OpBiz, EquityCo, Post Advisory Group, L.L.C. (the "Collateral Agent"), and the Investors (collectively, the "Restructuring Parties"), entered into a Restructuring Agreement, dated November 30, 2006 (the "Restructuring Agreement"), pursuant to which the Restructuring Parties terminated in full the Securities Purchase Agreement, terminated and amended certain other existing agreements, and entered into certain other ancillary agreements, as more fully described below under "Description of Certain Indebtedness".

The Planet Hollywood Resort & Casino

The PH Resort is located at 3667 Las Vegas Boulevard South in Las Vegas, Nevada, in the area commonly referred to as the Las Vegas Strip. The PH Resort is part of a resort, casino and entertainment complex (the "Complex") that occupies a 35-acre site located on the northeast corner of Las Vegas Boulevard (the "Strip") and Harmon Avenue in Las Vegas, Nevada.

The PH Resort includes a 2,496-room hotel (the "Hotel"), which offers deluxe guestrooms, resort guestrooms, suites, luxury rooms and mega suites. In addition, the hotel has an outdoor pool area and an approximately 32,000-square foot spa that is leased to a third party.

PH Resort's 116,000-square foot casino (the "Casino") offers approximately 1,850 slot machines, 75 table games, a poker room and a race-and sports-book facility.

The PH Resort has eight restaurants. Six of those restaurants are operated pursuant to leases with third parties and include a Chinese restaurant leased to P.F. Chang's, a 24-hour casual dining facility known as Planet Dailies, Koi (a high end Japanese restaurant), the Strip House (an elegant and world renowned steak house), Yolos (a Mexican restaurant) and Earl of Sandwich (a casual sandwich shop). We operate the remaining two restaurants which are the buffet and a poolside snack bar, as well as room service and banquet services in the convention space. We also operate a Starbucks Coffee franchise under an agreement with Starbucks Corporation. Additionally, the PH Resort has a lounge (the Living Room) and nightclub (Prive) operated by a third party as well as gift and merchandise shops operated by the Marshall Retail Group.

The PH Resort also has over 75,000 square feet of convention, trade show and meeting facilities, including a 37,000-square foot main ballroom, 10,000 square feet of pre-function space and 16,000 square feet of breakout space in 18 separate rooms.

The 7,500-seat Theater for the Performing Arts (the "TPA") is part of the Complex but is not directly connected to the Hotel and the Casino. Hotel and Casino customers and the general public can enter the TPA through the adjacent shopping mall, known as the Miracle Mile Shops, as described below, or through entrances leading directly into the TPA. The TPA is used for award shows, live music events and theatrical performances. The PH Resort also has a 1,300-seat theater on the mezzanine level above the Casino (the "Showroom"). The Showroom will be home to a nightly show called Peepshow (as discussed in greater detail herein). The TPA and Showroom are leased to CC Entertainment Theatrical-LV, LLC, successor-in-interest to SFX Entertainment, Inc. pursuant to an assignment dated September 26, 2005 ("CCE"). CCE has renovated and has the exclusive right to use, reconfigure, adapt, change and operate the leased premises.

The Timeshare Parcel is a four-acre parcel of land adjacent to the Miracle Mile Shops which is currently being developed by Westgate. The site will be the home of the PH Towers which will include residential units, primarily available as timeshare. The PH Towers will be integrated into the Complex with the units that are unsold available for use as added hotel inventory. Westgate has developed a plan which exceeds the established minimum project density requirements under the transaction documents and is currently constructing pursuant to that plan. Pursuant to this plan, it is anticipated that the first tower which includes 1,201 two bedroom units will be ready for occupancy by no later than November 21, 2009. The second tower with 504 two bedroom units and the third tower with 1,082 two bedroom units has a planned total completion date of no later than November 2013.

In addition to the Hotel, Casino, PH Towers and TPA, the Complex includes the Miracle Mile Shops, which is a themed entertainment shopping mall with approximately 435,000 square feet of retail space, and an approximately 4,800-space parking facility jointly used by the PH Resort and the Miracle Mile Shops.

The Miracle Mile Shops and the parking facility are owned by Boulevard Invest, LLC ("Boulevard Invest"), an unaffiliated third party. The Miracle Mile Shops, which is directly connected to the Casino, contains an array of stores, boutiques, restaurants, cafes and other entertainment offerings. We are a party to reciprocal use easements and agreements among us, Boulevard Invest and Westgate governing the operation and maintenance of the Hotel, the Casino, the TPA, the Miracle Mile Shops, the Timeshare Parcel, the parking facility and utilization of services from the central utility plant.

The central utility plant, which provides hot and cold water and emergency power to the Complex, is owned by Northwind Aladdin ("Northwind"), an unaffiliated third party. We lease the land on which the central utility plant is located to Northwind for a nominal yearly rent.

Business Strategy

Our strategy is to improve profitability by:

•: enhancing opportunities from the completion of the renovation into the PH Resort;
•: implementing a new marketing program to capitalize on the Planet Hollywood and Starwood brand names;
•: upgrading and expanding gaming and non-gaming attractions; and
•: entering into agreements with third parties for operation of the restaurant, entertainment and retail shops.

Renovate the Property

We have completed a design and construction plan with an estimated cost of $214 million that transformed the Aladdin into the PH Resort. In addition, we have entered into agreements with third parties to develop and operate the TPA, showroom, nightclub and lounge, additional restaurants and retail outlets at the PH Resort, thereby increasing the number of amenities at the PH Resort without increasing renovation costs. The renovation was complete at the end of 2007. The renovation and design work focused on correcting certain design flaws that were detrimental to operation of the property.

The key elements of our redesigned property are:

Improved entrance and traffic flow. We have constructed a new main entrance to the PH Resort that has improved access to the Casino from Las Vegas Boulevard by creating a large main entrance and several well-identified secondary entrances including joint common entries with the Miracle Mile Shops. We leveled the plaza that contained several barriers to entry and created an inviting walkway along the front of the building which we expect will improve pedestrian traffic into the Casino from the Strip. We have made improvements to the interior traffic flow of the Casino which include clear access for customers to reach our restaurants, shops and entertainment attractions. In addition, we have redesigned the façade of the building and created an attraction with that façade, as well as added a large marquee to the front of the PH Resort.

Renovated and expanded Casino. The renovation of the Casino included improved integration with the Miracle Mile Shops. We expanded the Casino into portions of the Miracle Mile Shops that we currently lease to improve the traffic flow throughout the Complex. We also removed obstructions in the Casino allowing us to make the Casino floor appear larger and more inviting and to better use the available gaming space.

Implement a New Marketing Program

We intend to focus our marketing efforts on attracting middle market gaming customers and establishing celebrity marketing agreements. We believe the general quality of the Hotel rooms is very competitive for the middle market segment. The new marketing program features:

•: the entry of the Planet Hollywood brand name into the Las Vegas casino market; and
•: Starwood's reservation system and marketing and loyalty programs.

Planet Hollywood Brand Name. We believe the Planet Hollywood brand name is well-known and internationally recognized. As a result, we expect that we will be able to spend more of our advertising budget on direct customer marketing and introduction to property specific events rather than general brand awareness. In addition, the PH Resort will host movie premieres, live television productions and similar entertainment industry events, with the goal of attracting Las Vegas tourists, including customers of other properties on the Las Vegas Strip, to the PH Resort.

Relationship with Starwood and Sheraton. We believe that our relationship with Starwood and Sheraton presents a number of advantages for the PH Resort. We believe that including the PH Resort in the Starwood reservation system and marketing and loyalty programs may result in higher average daily room rates at the Hotel. We also estimate that Starwood's convention bookings database will generate more profitable convention and meeting business for the PH Resort, improving both mid-week occupancy levels and average daily room rates. The Starwood preferred guest program has approximately 4.7 million active members and approximately 10 million total members and Starwood has added the PH Resort as an option for Starwood preferred guest program members to utilize the PH Resort as an award-redeeming destination.

Upgrade and Expand Gaming and Non-Gaming Attractions

Improve Mix and Layout of Casino Slot Machines. We intend to improve our gaming operations by continuing to provide our customers with newer and more attractive slot machine options. Our slot floor is currently 100% equipped with the ticket-in/ticket-out technology. We also intend to continue to offer the most up to date variety of games which includes participatory slot machines which are slot machines that require the casino operator to pay a percentage of its winnings to the manufacturer.

Expanded Entertainment Amenities. The newly designed Showroom will be home to Peepshow, a nightly production show that is a collaboration between CCE and a legendary Broadway producer which will feature celebrities in the starring roles. We are also hosting a nightly production of Tony and Tina's wedding on the mezzanine level in a 310 seat showroom. We also have plans to maintain an interactive exhibit on the mezzanine level. In addition to the nightly shows and interactive exhibits, the TPA will continue to offer larger concerts and shows to be done periodically. We will also be able to use the TPA and Showroom for casino and convention needs during certain periods. We believe that increasing the number, variety and desirability of non-gaming amenities at the PH Resort will attract more customers and, as a result, increase revenues and profits, including those from our gaming operations.

Upgraded and Expanded Restaurant Choices. We believe that most Las Vegas Strip properties currently include dining options affiliated with a well-known restaurant or chef from a major U.S. metropolitan area. We have added well known restaurants from Los Angeles and New York and believe that having these dining options presents opportunities to attract customers to the Casino and to other non-gaming attractions and amenities at the PH Resort.

Timeshare Parcel

Pursuant to an agreement dated December 10, 2004 and modified on September 10, 2007, OpBiz entered into a Timeshare Purchase Agreement with Westgate, whereby OpBiz agreed to sell the Timeshare Parcel to Westgate, to develop, market, manage and sell timeshare units on such Timeshare Parcel. Under the Timeshare Purchase Agreement, OpBiz will receive fees each year based on sales of timeshare units until the timeshare units are one hundred percent sold out. We expect that development of the formerly vacant property will also benefit us by providing additional revenues by increasing the number of potential customers for the PH Resort, as the new towers will have limited amenities so those guests will be directed to our Complex for gaming, entertainment and food and beverage facilities.

Markets

The well documented credit crisis and economic downturn has resulted in a significant decline in tourism and gaming spend in Las Vegas. According to the Las Vegas Convention and Visitors Authority, total Las Vegas visitor volume declined 4.4% to 37.5 million visitors for the year ended December 31, 2008 compared to 39.2 million visitors for the year ended December 31, 2007. Occupancy rates across Las Vegas declined by 4.2%, room rates declined by 9.8% and gaming revenue declined by 9.9%, in 2008 compared to 2007.

A number of major hotel casinos have opened in the past ten years on the Las Vegas Strip, including Bellagio, Mandalay Bay Resort & Casino, New York-New York Hotel and Casino, Paris Las Vegas, The Venetian Casino Resort, The Palazzo, Wynn Resort Las Vegas and Encore. In addition, a number of existing properties on the Las Vegas Strip have expanded during this period, including MGM Grand Hotel and Casino, Luxor Hotel and Casino, Circus Circus Hotel, Casino and Theme Park, Bellagio and Caesars Palace. There are several other large resorts that are expected to open on the Las Vegas Strip before the end of 2010 including Cosmopolitan, Fountainebleau and City Center.

Las Vegas has sought to increase its popularity as an overall vacation resort destination. The Las Vegas market continues to evolve from its historical gaming focus to broader entertainment and leisure offerings, such as retail, fine dining, sporting activities and major concerts. This diversification has contributed to the historical growth in the market and broadened the universe of individuals who would consider Las Vegas as a vacation destination. The more diversified entertainment and leisure offerings present significant growth opportunities. In particular, the newer, large theme-destination resorts have been designed to capitalize on this development by providing better quality hotel rooms at higher rates and by providing expanded shopping, dining and entertainment opportunities to their patrons, in addition to gaming. The current economic environment and the reductions in visitor volume and discretionary consumer spending have led to increased competition, particularly on the Las Vegas Strip.

Competition

The hotel casino industry is highly competitive. The PH Resort competes, on the basis of overall atmosphere, range of amenities, level of service, price, location, entertainment offered, theme and size with other high-quality resorts and hotel casinos on the Las Vegas Strip and in downtown Las Vegas, as well as a large number of hotels in and near Las Vegas.

Many competing properties in the Las Vegas market have recently expanded or are expanding their facilities. MGM Mirage has constructed a 928-room "spa tower" addition to Bellagio, as well as an expansion of Bellagio's spa and salon, meeting space and retail space. Harrah's (formerly Caesars Entertainment) has completed construction of a 949-room hotel tower and additional convention and meeting facilities at Caesars Palace, which includes additional retail space and restaurant facilities. The Wynn Resort Las Vegas added Encore with approximately 2,034 luxury rooms. The Venetian Casino Resort constructed the Palazzo with approximately 3,000 luxury rooms. The Cosmopolitan Resort &

Casino, which will be located directly across the Strip from the PH Resort, will have approximately 2,200 rooms comprised of condo hotel units and hotel rooms and is expected to be completed in 2009. MGM Mirage is building a 66-acre development currently called Project City Center, which will also be located across Las Vegas Boulevard from the PH Resort. The initial phase of the project is expected to be completed in 2010 and includes a 4,000-room hotel and casino, as well as three 400-room boutique hotels. According to the Las Vegas Convention and Visitors Authority, the number of hotel rooms in Las Vegas is expected to increase by 17,223 in 2009. Some of these properties are operated by companies that have more than one location and may have greater name recognition and financial and marketing resources than we have and will target the same demographic group as the PH Resort and also compete with the PH Resort for conventions and trade shows. We will seek to differentiate the PH Resort from other major Las Vegas hotel casino resorts by concentrating on the design, atmosphere, personal service and amenities that we will provide and the added value of our relationships with Planet Hollywood, Starwood and Sheraton. Along with our competitors on the Las Vegas Strip, the PH Resort has responded to the current economic environment and erosion of consumer spending by aggressively marketing and pricing our offerings.

Las Vegas casinos also compete with other hotel casino facilities elsewhere in Nevada and in Atlantic City, riverboat and Native American gaming facilities in other states, hotel casino facilities elsewhere in the world, Internet gaming and other forms of gaming. In addition, certain states recently have legalized, and others may legalize, casino gaming in specific areas. Passage of the Tribal Government Gaming and Economic Self-Sufficiency Act in 1988 has led to rapid increases in Native American gaming operations. In March 2000, California voters approved an amendment to the California Constitution allowing federally recognized Native American tribes to conduct and operate slot machines, lottery games and banked and percentage card games on Native American land in California. As a result, casino-style gaming on Native American land is growing and has become a significant competitive force. The proliferation of Native American gaming in California and gaming activities in other areas could have a negative impact on our operations. In particular, the legalization of casino gaming in or near metropolitan areas, such as New York, Los Angeles, San Francisco and Boston, from which we intend to attract customers, could have a substantial negative effect on our business. In addition, new or renovated casinos in Asia could reduce the number of Asian customers who would otherwise visit Las Vegas. We also compete with other forms of gaming on both a local and national level, including state lotteries, on-and off-track wagering and card parlors. The expansion of legalized gaming into new jurisdictions throughout the United States will also increase competition.

Intellectual Property

We have entered into agreements with Planet Hollywood and Sheraton which, among other things, grant us the right to use certain of their respective intellectual property in connection with the operation of the PH Resort. These licensing arrangements are described below under "Item 13. Certain Relationships and Related Transactions, and Director Independence."

Regulation and Licensing

Nevada Gaming Regulations

Introduction

The ownership and operation of casino gaming facilities in Clark County, Nevada are subject to: (i) the Nevada Gaming Control Act and the regulations promulgated thereunder (collectively, the "Nevada Act"); and (ii) various local ordinances and regulations. Our operations are subject to the licensing and regulatory control of the Nevada Gaming Commission ("Nevada Commission"), the Nevada State Gaming Control Board ("Nevada Board") and the Clark County Liquor and Gaming License Board (collectively, the "Nevada Gaming Authorities").

Policy Concerns of Gaming Laws

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy. These public policy concerns include, among other things:

•: preventing unsavory or unsuitable persons from being directly or indirectly involved with gaming at any time or in any capacity;
•: establishing and maintaining responsible accounting practices and procedures;
•: maintaining effective controls over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs, and safeguarding assets and revenues, providing reliable recordkeeping and requiring the filing of periodic reports with the Nevada Gaming Authorities;
•: preventing cheating and fraudulent practices; and
•: providing a source of state and local revenues through taxation and licensing fees.

Changes in these laws, regulations and procedures could have significant negative effects on our gaming operations and our financial condition and results of operations.

Owner and Operator Licensing Requirements

As the owner and operator of the PH Resort, OpBiz, as a registered company, is required to be licensed by the Nevada Gaming Authorities as a limited liability company licensee, referred to as a company licensee. This gaming license requires us to pay periodic fees and taxes and is not transferable. We are required periodically to submit detailed financial and operating reports to the Nevada Commission and the Nevada Board and furnish any other information, which the Nevada Commission or the Nevada Board may require. No person may become a stockholder or holder of an interest of, or receive any percentage of profits from the PH Resort without first obtaining licenses and approvals from the Nevada Gaming Authorities. We have obtained from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses required in order to engage in gaming activities in Nevada.

Individual Licensing Requirements

The Nevada Gaming Authorities may investigate any individual who has a material relationship to or material involvement with OpBiz to determine whether the individual is suitable or should be licensed as a business associate of a gaming licensee. The officers, directors and certain key employees of OpBiz, MezzCo, EquityCo and BH/RE are required to file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause which they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. An applicant for licensing or an applicant for a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensing, the Nevada Gaming Authorities have the jurisdiction to disapprove a change in a corporate position. Messrs. Teitelbaum and Earl, along with Donna Lehmann, Chief Financial Officer of OpBiz and Treasurer of BH/RE, Mark S. Helm, General Counsel and Secretary of OpBiz, Thomas M. Smith, manager of EquityCo and OpBiz, and Allison Reid, manager of EquityCo and OpBiz, have been licensed by the Nevada Gaming Authorities. Applications for Thomas J. McCartney, President and Chief Executive Officer of OpBiz, George Barry Hardy, manager of OpBiz, and Eugene I. Davis, manager of OpBiz, are pending approval by the Nevada Gaming Authorities.

If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with OpBiz, OpBiz would have to terminate all relationships with that person. In addition, the Nevada Commission may require us to terminate the employment of any person who refuses to file appropriate applications. Determinations of suitability or questions pertaining to licensing are not subject to judicial review in Nevada.

We are required to submit detailed financial and operating reports to the Nevada Commission and provide any other information that the Nevada Commission may require. Substantially all of the material loans, leases, sales of securities and similar financing transactions of OpBiz, MezzCo, EquityCo and BH/RE must be reported to, or approved by, the Nevada Commission and/or the Nevada Board.

Consequences of Being Found Unsuitable

Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Commission or by the chairman of the Nevada Board, or who refuses or fails to pay the investigative costs incurred by the Nevada Gaming Authorities in connection with the investigation of its application, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any person found unsuitable and who holds, directly or indirectly, any beneficial ownership of any voting security or debt security of a registered company beyond the period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. We will be subject to disciplinary action if, after we receive notice that a person is unsuitable to hold an equity interest or to have any other relationship with, we:

•: pay that person any dividend or interest upon any voting or debt securities;
•: allow that person to exercise, directly or indirectly, any voting right held by that person relating to BH/RE, EquityCo, MezzCo or OpBiz;
•: pay remuneration in any form to that person for services rendered or otherwise; or
•: fail to pursue all lawful efforts to require the unsuitable person to relinquish such person's voting securities including, if necessary, the immediate purchase of the voting securities for cash at fair market value.

Consequences of Violating Gaming Laws

If the Nevada Commission decides that we have violated the Nevada Act or any of its regulations, it could limit, condition, suspend or revoke our registrations and gaming license. In addition, we and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act, or of the regulations of the Nevada Commission, at the discretion of the Nevada Commission. Further, the Nevada Commission could appoint a supervisor to operate the PH Resort and, under specified circumstances, earnings generated during the supervisor's appointment (except for the reasonable rental value of the premises) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of any of our gaming licenses and the appointment of a supervisor could, and revocation of any gaming license would, have a significant negative effect on our gaming operations.

Requirements for Beneficial Securities Holders

Regardless of the number of shares held, any beneficial holder of BH/RE's voting securities may be required to file an application, be investigated and have that person's suitability as a beneficial holder of voting securities determined if the Nevada Commission has reason to believe that the ownership would otherwise be inconsistent with the policies of the State of Nevada. If the beneficial holder of the voting securities of BH/RE who must be found suitable is a corporation, partnership, limited partnership, limited liability company or trust, it must submit detailed business and financial

information including a list of its beneficial owners. The applicant must pay all costs of the investigation incurred by the Nevada Gaming Authorities in conducting any investigation.

The Nevada Act requires any person who acquires more than 5% of the voting securities of a registered company to report the acquisition to the Nevada Commission. The Nevada Act requires beneficial owners of more than 10% of a registered company's voting securities to apply to the Nevada Commission for a finding of suitability within 30 days after the chairman of the Nevada Board mails the written notice requiring such filing. Under certain circumstances, an "institutional investor," as defined in the Nevada Act, which acquires more than 10%, but not more than 15%, of the registered company's voting securities may apply to the Nevada Commission for a waiver of a finding of suitability if the institutional investor holds the voting securities for investment purposes only. In certain circumstances, an institutional investor that has obtained a waiver can hold up to 19% of a registered company's voting securities for a limited period of time and maintain the waiver. An institutional investor will not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors of the registered company, a change in the corporate charter, bylaws, management, policies or operations of the registered company, or any of its gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding the registered company's voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include:

•: voting on all matters voted on by stockholders or interest holders;
•: making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and
•: other activities that the Nevada Commission may determine to be consistent with such investment intent.

The articles of organization of BH/RE include provisions intended to help it implement the above restrictions.

Gaming Laws Relating to Securities Ownership

The Nevada Commission may, in its discretion, require the holder of any debt or similar securities of a registered company to file applications, be investigated and be found suitable to own the debt or other security of the registered company if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the Nevada Commission decides that a person is unsuitable to own the security, then under the Nevada Act, the registered company can be sanctioned, including the loss of its approvals if, without the prior approval of the Nevada Commission, it:

•: pays to the unsuitable person any dividend, interest or any distribution whatsoever;
•: recognizes any voting right by the unsuitable person in connection with the securities;
•: pays the unsuitable person remuneration in any form; or
•: makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.

BH/RE is required to maintain a current ownership ledger in Nevada which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the

Nevada Gaming Authorities. A failure to make the disclosure may be grounds for finding the record holder unsuitable. We will be required to render maximum assistance in determining the identity of the beneficial owner of any of BH/RE's voting securities. The Nevada Commission has the power to require the certificates representing equity interests of any registered company to bear a legend indicating that the securities are subject to the Nevada Act. We do not know whether this requirement will be imposed on us. However, the certificates representing BH/RE's membership interests note that the membership interests are subject to a right of redemption and other restrictions set forth in BH/RE's articles of organization and operating agreement and that the membership interests are, or may become, subject to restrictions imposed by applicable gaming laws.

Approval of Public Offerings

Neither BH/RE nor any of its affiliates may make a public offering of its debt or equity securities without the prior approval of the Nevada Commission if the proceeds from the offering are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for those purposes or for similar transactions, unless, upon a written request for a ruling, the chairman of the Nevada Board has ruled that it is not necessary to submit an application for approval. Any approval that we might receive in the future relating to future offerings will not constitute a finding, recommendation or approval by any of the Nevada Gaming Authorities as to the accuracy or adequacy of the offering memorandum or the investment merits of the securities. Any representation to the contrary is unlawful.

Approval of Changes in Control

As a registered company, BH/RE must obtain prior approval of the Nevada Commission with respect to a change in control through:

•: merger;
•: consolidation;
•: stock or asset acquisitions;
•: management or consulting agreements; or
•: any act or conduct by a person by which the person obtains control of us.

Entities seeking to acquire control of a registered company must satisfy the Nevada Board and Nevada Commission with respect to a variety of stringent standards before assuming control of the registered company. The Nevada Commission may also require controlling stockholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control to be investigated and licensed as part of the approval process relating to the transaction.

Approval of Defensive Tactics

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada gaming licenses or affecting registered companies that are affiliated with the operations permitted by Nevada gaming licenses may be harmful to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to reduce the potentially adverse effects of these business practices upon Nevada's gaming industry and to further Nevada's policy to:

•: assure the financial stability of corporate gaming operators and their affiliates;
•: preserve the beneficial aspects of conducting business in the corporate form; and

•: promote a neutral environment for the orderly governance of corporate affairs.

We may be required to obtain approval from the Nevada Commission before we can make exceptional repurchases of voting securities above their current market price and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by a registered company's board of directors in response to a tender offer made directly to its stockholders for the purpose of acquiring control.

Fees and Taxes

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the licensed operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon:

•: a percentage of the gross revenues received;
•: the number of gaming devices operated; or
•: the number of table games operated.

A live entertainment tax is also paid by casino operators where entertainment is furnished in connection with an admission charge or the selling or serving of food or refreshments or the selling of merchandise.

License for Conduct of Gaming and Sale of Alcoholic Beverages

The conduct of gaming activities and the service and sale of alcoholic beverages at the PH Resort is subject to licensing, control and regulation by the Clark County Liquor and Gaming License Board. In addition to approving OpBiz, the Clark County Liquor and Gaming License Board has the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming license. All licenses are revocable and are not transferable. The county agency has full power to limit, condition, suspend or revoke any license. Any disciplinary action could, and revocation would, have a substantial negative impact upon our operations.

Employees

OpBiz currently has approximately 2,536 employees. Approximately 1,221 employees (48%) are covered under a collective bargaining agreement.

ITEM 1A. RISK FACTORS

Our plans and business are subject to the following risks:

Risks Related to Our Substantial Indebtedness

Our substantial indebtedness could adversely affect our financial results.

We have $860.0 million of indebtedness under the Loan Agreement and approximately $27.6 million of indebtedness under the Energy Service Agreement described below at the end of Item 7.—"Management's Discussion and Analysis of Financial Condition and Results of Operations." The indebtedness under the Loan Agreement is secured by a deed of trust on the PH Resort and a pledge, subject to approval by the Nevada gaming authorities, by MezzCo of its membership interest in OpBiz.

The Loan Agreement requires that we establish and maintain certain reserves including a reserve for payment of property taxes and insurance and a reserve for on-going furniture, fixture and

equipment purchases or property improvements. The Loan Agreement also requires that we maintain an interest reserve and restricts our ability to spend excess cash flow until certain debt service coverage ratios are met. Pursuant to the terms of the Loan Agreement, the Lenders have approval rights over our annual operating budget and restrictions over our operating cash (excluding certain requirements to maintain minimum operating cash under Nevada gaming regulations). Therefore, we will have limited cash flow available for unplanned working capital needs and other general corporate activities and to make distributions to our owners until certain debt service coverage ratios are met. Our substantial indebtedness could also have the following additional consequences:

•: limit our ability to obtain additional financing in the future;
•: increase our vulnerability to general adverse economic and industry conditions;
•: limit flexibility in planning for, or reacting to, changes in our business and industry; and
•: place us at a disadvantage compared to less leveraged competitors.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations or prospects.

Our future cash flows may not be sufficient to meet our debt obligations.

Our ability to make payments on our indebtedness depends on our ability to generate sufficient cash flow in the future. Our ability to generate cash flow will depend upon many factors, some of which are beyond our control, including:

•: demand for our services;
•: economic conditions generally, as well as in Nevada and within the casino industry;
•: competition in the hotel and casino industries;
•: legislative and regulatory factors affecting our operations and business; and
•: our ability to hire and retain employees at a reasonable cost.

We cannot assure you that we will generate cash flow from operations in an amount sufficient to make payments on our indebtedness or to fund other liquidity needs. Our inability to generate sufficient cash flow would have a material adverse effect on our financial condition and results of operations. In addition, if we are not able to generate sufficient cash flow to service our indebtedness, we may need to refinance or restructure our indebtedness, sell assets, reduce or delay capital investment, or seek to raise additional capital. If we cannot implement one or more of these alternatives, we may not be able to meet our payment obligations under our indebtedness.

The Loan Agreement imposes restrictions on our operations.

The Loan Agreement imposes operating and financial restrictions on us. These restrictions include, among other things, limitations on our ability to:

•: incur operating expenses in excess of our annual operating budget unless prior approval is obtained;
•: incur additional debt or refinance existing debt;
•: create liens or other encumbrances;
•: make distributions with respect to our, or our subsidiaries', equity (other than distributions for tax obligations) or make other restricted payments;
•: make investments, capital expenditures, loans or other guarantees; and

•: merge or consolidate with another entity.

Risks Related to Our Business

We have a limited operating history.

We have operated the Hotel and Casino since September 2004. Consequently, we cannot assure you that our transformation of the Aladdin into the PH Resort will attract the number and type of Hotel and Casino customers and other visitors we desire or whether we will be able to achieve our objectives to improve the profitability of the property.

We will be subject to the significant business, economic, regulatory and competitive uncertainties and contingencies frequently encountered by new businesses in competitive environments, many of which are beyond our control. Because we have a limited operating history, it may be more difficult for us to prepare for and respond to these types of risks, and the other risks described in this Annual Report on Form 10-K, as compared to a company with an established business. If we are not able to manage these risks successfully, our results of operations could be negatively affected.

The Planet Hollywood brand has not historically been associated with hotels or casinos.

Planet Hollywood is a franchisor of themed restaurants and related retail shops. In the past, the Planet Hollywood brand has not been associated with hotels or casinos. We cannot assure you that customers will be attracted to a Planet Hollywood-themed resort such as the PH Resort. In addition, Planet Hollywood filed for Chapter 11 bankruptcy protection in October 1999 and emerged in May 2000. Planet Hollywood subsequently filed for Chapter 11 bankruptcy protection in October 2001 and emerged in March 2003. We cannot provide assurance that Planet Hollywood's bankruptcy proceedings will not have a negative impact on the general perception of the Planet Hollywood brand or the PH Resort.

We are dependent upon Planet Hollywood's entertainment industry relationships and the efforts and skills of the senior management of OpBiz.

Our ability to maintain our competitive position will be dependent to a large degree on our ability to leverage Planet Hollywood's celebrity and entertainment industry relationships and to hire and retain experienced senior management, including marketing and operating personnel. Whether the PH Resort becomes a venue for entertainment industry events will be highly dependent on Planet Hollywood's entertainment industry relationships and the efforts and skill of our marketing personnel in brand management and their ability to attract celebrities and entertainment industry personalities to the PH Resort. If we are unable to leverage Planet Hollywood's relationships within the entertainment industry or to hire and retain experienced senior management, our business may be significantly impaired.

We may not be able to retain qualified senior management.

We believe that the pool of experienced gaming and other personnel is limited and competition to recruit and retain gaming and other personnel is intense. We cannot assure you that we will be able to retain a sufficient number of qualified senior managers for our planned operations.

Our managers, officers and key employees may not obtain applicable gaming licenses.

Our managers, officers and certain key employees are required to file applications with the Nevada Gaming Authorities and may be required to be approved by the Nevada Gaming Authorities. If the Nevada Gaming Authorities were to find an officer, manager or key employee unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever all relationships with that person. Furthermore, the Nevada Commission may require us to terminate the employment of any

person who refuses to file appropriate applications. Either result could adversely affect our gaming operations.

We will face intense competition from other hotel casino resorts in Las Vegas.

There is intense competition in the gaming industry. Competition in the Las Vegas area has increased over the last several years as the result of significant increases in hotel rooms, casino size and convention, trade show and meeting facilities. Moreover, this growth is presently continuing and is expected to continue.

Resorts located on or near the Las Vegas Strip compete with other Las Vegas Strip hotels and with other hotel casinos in Las Vegas on the basis of overall atmosphere, range of amenities, level of service, price, location, entertainment offered, theme and size. We compete with a large number of other hotels and motels located in and near Las Vegas, as well as other resort destinations. Many of our competitors have established gaming operations and may have greater financial and other resources than we do.

We cannot assure you that declines in the Las Vegas market are over or that hotel casino resorts will continue to be popular. Continued declines in economic conditions or the popularity of hotel casino resorts or the appeal of the features offered by the PH Resort, could impair our financial condition and results of operations. Even after the global economy begins to recover, there may be excess supply in the Las Vegas market. Further, the design and amenities of the PH Resort may not appeal to customers. Customer preferences and trends can change, often without warning, and we may not be able to predict or respond to changes in customer preferences in time to adapt the attractions and amenities offered at the PH Resort to address these new trends.

We face competition from gaming operations outside Las Vegas.

We compete with other hotel casino facilities elsewhere in Nevada and in Atlantic City, riverboat gaming facilities in other states, hotel casino facilities elsewhere in the world, Internet gaming, state lotteries and other forms of gaming. Certain states recently have legalized, and others may legalize, casino gaming in specific areas, and casino-style gaming on Native American tribal lands is growing and could become a significant competitive force. In particular, the expansion of Native American gaming in California could have a negative impact on our results of operations.

Expansion of gaming activities in other areas could significantly harm our business. In particular, the legalization of casino gaming in or near areas from which we intend to attract customers could have a substantial negative effect on our business. In addition, new or renovated casinos in Asia could reduce the number of Asian customers who would otherwise visit Las Vegas.

Continued weakness and further weakening in global economic conditions may adversely affect consumer and corporate spending and tourism trends, resulting in additional deterioration in our business.

Discretionary consumer spending has been adversely affected by the current economic crisis. Worldwide, consumers are traveling less and spending less when they do travel. Likewise, corporate spending on conventions and business development is being significantly curtailed as businesses cut their budgets. Since our business model relies on significant discretionary spending, continuation or deepening of the crisis will adversely affect our operations.

The current conditions in the world's financial and credit markets may adversely affect our profitability.

There was unprecedented deterioration in financial and credit markets worldwide in 2008. There can be no assurance that the decline is over and there can be no assurance that government response

to these conditions will successfully address the fundamental weakness, restore consumer confidence or lead to improvement of or increase liquidity in the markets. Customer demand for the amenities and leisure activities that we offer may continue to decline.

We extend credit to our customers and we may not be able to collect gaming receivables from our credit players.

We conduct our gaming activities on a credit basis as well as a cash basis, which credit is unsecured. Table games players typically are extended more credit than slot players, and high stakes players are typically extended more credit than patrons who tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results attributable to high-end gaming may have a significant positive or negative impact on cash flow and earnings in a particular quarter.

We extend credit to those customers whose level of play and financial resources warrant, in the opinion of management, an extension of credit. For the year ended December 31, 2008, our table games drop was approximately 24% from credit-based guest wagering. These large receivables could have a significant impact on our results of operations if deemed uncollectible.

We are entirely dependent upon OpBiz for all of our cash flow.

We do not currently expect to have material assets or operations other than our investment in OpBiz. OpBiz conducts substantially all of our operations. Consequently, our cash flow depends on the cash flow of OpBiz and the payment of funds to us by OpBiz in the form of loans, distributions or otherwise, which payments are either restricted or prohibited without the consent of OpBiz's lenders. Given that our operations only focus on one property in Las Vegas, we are subject to greater degrees of risk than a gaming company with multiple operating properties. Material risks include:

•: a decrease in gaming and non-gaming activities at the PH Resort;
•: a decline in the number of visitors to Las Vegas;
•: local economic and competitive conditions;
•: an increase in the cost of electrical power as a result of, among other things, power shortages in California or other western states with which Nevada shares a single regional power grid;
•: changes in local and state governmental laws and regulations, including gaming laws and regulations; and
•: natural and other disasters.

Any of the factors outlined above could negatively affect our ability to generate sufficient cash flow to make payments on our indebtedness and to make distributions to our owners.

The gaming industry is highly regulated and we are required to adhere to various regulations and maintain our licenses to continue operations.

The operation of the PH Resort is contingent upon the receipt and maintenance of various regulatory licenses, permits, approvals, registrations, findings of suitability, orders and authorizations. The laws, regulations and ordinances requiring these licenses, permits and other approvals generally relate to the responsibility, financial stability and character of the owners and managers of gaming operations, as well as persons financially interested or involved in gaming operations. The scope of the approvals required to acquire and operate a facility is extensive.

Nevada regulatory authorities have broad powers to request detailed financial and other information, to limit, condition, suspend or revoke a registration, gaming license or related approval

and to approve changes in the operations of the PH Resort. Substantial fines or forfeiture of assets for violations of gaming laws or regulations may be levied. The suspension or revocation of any license which may be granted to us or the levy of substantial fines or forfeiture of assets could significantly harm our business, financial condition and results of operations. Furthermore, compliance costs associated with gaming laws, regulations and licenses are significant. Any change in the laws, regulations or licenses applicable to our business or a violation of any current or future laws or regulations applicable to our business or gaming license could require us to make substantial expenditures or could otherwise negatively affect our gaming operations.

Our employees have joined unions.

A collective bargaining agreement between OpBiz and the culinary union expires on May 31, 2012. We cannot provide assurance that renewal of the collective bargaining agreement will not have a material impact on OpBiz's results of operations or financial position.

Because we own real property, we are subject to environmental regulation.

We may incur costs and expend funds to comply with environmental requirements, such as those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste and the cleanup of properties affected by hazardous substances. Under these and other environmental requirements, OpBiz, as the owner of the property on which the PH Resort will be situated, may be required to investigate and clean up hazardous or toxic substances or chemical releases at that property. As an owner or operator, OpBiz could also be held responsible to a governmental entity or third parties for property damage, personal injury and investigation and cleanup costs incurred by them in connection with any contamination.

These laws typically impose cleanup responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. The liability under those laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of the responsibility. The costs of investigation, remediation or removal of those substances may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use the property.

Energy price increases could adversely affect our costs of operations and our revenues.

We use significant amounts of electricity, natural gas and other forms of energy. While Las Vegas Strip properties have not recently experienced significant energy shortages, substantial increases in the cost of electricity in the western United States would negatively affect our operating results. The extent of the impact is subject to the magnitude and duration of any energy price increase, but this impact could be material. In addition, higher energy and gasoline prices may result in reduced visits to Las Vegas.

Acts of terrorism, as well as other factors affecting discretionary consumer spending, have impacted our industry and may harm our operating results and our ability to insure against certain risks.

The terrorist attacks of September 11, 2001 had an immediate negative impact on travel and leisure expenditures, including lodging, gaming and tourism, and ongoing terrorist and war activities have occasionally had a negative effect on our industry. As a destination whose primary customers arrive by air, Las Vegas is vulnerable to consumer concerns about travel in general, and particularly flying. We cannot predict the extent to which ongoing terrorist and war activities may affect us. These events, the potential for future terrorist attacks, the national and international responses to terrorist attacks and other acts of war or hostility have created many economic and political uncertainties which could adversely affect our business and results of operations. Future acts of terror in the United States or an outbreak of hostilities involving the United States may reduce a willingness on the part of the general public to travel with the result that our operations will suffer.

In addition to fears of war and future acts of terrorism, other factors affecting discretionary consumer spending, including general economic conditions, disposable consumer income, fears of recession and consumer confidence in the economy, may negatively impact our business. Adverse changes in factors affecting discretionary spending could reduce customer demand for the gaming, dining and entertainment activities we will offer, thus imposing practical limits on pricing and harming our operations.

Partly as a consequence of the events of September 11, 2001 and the threat of similar events in the future, premiums for a variety of insurance products have increased sharply, and some types of insurance coverage are no longer available. Although we will endeavor to obtain and maintain insurance covering extraordinary events that could affect our operations, conditions in the marketplace have made it prohibitive for us to maintain insurance against losses and interruptions caused by terrorist acts and acts of war. If any such event were to affect the PH Resort, we would likely suffer a substantial loss.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Substantially all of our assets have been pledged as collateral for our Loan Agreement. The outstanding balance under the Loan Agreement was $860.0 million at December 31, 2008. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Description of Certain Indebtedness".

The Complex occupies a 35-acre site located on the northeast corner of the Strip and Harmon Avenue in Las Vegas, Nevada. We own approximately 21.8 acres, which consists of the PH Resort, the TPA, the Showroom, Hotel, Casino, various restaurants and bars and the central utility plant. Approximately 0.62 acres are leased to the owner and operator of the central utility plant. The Complex is described in greater detail above under Item 1. "Business—The PH Resort and Casino."

ITEM 3. LEGAL PROCEEDINGS

As of December 31, 2008, neither BH/RE nor any of its subsidiaries was a party to any material litigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the fourth quarter of 2008.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

There is no established public trading market for BH/RE's membership interests and we do not presently expect that a trading market in BH/RE's membership interests will develop. There are no outstanding options or warrants to purchase, or securities convertible into, any of BH/RE's membership interests.

As of December 31, 2008, there were two holders of record of BH/RE's voting membership interests and three holders of record of BH/RE's equity membership interests.

BH/RE does not pay, and does not anticipate paying, any distributions to the holders of its membership interests, other than distributions in respect of income taxes payable by such members resulting from their ownership of membership interests.

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data presented below is qualified in its entirety by, and should be read in conjunction with, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements, the notes thereto and other financial and statistical information included elsewhere in this Annual Report on Form 10-K.

	For the years ended December 31,

																Predecessor Information
	2008			2007			2006			2005			2004(a)			2004(b)
	(in thousands)
Operating Results:
Net revenues	$	277,172		$	257,595		$	267,112		$	306,258		$	96,141		$	190,889
Operating costs and expenses, excluding the following items		264,532			273,983			256,259			284,602			85,465			146,791
Pre-opening expenses(c)		—			—			—			—			1,684			—
Impairment of long-lived assets(e)		—			—			—			—			—			1,732
Loss on disposition of assets(d)		—			—			—			1,787			—			—

Operating income (loss)		12,640			(16,388	)		10,853			19,869			(8,992	)		42,366
Other income (expense), net		(57,692	)		(58,614	)		(106,529	)		(49,730	)		(15,648	)		(2,541	)

Income (loss) before income taxes, cumulative effect of change in accounting principal and reorganization items		(45,052	)		(75,002	)		(95,676	)		(29,861	)		(6,656	)		39,825
Income tax provision		—			—			—			(15	)		—			—
Reorganization items		—			—			—			—			—			(6,647	)

Net income (loss)	$	(45,052	)	$	(75,002	)	$	(95,676	)	$	(29,876	)	$	(6,656	)	$	33,178

Balance Sheet Data:
Total assets	$	689,050		$	767,068		$	737,194		$	654,495		$	663,383		$	548,634
Long-term debt		885,561			887,545			788,985			604,877			584,814			33,958
Member's equity (deficit)		(219,293	)		(186,941	)		(111,939	)		(16,263	)		13,613			(20,194	)

(a): Includes the operations of BH/RE and its subsidiaries for the twelve months ended December 31, 2004, which includes the operations of the Aladdin for four months beginning on September 1, 2004.
(b): Includes the operations of the Aladdin by Aladdin Gaming for the eight months ended August 31, 2004.
(c): Pre-opening expenses for the year ended December 31, 2004 were approximately $1.7 million, which included costs incurred prior to the acquisition of the Aladdin by BH/RE on September 1, 2004. Pre-opening expenses for the year ended December 31, 2003 were approximately $1.3 million.
(d): On August 31, 2004, Aladdin Gaming recorded an impairment loss of approximately $1.7 million based on the purchase price of assets sold to OpBiz on September 1, 2004. On August 29, 2003, the Bankruptcy Court confirmed Aladdin Gaming's plan of reorganization and approved the Purchase Agreement with OpBiz. As a result, Aladdin Gaming classified substantially all of its assets as "assets held for sale" and performed an impairment review in accordance with SFAS 144. An impairment loss of approximately $29.5 million was recognized based on a discounted cash flow

analysis and allocated to the individual assets based on their relative fair values for the year ended December 31, 2003.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview of Management's Discussion and Analysis of Financial Condition and Results of Operations

Set forth below is a discussion of the financial condition and results of operations of BH/RE and our subsidiaries for the periods covered in the report. The discussion of operations herein focuses on events and the revenues and expenses during the year ended December 31, 2008 as compared to the year ended December 31, 2007, and the year ended December 31, 2007 as compared to the year ended December 31, 2006.

The following discussion and analysis should be read in conjunction with "Item 6. Selected Financial Data" and the financial statements and the notes thereto included in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

Significant Accounting Policies and Estimates

Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles. Certain policies, including the determination of bad debt reserves, the estimated useful lives assigned to assets, asset impairment, insurance reserves and the calculation of liabilities, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from our estimates. To provide an understanding of the methodology we apply, our significant accounting policies and basis of presentation are discussed below, as well as where appropriate in the notes to the consolidated financial statements.

Property and Equipment

Property and equipment are stated at cost. Recurring repairs and maintenance costs, including items that are replaced routinely in the casino, hotel and food and beverage departments which do not meet the Company's capitalization policy, are expensed as incurred. The Company has established its capital expense policy to be reflective of its individual ongoing repairs and maintenance programs. Gains or losses on dispositions of property and equipment are included in the determination of income. Property and equipment are generally depreciated over the following estimated useful lives on a straight-line basis:


Buildings		40 years
Building improvements		15 to 40 years
Furniture, fixtures and equipment		3 to 7 years

Property and equipment and other long-lived assets are evaluated for impairment in accordance with the Financial Accounting Standards Board's ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." For assets to be disposed of, the asset to be sold is recognized at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is estimated based on comparable asset sales, solicited offers or a discounted cash flow model.

Property and equipment are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the estimated future cash flows of the asset, on an undiscounted basis, are compared to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model.

Derivative Instruments and Hedging Activities

Pursuant to the refinancing of the Securities Purchase Agreement and the terms of the Restructuring Agreement, the Restructuring Parties agreed to amend the warrants issued by MezzCo to purchase 17.5% of the fully diluted equity in MezzCo. The warrants contain a net cash settlement, and therefore are accounted for in accordance with Emerging Issues Task Force ("EITF") 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock". Both SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" and EITF 00-19 require that the warrants be recognized as liabilities, with changes in fair value affecting net income. See "Note 7. Long-Term Debt."

The terms of the Loan Agreement required the Company to enter into an interest rate cap agreement, which expires on December 9, 2009, to manage interest rate risk. The Company did not apply cash flow hedge accounting to this instrument. Although this derivative was not afforded cash flow hedge accounting, the Company retained the instrument as protection against the interest rate risk associated with its long-term borrowings. The Company accounts for its derivative activity in accordance with SFAS No. 133 and accordingly, recognizes all derivatives on the balance sheet at fair value with any in change in fair value being recorded in interest income or expense in the accompanying consolidated statements of operations.

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 does not establish requirements for any new fair value measurements, but it does apply to existing accounting pronouncements in which fair value measurements are already required. SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. The Company has adopted the provisions of SFAS 157 as of January 1, 2008, for financial instruments. Although the adoption of SFAS 157 has not materially impacted its financial condition, results of operations, or cash flow, the Company is now required to provide additional disclosures as part of its financial statements.

SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of December 31, 2008, the Company held certain items that are required to be measured at fair value on a recurring basis. These included an interest rate cap contract and certain put warrants to purchase 17.5% of fully diluted equity interest in the Company. The fair value of interest rate cap contract is determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized the cap contract as Level 2. The Company determines the value of the put warrants using a discounted cash flow model and weekly asset volatilities of comparable companies over the past three years. Therefore, the Company has categorized these put warrants as Level 2. The fair value of the rate cap and the put warrants at December 31, 2008 were approximately $26,000 and $1,537,000, respectively.

Revenues and Promotional Allowances

Casino revenues are recognized as the net win from gaming activities, which is the difference between gaming wins and losses. All other revenues are recognized as the service is provided. Revenues include the retail value of food, beverage, rooms, entertainment, and merchandise provided on a complimentary basis to customers. Such complimentary amounts are then deducted from revenues as promotional allowances on our consolidated statements of operations. The estimated departmental costs of providing such promotional allowances are included in casino costs and expenses.

Hotel and Food and Beverage Revenues

Hotel revenue recognition criteria are generally met at the time of occupancy. Food and beverage revenue recognition criteria are generally met at the time of service. Deposits for future hotel occupancy or food and beverage services are recorded as deferred income until revenue recognition criteria are met. Cancellation fees for hotel and food and beverage services are recognized upon cancellation by the customer as defined by a written contract entered into with the customer.

Players' Club Program

Allowance for Doubtful Accounts

Our receivables balances relate primarily to our hotel and casino operations. We reserve an estimated amount for receivables that may not be collected. We estimate the allowance for doubtful accounts by applying standard reserve percentages to aged account balances under a specific dollar amount and specifically analyzing the collectability of each account with a balance over the specified dollar amount, based on the age of the account, the customers' financial condition, collection history and any other known information.

We maintain strict controls over the issuance of markers and aggressively pursue collection from those customers who fail to pay their markers timely. Markers are generally legally enforceable instruments in the United States and at December 31, 2008 and 2007, all of our casino receivables were owed by customers in the United States.

The following table summarizes our receivable balances (in thousands):

		December 31,

		2008			2007
Casino		$	13,584		$	18,322
Hotel			5,999			6,811
Land sale receivable			19,918			25,373
Other			4,368			3,248

			43,869			53,754
Long-term portion of land sale receivable			(16,918	)		(19,728	)
Allowance for doubtful accounts			(8,234	)		(7,106	)

	Receivables, net	$	18,717		$	26,920

Self-Insurance Accruals

We are self-insured, up to certain limits, for costs associated with employee medical coverage. We accrue for the estimated expense of known claims, as well as estimates for claims incurred but not yet reported.

Income Taxes

The consolidated financial statements include the operations of BH/RE and its majority-owned subsidiaries: EquityCo, MezzCo, OpBiz, PH Mezz II, PH Mezz I, PH Fee Owner and TSP Owner. BH/RE and EquityCo are limited liability companies and are taxed as partnerships for federal income tax purposes. However, MezzCo has elected to be taxed as a corporation for federal income tax purposes. OpBiz and PH Mezz II, wholly-owned subsidiaries of MezzCo, will be treated as divisions of MezzCo for federal income tax purposes, and accordingly, will also be subject to federal income taxes. Additionally, PH Mezz I, a wholly-owned subsidiary of PH Mezz II, PH Fee Owner, a wholly owned subsidiary of PH Mezz I and TSP Owner, a wholly owned subsidiary of PH Fee Owner will also be subject to federal income taxes.

MezzCo, OpBiz, PH Mezz II, PH Mezz I, PH Fee Owner and TSP Owner account for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes". SFAS 109 requires the recognition of deferred income tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. The standard requires recognition of a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.

Membership Interests

As of December 31, 2008, our membership interests had not been unitized and our members do not presently intend to unitize these membership interests. Accordingly, we have excluded earnings per membership unit data required pursuant to SFAS No. 128, "Earnings Per Share," because we believe that such disclosures would not be meaningful to the financial statement presentation.

The Company has entered into various employment agreements, as amended, with several executives. The employment agreements have initial terms of two to five years. The employment agreements provide that the executives will receive a base salary with either mandatory increases or annual adjustments and annual bonus payments. In addition, depending on the terms of the employment agreements, these executives are entitled to options to purchase between 0.2% and 3% of the equity of MezzCo. The options were granted with an exercise price equal to or greater than the fair value at the date of grant.

Sheraton Hotel Management Contract

OpBiz and Sheraton have entered into a management contract pursuant to which Sheraton provides hotel management services to the Hotel, assists OpBiz in the management, operation and promotion of the Hotel and permits OpBiz to use the Sheraton brand and trademarks in the promotion of the Hotel. OpBiz pays Sheraton a monthly fee of 4% of gross Hotel revenue and certain food and beverage outlet revenues and 2% of rental income from third-party leases in the Hotel. The management contract has a 20-year term that commenced on the completion of the Aladdin acquisition and is subject to certain termination provisions by either OpBiz or Sheraton. Sheraton is a wholly owned subsidiary of Starwood, which has an 11.39% equity interest in EquityCo and has the right to appoint two members to the EquityCo board of managers.

Recently Issued Accounting Standards

SFAS No. 141

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations." SFAS No. 141 (revised) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and noncontrolling interest in the acquiree and the goodwill acquired. The revision is intended to simplify existing guidance and converge rulemaking under U.S. generally accepted accounting principles with international accounting rules. This statement applies prospectively to business combinations where the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of SFAS No. 141 (revised) is not expected to have a material impact on the Company's financial position, results of operations or cash flows.

SFAS No. 160

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51." This statement establishes accounting and reporting standards for ownership interest in subsidiaries held by parties other than the parent and for the deconsolidation of a subsidiary. It also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 changes the way the consolidated statement of operations is presented by requiring consolidated net income to be reported at amounts that include the amount attributable to both the parent and the noncontrolling interests. The statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interest of the parent and those of the noncontrolling owners. This statement is effective

for fiscal years beginning on or after December 15, 2008. The adoption of SFAS No. 160 is not expected to have a material impact on the Company's financial position, results of operations or cash flows.

SFAS No. 161

In March 2008, the FASB issued SFAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133." SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. This statement is effective for fiscal years beginning after November 15, 2008. SFAS No. 161 is not expected to have a material impact on the Company's financial position, results of operations or cash flows.

SFAS No. 162

In May 2008, FASB issued Statement No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP (the GAAP hierarchy). SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The adoption of SFAS 162 is not expected to have a material impact on the Company's financial position, results of operations or cash flows.

Results of Operations

Current Economic Conditions and Comparability of Results

The outlook for the leisure and gaming industries remains highly uncertain due to a number of factors affecting consumers, including a slowdown in global economies, reduced consumer spending, and restricted credit markets. Reduced casino volumes, a reduced demand for hotel rooms and a highly competitive market driving hotel rates down have all contributed to declines in the overall Las Vegas market. This slow down was particularly significant in the fourth quarter of 2008 and has continued into the first quarter of 2009. Although operating results for the PH Resort for the year ended December 31, 2008, improved in all divisions when compared to the operating results for the year ended December 31, 2007 this was mainly due to the completion of a substantial renovation project in the last quarter of 2007 that negatively impacted 2007 performance. 2008 was the PH Resort's first full year of operation as a rebranded property. We believe that fourth quarter 2008 operating results were negatively impacted by the current market conditions and that we will continue to experience lower than historical hotel occupancy, room rates and casino volumes in 2009. As a result, we have increasingly focused on efficiency initiatives to save expenses and improve performance. We are continually reviewing the costs and marketing opportunities to ensure maximum operating performance in the face of the current economic conditions.

The following table highlights the results of operations as compared to the prior years.

		Year Ended December 31,

		2008		Percent Change			2007			Percent Change			2006
		(In thousands)
Net revenues		$	277,172		7.6	%	$	257,595			(3.6	)%	$	267,112
Operating expenses:
	Casino		75,341		4.8	%		71,887			5.9	%		67,893
	Hotel		40,737		(1.9	)%		41,525			2.2	%		40,651
	Food and beverage		37,488		1.6	%		36,893			(20.0	)%		46,145
	Other		1,393		13.3	%		1,229			(72.3	)%		4,442
	Selling, general and administrative		73,323		(16.6	)%		87,870			(17.8	)%		74,619
	Depreciation and amortization		36,250		4.8	%		34,579			53.6	%		22,509

Operating income (loss)		$	12,640		(177.1	)%	$	(16,388	)		(251.0	)%	$	10,853

Net revenues for the year ended December 31, 2008, increased over those of the year ended December 31, 2007. This increase is mainly the result of the property being under renovation until late 2007. Revenues and operating income have increased in all divisions as a result of the completion of the renovation project.

Net revenues for the year ended December 31, 2007, declined over those of the year ended December 31, 2006. The decline is mainly the result of declines in hotel revenue related to the renovation and food and beverage revenues which declined with the transition of outlets to third party operators.

The following table highlights the various sources of our revenues and expenses as compared to the prior years.

		Year Ended December 31,

		2008			Percent Change			2007			Percent Change			2006
		(In thousands)
Casino revenues		$	122,207			7.0	%	$	114,245			9.0	%	$	104,841
Casino expenses			75,341			4.8	%		71,887			5.9	%		67,893
	Margin		38.3	%					37.1	%					35.2	%
Hotel revenues		$	111,534			4.5	%	$	106,750			(3.9	)%	$	111,040
Hotel expenses			40,737			(1.9	)%		41,525			2.2	%		40,651
	Margin		63.5	%					61.1	%					63.4	%
Food and beverage revenues		$	53,412			9.2	%	$	48,903			(18.1	)%	$	59,716
Food and beverage expenses			37,488			1.6	%		36,893			(20.0	)%		46,145
	Margin		29.8	%					24.6	%					22.7	%
Other revenues		$	16,445			75.7	%	$	9,358			(26.5	)%	$	12,733
Other expenses			1,393			13.3	%		1,229			(72.3	)%		4,442
Selling, general and administrative expenses		$	73,323			(16.6	)%	$	87,870			17.8	%	$	74,619
	Percent of net revenues		26.5	%					34.1	%					27.9	%

Casino

Casino revenue is derived primarily from patrons wagering on slot machines, table games and other gaming activities. Table games generally include Blackjack or Twenty One, Craps, Baccarat and Roulette. Other gaming activities include the Race and Sports Books, Poker and Keno. Casino revenue is defined as the win from gaming activities, computed as the difference between gaming wins and losses.

Casino revenues vary from time-to-time due to general economic conditions, competition, popularity of entertainment offerings, table game hold, slot machine hold and occupancy percentages in the hotel. Casino revenues also vary depending upon the amount of gaming activity, as well as variations in the odds for different games of chance. Casino revenue is recognized at the end of each gaming day.

2008 compared with 2007

Casino revenues increased 7.0% to $122.2 million for the year ended December 31, 2008 as compared to $114.2 million for the year ended December 31, 2007. Table games revenue for the year ended December 31, 2008, decreased approximately $0.5 million or 1.1% as compared to the year ended December 31, 2007. The decrease in table revenue was the result of a decrease in hold percentage. Table drop for the year ended December 31, 2008 was up 23.5% when compared to the year ended December 31, 2007 but overall win percentage for the year ended December 31, 2008 was 16.6% compared to 20.7% for the year ended December 31, 2007. Slot revenue for the year ended December 31, 2008 increased by approximately $8.1 million or 10.9% as compared to the year ended December 31, 2007. The number of slot units on the floor increased 12.9% with a resulting increase in slot handle of 7.9%. Combined revenues from other gaming activities increased by $1.1 million or 32.4% for the year ended December 31, 2008 as compared to the year ended December 31, 2007. The increases in casino revenues are attributed to the completion of the renovation project and the improvement of entryways from Las Vegas Boulevard and the mall. The gaming floor is now fully operational with a full compliment of amenities.

Casino expenses increased 4.8% to $75.3 million for the year ended December 31, 2008 as compared to $71.9 million for the year ended December 31, 2007. The Casino profit margin increased 1.2 percentage points over the same twelve-month periods. Expenses increased commensurate with the revenue increases in the casino while operating margins improved over prior year.

2007 compared with 2006

Casino revenues increased 9.0% to $114.2 million for the year ended December 31, 2007 as compared to $104.8 million for the year ended December 31, 2006. Table games revenue for the year ended December 31, 2007, increased approximately $9.2 million or 23.9% as compared to the year ended December 31, 2006. The number of operational table units and drop increased as the renovation was completed and areas of the Casino were opened resulting in an overall increase in total drop of 6.6% for the year ended December 31, 2007 when compared to the year ended December 31, 2006. Overall win percentage of 20.7% for the year ended December 31, 2007 was up compared to 17.8% for the year ended December 31, 2006. Slot revenue for the year ended December 31, 2007 decreased by approximately $1.1 million or 1.5% as compared to the year ended December 31, 2006. As the renovation was completed and areas of the Casino were opened, the number of slot machines on the floor was increased. Overall, total slot handle for the year ended December 31, 2007 declined 0.6% when compared to the year ended December 31, 2006. Combined revenues from other gaming activities decreased by $0.2 million or 5.7% for the year ended December 31, 2007 as compared to the year ended December 31, 2006 primarily due to business level declines related to the renovation. The race and sports book and poker were both temporarily relocated due to the renovation.

Casino expenses increased 5.9% to $71.9 million for the year ended December 31, 2007 as compared to $67.9 million for the year ended December 31, 2006. The Casino profit margin increased 1.9 percentage points over the same twelve-month periods. As the renovation was completed and operating conditions returned to normal, operating margins stabilized.

Hotel

Hotel revenue is derived from rooms and suites rented to guests. "Average daily rate" is an industry specific term used to define the average amount of revenue per occupied room per day. "Occupancy percentage" defines the total percentage of rooms occupied and is computed by dividing the number of rooms occupied by the total number of rooms available. Hotel revenue is recognized at the time the room is provided to the guest.

2008 compared with 2007

Hotel revenues increased 4.5% to $111.5 million for the year ended December 31, 2008 as compared to $106.8 million for the year ended December 31, 2007. Hotel occupancy percentage was 93.4% for the year ended December 31, 2008, as compared to 96.4% for the year ended December 31, 2007. Average daily room rates increased to $133 for the year ended December 31, 2008, as compared to $128 for the year ended December 31, 2007. Approximately 1,076 rooms were remodeled in 2008 which drove the reduced occupancy levels. Average daily rate increases in the first three quarters of the year offset the occupancy declines contributing to the revenue increase year over year despite challenging market conditions in the fourth quarter of 2008.

Hotel expenses decreased 1.9% to $40.7 million for the year ended December 31, 2008 as compared to $41.5 million for the year ended December 31, 2007. The Hotel profit margin increased 2.4 percentage points over the same twelve-month period. The expense savings and profit margin increases were the direct result of savings initiatives put in place in response to the economic downturn and market declines.

2007 compared with 2006

Hotel revenues decreased 3.9% to $106.8 million for the year ended December 31, 2007 as compared to $111.0 million for the year ended December 31, 2006. Hotel occupancy for the year ended December 31, 2007 was 96.4% of available rooms. Average daily room rates increased 4.7% to $128 for the year ended December 31, 2007 as compared to $122 for the year ended December 31, 2006. The number of available rooms was reduced due to renovation of approximately 1,300 rooms during 2007 resulting in the decline in overall revenue.

Hotel expenses increased 2.2% to $41.6 million for the year ended December 31, 2007 as compared to $40.7 million for the year ended December 31, 2006. The Hotel profit margin decreased 2.3 percentage points over the same twelve-month period. Although expenses were controlled during the renovation period, certain fixed expenses and incremental expenses related to concessions for guest satisfaction during the renovation period could not be eliminated resulting in temporary declines in profit margin.

Food and Beverage

Food and beverage revenues are derived from food and beverage sales in the restaurants, bars, room service, banquets and entertainment outlets. Food and beverage revenue is recognized at the time the food and/or beverage are provided to the guest.

2008 compared with 2007

Combined food and beverage revenues increased 9.2% to $53.4 million for the year ended December 31, 2008 as compared to $48.9 million for the year ended December 31, 2007. Food revenues decreased $0.9 million or 2.3% for the twelve months ended December 31, 2008 when compared to the twelve months ended December 31, 2007 mainly due to the food outlet conversion to third party leased operations. Beverage revenues increased $3.8 million or 25.2% over the same twelve-month period. The increase in beverage revenue was due to the completion of the renovation project and all beverage outlets being fully operational in 2008.

Combined food and beverage expenses increased 1.6% to $37.5 million for the year ended December 31, 2008 as compared to $36.9 million for the year ended December 31, 2007. Food and beverage profit margin increased 5.2% for the twelve months ended December 31, 2008 as compared to the twelve months ended December 31, 2007. The expense increase is commensurate with the revenue increases in the beverage division and the overall operating margin increase is consistent with the transition from in-house food operations to leased outlets operated by third parties.

2007 compared with 2006

Combined food and beverage revenues decreased 18.1% to $48.9 million for the year ended December 31, 2007 as compared to $59.7 million for the year ended December 31, 2006. Food revenues decreased $12.5 million or 24.0% over the previous twelve-month period as a result of the transition to leased outlets as well as a decrease in the number of hotel guests due to the room renovations. Beverage revenues increased $1.7 million or 12.6% when comparing the year ended December 31, 2007 to December 31, 2006 due to the opening of new beverage outlets including the race and sports book bar and the new center bar as the renovation to these areas was completed. Casino bars were temporarily closed and relocated throughout the course of the renovation in 2006.

Combined food and beverage expenses decreased 20.0% to $36.9 million for the year ended December 31, 2007 as compared to $46.1 million for the year ended December 31, 2006. Food and beverage profit margin increased 1.9% over the same twelve-month period. The decrease in operating

expenses and increase in profit margin were primarily the result of the transition to leased outlets during the year ended 2007 which resulted in significant labor and other expense elimination.

Other

Other revenue includes tenant income, telephone and other miscellaneous income and is recognized at the time the goods or services are provided to the guest. Tenant income also includes a portion of the marketing fees received from Westgate based on sales of timeshare units.

2008 compared with 2007

Other revenues increased 75.7% to $16.4 million for the year ended December 31, 2008 as compared to $9.4 million for the year ended December 31, 2007. The increase in other revenue is primarily due to the increase in the amount received from Westgate based on sales of timeshare units. Westgate pays OpBiz 9% of total timeshare sales on a monthly basis with 50% of the proceeds recorded as tenant income and the remaining 50% recorded against land receivable.

Other expenses increased 13.3% to $1.4 million for the year ended December 31, 2008 as compared to $1.2 million for the year ended December 31, 2007.

2007 compared with 2006

Other revenues decreased $3.3 million or 26.5% to $9.4 million for the year ended December 31, 2007 as compared to $12.7 million for the year ended December 31, 2006. The decrease in other revenues was primarily due to loss of entertainment revenue from the TPA which has been operating under a third party lease since August 2006. The loss of entertainment revenue accounted for $5.4 million of the other revenue decline and has been partially offset by an increase in tenant income which is primarily driven by an increase in the amount received from Westgate based on sales of timeshare units. Westgate pays OpBiz 9% of total timeshare sales on a monthly basis with 50% of the proceeds recorded as tenant income and the remaining 50% recorded against the land receivable.

Other expenses decreased 72.3% to $1.2 million for the year ended December 31, 2007 as compared to $4.4 million for the year ended December 31, 2006. The decrease in other expenses was commensurate with the decrease in other revenues.

Selling, General and Administrative ("SG&A")

SG&A expenses decreased 16.6% to $73.3 million for the year ended December 31, 2008 as compared to $87.9 million for the year ended December 31, 2007. SG&A expenses as a percentage of net revenues decreased 7.6% in comparing the same twelve-month periods. The reduction in SG&A expenses is the result of savings initiatives put in place throughout the year in reaction to the economic downturn. 2007 SG&A expenses were also unusually high due to the marketing expenses related to the grand re-opening of the property in November 2007.

SG&A expenses increased 17.8% to $87.9 million for the year ended December 31, 2007 as compared to $74.6 million for the year ended December 31, 2006. SG&A expenses as a percentage of net revenues increased 6.2% in comparing the same twelve-month periods. The increase in SG&A expenses for the year ended December 31, 2007 were the result of marketing expenses incurred related to the grand re-opening of the property once renovations were complete.

Depreciation and Amortization

Depreciation and amortization expense for the year ended December 31, 2008 was approximately $36.3 million compared to $34.6 million for year ended December 31, 2007. The increase in

depreciation expense is a direct result of additional assets placed in service once the renovation was complete.

Depreciation and amortization expense for the year ended December 31, 2007 was approximately $34.6 million compared to $22.5 million for year ended December 31, 2006. The increase in depreciation and amortization expense was directly related to the assets that were placed in service as the renovation was completed.

Net Interest Expense

Net interest expense decreased to $68.1 million for the year ended December 31, 2008 as compared to $71.9 million for the year ended December 31, 2007. The decrease in interest expense is directly related to the reduction in the interest rates.

Net interest expense increased to $71.9 million for the year ended December 31, 2007 as compared to $61.7 million for the year ended December 31, 2006. Interest expense increased as the future funding available under the Loan was drawn.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Description of Certain Indebtedness" below for a detailed discussion of the Company's debt and related interest rates.

Loss on Early Extinguishment of Debt

For the year ended December 31, 2006, the Company recorded a loss on early extinguishment of debt of $60.2 million associated with the repayment of the debt outstanding under the Credit Agreement once the refinance was complete. This loss was comprised of the unamortized balance of the original issue discount recorded in connection with the Credit Agreement of $20.6 million, an exit fee payable to the lenders under the Credit Agreement of $3.7 million, a call premium on the Notes of $26.8 million and the write-off of previously deferred debt issuance costs and warrant amortization of $9.1 million.

Liquidity and Capital Resources

During the year ended December 31, 2008, the PH Resort utilized cash flows from operating activities of approximately $7.7 million and had a balance of $23.9 million in cash and cash equivalents as of December 31, 2008. We also had current restricted cash and cash equivalents of approximately $29.4 million and long-term restricted cash and cash equivalents of approximately $11.3 million at December 31, 2008. The current restricted cash and cash equivalents are primarily reserve accounts that have been established under the Loan Agreement to guarantee payment of property taxes, insurance and furniture, fixtures and equipment replacement. Current restricted cash also includes the balance in the cash management account. Under the terms of the Loan Agreement, all cash receipts are deposited into a cash management account under Lender control which is used to fund reserves and operating expenses. The long-term cash and cash equivalents include funds designated for the remaining payments associated with the renovation project and the interest reserve account balance which will be released once certain debt service coverage ratios are achieved. See "Description of Certain Indebtedness" below.

Our primary cash requirements for 2009 are expected to include (i) approximately $9.2 million for maintenance capital expenditures or replacement furniture, fixtures and equipment and (ii) up to approximately $34.9 million in interest payments on our debt.

The challenging economic conditions in the Las Vegas market led us to request a working capital contribution to OpBiz for the liquidity needs of the PH Resort during the year ended December 31, 2008 of $14.5 million. EquityCo requested that its members make the additional capital contribution

(the "Capital Contribution") on a pro rata basis in accordance with their relative ownership interests in EquityCo. Prior to the Capital Contribution, BH/RE owned 85% of EquityCo and Starwood owned the remaining 15%. Starwood, however, declined to contribute its portion of the Capital Contribution. As a result, the principals of BH/RE orally agreed to contribute the entire Capital Contribution. Each of the equity owners of BH/RE (BHCH, which holds a combined 59.25% equity membership interest, and OCS, which holds a 40.75% equity membership interest), contributed their proportionate share of the Capital Contribution to BH/RE, BH/RE then contributed the capital to EquityCo, which in turn contributed the capital to MezzCo, which in turn contributed the capital to OpBiz. BHCH has contributed $7.3 million and OCS has contributed $5.4 million of the Capital Contribution. The Capital Contributions reduced Starwood's ownership interest in EquityCo from 15.00% to 11.39% and increased BH/RE's ownership interest in EquityCo to 88.61% from 85.00%. The Capital Contribution was originally estimated at $14.5 million based on the projected operating results and estimated LIBOR (used to calculate the interest payment) for each month in the fourth quarter 2008. However, the actual Capital Contribution for the year ended December 31, 2008 was $12.7 million based on actual performance and interest due under the Loan. Therefore, there are no further amounts due for the Capital Contribution.

We believe that cash generated from operations and cash held in reserve by the lenders under the Loan Agreement will be adequate to meet the anticipated working capital, capital expenditure, renovation and debt service obligations of OpBiz for at least the next twelve months of operation.

There can be no assurance that we have accurately estimated our liquidity needs, or that we will not experience unforeseen events that may materially increase our need for liquidity to fund our operations or capital expenditure programs or decrease the amount of cash generated from our operations.

Off Balance Sheet Arrangements

As of December 31, 2008, we did not have any off balance sheet arrangements. We have not entered into any transactions with special purposes entities, nor have we engaged in any derivative transactions other than the warrants attached to the Mezzanine Financing and the interest rate cap agreement described above (see "Critical Accounting Policies and Estimates—Derivative Instruments and Hedging Activities").

Commitments and Contractual Obligations

The following table summarizes our scheduled commitments and contractual obligations as of December 31, 2008:

		2009		2010		2011		2012		2013		Thereafter

		(In thousands)
Long-term debt(a)		$	2,001	$	862,243	$	2,515	$	2,819	$	3,162	$	14,822
Sheraton hotel management contract(b)			10,694		11,015		11,345		11,686		12,036		175,946
Planet Hollywood licensing agreement(c)			3,299		3,398		3,500		3,605		3,714		71,140
Energy service operating charges			1,140		1,140		1,140		1,140		1,140		7,980
Operating leases(d)			468		422		187		—		—		—
Employment agreements			2,861		2,304		830		19		—		—
Common Parking Area Use agreement(e)			6,593		6,818		6,844		6,871		6,898		910,825

	Total	$	27,056	$	887,340	$	26,361	$	26,140	$	26,950	$	1,180,713

(a): See Note 7 to the Consolidated Financial Statements in this Annual Report on Form 10-K.
(b): We pay management fees to Sheraton under the hotel management contract. These management fees are generally based on various percentages of our non-gaming revenues. See Note 9 to the Consolidated Financial Statements in this Annual Report on Form 10-K. We also pay Sheraton a centralized service fee, a portion of which is fixed, and other de minimis charges which are included in the table above. Amounts are based on internal projections made by management.
(c): Fees under the Planet Hollywood licensing agreement generally commence when we begin operating as the PH Resort and are based on a percentage of our non-gaming revenues. See "Item 1. Business—Material Agreements—Planet Hollywood Licensing Agreement." Amounts are based on internal projections made by management.
(d): Consists of leases for certain office and casino equipment.
(e): Includes amounts paid for parking charges, as well as common area maintenance charges, which are estimates made by management based on current year expenses. The base fee is subject to a maximum 5% increase every five years.

Description of Certain Indebtedness

Loan Agreement

On November 30, 2006, OpBiz and PH Fee Owner (collectively the "Borrower") entered into the Loan Agreement (the "Loan Agreement") with Column Financial, Inc. (the "Lender") for a mortgage loan in the principal amount of up to $820 million. The Loan Agreement provided for an initial disbursement in the amount of $759.7 million and a future funding facility in the amount of up to $60.3 million. On July 17, 2007, the Borrower and the Lender entered into an amendment (the "Amendment") to the Loan Agreement. The Amendment provided for the immediate funding to Borrower of the balance of future funding that was available under the Loan Agreement and established an additional future funding facility in the amount of up to $40 million ("Future Funding Tranche B"). Future Funding Tranche B has the same terms as the Loan Agreement for maturity and extension. The Loan Agreement, as amended by the Amendment, is referred to as the Loan. The Loan is secured by a deed of trust on the PH Resort and a pledge, subject to approval by the Nevada gaming authorities, by MezzCo of its membership interest in OpBiz (as described below).

The initial maturity date of the Loan was December 9, 2008 with three one year extension options available, subject to payment of a fee (applicable to the second and third extensions only) and the Borrower's compliance with the requirements for an extension outlined in the Loan Agreement. The Borrower exercised the first available extension option thereby extending the maturity date to December 9, 2009. Since the Company intends to exercise the remaining available extension options, the Loan is classified as a non-current liability in the accompanying financial statements. Interest on the Loan is payable monthly and accrues at the 30 day LIBOR rate (1.195% for the December 31, 2008 interest payment) plus 3.25% with a .25% ticking fee on available but un-advanced future funding. Interest on Future Funding Tranche B is payable monthly and accrues at the 30 day LIBOR rate plus 7.50% with a 1.50% ticking fee on available but un-advanced funds. The Loan does not require amortization during the initial term or, provided certain EBITDA thresholds are met, during the extension periods. The Loan requires that the Borrower establish and maintain certain reserves including a reserve for completion of the renovation project, a reserve for projected interest shortfalls, a reserve for payment of property taxes and insurance and a reserve for on-going furniture, fixture and equipment purchases or property improvements. The Loan restricts the Borrower's ability to spend excess cash flow until certain debt service coverage ratios are met.

Using the proceeds from the Loan, all amounts outstanding under the Credit Agreement, dated August 31, 2004, among OpBiz, the lenders named therein and The Bank of New York, Asset Solution Division were paid in full. Pursuant to the terms of the Credit Agreement, upon repayment of all amounts due, the warrant to purchase 2.5% of the equity in EquityCo issued to the Lenders at the closing of the Credit Agreement became exercisable. The Company compensated the holders of all unexercised warrants in accordance with the terms of a letter agreement between the parties and the warrants were canceled.

In connection with the Loan, the Lender required that Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd. and Bay Harbour Master Ltd., which are affiliates of Bay Harbour Management, execute and deliver a certain Guaranty (as described below). In exchange for Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd. and Bay Harbour Master Ltd. (the "Guarantors") executing the Guaranty, OpBiz and PH Fee Owner agreed to pay to Trophy Hunter Investments, Ltd. and Bay Harbour Master Ltd. a fee equal to $1,500,000 per year. The fee is accrued and only payable once OpBiz hits certain debt service coverage ratios defined in the Loan Agreement.

substantially the same as that delivered by the Guarantors, however the liability of each of them was limited to (i) liability arising from events, acts or circumstances actually committed or brought about by willful acts by him and (ii) the extent of any benefit received by him as a result of the acts giving rise to the liability under the Guaranty.

In addition, in connection with the Loan Agreement, we effected a refinancing of the Securities Purchase Agreement, dated August 9, 2004, among MezzCo and the Investors, pursuant to which MezzCo issued to the Investors (i) 16% senior subordinated secured Notes in the original aggregate principal amount of $87 million, and (ii) Warrants for the purchase (subject to certain adjustments as provided for therein) of membership interests of MezzCo, representing 17.5% of its fully diluted equity. Loan proceeds were used to redeem in full the Notes.

In connection with the refinancing of the Securities Purchase Agreement and redemption of the Notes, the Restructuring Parties entered into the Restructuring Agreement, pursuant to which the Restructuring Parties terminated in full the Securities Purchase Agreement, the Subordination Agreement, dated as of August 31, 2004, among MezzCo, OpBiz, the Senior Agent and the Investors, the Pledge Agreement, dated August 9, 2006, among MezzCo and the Collateral Agent, and the Guaranty, dated August 9, 2004, made by OpBiz to the Investors, and amended certain other existing agreements, as described below.

In accordance with the terms of the Restructuring Agreement, the Investors and EquityCo, MezzCo and OpBiz entered into a Release, Consent and Waiver Agreement, pursuant to which the Investors (i) released OpBiz from its guaranteed obligations, under that certain Guaranty Agreement, dated as of August 9, 2004 and executed by OpBiz in favor of the Investors and the collateral agent; (ii) released MezzCo from its pledge of the collateral, under that certain Pledge Agreement, dated as of August 9, 2004, and executed by MezzCo in favor of the collateral Agent, the Investors released their security interest, as defined in that certain Security Agreement, as amended by that certain Amendment to Security Agreement, in each case dated as of August 9, 2004 and executed by the Company in favor of the collateral agent; (iii) released and terminated the Deed of Trust, dated as of August 9, 2004 and executed by MezzCo in favor of the Trustee (as defined therein) for the benefit of the collateral agent; (iv) released and terminated the Investors' security interest in the securities account, provided for that certain Securities Account Control Agreement, dated as of August 9, 2004 and executed by the Company, the collateral agent and Wells Fargo Bank, N.A.

Additionally, MezzCo, EquityCo, and the Investors entered into an Amended and Restated Investor Rights Agreement, dated November 30, 2006 (the "A&R Investor Rights Agreement"), to amend and restate the original Investor Rights Agreements among the parties thereto, dated August 9, 2004.

the A&R Warrants may be increased from time to time upon the occurrence of certain events as described in the A&R Warrants. Holders of the A&R Warrants and any securities issued upon exercise thereof may require MezzCo to redeem such securities commencing on December 9, 2011 at a redemption price based upon a formula set forth in the A&R Warrants. These rights expire upon completion of a public offering by MezzCo or OpBiz.

In connection with the Restructuring Agreement, EquityCo entered into a Guaranty Agreement, dated November 30, 2006 (the "Guaranty Agreement"), in favor of the Investors and the Collateral Agent, pursuant to which EquityCo has guaranteed the obligation of MezzCo to pay the redemption price under the A&R Warrants prior to expiration and any indebtedness arising under the Put Note (as defined in the A&R Warrants).

EquityCo and the Collateral Agent also entered into a Pledge Agreement, dated November 30, 2006 (the "Pledge Agreement"), pursuant to which EquityCo has, subject to approval of the Nevada gaming authorities, pledged and granted a first priority security interest to the Collateral Agent for the ratable benefit of the Investors in the membership interests of EquityCo in MezzCo. The Pledge Agreement, once approved, will secure the full payment of the Put Right (as defined in the A&R Warrants), including any obligations under the Put Note.

On November 30, 2006, we entered into an Indemnification Agreement with the Investors, pursuant to which we agreed to indemnify the Investors for any losses caused by (i) lack of gaming approvals for the issuance of the A&R Warrants, (ii) lack of gaming approval for the granting of a lien by EquityCo in the equity interests in MezzCo, as described in the Pledge Agreement, and (iii) the inability of the Investors to exercise the Warrants until July 1, 2007.

The foregoing descriptions of the various agreements described above do not purport to be complete and are qualified in their entirety by reference to the agreements, which are filed herewith as exhibits, and incorporated herein by reference.

Energy Services Agreement

Northwind, a third party, owns and operates a central utility plant on land leased from us. The plant supplies hot and cold water and emergency power to the PH Resort under a contract which expires in 2020. Under the agreement, we are required to pay Northwind a monthly consumption charge, a monthly operational charge, a monthly debt service payment and a monthly return on equity payment. Payments under the Northwind agreement totaled approximately $0.4 million per month in 2008.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our long-term debt. We pay interest on the amount outstanding under the Loan Agreement monthly, in cash, at the London Inter-Bank Offered Rate, or LIBOR, plus 3.25% with a .25% ticking fee on available but un-advanced Future Funding. We pay interest on the amount outstanding under the Future Funding Tranche B monthly, in cash, at the London Inter-Bank Offered Rate, or LIBOR, plus 7.50% with a 1.5% ticking fee on available but un-advanced Future Funding. An increase of one percentage point in the average interest rate applicable to the variable rate debt outstanding at December 31, 2008 would increase the annual interest cost by approximately $8.6 million.

The following table provides information about our long-term debt at December 31, 2008 (see also "Description of Certain Indebtedness" above):

	Maturity Date	Face Amount		Carrying Value		Estimated Fair Value

	(In thousands)
Loan Agreement	December 2009	$	860,000	$	860,000	$	860,000
Energy Services Agreement	February 2020		27,562		27,562		27,562

Total long-term debt		$	887,562	$	887,562	$	887,562

We have entered into an interest rate cap agreement to manage interest rate risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page

Report of Independent Registered Public Accounting Firm		41
Consolidated Balance Sheets		42
Consolidated Statements of Operations		43
Consolidated Statements of Members' Equity (Deficit)		44
Consolidated Statements of Cash Flows		45
Notes to Consolidated Financial Statements		46

Report of Independent Registered Public Accounting Firm

To the Board of Managers of BH/RE, L.L.C.

We have audited the accompanying consolidated balance sheets of BH/RE, L.L.C. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the related consolidated statements of operations, members' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2008. Our audit also included the financial statement schedule in the Index of Item 15 (a)(2). These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of BH/RE, L.L.C. and subsidiaries at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.


		/s/ ERNST & YOUNG LLP

Las Vegas, Nevada
March 31, 2009

BH/RE, L.L.C. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

			December 31, 2008			December 31, 2007

ASSETS
Current assets:
	Cash and cash equivalents		$	23,881		$	21,468
	Receivables, net			18,717			26,920
	Inventories			2,498			1,729
	Prepaid expenses			7,935			7,487
	Other current assets			164			216
	Restricted cash and cash equivalents			29,366			32,008

		Total current assets		82,561			89,828
Property and equipment, net				578,043			602,098
Restricted cash and cash equivalents				11,284			45,613
Land receivable				16,918			19,728
Deferred income tax				—			172
Deposits and other assets, net				244			9,629

		Total assets	$	689,050		$	767,068

LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
	Current portion of long-term debt		$	2,001		$	1,785
	Accounts payable			3,549			29,273
	Accrued payroll and related			10,786			11,817
	Accrued interest payable			6,827			8,182
	Accrued taxes			2,422			3,338
	Accrued expenses			8,881			9,422
	Deposits			4,587			6,476
	Other current liabilities			4,512			6,493
	Due to affiliates			1,773			1,661

		Total current liabilities		45,338			78,447
Long-term debt, less current portion				885,561			887,545
Deferred income tax				—			172
Warrants				1,537			4,117

		Total liabilities		932,436			970,281

Commitments and contingencies (Note 11)
Minority interest				(24,093	)		(16,272	)
Members' deficit:
	Member's equity			34,200			21,500
	Accumulated deficit			(253,493	)		(208,441	)

		Total members' deficit		(219,293	)		(186,941	)

		Total liabilities and members' deficit	$	689,050		$	767,068

The accompanying notes are an integral part of these consolidated financial statements.

BH/RE, L.L.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands)

			Years Ended

			2008			2007			2006
Operating revenues:
	Casino		$	122,207		$	114,245		$	104,841
	Hotel			111,534			106,750			111,040
	Food and beverage			53,412			48,903			59,716
	Other			16,445			9,358			12,733

		Gross revenues		303,598			279,256			288,330
	Promotional allowances			(26,426	)		(21,661	)		(21,218	)

		Net revenues		277,172			257,595			267,112

Operating costs and expenses:
	Casino			75,341			71,887			67,893
	Hotel			40,737			41,525			40,651
	Food and beverage			37,488			36,893			46,145
	Other			1,393			1,229			4,442
	Selling, general and administrative			73,323			87,870			74,619
	Depreciation and amortization			36,250			34,579			22,509

				264,532			273,983			256,259

Operating income (loss)				12,640			(16,388	)		10,853

Other income (expense):
	Interest expense, net			(68,093	)		(71,852	)		(61,702	)
	Loss on early extinguishment of debt			—			—			(60,225	)
	Minority interest			7,821			13,238			16,897
	Gain (loss) on warrant valuation			2,580			—			(1,499	)

				(57,692	)		(58,614	)		(106,529	)

Pre-tax loss				(45,052	)		(75,002	)		(95,676	)
Income tax provision				—			—			—

Net loss			$	(45,052	)	$	(75,002	)	$	(95,676	)

The accompanying notes are an integral part of these consolidated financial statements.

BH/RE, L.L.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY (DEFICIT)

(amounts in thousands)

	Members' Equity		Accumulated Deficit			Total Members' Equity (Deficit)

Balances, December 31, 2005		21,500		(37,763	)		(16,263	)
Net loss		—		(95,676	)		(95,676	)

Balances, December 31, 2006		21,500		(133,439	)		(111,939	)
Net loss		—		(75,002	)		(75,002	)

Balances, December 31, 2007		21,500		(208,441	)		(186,941	)

Equity Contributions		12,700		—			12,700
Net loss		—		(45,052	)		(45,052	)

Balances, December 31, 2008	$	34,200	$	(253,493	)	$	(219,293	)

The accompanying notes are an integral part of these consolidated financial statements.

BH/RE, L.L.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

				Year Ended December 31,

				2008			2007			2006
Cash flows from operating activities:
Net loss				$	(45,052	)	$	(75,002	)	$	(95,676	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization				36,250			34,579			22,509
	Amortization of debt discount and issuance costs				7,809			8,010			7,040
	Loss on early extinguishment of debt				—			—			60,225
	Minority interest				(7,821	)		(13,238	)		(16,897	)
	Change in value of warrants				(2,580	)		—			1,987
	Decrease in value of interest rate cap				2,381			205			49
	Changes in assets and liabilities:
		Restricted cash and cash equivalents			2,642			(13,667	)		(18,341	)
		Receivables, net			8,203			(8,358	)		6,876
		Inventories and prepaid expenses			(1,217	)		551			(2,689	)
		Deposits and other current assets			52			173			1,134
		Due to affiliates			112			236			(166	)
		Accounts payable			(4,918	)		40,441			(2,781	)
		Accrued payroll and related			(1,031	)		(756	)		(800	)
		Accrued expenses			(1,457	)		3,964			(381	)
		Deposits and other current liabilities			(3,870	)		(302	)		1,105
		Accrued interest			(1,355	)		2,123			(837	)
		Long term deposits and other assets			1,300			360			547
		Long term receivable, land			2,810			—			—

			Net cash used in operating activities		(7,742	)		(20,681	)		(37,096	)

Cash flows from investing activities:
	Purchases of property and equipment				(32,553	)		(166,525	)		(47,075	)
	Proceeds from sale of land to Westgate				—			2,683			1,444
	Restricted cash and cash equivalents				34,329			82,436			(40,261	)

			Net cash provided by (used in) investing activities		1,776			(81,406	)		(85,892	)

Cash flows from financing activities:
	Borrowings under bank facility				—			100,330			759,670
	Payable-in-kind interest added to debt principal				—			—			10,593
	Repayment of bank facility				—			—			(497,971	)
	Repayment of mezzanine financing				—			—			(117,444	)
	Early extinguishment of debt				—			—			(30,485	)
	Payments on CUP financing				(1,768	)		(1,577	)		(1,407	)
	Equity contributions				12,700			—			—
	Purchase of interest rate cap				(2,407	)		(8	)		(246	)
	Financing fees				(146	)		(830	)		(15,501	)

			Net cash provided by financing activities		8,379			97,915			107,209

Cash and cash equivalents:
	Increase (decrease) in cash and cash equivalents				2,413			(4,172	)		(15,779	)
	Balance, beginning of period				21,468			25,640			41,419

	Balance, end of period			$	23,881		$	21,468		$	25,640

Supplemental cash flow disclosures:
	Cash paid for interest, net of capitalized interest			$	59,857		$	72,672		$	64,052

	Non-cash investing and financing activities:
		Capital assets acquired from incurring accounts payable and accrued liabilities		$	—		$	26,517		$	12,964

	Sale of land to Westgate, net of amount collected			$	—		$	25,373		$	—

The accompanying notes are an integral part of these consolidated financial statements.

BH/RE, L.L.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

BH/RE is a holding company that owns 88.61% of EquityCo, L.L.C. ("EquityCo"). The remaining 11.39% of EquityCo is owned indirectly by Starwood Hotels & Resorts Worldwide, Inc. ("Starwood"). MezzCo, L.L.C. ("MezzCo") is a wholly owned subsidiary of EquityCo and each of OpBiz, LLC ("OpBiz") and PH Mezz II LLC ("PH Mezz II") is a wholly owned subsidiary of MezzCo. PH Mezz I LLC ("PH Mezz I") is a wholly owned subsidiary of PH Mezz II. PH Fee Owner LLC ("PH Fee Owner") is a wholly owned subsidiary of PH Mezz I. TSP Owner LLC ("TSP Owner") is a wholly owned subsidiary of PH Fee Owner. PH Mezz II, PH Mezz I, PH Fee Owner and TSP Owner are Delaware limited liability companies structured as bankruptcy remote special purpose entities which, together with OpBiz, own and operate the Planet Hollywood Resort and Casino (the "PH Resort"). OpBiz is the licensed owner and operator of the gaming assets and leases the casino space and hotel space together with all hotel assets from PH Fee Owner. TSP Owner was formed to hold the parcel of land (the "Timeshare Parcel") that was sold to Westgate Resorts, LLP, a Florida limited partnership ("Westgate") subject to the Timeshare Purchase Agreement, dated December 10, 2004, between OpBiz and Westgate, as more fully described below. As of March 31, 2009, each of Robert Earl and Douglas P. Teitelbaum held 50% of BH/RE's voting membership interests. BH/RE's equity membership interests were held 43.27% by BH Casino and Hospitality LLC I ("BHCH I"), 15.61% by BH Casino and Hospitality LLC II ("BHCH II" and, together with BHCH I, "BHCH") and 41.13% by OCS Consultants, Inc. ("OCS").

BH/RE and its subsidiaries were formed to acquire, operate and renovate the Aladdin Resort and Casino (the "Aladdin") located in Las Vegas, Nevada. OpBiz completed the acquisition of the Aladdin on September 1, 2004 and completed a renovation project which transformed the Aladdin into the PH Resort at the end of 2007. In connection with the operation of the PH Resort, OpBiz has entered into an agreement with Planet Hollywood International, Inc. ("Planet Hollywood") and certain of its subsidiaries to, among other things, license Planet Hollywood's trademarks, memorabilia and other intellectual property. OpBiz has also entered into an agreement with Sheraton Operating Corporation ("Sheraton"), a subsidiary of Starwood, pursuant to which Sheraton will provide hotel management, marketing and reservation services for the hotel that comprises a portion of the PH Resort.

BH/RE is a Nevada limited liability company and was organized on March 31, 2003. BH/RE was formed by BHCH and OCS. BHCH is controlled by Douglas P. Teitelbaum, a managing principal of Bay Harbour Management, L.C. ("Bay Harbour Management"). BHCH was formed by Mr. Teitelbaum for the purpose of holding investments in BH/RE by funds managed by Bay Harbour Management. Bay Harbour Management is an investment management firm. OCS is wholly owned and controlled by Robert Earl and holds Mr. Earl's investment in BH/RE. Mr. Earl is the founder, chairman and chief executive officer of Planet Hollywood and Mr. Teitelbaum is a director of Planet Hollywood. Collectively, Mr. Earl, a trust for the benefit of Mr. Earl's children and affiliates of Bay Harbour Management, own substantially all of the equity of Planet Hollywood. Mr. Earl disclaims beneficial ownership of any equity of Planet Hollywood owned by the trust.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies and Estimates

The consolidated financial statements are prepared in conformity with United States generally accepted accounting principles. Certain policies, including the determination of bad debt reserves, the

estimated useful lives assigned to assets, asset impairment, insurance reserves and the calculation of liabilities, require that management apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Management's judgments are based on historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from our estimates. To provide an understanding of the methodology management applies, BH/RE's significant accounting policies and basis of presentation are discussed below.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, as well as short-term investments with original maturities not in excess of 90 days.

Restricted Cash and Cash Equivalents

The balance in current restricted cash and cash equivalents at December 31, 2008 and 2007 was approximately $29.4 million and $32.0 million, respectively, which consists of reserves required under the Loan Agreement (as defined in note 7) including a reserve for payment of property taxes and insurance and a reserve for on-going furniture, fixture and equipment purchases or property improvements. Long-term restricted cash and cash equivalents consist of approximately $11.3 million and $45.6 million at December 31, 2008 and 2007, respectively, which represents the remaining cash commitments for the renovations to the property and includes a reserve for interest shortfalls and a contingency required by the Loan Agreement which will be released, in accordance with the terms of the Loan Agreement, if the cost of the renovation does not exceed the current budget.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable, including casino and hotel receivables, are typically non-interest bearing and are initially recorded at cost. An estimated allowance for doubtful accounts is maintained to reduce the receivables to their carrying amount, which approximates fair value. BH/RE estimates the allowance for doubtful accounts by applying standard reserve percentages to aged account balances under a specific dollar amount and specifically analyzes the collectability of each account with a balance over the specified dollar amount, based on the age of the account, the customer's financial condition, collection history and any other known information. The allowance for doubtful accounts totaled approximately $8.2 million and $7.1 million as of December 31, 2008 and 2007, respectively.

Inventories

Inventories consist of food and beverage, retail merchandise and operating supplies, and are stated at the lower of cost or market. Cost is determined by the first-in, first-out and specific identification methods.

Property and Equipment

Property and equipment are generally depreciated over the following estimated useful lives on a straight-line basis:


Buildings		40 years
Building improvements		15 to 40 years
Furniture, fixtures and equipment		3 to 7 years

Debt Issuance Costs

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over the expected terms of the related debt agreements using the straight-line method, which approximates the effective interest method, and are included in other assets on BH/RE's consolidated balance sheets. Debt issuance costs were fully amortized at December 31, 2008, and totaled approximately $7.7 million, net of related amortization, for the year ended December 31, 2007.

Intangible Assets

In connection with the purchase of the Aladdin, BH/RE recorded intangible assets, which consist of a customer list and trade name. The customer list was valued at approximately $2.7 million at the time of purchase and at December 31, 2008, is fully amortized. The net book value of the customer list at December 31, 2007 was approximately $1.1 million. The trade name was valued at approximately $1.0 million at the time of purchase and was fully amortized as of December 31, 2008 and 2007, respectively. The customer list and trade names were amortized using the straight-line method over a useful life of 4 years and 1.5 years, respectively. Amortization expense related to the customer list and trade name for the years ended December 31, 2008 and 2007, totaled approximately $0.4 million and $0.7 million, respectively.

Derivative Instruments and Hedging Activities

Revenue Recognition and Promotional Allowances

Casino revenues are recognized as the net win from gaming activities, which is the difference between gaming wins and losses. Hotel revenue recognition criteria are generally met at the time of occupancy. Food and beverage revenue recognition criteria are generally met at the time of service. Deposits for future hotel occupancy or food and beverage services are recorded as deferred income until revenue recognition criteria are met. Cancellation fees for hotel and food and beverage services are recognized upon cancellation by the customer as defined by a written contract entered into with the customer. All other revenues are recognized as the service is provided. Revenues include the retail value of food, beverage, rooms, entertainment, and merchandise provided on a complimentary basis to customers. Such complimentary amounts are then deducted from revenues as promotional allowances

on BH/RE's consolidated statements of operations. The estimated departmental costs of providing such promotional allowances are included in casino costs and expenses and are listed in the table below.

	Year ended December 31,

	2008		2007		2006
Rooms	$	6,374	$	5,492	$	3,661
Food and beverage		8,691		10,012		9,152
Other		52		28		764

Total cost of promotional allowances	$	15,117	$	15,532	$	13,577

Players' Club Program

Players' club members earn points based on gaming activity, which can be redeemed for cash. OpBiz accrues expense and a liability related to this program as the points are earned based on historical redemption percentages. Revenues are recognized net of certain sales incentives in accordance with the Emerging Issues Task Force ("EITF") consensus on Issue 01-9, "Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products)." EITF 01-9 requires that sales incentives be recorded as a reduction of revenue; consequently, casino revenues are reduced by points earned through the players' club loyalty program. The total accrued liability related to the players' club was $2.2 million at December 31, 2008 and $1.8 million at December 31, 2007.

Self-Insurance Accruals

BH/RE is self-insured, up to certain limits, for costs associated with employee medical coverage. The Company accrues for the estimated expense of known claims, as well as estimates for claims incurred but not yet reported which totaled approximately $2.4 million and $1.8 million as of December 31, 2008 and 2007, respectively.

Advertising Costs

Advertising costs are expensed as incurred and included in selling, general and administrative costs and expenses. Advertising costs totaled approximately $9.8 million, $11.5 million and $4.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Income Taxes

The consolidated financial statements include the operations of BH/RE and its majority-owned subsidiaries: EquityCo, MezzCo, OpBiz, PH Mezz II, PH Mezz I, PH Fee Owner and TSP Owner. BH/RE and EquityCo are limited liability companies and are taxed as partnerships for federal income tax purposes. However, MezzCo has elected to be taxed as a corporation for federal income tax purposes. OpBiz and PH Mezz II, wholly-owned subsidiaries of MezzCo, will be treated as a divisions of MezzCo for federal income tax purposes, and accordingly, will also be subject to federal income taxes. Additionally, PH Mezz I, a wholly-owned subsidiary of PH Mezz II, PH Fee Owner, a wholly owned subsidiary of PH Mezz I and TSP Owner, a wholly owned subsidiary of PH Fee Owner will also be subject to federal income taxes.

Timeshare Purchase Agreement

Pursuant to an agreement dated December 10, 2004 and modified on September 10, 2007, OpBiz entered into a Timeshare Purchase Agreement with Westgate Resorts, LTD. ("Westgate"), a Florida limited partnership, whereby OpBiz agreed to sell approximately 4 acres of land adjacent to the PH Resort to Westgate (the "Timeshare Parcel"), who plans to develop, market, manage and sell timeshare units on the land. On September 19, 2007, the sale of the land and deed transfer to Westgate was completed. In connection with the close of the transaction, OpBiz, PH Fee Owner, LLC and TSP Owner, LLC, entered into a modification agreement (the "Modification Agreement") with Westgate. The Modification Agreement defines the development phases for the Timeshare Parcel and outlines the permitted number of timeshare, whole ownership and penthouse units. The Modification Agreement also outlines permitted amenities on the Timeshare Parcel and documents Seller's approval of Westgate's financing for the project.

Pursuant to the terms of the Timeshare Purchase Agreement, the purchase price of the land was $29.5 million. The Company was carrying the land at a value of $29.5 million. Accordingly, no gain on the sale of this land has been recognized in the accompanying financial statements. Westgate pays the Company a monthly fee equal to 9% of total timeshare sales. 50% of the fees received will be used to pay the purchase price for the land and the remaining 50% will be recorded as income as received. As of December 31, 2008, the Company has a receivable balance for the sale of land of $19.9 million, $16.9 million of which is classified as long-term in the accompanying financial statements.

Membership Interests

As of December 31, 2008, BH/RE's membership interests had not been unitized and BH/RE's members do not presently intend to unitize these membership interests. Accordingly, management of BH/RE has excluded earnings per share data required pursuant to SFAS No. 128 "Earnings Per Share" because management believes that such disclosures would not be meaningful to the financial statement presentation.

Equity Compensation

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R) requiring that compensation cost relating to share-based payment transactions be recognized in the operating expenses. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee's estimated requisite service period (generally the vesting period of the equity award) on a straight-line basis. Estimates are revised if subsequent information indicates that forfeitures will differ from previous estimates, and the cumulative effect on compensation cost of a change in the estimated forfeitures is recognized in the period of the change. Prior to January 1, 2006, the Company accounted for share-based compensation to employees in accordance with APB No. 25, and related interpretations. The Company also followed the disclosure requirements of SFAS No. 123 as amended by SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." The Company adopted SFAS No. 123(R) using the modified prospective method and, accordingly, financial statement amounts for prior periods presented in this Form 10-K have not been restated to reflect the fair value method of recognizing compensation cost relating to non-qualified stock options.

There was $11,000 and $164,000 of compensation cost, which approximated fair value, related to non-qualified stock options recognized in operating results (included in selling, general and administrative expenses) for the years ended December 31, 2008 and 2007, respectively.

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. Expected volatility is based on historical volatility trends as well as implied future volatility observations as determined by management. In determining the expected life of the option grants, the Company used historical data to estimate option exercise and employee termination behavior. The expected term represents an estimate of the time options are expected to remain outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. treasury yield curve in effect at the time of grant. The following table sets forth the assumptions used to determine compensation cost for the Company's non-qualified stock options consistent with the requirements of SFAS No. 123(R).

		Year Ended December 31, 2008

Weighted-average fair value per share of options granted during the period (estimated on grant date using Black-Scholes-Merton option-pricing model)		$	235.28
Weighted-average assumptions:
	Expected stock price volatility		36	%
	Risk-free interest rate		3.76	%
	Expected option life (years)		7
	Expected annual dividend yield		—	%

Recently Issued Accounting Standards

SFAS No. 141

SFAS No. 160

SFAS No. 161

SFAS No. 162

In May 2008, FASB issued Statement No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP (the GAAP hierarchy). SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The adoption of SFAS 162 is not expected to have a material impact on the Company's financial position, results of operations or cash flows.

Reclassifications

Certain amounts in the December 31, 2007 consolidated financial statements have been reclassified to conform to the December 31, 2008 presentation. These reclassifications had no effect on the previously reported net loss.

3. RECEIVABLES

Accounts receivable consist of the following (in thousands):

		December 31,

		2008			2007
Casino		$	13,584		$	18,322
Hotel			5,999			6,811
Land sale receivable			19,918			25,373
Other			4,368			3,248

			43,869			53,754
Long-term portion of land sale receivable			(16,918	)		(19,728	)
Allowance for doubtful accounts			(8,234	)		(7,106	)

	Receivables, net	$	18,717		$	26,920

4. PROPERTY AND EQUIPMENT

Property and equipment and the related accumulated depreciation consist of the following (in thousands):

		December 31,

		2008			2007
Land		$	68,479		$	68,479
Building and improvements			502,305			502,584
Furniture, fixtures and equipment			126,582			115,003
Construction in progress			464			17

			697,830			686,083
Accumulated depreciation			(119,787	)		(83,985	)

	Property and equipment, net	$	578,043		$	602,098

Depreciation and amortization expense was approximately $36.2 million, $34.6 million and $22.5 million for the years ended December 31, 2008, 2007, and 2006, respectively.

5. ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

		December 31,

		2008		2007
Accrued slot club points		$	2,165	$	1,803
Accrued accounts payable			1,226		1,638
Accrued progressive reserve			1,038		997
Accrued utilities			624		627
Accrued legal fees			281		362
Accrued slot participation fees			285		350
Accrued commissions			330		419
Accrued Central Utility Plant charges			326		375
Accrued advertising			88		638
Accrued slot machines payable			1,406		852
Other accrued expenses			1,112		1,361

	Accrued expenses	$	8,881	$	9,422

6. OTHER CURRENT LIABILITIES

Other current liabilities consist of the following (in thousands):

		December 31,

		2008		2007
Outstanding chips		$	1,252	$	2,389
Gaming and related			1,013		1,780
Advance commissions			589		812
Other			1,658		1,512

	Other current liabilities	$	4,512	$	6,493

7. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

		December 31,

		2008			2007
$860 million Loan Agreement		$	860,000		$	860,000
Northwind Aladdin obligation under capital lease			27,562			29,330

	Total long-term debt		887,562			889,330
Current portion of long-term debt			(2,001	)		(1,785	)

	Total long-term debt, net	$	885,561		$	887,545

Loan Agreement

On November 30, 2006, OpBiz and PH Fee Owner (collectively the "Borrower") entered into the Loan Agreement (the "Loan Agreement") with Column Financial, Inc. (the "Lender") for a mortgage loan in the principal amount of up to $820 million. The Loan Agreement provided for an initial disbursement in the amount of $759.7 million and a future funding facility in the amount of up to $60.3 million. On July 17, 2007, the Borrower and the Lender entered into an amendment (the "Amendment") to the Loan Agreement. The Amendment provided for the immediate funding to Borrower of the balance of future funding that was available under the Loan Agreement and established an additional future funding facility in the amount of up to $40 million ("Future Funding Tranche B"). Future Funding Tranche B has the same terms as the Loan Agreement for maturity and extension. The Loan Agreement, as amended by the Amendment, is referred to as the Loan. The Loan is secured by a deed of trust on the PH Resort and a pledge, subject to approval by the Nevada gaming authorities, by MezzCo of its membership interest in OpBiz (as described below).

In order to permit the Lender to foreclose on the Hotel and Casino separately and to allow OpBiz to continue to operate the casino after such a foreclosure (should the Lender choose to do so), title to the real property comprising the Hotel and Casino (the "Property") was transferred from OpBiz to PH Fee Owner. OpBiz and PH Fee Owner then entered into a lease pursuant to which OpBiz agreed to continue to operate the Hotel in the manner it had been and to pay monthly rent of approximately $916,000. OpBiz and PH Fee Owner also entered into a lease pursuant to which OpBiz agreed to continue to operate the Casino in the manner it had been and to pay monthly rent of approximately $1,160,000.

In connection with the Loan, the Lender required that Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd. and Bay Harbour Master Ltd., which are affiliates of Bay Harbour Management, execute and deliver a certain Guaranty (as described below). In exchange for Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd. and Bay Harbour Master Ltd. (the "Guarantors") executing the Guaranty, OpBiz and PH Fee Owner agreed to pay to Trophy Hunter Investments, Ltd. and Bay Harbour Master Ltd. a fee equal to $1,500,000 per year. The fee is accrued as of December 31, 2008 and only payable once OpBiz hits certain debt service coverage ratios defined in the Loan Agreement.

In addition, in connection with the Loan Agreement, MezzCo effected a refinancing of the Securities Purchase Agreement, dated August 9, 2004, among MezzCo and the Investors, pursuant to which MezzCo issued to the Investors (i) 16% senior subordinated secured Notes in the original aggregate principal amount of $87 million, and (ii) Warrants for the purchase (subject to certain adjustments as provided for therein) of membership interests of MezzCo, representing 17.5% of its fully diluted equity. Loan proceeds were used to redeem in full the Notes.

In connection with the refinancing of the Securities Purchase Agreement and redemption of the Notes, the Restructuring Parties entered into the Restructuring Agreement, dated November 30, 2006, pursuant to which the Restructuring Parties terminated in full the Securities Purchase Agreement, the Subordination Agreement, dated as of August 31, 2004, among MezzCo, OpBiz, the Senior Agent and the Investors, the Pledge Agreement, dated August 9, 2006, among MezzCo and the Collateral Agent,

and the Guaranty, dated August 9, 2004, made by OpBiz to the Investors, and amended certain other existing agreements, as described below.

In accordance with the terms of the Restructuring Agreement, the Investors and EquityCo, MezzCo and OpBiz entered into a Release, Consent and Waiver Agreement, pursuant to which the Investors (i) released OpBiz from its guaranteed obligations, under that certain Guaranty Agreement, dated as of August 9, 2004 and executed by OpBiz in favor of the Investors and the collateral agent; (ii) released MezzCo from its pledge of the collateral, under that certain Pledge Agreement, dated as of August 9, 2004, and executed by MezzCo in favor of the collateral agent, the Investors released their security interest, as defined in that certain Security Agreement, as amended by that certain Amendment to Security Agreement, in each case dated as of August 9, 2004 and executed by the Company in favor of the collateral agent; (iii) released and terminated the Deed of Trust, dated as of August 9, 2004 and executed by MezzCo in favor of the Trustee (as defined therein) for the benefit of the collateral agent; (iv) released and terminated the Investors' security interest in the securities account, provided for that certain Securities Account Control Agreement, dated as of August 9, 2004 and executed by the Company, the collateral agent and Wells Fargo Bank, N.A.

Pursuant to the Restructuring Agreement, the Restructuring Parties agreed to amend the Warrants by issuing Amended and Restated Warrants to Purchase Membership Interests of MezzCo (the "A&R Warrants") to the Investors upon approval by the Nevada gaming authorities. The A&R Warrants will be exercisable at any time, subject to the approval of the Nevada gaming authorities, at a purchase price of $0.01 per unit. Subject to the approval of the Nevada gaming authorities, the warrants may be exercised to purchase either voting or non-voting membership interests of MezzCo or a combination thereof through the expiration date of December 9, 2012. In addition to customary anti-dilution protections, the number of units representing MezzCo membership interests issuable upon exercise of the A&R Warrants may be increased from time to time upon the occurrence of certain events as described in the A&R Warrants. Holders of the A&R Warrants and any securities issued upon exercise thereof may require MezzCo to redeem such securities commencing on December 9, 2011 at a redemption price based upon a formula set forth in the A&R Warrants. These rights expire upon completion of a public offering by MezzCo or OpBiz.

On November 30, 2006, MezzCo entered into an Indemnification Agreement with the Investors, pursuant to which we agreed to indemnify the Investors for any losses caused by (i) lack of gaming approvals for the issuance of the A&R Warrants, (ii) lack of gaming approval for the granting of a lien by EquityCo in the equity interests in MezzCo, as described in the Pledge Agreement, and (iii) the inability of the Investors to exercise the Warrants until July 1, 2007.

Energy Services Agreement

Northwind Aladdin ("Northwind"), a third party, owns and operates a central utility plant on land leased from OpBiz. The plant supplies hot and cold water and emergency power to the property under a contract which expires in 2020. Under the agreement, OpBiz is required to pay Northwind a monthly consumption charge, a monthly operational charge, a monthly debt service payment and a monthly return on equity payment. Payments under the Northwind agreement totaled approximately $0.4 million per month in 2008.

Scheduled Maturities of Long-Term Debt

Scheduled maturities of BH/RE's long-term debt are as follows (in thousands):


Years ending December 31,
2009		$	2,001
2010			862,243
2011			2,515
2012			2,819
2013			3,162
Thereafter			14,822

	Total	$	887,562

Fair Value of Long-Term Debt

The estimated fair value of BH/RE's long-term debt at December 31, 2008 and December 31, 2007 approximates the carrying values of $887.6 million and $889.3 million respectively.

Loss on Early Extinguishment of Debt

In connection with the repayment of all amounts due under the Credit Agreement and the Notes issued under the Securities Purchase Agreement with the proceeds of the Loan Agreement effective November 30, 2006, the Company recorded a loss on early extinguishment of debt of $60.2 million which is comprised of the unamortized balance of the original issue discount recorded in connection with the Credit Agreement of $20.6 million, an exit fee payable to the lenders under the Credit Agreement of $3.7 million, a call premium on the Notes of $26.8 million and the write-off of previously deferred debt issuance costs and warrant amortization of $9.1 million.

8. MEMBERSHIP INTERESTS

The non-voting interests in BH/RE are owned 43.27% by BHCH I, 15.61% by BHCH II and 41.13% by OCS and the voting interests are owned 50% by Douglas P. Teitelbaum and 50% by Robert Earl. BHCH is controlled by Mr. Teitelbaum, managing principal of Bay Harbour Management, an investment management firm. BHCH was formed by Mr. Teitelbaum for the purpose of holding investments in BH/RE by funds managed by Bay Harbour Management. OCS is wholly-owned and controlled by Mr. Earl and holds Mr. Earl's investment in BH/RE. Mr. Earl is the founder, chairman and chief executive officer of Planet Hollywood and Mr. Teitelbaum is a director of Planet Hollywood. Collectively, Mr. Earl, a trust for the benefit of Mr. Earl's children and affiliates of Bay Harbour Management, own substantially all of the equity of Planet Hollywood.

BH/RE owns 88.61% of the membership interests in EquityCo and Starwood owns 11.39%. OpBiz is a wholly owned subsidiary of EquityCo. BH/RE and Starwood made total equity contributions of $20 million each in EquityCo to fund the costs of the planned renovations to the Aladdin. Starwood's

equity interest in EquityCo is reflected as minority interest in the accompanying consolidated financial statements.

BH/RE has the option to purchase all of Starwood's membership interests in EquityCo if OpBiz is entitled to terminate the hotel management contract between OpBiz and Sheraton (see Note 9) as a result of a breach by Sheraton. Starwood can require EquityCo to purchase all of its membership interests in EquityCo if the hotel management contract is terminated for any reason other than in accordance with its terms or as the result of a breach by Sheraton. In addition, BH/RE and Starwood entered into a registration rights agreement with respect to their membership interests in EquityCo.

9. RELATED PARTY TRANSACTIONS

Planet Hollywood Licensing Agreement

OpBiz, Planet Hollywood and certain of Planet Hollywood's subsidiaries have entered into a licensing agreement pursuant to which OpBiz received a non-exclusive, irrevocable license to use various "Planet Hollywood" trademarks and service marks. Under the licensing agreement, OpBiz also has the right, but not the obligation, to open a Planet Hollywood restaurant and one or more Planet Hollywood retail shops under a separate restaurant agreement with Planet Hollywood. OpBiz pays Planet Hollywood a quarterly licensing fee of 1.75% of OpBiz's non-casino revenues. The initial term of the licensing agreement will expire in 2028. OpBiz can renew the licensing agreement for three successive 10-year terms. The property officially began operation as the PH Resort on April 17, 2007 and began paying fees pursuant to the licensing agreement as of that date. Licensing fees paid to Planet Hollywood totaled approximately $3.0 million for the year ended December 31, 2008, and $1.9 million for the year ended December 31, 2007.

In addition to being a manager of BH/RE, Mr. Earl is the chief executive officer and chairman of the board of directors of Planet Hollywood. Similarly, Mr. Teitelbaum is a manager of BH/RE and a director of Planet Hollywood. Together, Mr. Earl, a trust for the benefit of Mr. Earl's children and affiliates of Bay Harbour Management, own substantially all of the equity of Planet Hollywood. Mr. Earl disclaims beneficial ownership of any equity of Planet Hollywood owned by the trust.

Sheraton Hotel Management Contract

OpBiz and Sheraton have entered into a management contract pursuant to which Sheraton provides hotel management services to OpBiz, assists OpBiz in the management, operation and promotion of the Hotel and permits OpBiz to use the Sheraton brand and trademarks in the promotion of the Hotel. OpBiz pays Sheraton a monthly fee of 4% of gross hotel revenue and certain food and beverage outlet revenues and 2% of rental income from third-party leases in the hotel. The management contract has a 20-year term commencing on the completion of the Aladdin acquisition and is subject to certain termination provisions by either OpBiz or Sheraton. Sheraton is a wholly owned subsidiary of Starwood, which has a 11.39% equity interest in EquityCo and has the right to appoint two members to the EquityCo board of managers. Management fees paid to Starwood totaled approximately $9.6 million, $9.3 million and $9.9 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Planet Hollywood (LV) LLC Lease Agreement

the lease agreement will expire in 2017. Planet Hollywood LV can renew the lease agreement for two successive 5-year terms. Planet Dailies began operation on April 1, 2007 and began paying rent pursuant to the lease agreement as of that date. Rent received from Planet Dailies totaled approximately $0.4 million for the year ended December 31, 2008, and $0.3 million for the year ended December 31, 2007.

Planet Hollywood LV is wholly owned by, and a subsidiary of, Planet Hollywood International, Inc. Together, Mr. Earl, a trust for the benefit of Mr. Earl's children and affiliates of Bay Harbour Management, own substantially all of the equity of Planet Hollywood International, Inc. Mr. Earl disclaims beneficial ownership of any equity of Planet Hollywood International Inc. owned by the trust.

Earl of Sandwich (Las Vegas), LLC Lease Agreement

OpBiz and Earl of Sandwich (Las Vegas), LLC ("Earl of Sandwich") have entered into a lease agreement pursuant to which Earl of Sandwich, as tenant, operates a restaurant named "Earl of Sandwich" within approximately 3,030 square feet of space located on the premises owned by OpBiz. Earl of Sandwich pays OpBiz base rent in the amount of $161,600 per year (subject to annual increase adjustments), in addition to percentage rent of up to 12% based on annual gross sales (to the extent such percentage rent exceeds base rent). The initial term of the lease agreement will expire in 2017. Earl of Sandwich can renew the lease agreement for two successive 5-year terms. Earl of Sandwich began operation in September 2007 and began paying rent pursuant to the lease agreement as of that date. Rent received from Earl of Sandwich totaled approximately $0.5 million for the year ended December 31, 2008, and $0.1 million for the year ended December 31, 2007.

Earl of Sandwich is wholly and indirectly owned by a trust for the benefit of Mr. Earl's children. Mr. Earl disclaims beneficial ownership of any equity of Earl of Sandwich owned by the trust.

Guaranty Agreement

In connection with the Loan, the Lender required that Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd. and Bay Harbour Master Ltd., which are affiliates of Bay Harbour Management, execute and deliver a certain Guaranty (see Note 7.—Long-Term Debt). In exchange for executing the Guaranty, OpBiz and PH Fee Owner agreed to pay Trophy Hunter Investments, Ltd. and Bay Harbour Master Ltd. a fee equal to $1,500,000 per year. The fee is accrued and only payable once OpBiz hits certain debt service coverage ratios defined in the Loan Agreement.

Aircraft Charter Arrangements

In the ordinary course from time to time the Company utilizes the services of private aircrafts for charter. The Company currently utilizes several different third-party aircraft management/charter vendors for the provision of charter flights depending upon aircraft size, availability and location. One or more affiliates of BH/RE have placed an owned aircraft in service with one such vendor. From time to time, the Company may utilize the services of this vendor which may involve the affiliates' owned aircraft provided that the rate charged for that aircraft shall be at arm's length and fair market for similar aircraft.

10. INCOME TAXES

The consolidated financial statements include the operations of BH/RE and its majority-owned subsidiaries: EquityCo, MezzCo, OpBiz, PH Mezz II, PH Mezz I, PH Fee Owner and TSP Owner. BH/RE and EquityCo are limited liability companies and are taxed as partnerships for federal income tax purposes. However, MezzCo has elected to be taxed as a corporation for federal income tax purposes. OpBiz and PH Mezz II, wholly-owned subsidiaries of MezzCo, will be treated as a divisions of MezzCo for federal income tax purposes, and accordingly, will also be subject to federal income taxes.

Additionally, PH Mezz I, a wholly-owned subsidiary of PH Mezz II, PH Fee Owner, a wholly owned subsidiary of PH Mezz I and TSP Owner, a wholly owned subsidiary of PH Fee Owner will also be treated as divisions of MezzCo for federal income tax purposes and, accordingly, will also be subject to federal income taxes.

MezzCo, OpBiz, PH Mezz II, PH Mezz I, PH Fee Owner and TSP Owner (collectively referred to as MezzCo hereafter) account for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes". SFAS 109 requires the recognition of deferred income tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. The standard requires recognition of a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.

Management believes it is more likely than not that its net deferred tax asset will not be realized and has therefore recorded a valuation allowance against this net deferred tax asset.

The income tax provision from operations consists of the following (amounts in thousands):

		December 31,

		2008		2007
Current		$	—	$	—
Deferred			—

	Total income tax provision	$	—	$	—

The income tax provision differs from that computed at the federal statutory corporate tax rate as follows (amounts in thousands):

		December 31,

		2008						2007
		Amount			Percent			Amount			Percent
Pre-tax loss at U.S. statutory rate		$	(15,768	)		35.0	%	$	(26,251	)		35.0	%
Tax attributable to pass-through entities			(2,737	)		6.1			(4,633	)		6.2
Gain on warrant valuation			(903	)		2.0			—			—
Tax credits, net of current addback			(433	)		0.9			(279	)		0.4
Other			302			(0.6	)		127			(0.2	)
Valuation allowance			19,539			(43.4	)		31,036			(41.4	)

	Effective tax rate	$	—			(0.0	)%	$	—			(0.0	)%

The tax effects of significant temporary differences representing net deferred tax assets and liabilities are as follows (amounts in thousands):

		December 31,

		2008			2007
Deferred tax assets:
	NOL carryforward	$	102,033		$	81,452
	Accruals		5,117			2,688
	Reserves for doubtful accounts		3,433			3,398
	Amortization		988			1,034
	Tax credits		2,009			1,576
	Other		498			1,168

Total deferred tax assets		$	114,078		$	91,316

Deferred tax liabilities:
	Depreciation	$	(12,309	)	$	(8,701	)
	Prepaid expenses		(2,206	)		(2,283	)

Total deferred tax liabilities		$	(14,515	)	$	(10,984	)

Valuation allowance			(99,563	)		(80,160	)

Net deferred tax assets and liabilities		$	—		$	172

MezzCo has a valuation allowance at December 31, 2008 and 2007 recorded against tax benefits that are more likely than not unrealizable. As of December 31, 2008, MezzCo has federal net operating losses of $297.6 million which begin to expire after 2024. MezzCo has general business credit carryforwards at December 31, 2008 of $2.0 million which begin to expire after 2024 and a minimum tax credit carryforward of $7,000.

The Company adopted the provisions of FASB Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income Taxes." on January 1, 2007. At the time FIN 48 became effective, the Company had $1.8 million of uncertain tax benefits. Upon the adoption of FIN 48, the Company reclassified the uncertain tax benefits as required and reclassified a portion of the existing valuation allowance. Accordingly, there has been no adjustment to retained earnings recorded as a result of the FIN 48 reclassifications. Absent the existing valuation allowance, $0.6 million of uncertain tax benefits would affect the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits are as follows (in thousands):

		As of December 31,

		2008		2007
Balance—beginning of year		$	1,747	$	1,776
	Gross increases—tax positions in prior period		31		41
	Gross decreases—tax positions in prior period		—		(225	)
	Gross increases—current-period tax positions		360		155
	Gross decreases—current-period tax positions		—		—
	Settlements		—		—
	Lapse of statute limitations		—		—

Balance—end of year		$	2,138	$	1,747

The Company recognizes penalties and interest as a component of income tax expense. We do not expect any penalty assessment associated with our adoption of FIN 48 and do not expect any significant

increases or decreases to amounts of unrecognized tax benefits for the next twelve months. We are no longer subject to U.S. federal tax examinations by tax authorities for tax years before 2004.

11. COMMITMENTS AND CONTINGENCIES

Litigation

In the normal course of business, BH/RE is subject to various litigation, claims and assessments. The Company is not currently a party to any material litigation.

Employment Agreements

Leases

OpBiz leases certain real property, furniture and equipment. The leases are accounted for as operating or capital leases in accordance with SFAS No. 13, "Accounting for Leases."

At December 31, 2008, aggregate minimum rental commitments under noncancelable operating leases and capital leases with initial or remaining terms of one year or more consisted of the following (in thousands):

		Operating Leases		Capital Leases

Years ending December 31,
2009		$	468	$	4,963
2010			422		4,964
2011			187		4,965
2012			—		4,963
2013			—		4,974
Thereafter			—		18,936

	Total minimum lease payments	$	1,077		43,765

Less: Amounts representing interest					(16,203	)
	Total obligations under capital leases				27,562
Less: Amounts due within one year					(2,001	)

	Amounts due after one year			$	25,561

The current and long-term obligations under capital leases are included in "Current portion of long-term debt" and "Long-term debt, less current portion," respectively, in the accompanying consolidated balance sheets. Rental expense amounted to approximately $2.7 million, $2.2 million and $2.8 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Theater Lease

On December 16, 2004, OpBiz entered into a long-term lease agreement whereby CC Entertainment Theatrical-LV, LLC, successor-in-interest to SFX Entertainment, Inc. pursuant to an assignment dated September 26, 2005 ("CCE") renovated and is operating a showroom on the

mezzanine level and the 7,500 seat theater at the PH Resort. CCE has the exclusive right to use, reconfigure, adapt, change and operate the leased premises.

12. EMPLOYEE BENEFIT PLANS

401K Plan

Health Insurance Plan and Self-Funded Employee Health Care Insurance Program

OpBiz maintains a qualified employee health insurance plan covering all employees who work in a full-time capacity. The plan, which is self-funded by OpBiz with respect to claims below a certain maximum amount, requires contributions from eligible employees and their dependents.

OpBiz's employee health care benefits program is self-funded up to a maximum amount per claim. Claims in excess of this maximum amount are fully insured through a stop-loss insurance policy. Accruals are based on claims filed and estimates of claims incurred but not reported.

At December 31, 2008 and 2007, OpBiz's estimated liabilities for all unpaid and incurred but not reported claims totaled approximately $2.4 million and $1.8 million respectively.

13. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	Net revenues		Operating income (loss)			Pre-tax loss			Net loss

	(In thousands)
Year ended December 31, 2008:
First Quarter	$	73,994	$	5,881		$	(10,208	)	$	(10,208	)
Second Quarter		72,226		1,850			(12,200	)		(12,200	)
Third Quarter		69,312		3,637			(10,677	)		(10,677	)
Fourth Quarter		61,640		1,272			(11,967	)		(11,967	)
Year ended December 31, 2007:
First Quarter	$	63,587	$	(86	)	$	(15,157	)	$	(15,157	)
Second Quarter		64,832		(181	)		(15,188	)		(15,188	)
Third Quarter		57,129		(12,687	)		(26,833	)		(26,833	)
Fourth Quarter		72,047		(3,434	)		(17,824	)		(17,824	)

14. SUBSEQUENT EVENT (UNAUDITED)

On January 30, 2009, OpBiz entered into the Fifth Amendment to Energy Services Agreement (the "Fifth Amendment") with Northwind, the third party that owns and operates a central utility plant on land leased from OpBiz (See Note 7—Long-Term Debt, Energy Services Agreement). The plant supplies hot and cold water and emergency power to the property under a contract which expires in 2020. The Fifth Amendment assigns a portion of the capacity to heat and chill water provided to OpBiz to Westgate for operation of the timeshare tower. Operation of the timeshare tower is fully described in Note 2—Summary of Significant Accounting Policies, Timeshare Purchase Agreement. The Fifth

Amendment provides for Westgate to assume a pro-rata portion of the debt and equity obligations payable by OpBiz to Northwind. OpBiz's obligations to Northwind, recorded as a capital lease in the accompanying financial statements, will be reduced by the pro-rata assignment to Westgate.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. The Company's Chief Executive Officer and its Chief Financial Officer have evaluated the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) (the "Exchange Act") of the Company as of December 31, 2008 and have concluded that they are effective within the reasonable assurance threshold described below.

(b) Management's Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this assessment, management believes that, as of December 31, 2008, the Company's internal control over financial reporting was effective.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

(c) Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The members of the board of managers and executive officers of BH/RE and its subsidiaries are as follows:

Name		Position

Robert Earl	57	Manager of BH/RE and EquityCo, Co-Chairman of OpBiz
Douglas P. Teitelbaum	43	Manager of BH/RE and EquityCo, Co-Chairman of OpBiz
Thomas J. McCartney	56	President and Chief Executive Officer of OpBiz
Donna Lehmann	39	Chief Financial Officer of OpBiz and Treasurer of BH/RE
Mark S. Helm	38	Senior Vice President, General Counsel and Secretary of OpBiz
William Feather	47	President, Planet Hollywood Resorts Management
Dean DiLullo	45	Executive Vice President and Chief Operating Officer of OpBiz
Joey Tallone	58	Executive Vice President of Casino Marketing of OpBiz
George Barry Hardy	61	Manager of OpBiz
Eugene I. Davis	53	Manager of OpBiz
Allison Reid	44	Manager of EquityCo and OpBiz
Thomas M. Smith	56	Manager of EquityCo and OpBiz

Robert Earl. Mr. Earl has been a manager of BH/RE since its formation in March 2003. Mr. Earl has over 30 years experience in the restaurant industry. Mr. Earl is the founder of Planet Hollywood and has been the chief executive officer and a member of the board of directors of Planet Hollywood and its predecessors since 1991. In November 1998, Mr. Earl was elected chairman of the board of directors of Planet Hollywood. Planet Hollywood filed voluntary petitions for relief under the Bankruptcy Code in October 1999 and October 2001.

Douglas P. Teitelbaum. Mr. Teitelbaum has been a manager of BH/RE since its formation in March 2003. Mr. Teitelbaum is the co-owner and a managing principal of Bay Harbour Management, an SEC-registered investment management firm focusing on investments in distressed securities, as well as acquiring and restructuring distressed companies. Mr. Teitelbaum joined Bay Harbour Management in 1996 as a principal and co-portfolio manager. Prior to joining Bay Harbour Management, Mr. Teitelbaum was a managing director at Bear, Stearns & Co. Inc. in the high yield and distressed securities department. Mr. Teitelbaum currently serves on the board of directors of Planet Hollywood and the American Jewish Congress.

Thomas J. McCartney. Mr. McCartney was appointed President and Chief Executive Officer of OpBiz on January 15, 2009. Mr. McCartney has over 25 years of experience in the casino and hospitality industry including the past 12 years with the MGM Mirage group in Las Vegas. Prior to joining OpBiz as President and Chief Executive Officer, Mr. McCartney most recently served as the Executive Vice President of Luxor Hotel & Casino, an MGM Mirage company, as a member of the leadership team responsible for the repositioning of that property. Mr. McCartney was employed at the Luxor Hotel and Casino from April 2005 through January 2009, when he joined Planet Hollywood. Additionally Mr. McCartney's experience includes the opening and rebranding of New York-New York Hotel & Casino, Las Vegas. Mr. McCartney was employed at the New York-New York, which is also an MGM Mirage property, from May 1996 through April 2005. Mr. McCartney was the Senior Vice President of Marketing and Development with New York-New York from November 2001 through April 2005. From January 1997 through November 2001, Mr. McCartney was the Senior Vice President of Hotel Operations at New York-New York and from May 1996 through January 2007, he was the Vice President of Hotel Operations. Preceding his arrival to the Las Vegas Market, Mr. McCartney was employed by Caesars Atlantic City.

Thomas J. McCartney Employment Agreement

Mr. McCartney serves as president and chief executive officer of OpBiz under an employment agreement that expires on January 15, 2012. His employment in that position commenced on January 15, 2009. OpBiz pays Mr. McCartney a base salary of $500,000, which is subject to annual upward adjustments. OpBiz pays Mr. McCartney a performance bonus determined by OpBiz's board of managers based on OpBiz's financial performance and certain other factors. Mr. McCartney may also receive an option to purchase up to 3% of the equity of MezzCo at an exercise price based on a fair market value at the time of grant vesting in equal installments on the anniversary dates of the first three years of continued employment.

OpBiz may terminate Mr. McCartney's employment immediately at any time for cause. If OpBiz terminates Mr. McCartney's employment for cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) base salary earned but unpaid through the date of termination; and (ii) nonreimbursed business expenses. The term "cause" is defined in Mr. McCartney's employment agreement as (i) loss of key license issued by the Nevada Gaming Commission; (ii) conviction of a felony; (iii) material breach of his employment agreement; provided however, in the event of such breach, OpBiz shall give Mr. McCartney written notice of such breach, and Mr. McCartney shall have ten days to cure such breach; or (iv) engagement in any unauthorized, morally-bankrupt activity which has a material adverse effect on OpBiz's name, reputation or goodwill in the Las Vegas, Nevada community, such determination being made by majority vote of the Board of Managers, acting reasonably.

OpBiz may terminate Mr. McCartney's employment at any time without cause upon 15 days written notice. If OpBiz terminates Mr. McCartney's employment without cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) severance in the amount of twelve (12) months of his then annual base salary; (ii) base salary earned but unpaid through the date of termination; (iii) all accrued but unpaid bonus up to the date of termination, as determined by OpBiz's Board of Managers utilizing EBITDA targets established pursuant to the employment agreement against year to date budgets (adjusted for budgeting seasonality); (iv) nonreimbursed business expenses; and (v) benefits under benefit plans and programs that have been earned and vested by the date of termination. If Mr. McCartney's employment is terminated without cause after the 25^th month of employment but prior to the expiration of the initial three year term, the balance of unvested options shall accelerate and vest.

Upon Mr. McCartney's death or disability, his employment agreement terminates immediately. If Mr. McCartney's employment is terminated due to his death or disability, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than (to Mr. McCartney, or his estate or legal representative, as applicable): (i) base salary earned but unpaid through the date of termination; (ii) bonus earned but unpaid through the date of termination; (iii) nonreimbursed business expenses; (iv) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (v) options to purchase membership interests in MezzCo that have vested by the date of termination. The term "disability" is defined in Mr. McCartney's employment agreement as his inability to perform the essential functions of his duties for a period of time in excess of that set forth in our policies and procedures, as in effect from time to time, or in excess of a qualified leave pursuant to the Family and Medical Leave Act or as otherwise required by the Americans with Disabilities Act, as applicable.

Donna Lehmann. Ms. Lehmann has been the Chief Financial Officer of OpBiz and Treasurer of BH/RE since the purchase of the Aladdin on September 1, 2004. Ms. Lehmann has over 15 years of experience in the gaming industry. She was the Vice President of Finance for Aladdin Gaming, LLC from July 2001 until August 31, 2004. Prior to joining the Aladdin, Ms. Lehmann held several progressive positions ending with Controller at Showboat Operating Company from November 1993 through January 1998 and was Controller for Ethel M. Chocolates (a subsidiary of M&M Mars, Inc.)

from June 2000 until July 2001. She was a Senior Auditor with Arthur Andersen LLP from January 1998 to June 2000 and is a Certified Public Accountant in Nevada.

Mark S. Helm. Mr. Helm has been the Senior Vice President, General Counsel and Secretary of OpBiz since November 2004. Prior to joining OpBiz, Mr. Helm was in-house counsel for Planet Hollywood and its subsidiaries from 1995 until October of 2004 and served as Vice President, General Counsel and Secretary of Planet Hollywood from January 2000 until October of 2004. Mr. Helm is a member of the Florida Bar and maintains an In-House Counsel designation with the Nevada Bar.

William Feather. Mr. Feather was appointed President of Planet Hollywood Resorts Management in June, 2008. Mr. Feather served as Executive Vice President of Hotel Operations and Food and Beverage from September 2004 through June, 2008. Mr. Feather has over 23 years of senior level management experience in hotel operations. Mr. Feather has served in several key positions for Starwood Hotels and Resorts Worldwide including regional hotel responsibility for Starwood in Dallas and Boston. Mr. Feather's last position with Starwood prior to coming to Las Vegas was the General Manager of the Westin Mission Hills in Rancho Mirage, California where his scope of responsibility included managing the addition of Starwood Vacation Ownership Villas. Mr. Feather was employed by Starwood since 1997.

Dean DiLullo. Mr. DiLullo was appointed Executive Vice President and Chief Operating Officer of OpBiz effective March 24, 2008 pursuant to an employment agreement entered into on March 19, 2008. Mr. Dillulo has over 21 years of experience in the gaming industry. Prior to joining OpBiz, Mr. DiLullo served as President of M1 Network which provided consulting services in gaming operations, marketing, advertising and database strategies from October 2007 through March 2008. Mr. DiLullo held varying positions at Station Casinos, Inc., including Vice President/General Manager at several of their Las Vegas properties, from November 1995 through September 2007. His most recent position prior to leaving Station Casinos, Inc. was Vice President/General Manager of Sunset Station, Henderson, Nevada. Prior to his employment at Station Casinos, Inc., Mr. DiLullo was the Director of Marketing at the Rio Hotel & Casino, Las Vegas, Nevada from August 1992 through October 1995 and held varying positions at Aztar Corporation (Tropicana Resort & Casino), Las Vegas, Nevada from August 1986 through August 1992 including Manager of Financial Analysis and Planning and Director of Marketing and Advertising.

Joey Tallone. Joey Tallone was appointed the Executive Vice President of Casino Marketing of OpBiz effective April 14, 2008 pursuant to an employment agreement dated February 7, 2008. Mr. Tallone has over 28 years of experience in the gaming industry. Prior to joining OpBiz, Mr. Tallone was employed by Harrah's Entertainment, Inc. from September 1999 through April 2008 where he has held varying positions in marketing. Mr. Tallone was the Vice President of Casino Marketing at Bally's and Paris, two of Harrah's Entertainment, Inc.'s Las Vegas Strip properties from July 2001 through April 2008. Mr. Tallone was the Assistant Vice President of Casino Marketing for Harrah's Entertainment, Inc. from February 2000 through July 2001 and was a Senior Credit Executive from September 1999 through February 2000.

George Barry Hardy. Mr. Hardy was appointed as a manager of OpBiz and a member of the Audit Committee in August 2007. George Barry Hardy has over 30 years experience in the leisure and gaming industries and is a Fellow of the Institute of Chartered Accountants. Prior to his appointment as a manager of OpBiz, Mr. Hardy served in several key positions for London Clubs International including Chief Financial Officer, Chief Operating Officer and Deputy Executive Chairman. Mr. Hardy was employed by London Clubs International for 18 years and has extensive experience managing and operating casinos in multiple jurisdictions including the United States, Europe and South Africa.

Eugene I. Davis. Mr. Davis was appointed as a manager of OpBiz and Chairman of the Audit Committee in November 2006. Mr. Davis is the Chairman and Chief Executive Officer of Pirinate Consulting Group, LLC, a privately-held consulting firm specializing in turn-around management,

merger and acquisition consulting, hostile and friendly takeovers, proxy contests and strategic planning advisory services for domestic and international public and private business entities. Since forming PIRINATE in 1997, Mr. Davis has advised, managed, sold, liquidated and/or acted as a Chief Executive Officer, Chief Restructuring Officer, Director, Committee Chairman and/or Chairman of the Board of a number of businesses, including companies operating in the telecommunications, automotive, manufacturing, high-technology, medical technologies, metals, energy, financial services, consumer products and services, import-export, mining and transportation and logistics sectors. Prior to forming PIRINATE, Mr. Davis served as President, Vice-Chairman and Director of Emerson Radio Corp, and CEO and Vice-Chairman of Sport Supply Group, Inc. Mr. Davis began his career as an attorney and international negotiator with Exxon Corp. and Standard Oil Company (Indiana) and as a partner in two Texas- based law firms where he specialized in corporate/securities law, international transactions and restructuring advisory. Mr. Davis holds a BA from Columbia College, a Masters of International Affairs (MIA) in International Law and Organization from the School of International Affairs of Columbia University and a JD from the Columbia University School of Law.

Allison Reid. Ms. Reid was appointed as a manager of EquityCo and Opbiz in August 2007. Ms. Reid has been employed by Starwood Hotels and Resorts Worldwide (HOT) since August 2000. She currently serves as Starwood's Senior Vice President Real Estate Investment Management and is responsible for overseeing Starwood's global joint venture and leasehold interests. Ms. Reid has held several roles at Starwood including, Senior Vice President Real Estate Administration, CFO W Hotels Worldwide, VP Investor Relations and VP Owner Relations. Prior to joining Starwood, Ms. Reid held various finance and operations related positions with Interstate Hotels and Resorts and ITT Sheraton Corporation. Ms. Reid and Thomas M. Smith, a member of the Board of Managers of OpBiz and EquityCo, are the Starwood designees to the Board of Managers.

Thomas M. Smith. Mr. Smith was appointed as a manager of EquityCo and OpBiz in March 2005. Mr. Smith has more than twenty-five years of senior level management experience in hotel real estate investment and operations. He is a Senior Vice President of Starwood Hotels and Resorts Worldwide (HOT) Real Estate Group. Prior to joining Starwood in 1998, Mr. Smith was a managing director with CIGNA Corporation's Real Estate Investment Division, where he was responsible for hotel real estate investments for eleven years.

Michael V. Mecca. On January 14, 2009 Michael V. Mecca resigned his position as President and Chief Executive Officer of OpBiz and BH/RE, subject to the terms of a Separation Agreement between OpBiz and Mr. Mecca, effective as of that date. Pursuant to the terms of the Separation Agreement, Mr. Mecca was paid $348,168.60 as a one time severance payment. Also effective January 14, 2009, Mr. Mecca resigned as a member of the Board of Managers of EquityCo.

As OpBiz is our operating subsidiary, the information provided below discusses the board of managers of OpBiz (the "Board").

Meetings of the Board of Managers

The Board met four times between January 1, 2008 and December 31, 2008. The Board has a standing Audit Committee, Compensation Committee, Compliance/Credit Committee, Executive Committee and a Renovation Committee. During 2008, none of the members of the Board attended less than 75% of the meetings held by the Board, or the total number of meetings held by all committees of the Board on which various members served. The current members of each of the Board's standing committees are listed below.

The Audit Committee

The Board has a separately designated standing Audit Committee, whose current members are Eugene I. Davis and George Barry Hardy. Mr. Davis serves as Chairman of the Audit Committee. The

Board has considered the independence of our Audit Committee members and determined that all members of the Audit Committee are independent for purposes of serving on the Audit Committee.

The Audit Committee meets periodically with BH/RE's independent auditors, management, internal auditors and legal counsel to discuss accounting principles, financial and accounting controls, the scope of the annual audit, internal controls, regulatory compliance and other matters. The Audit Committee also advises the Board on matters related to accounting and auditing and selects the independent auditors. The independent auditors and internal auditors have complete access to the Audit Committee without management present to discuss results of their audit and their opinions on adequacy of internal controls, quality of financial reporting and other accounting and auditing matters. The Audit Committee operates under a formal charter, which is filed as an exhibit to this Annual Report on Form 10-K.

The Board has determined that all Audit Committee members are financially literate and has also determined that both Eugene I. Davis and George Barry Hardy qualify as audit committee financial experts as such term is defined in Item 407(d)(5) of Regulation S-K. The Board has further determined that both audit committee members are independent as such term is defined in Rule 4200 of the NASDAQ Marketplace Rules and in the rules and regulations of the Securities and Exchange Commission.

The Compensation Committee

The current members of the Compensation Committee are Douglas P. Teitelbaum, Robert Earl and Thomas M. Smith. Each member of the Compensation Committee is a non-employee director. Mr. Teitelbaum serves as Chairman of the Compensation Committee.

The Compensation Committee reviews and takes action regarding terms of compensation, employment contracts and pension matters that concern officers and key employees. The responsibilities of the Compensation Committee are outlined in a written charter, which is filed as an exhibit to this Annual Report on Form 10-K.

The Compliance/Credit Committee

The current members of the Compliance/Credit Committee are Douglas P. Teitelbaum and Robert Earl. The Compliance/Credit Committee has the responsibility and authority to set policies for the establishment of the Gaming Compliance Program and the Credit Extension Program. The Gaming Compliance Program establishes policies and procedures to ensure that OpBiz remains in compliance with any and all gaming regulations. The Credit Extension Program establishes policies and procedures for extending credit to OpBiz's gaming customers.

The Executive Committee

The current members of the Executive Committee are Douglas P. Teitelbaum and Robert Earl. The Executive Committee has the full power and authority to act for the Board between meetings in all matters on which the Board is authorized to act and where specific actions shall not have previously been taken by the Board unless (i) the Board has taken action restricting the authority of the Executive Committee to act; (ii) the action is the final approval of BH/RE's annual budget or (iii) such action would require the consent of Starwood Nevada Holdings, LLC (as defined in the Second Amended and Restated Operating Agreement of EquityCo, LLC).

The Renovation Committee

The current members of the Renovation Committee are Douglas P. Teitelbaum and Robert Earl. The Renovation Committee has the authority to develop and implement the renovation capital expenditure budget for presentation and approval by the Board and, upon such approval, shall be further authorized to enter into and monitor any and all contracts, agreements or arrangements and payments made in connection therewith.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16 (a) of the Exchange Act requires our managers, executive officers and certain beneficial owners (collectively, "Section 16 Persons") to file reports of beneficial ownership on Form 3 and reports of changes in ownership on Form 4 or 5 with the Securities and Exchange Commission. Copies of all such reports are required to be furnished to us. To our knowledge, based solely on a review of the copies of Section 16(a) reports furnished to us for fiscal year 2008, and other information, all filing requirements for the Section 16 Persons have been complied with during or with respect to fiscal year 2008.

Code of Ethics

BH/RE's Code of Ethics, which is filed as an exhibit to this Annual Report on Form 10-K, has been approved by its Board and applies to all of its managers and executive officers, including its principal executive officer, principal financial officer and principal accounting officer. BH/RE's Code of Ethics covers all areas of professional conduct including, but not limited to, conflicts of interests, disclosure obligations, insider trading, confidential information, as well as compliance with all laws and rules and regulations applicable to its business.

BH/RE undertakes to provide without charge to any person, upon request, a copy of this Code of Ethics. Requests should be directed in writing to BH/RE, L.L.C., Attention: General Counsel, 3667 Las Vegas Boulevard South, Las Vegas, Nevada 89109.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Objectives of Compensation Program

The PH Resort operates in a highly competitive and rapidly changing hotel casino industry. The PH Resort competes, with other high-quality resorts and hotel casinos on the Las Vegas Strip and in downtown Las Vegas, as well as a large number of hotels in and near Las Vegas. In order to be and remain competitive with other companies in the hotel casino industry, one of the primary objectives of our compensation program is to attract, motivate and retain talented, qualified executives to manage and lead our Company. Our objective is to provide an executive compensation structure and system that is both competitive in the marketplace and also internally equitable based upon the weight and level of responsibilities in the respective executive positions. A further objective of our compensation program is to align the executive officers' compensation with our membership interest holders, which will lead to the long-term enhancement of membership interest value. Our compensation program provides incentives and rewards for each executive officer for their contribution to the Company and for the achievement of the Company's annual and long-term performance goals. We also endeavor to ensure that our compensation program reinforces business strategies and objectives consistent with the Company's goals and that it is administered in a fair and equitable manner consistent with established policies and guidelines.

Executive compensation programs impact all employees by setting general levels of compensation and helping to create an environment of goals, rewards and expectations. Because we believe the performance of every employee is important to our success, we are mindful of the effect of executive compensation and incentive programs on all of our employees. Our compensation program is designed to reward teamwork and each team member's contribution to the Company.

To enable us to achieve our objectives, we must maintain a flexible compensation structure to appropriately recognize and reward our existing and future executive officers. The ability to reward superior performance is essential if we want to provide superior services to our customers and remain competitive in the hotel casino industry. The Compensation Committee relies on its own judgment in setting each executive officer's compensation and not on any rigid guidelines or formula. Key factors affecting the Committee's compensation judgments include: (i) the nature and scope of an executive's responsibilities; (ii) an executive officer's performance (including contribution to the Company's financial results); and (iii) market compensation for similar responsibilities.

Elements of Compensation Program and Why We Chose Each (How It Relates to Objectives)

To accomplish these objectives, our executive officers' compensation encompasses a mix of base salary, annual discretionary cash bonuses, annual non-equity incentive based awards, membership interest, severance benefits, a small number of perquisites and a variety of other benefits that are generally available to all of our salaried employees, such as a 401(k) Plan and health and welfare benefits.

The Company chooses to pay each element of compensation in order to attract and retain the necessary executive talent, reward annual performance and provide incentive for their balanced focus on long-term and short-term strategic goals. The amount of each element of compensation is determined by or under the direction of our Compensation Committee, which uses the following factors to determine the amount of compensation and other benefits to pay each executive: (i) performance against corporate and individual objectives for the previous year; (ii) difficulty of achieving desired results in the coming year; (iii) value of their unique skills and capabilities to support long-term performance of the Company; (iv) performance of their general management responsibilities; and (v) contribution as a member of the executive management team. The elements of our compensation package are comparable to other hotel/casino operators in the Las Vegas market.

These elements fit into our overall compensation objectives by helping to secure the future potential of our operations, providing proper compliance and regulatory guidance, and helping to create a cohesive team. Our policy for allocating between long-term and currently paid compensation is to ensure adequate base compensation to attract and retain personnel, while providing incentives to maximize long-term value for our Company and our membership interest holders. For example, our annual non-equity incentive based bonus program is designed to reward executives for meeting short-term goals which include annual performance targets while our equity awards program rewards executives for long-term Company equity growth. Total compensation is comprised of cash compensation in the form of base salary to meet competitive salary norms and in the form of bonus payments to reward achievement of short-term goals on an annual basis and non-cash compensation in the form of options to purchase membership interests to retain talented, qualified executives and align their interests with that of our other membership interest holders. We believe that this allocation is competitive within the marketplace and appropriate to fulfill our stated policies.

Base Salaries

Generally, base salaries for executives are administered on a subjective, individual basis by the Compensation Committee using as a guideline a variety of factors, including the executive's scope of responsibilities, an assessment of similar roles within the hotel/casino industry, and internal equity among executives. We have a significant level of competition for attracting and retaining talented, qualified executive officers in the hotel casino industry. Base salaries are set at levels that allow the Company to attract and retain superior leaders that will enable the Company to deliver on its business goals. Base compensation is targeted to recognize each executive officer's unique value and historical contributions to our success in light of salary norms in our industries and the general marketplace. The criteria for measurement include data secured from a range of industry and general market sources.

Variation from salary norms occurs when the value of the individual's expertise, performance, specific skill set, experience and level of contribution relative to others in the organization justifies variation. Base salary recognizes an employee's role, responsibilities, skills, experience and sustained performance. We also recognize that it is necessary to provide executives with a portion of total compensation that is delivered each month and provides a balance to other pay elements that are more at risk, such as annual discretionary or incentive based bonuses.

The Company is a party to employment agreements, as amended, with all of the current named executive officers. Base salary is reviewed annually by the Compensation Committee and may be increased based on individual performance during the prior calendar year and cost of living adjustments, as appropriate. Pursuant to these employment agreements, however, a decrease in base salary is prohibited.

Bonuses

Our practice is to award annual cash bonuses based upon performance objectives. Executive bonuses are used to focus our management on achieving key corporate financial objectives, to motivate certain desired individual behaviors and to reward substantial achievement of these Company financial objectives and individual goals. Executive officers have the opportunity to earn a bonus of up to a maximum of 50% of their base salary (or, in the case of the Chief Executive Officer, up to a maximum of 100% of his base salary). Bonuses are determined based on a combination of qualitative and quantitative measures, the details of which are established annually for each executive as performance goals. The quantitative and qualitative performance goals used to determine executive bonuses include the achievement of the Company's EBITDA goals for the year (such EBITDA goals as are determined by the Board of Managers or Compensation Committee, as applicable) and also include goals that vary for each executive based on his/her responsibilities, which may include: discreet measures, benchmarks and standards of operation such as departmental EBITDA goals being achieved (for revenue generating departments), departmental productivity, cost containment, customer services and such other measures, benchmarks and standards as are established for such executives officers' respective department. When determining the bonuses for executive officers, the Compensation Committee makes a final determination based on the performance of the executive and the division or group that he/she leads relative to the performance-based goals. However, the Company's overall performance and achievement of annual, targeted EBITDA goals is at least a 25% factor in all performance goals. In this regard, we use full cash bonuses to reward performance achievements by our executive officers generally only as to years in which we are substantially profitable; we use salary as a base amount necessary to match our competitors for executive talent. Bonuses, if any, are determined and paid on an annual basis after completion of the bonus year.

Notwithstanding the foregoing, and pursuant to the Company's employment agreement with Joey Tallone, Joey Tallone will receive a guaranteed annual bonus for his first year of employment of $100,000.

Membership Interests; Long-Term Equity Incentives

We consider the granting of options to purchase membership interests to be an extremely effective form of compensation for executive officers because it provides long-term incentives for superior performance, leading to enhanced membership interest value, and aligning executive compensation with the interests of the other membership interest holders. We believe that granting options to purchase membership interests is a great method of motivating the executive officers to manage our Company in a manner that is consistent with the interests of our Company and the membership interest holders. Also, it is a key retention tool because the options to purchase membership interests vest over a period of years. Although there is no set formula for the granting of these options to individual executives,

generally the size of an executive's option award is based on the executive's level and role within the Company assessed against long-term compensation data for competitive positions.

The Company is a party to employment agreements, as amended, with all of the current named executive officers. The employment agreements have initial terms of two to five years. The employment agreements provide, depending on the terms thereof, that these executives are entitled to options to purchase between 0.2% and 3% of the equity in MezzCo. The options were granted with an exercise price equal to or greater than the fair value at the date of grant. The options are "time based" and portions thereof vest annually in equal increments throughout the terms of the respective employment agreements. The executive must remain employed by the Company at each year's end to receive the option's vested amount attributable to that year.

Severance Benefits

We believe that companies should provide reasonable severance benefits to their executive officers. These severance benefits should reflect the fact that it may be difficult for the executives to find comparable employment within a short period of time. They also should disentangle the company from the executive as soon as practicable. For instance, while it is possible to provide salary continuation to an executive during the job search process, which in some cases may be less expensive than a lump-sum severance payment, we prefer to pay a lump-sum severance payment in order to most cleanly sever the relationship as soon as practicable.

The Company is a party to employment agreements, as amended, with all of the current named executive officers. The employment agreements each contain severance provisions as detailed in the discussion of individual employment agreements below.

Perquisites

We limit the perquisites that we make available to our executive officers, and we annually review the perquisites that executive officers receive. Other than Mr. Mecca, in 2008 our executive officers were not entitled to benefits that are not otherwise available to all our employees and do not receive perquisites. Mr. Mecca received perquisites that are commensurate with industry norms. In this regard it should be noted that we do not provide pension arrangements, post-retirement health coverage, or similar benefits for our executives or employees.

401(k) Plan and Other Benefits

Our executive officers are eligible for the same level and offering of benefits made available to other employees, including the Company's 401(k) Plan and health and welfare benefit programs.

OpBiz has a retirement savings plan under Section 401(k) of the Internal Revenue Code covering its employees, which it assumed from Aladdin Gaming on September 1, 2004. The plan allows employees to defer, within prescribed limits, up to 15% of their income on a pre-tax basis through contributions to the plan. OpBiz currently matches, within prescribed limits, 50% of all employees' contributions up to 6% of their individual earnings on an annual basis. The amount of the company match paid to the eligible plan participants was approximately $0.9 million, $1.0 million and $0.9 million for the years ended December 31, 2008, December 31, 2007 and December 31, 2006 respectively. We also maintain other executive benefits that we consider necessary in order to offer fully competitive opportunities to our executive officers. Executive officers are eligible to participate in all of our employee health and welfare benefit plans, such as medical, dental, group life, disability, and accidental death and dismemberment insurance, in each case on the same basis as other employees.

How the Company Chose Amounts and/or Formulas for Each Element

Each executive's current and prior compensation is considered in setting future compensation. To some extent, our compensation plan is based on the market and the companies we compete against for executives. We believe that the elements of our plan (e.g., base salary, bonus and membership interest options) are similar to the elements used by many comparable companies in the hotel casino industry. The exact compensation and benefits are chosen in an attempt to balance our competing objectives of attracting, retaining and motivating executives, fairness to all membership interest holders, and internal equitability for respective executive positions.

Accounting and Tax Treatment

The accounting treatment of compensation generally has not been a factor in determining the amounts of compensation for our executive officers. However, the Company considers the accounting impact of various program designs to balance the potential costs to the Company with the benefit/value to the executive. The Company considers the tax impact of long-term incentive compensation awards, and therefore to the extent practical, strives to deliver pay that qualifies under IRS section 162(m) as performance-based to obtain a corporate tax deduction. Under 162(m), the Company may not deduct compensation expense for the named executives if that expense is over $1,000,000, except that performance- based pay is excluded from the total pay applying to 162(m).

COMPENSATION COMMITTEE REPORT

Our Compensation Committee reviewed and discussed with our management the "Compensation Discussion and Analysis" contained in this Form 10-K. Based on that review and discussions, our Compensation Committee recommended to our Board of Managers that the "Compensation Discussion and Analysis" be included in this Form 10-K.

Compensation Committee
Douglas P. Teitelbaum
Robert Earl
Thomas M. Smith

The following table sets forth the compensation paid or accrued for our principal executive officer, our principal financial officer and our next three highest paid executive officers for the years ended December 31, 2008, 2007 and 2006.

SUMMARY COMPENSATION TABLE

	Annual Compensation

Name and Principal Position	Year		Salary ($)		Bonus ($)		Option Awards ($)(2)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)		Total ($)
Michael V. Mecca President and Chief Executive Officer of BH/RE and OpBiz(1)		2008 2007 2006		596,789 567,089 532,550		— — —		— 67,683 235,280		— — —		58,086 34,576 32,927		654,875 669,348 800,757
Donna Lehmann Treasurer of BH/RE and Chief Financial Officer of OpBiz		2008 2007 2006		333,056 312,257 283,821		— — 100,000		— 15,685 23,528		— 166,375 37,813		— — —		333,056 494,317 445,162
Mark S. Helm Senior Vice President, General Counsel and Secretary of OpBiz		2008 2007 2006		333,056 282,761 243,562		— — 200,000		— 13,107 15,685		— 166,375 32,450		— — —		333,056 462,243 491,697
Joey Tallone Executive Vice President of Casino Marketing of OpBiz		2008		247,001		—		—		100,000		—		347,001
Darby Davies Senior Vice President of Casino Marketing of OpBiz(5)		2008 2007 2006		287,819 275,595 245,887		— — —		11,000 23,528 23,528		100,000 75,000 50,000		— — —		398,819 374,123 319,415

(1): Mr. Mecca was President and Chief Executive of OpBiz through January 15, 2009.
(2): The annual compensation for options vested during 2008, 2007 and 2006 has been computed in accordance with the provisions of SFAS 123 (R) as discussed in Note 2, "Summary of Significant Accounting Policies" to our financial statements for the fiscal year ended December 31, 2008. Although the options are fully vested, they are not exercisable.
(3): Ms. Lehmann and Mr. Helm earned compensation in accordance with the Company's annual bonus program for achieving certain short-term goals in 2006 and 2007. Ms. Davies received a bonus payment in accordance with the terms of her employment agreement for 2006, 2007 and 2008. Mr. Tallone received a bonus payment in accordance with the terms of his employment agreement for 2008.
(4): Represents an automobile allowance paid to Mr. Mecca in accordance with the terms of his employment agreement.
(5): Ms. Davies was the Company's Senior Vice President of Casino Marketing through December 31, 2008.

Michael V. Mecca Employment Agreement

On January 14, 2009 Michael V. Mecca resigned his position as President and Chief Executive Officer of OpBiz and BH/RE, subject to the terms of a Separation Agreement between OpBiz and Mr. Mecca, effective as of that date. Pursuant to the terms of the Separation Agreement, Mr. Mecca was paid $348,168.60 as a one time severance payment.

Mr. Mecca served as president and chief executive officer of BH/RE and OpBiz under an employment agreement that expired in March 31, 2013. The employment agreement automatically renewed for successive five-year terms unless either party elected not to renew at least 90 days prior to the end of a term. OpBiz paid Mr. Mecca a base salary of $596,789 in 2008. Mr. Mecca's annual salary

was subject to annual upward adjustments pursuant to the terms of his employment agreement. Mr. Mecca was eligible to receive an annual performance bonus determined by OpBiz's board of managers based on OpBiz's financial performance and certain other factors. The agreement provided Mr. Mecca with an option to purchase up to 3% of the equity of MezzCo at an exercise price based on a current subscription valuation, vesting one-third annually beginning on April 11, 2004. Mr. Mecca granted OpBiz a right of first refusal with respect to any proposed sales of his equity interests in MezzCo. The option is subject to adoption by the Company of an option plan which plan may be subject to the approval of the Nevada Gaming Commission.

Under the terms of his employment agreement, OpBiz could have terminated Mr. Mecca's employment immediately at any time for cause. If OpBiz terminated Mr. Mecca's employment for cause, our obligation to pay any further compensation or other amounts payable under the agreement terminated on the date of termination, other than: (i) base salary earned but unpaid through the date of termination; (ii) nonreimbursed business expenses; (iii) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (iv) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). The term "cause" is not specifically defined in Mr. Mecca's employment agreement. Based on the foregoing, in the event that OpBiz had terminated Mr. Mecca's employment for cause on December 31, 2008, OpBiz would have been obligated to pay Mr. Mecca $22,708 which represents accrued but unpaid base salary.

Under the terms of his employment agreement, OpBiz could have terminated Mr. Mecca's employment immediately at any time without cause. If OpBiz terminated Mr. Mecca's employment without cause, our obligation to pay any further compensation or other amounts payable under the agreement would have terminated on the date of termination, other than: (i) severance in the amount of twelve (12) months of his then annual base salary; (ii) base salary earned but unpaid through the date of termination; (iii) all accrued but unpaid bonus up to the date of termination, as determined by OpBiz's Board of Managers utilizing EBITDA targets established pursuant to the employment agreement against year to date budgets (adjusted for budgeting seasonality); (iv) nonreimbursed business expenses; (v) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (vi) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). Based on the foregoing, in the event that OpBiz had terminated Mr. Mecca's employment without cause on December 31, 2008, OpBiz would have been obligated to pay Mr. Mecca further compensation in the approximate total amount of $639,617.

Donna Lehmann Employment Agreement

Ms. Lehmann serves as the treasurer of BH/RE and chief financial officer of OpBiz under an employment agreement that expires on September 1, 2010. OpBiz paid Ms. Lehmann a base salary of $332,750 in 2008, which is subject to annual upward adjustments at a minimum of 5% per annum. Ms. Lehmann was paid a one-time transition bonus of $75,000 in 2004 for her transition from vice president of finance for Aladdin Gaming to her current position with OpBiz. She will receive an annual discretionary bonus of up to 50% of her annual compensation determined by OpBiz's board of managers based on OpBiz's financial performance and certain other factors. The agreement provides that Ms. Lehmann is eligible to receive an option to purchase up to 0.3% of the equity of MezzCo at an exercise price based on a $100 million equity value, vesting one-third annually beginning on September 1, 2005.

OpBiz may terminate Ms. Lehmann's employment immediately at any time for cause. If OpBiz terminates Ms. Lehmann's employment for cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) base salary earned but unpaid through the date of termination; (ii) nonreimbursed business expenses;

(iii) benefits under benefit plans and programs that are earned and vested by the date of termination; and (iv) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). The term "cause" is defined in Ms. Lehmann's employment agreement as follows: (i) failure to abide by the Company's policies and procedures; (ii) misconduct, insubordination, or inattention to the Company's business; (iii) failure to perform the duties required of her up to the standards established by the Board of Managers, or other material breach of the employment agreement (other than as a result of a disability); or (iv) failure or inability to obtain or maintain a license required of her by any regulatory authority having jurisdiction over the Company. Based on the foregoing, in the event that OpBiz had terminated Ms. Lehmann's employment for cause on December 31, 2008, OpBiz would have been obligated to pay Ms. Lehmann $12,810 which represents accrued but unpaid base salary.

OpBiz may terminate Ms. Lehmann's employment at any time without cause upon fifteen (15) days written notice to Ms. Lehmann of its intent to terminate the employment agreement, or, in OpBiz's sole discretion, the equivalent of two (2) weeks of her then annual base salary in lieu of notice. If OpBiz terminates Ms. Lehmann's employment without cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) severance in the amount of twelve (12) months of her then annual base salary; provided that severance benefits shall not exceed an amount equivalent to her base salary from the date of termination to the date the employment agreement would otherwise expire but for earlier termination;(ii) base salary earned but unpaid through the date of termination; (iii) accrued paid time off earned through the date of termination; (iv) nonreimbursed business expenses; (v) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (vi) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). Based on the foregoing, in the event that OpBiz had terminated Ms. Lehmann's employment without cause on December 31, 2008, OpBiz would have been obligated to pay Ms. Lehmann further compensation in the approximate total amount of $360,479.

Upon Ms. Lehmann's death or disability, her employment agreement terminates immediately. If Ms. Lehmann's employment is terminated due to her death or disability, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than (to Ms. Lehmann, or her estate or legal representative, as applicable): (i) base salary earned but unpaid through the date of termination; (ii) bonus earned but unpaid through the date of termination; (iii) nonreimbursed business expenses; (iv) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (v) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). The term "disability" is defined in Ms. Lehmann's employment agreement as her incapacity, certified by a licensed physician selected by the Company, which precludes her from performing the essential functions of her duties under the employment agreement for sixty (60) days or more. In the event that she disagrees with the conclusions of the Company's physician, she (or her representative) shall designate a physician, and both physicians shall jointly select a third physician, who shall make the determination which determination shall be final and binding on the parties. Based on the foregoing, in the event that Ms. Lehmann's employment was terminated for death or disability on December 31, 2008, OpBiz would have been obligated to pay Ms. Lehmann $12,810 which represents accrued but unpaid base salary.

Mark S. Helm Employment Agreement

Mr. Helm serves as senior vice president, general counsel and secretary of OpBiz under an employment agreement that expires on November 2, 2010. If Mr. Helm remains employed by OpBiz after his employment agreement expires, any such employment will be on an at-will basis unless he and

OpBiz agree in writing to extend the terms of his agreement. OpBiz paid Mr. Helm a base salary of $332,750 in 2007, which is subject to annual upward adjustments. He will receive an annual discretionary bonus of up to 50% of his annual compensation determined by OpBiz's board of managers based on OpBiz's financial performance and certain other factors. The agreement provides that Mr. Helm is eligible to receive an option to purchase up to 0.2% of the equity of MezzCo at an exercise price based on a $100 million equity value, vesting one-third annually beginning on November 2, 2005.

OpBiz may terminate Mr. Helm's employment immediately at any time for cause. If OpBiz terminates Mr. Helm's employment for cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) base salary earned but unpaid through the date of termination; (ii) nonreimbursed business expenses; (iii) benefits under benefit plans and programs that are earned and vested by the date of termination; and (iv) options to purchase membership interests in MezzCo that have vested by the date of termination. The term "cause" is defined in Mr. Helm's employment agreement as follows: (i) failure to abide by the Company's policies and procedures; (ii) misconduct, insubordination, or inattention to the Company's business; (iii) failure to perform the duties required of her up to the standards established by the Board of Managers, or other material breach of the employment agreement (other than as a result of a disability); or (iv) failure or inability to obtain or maintain a license required of him by any regulatory authority having jurisdiction over the Company. Prior to a termination for cause, OpBiz must provide a written letter of deficiency to Mr. Helm that details his deficient conduct and thereafter provides him thirty (30) days to cure such deficiency. If, after thirty (30) days, OpBiz continues to believe cause exists to terminate him, then OpBiz shall send a second letter to Mr. Helm terminating him that memorializes his failure to cure the asserted deficiency. Based on the foregoing, in the event that OpBiz had terminated Mr. Helm's employment for cause on December 31, 2008, OpBiz would have been obligated to pay Mr. Helm $12,810 which represents accrued but unpaid base salary.

OpBiz may terminate Mr. Helm's employment at any time without cause upon fifteen (15) days written notice to Mr. Helm of its intent to terminate the employment agreement, or, in OpBiz's sole discretion, the equivalent of two (2) weeks of his then annual base salary in lieu of notice. If OpBiz terminates Mr. Helm's employment without cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) severance in the amount of twelve (12) months of his then annual base salary; provided that severance benefits shall not exceed an amount equivalent to her base salary from the date of termination to the date the employment agreement would otherwise expire but for earlier termination (ii) base salary earned but unpaid through the date of termination; (iii) bonus earned but unpaid through the date of termination; (iv) nonreimbursed business expenses; (v) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (vi) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). Based on the foregoing, in the event that OpBiz had terminated Mr. Helm's employment without cause on December 31, 2008, OpBiz would have been obligated to pay Mr. Helm further compensation in the approximate total amount of $360,479.

In the event that there is a change in control of OpBiz, other than through a public offering, Mr. Helm may terminate his employment upon thirty (30) days written notice to OpBiz. If Mr. Helm terminates his employment for a change in control, other than through a public offering, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) severance in the amount of twelve (12) months of his then annual base salary; provided that severance benefits shall not exceed an amount equivalent to her base salary from the date of termination to the date the employment agreement would otherwise expire but for earlier termination; (ii) base salary earned but unpaid through the date of termination; (iii) bonus earned but

unpaid through the date of termination; (iv) nonreimbursed business expenses; (v) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (vi) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). The term "change in control" is not specifically defined in Mr. Helm's employment agreement. Based on the foregoing, in the event that there was a change in control of OpBiz, other than through a public offering, and Mr. Helm terminated his employment on December 31, 2008, OpBiz would have been obligated to pay Mr. Helm further compensation in the approximate total amount of $360,479.

Upon Mr. Helm's death or disability, his employment agreement terminates immediately. If Mr. Helm's employment is terminated due to his death or disability, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than (to Mr. Helm, or his estate or legal representative, as applicable): (i) base salary earned but unpaid through the date of termination; (ii) bonus earned but unpaid through the date of termination; (iii) nonreimbursed business expenses; (iv) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (v) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). The term "disability" is defined in Mr. Helm's employment agreement as his incapacity, certified by a licensed physician selected by the Company, which precludes him from performing the essential functions of his duties under the employment agreement for sixty (60) days or more. In the event that he disagrees with the conclusions of the Company's physician, he (or his representative) shall designate a physician, and both physicians shall jointly select a third physician, who shall make the determination which determination shall be final and binding on the parties. Based on the foregoing, in the event that Mr. Helm's employment was terminated for death or disability on December 31, 2008, OpBiz would have been obligated to pay Mr. Helm $12,810 which represents accrued but unpaid base salary.

Dean DiLullo Employment Agreement

Mr. DiLullo serves as executive vice president and chief operating officer of OpBiz under an employment agreement that expires on March 24, 2011. OpBiz pays Mr. DiLullo a base salary of $350,000, which is subject to annual upward adjustments. OpBiz pays Mr. DiLullo a performance bonus of up to 50% of his base salary determined by OpBiz's board of managers based on OpBiz's financial performance and certain other factors. Provided however, that in his first year of employment Mr. DiLullo will receive a guaranteed minimum bonus equal to 25% of his base salary.

OpBiz may terminate Mr. DiLullo's employment immediately at any time for cause. If OpBiz terminates Mr. DiLullo's employment for cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) base salary earned but unpaid through the date of termination; and (ii) nonreimbursed business expenses. The term "cause" is defined in Mr. DiLullo's employment agreement as (i) failure to abide by employer's policies and procedures; (ii) misconduct, insubordination, or inattention to employer's business; (iii) material breach of his employment agreement (other than as a result of disability); or (iv) failure or inability to satisfy the licensing requirements of the state of Nevada. Based on the foregoing, in the event that OpBiz had terminated Mr. DiLullo's employment for cause on December 31, 2008, OpBiz would have been obligated to pay Mr. DiLullo $13,462 which represents accrued but unpaid base salary.

OpBiz may terminate Mr. DiLullo's employment at any time without cause upon 15 days written notice. If OpBiz terminates Mr. DiLullo's employment without cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) severance in the amount of twelve (12) months of his then annual base salary, provided that severance pay shall not exceed an amount equivalent to base salary from the date of termination

to the date his agreement would otherwise expire; (ii) base salary earned but unpaid through the date of termination; (iii) all accrued but unpaid bonus up to the date of termination, as determined by OpBiz's Board of Managers utilizing EBITDA targets established pursuant to the employment agreement against year to date budgets (adjusted for budgeting seasonality); (iv) nonreimbursed business expenses; and (v) benefits under benefit plans and programs that have been earned and vested by the date of termination. Based on the foregoing, in the event that OpBiz had terminated Mr. DiLullo's employment without cause on December 31, 2008, OpBiz would have been obligated to pay Mr. DiLullo further compensation in the amount of $379,167.

Upon Mr. DiLullo's death or disability, his employment agreement terminates immediately. If Mr. DiLullo's employment is terminated due to his death or disability, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than (to Mr. DiLullo, or his estate or legal representative, as applicable): (i) base salary earned but unpaid through the date of termination; (ii) bonus earned but unpaid through the date of termination; (iii) nonreimbursed business expenses; (iv) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (v) options to purchase membership interests in MezzCo that have vested by the date of termination. The term "disability" is defined in Mr. DiLullo's employment agreement as his inability to perform the essential functions of his duties for a period of time in excess of that set forth in our policies and procedures, as in effect from time to time, or in excess of a qualified leave pursuant to the Family and Medical Leave Act or as otherwise required by the Americans with Disabilities Act, as applicable. Based on the foregoing, in the event that OpBiz had terminated Mr. DiLullo's employment for death or disability on December 31, 2008, OpBiz would have been obligated to pay Mr. DiLullo $13,462 which represents accrued but unpaid base salary.

Joey Tallone Employment Agreement

Mr. Tallone serves as executive vice president of casino marketing of OpBiz under an employment agreement that expires on April 14, 2011. OpBiz pays Mr. Tallone a base salary of $350,000, which is subject to annual upward adjustments. OpBiz pays Mr. Tallone a performance bonus of up to 50% of his base salary determined by OpBiz's board of managers based on OpBiz's financial performance and certain other factors. Provided however, that in his first year of employment Mr. Tallone will receive a guaranteed minimum bonus of $100,000.

OpBiz may terminate Mr. Tallone's employment immediately at any time for cause. If OpBiz terminates Mr. Tallone's employment for cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) base salary earned but unpaid through the date of termination; and (ii) nonreimbursed business expenses. The term "cause" is defined in Mr. Tallone's employment agreement as (i) failure to abide by employer's policies and procedures; (ii) misconduct, insubordination, or inattention to employer's business; (iii) material breach of his employment agreement (other than as a result of disability); or (iv) failure or inability to satisfy the licensing requirements of the state of Nevada. Based on the foregoing, in the event that OpBiz had terminated Mr. Tallone's employment for cause on December 31, 2008, OpBiz would have been obligated to pay Mr. Tallone $13,462 which represents accrued but unpaid base salary.

OpBiz may terminate Mr. Tallone's employment at any time without cause upon 15 days written notice. If OpBiz terminates Mr. Tallone's employment without cause, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than: (i) severance in the amount of twelve (12) months of his then annual base salary, provided that severance pay shall not exceed an amount equivalent to base salary from the date of termination to the date his agreement would otherwise expire; (ii) base salary earned but unpaid through the date of termination; (iii) all accrued but unpaid bonus up to the date of termination, as determined by

OpBiz's Board of Managers utilizing EBITDA targets established pursuant to the employment agreement against year to date budgets (adjusted for budgeting seasonality); (iv) nonreimbursed business expenses; and (v) benefits under benefit plans and programs that have been earned and vested by the date of termination. Based on the foregoing, in the event that OpBiz had terminated Mr. Tallone's employment without cause on December 31, 2008, OpBiz would have been obligated to pay Mr. Tallone further compensation in the amount of $379,167.

Upon Mr. Tallone's death or disability, his employment agreement terminates immediately. If Mr. Tallone's employment is terminated due to his death or disability, our obligation to pay any further compensation or other amounts payable under the agreement terminates on the date of termination, other than (to Mr. Tallone, or his estate or legal representative, as applicable): (i) base salary earned but unpaid through the date of termination; (ii) bonus earned but unpaid through the date of termination; (iii) nonreimbursed business expenses; (iv) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (v) options to purchase membership interests in MezzCo that have vested by the date of termination. The term "disability" is defined in Mr. Tallone's employment agreement as his inability to perform the essential functions of his duties for a period of time in excess of that set forth in our policies and procedures, as in effect from time to time, or in excess of a qualified leave pursuant to the Family and Medical Leave Act or as otherwise required by the Americans with Disabilities Act, as applicable. Based on the foregoing, in the event that OpBiz had terminated Mr. Tallone's employment for death or disability on December 31, 2008, OpBiz would have been obligated to pay Mr. Tallone $13,462 which represents accrued but unpaid base salary.

Darby Davies Employment Agreement

Ms. Davies served as senior vice president of casino marketing of OpBiz under an employment agreement effective as of January 2, 2006. The term of the agreement was three (3) years, terminating on December 31, 2008. OpBiz paid Ms. Davies a base salary of $286,659 in 2008, which was subject to annual upward adjustments, and she was eligible to participate in OpBiz's bonus program. She received a minimum bonus payment of $50,000 for the year ended December 31, 2006, $75,000 for the year ended December 31, 2007 and $100,000 for the year ended December 31, 2008. The agreement also provided Ms. Davies with an option to purchase up to 0.25% of the equity of MezzCo at an exercise price based on a $100 million equity value, vesting 40% on January 2, 2007, 40% on January 2, 2008 and 20% on December 31, 2008. Ms. Davies employment agreement expired on December 31, 2008 and she resigned from her position at that time. Upon expiration of her employment agreement, OpBiz had no further obligation to Ms. Davies for compensation or severance benefits.

During the term of her agreement, OpBiz could have terminated Ms. Davies' employment immediately upon written notice for cause. If OpBiz terminated Ms. Davies' employment for cause, our obligation to pay any further compensation or other amounts payable under the agreement terminated on the date of termination, other than: (i) base salary earned but unpaid through the date of termination; (ii) nonreimbursed business expenses; (iii) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (iv) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). The term "cause" is defined in Ms. Davies' employment agreement as the following: (i) commission of any act of material fraud or gross negligence by her in the course of her employment thereunder which, in the case of gross negligence, has a materially adverse affect on the goodwill, business or financial condition of the Company; (ii) engagement by her in any conduct or commission by her of any act which is materially injurious or detrimental to the substantial interests of the Company; (iii) engagement by her in any act, whether with respect to her employment or otherwise, which is in violation of the criminal laws of the United States or any state thereof, involving acts of moral turpitude; or (iv) a failure to secure or maintain a

license required of her by any regulatory authority having jurisdiction over the Company. Prior to a termination for cause, OpBiz would have been required to provide a written letter of deficiency to Ms. Davies which detailed her deficient conduct and thereafter provided her thirty (30) days to cure such deficiency if capable of being cured. If such activity was incapable of being cured or if, after thirty (30) days, Ms. Davies failed to cure the deficient conduct, OpBiz could have terminated Ms. Davies' employment agreement for cause. If OpBiz elected to terminate Ms. Davies' employment agreement, it would have been required to send a second letter to Ms. Davies that memorialized her failure to cure the asserted deficiency. Based on the foregoing, in the event that OpBiz had terminated Ms. Davies' employment for cause on December 31, 2008, OpBiz would have been obligated to pay Ms. Davies $11,070 which represents accrued but unpaid base salary.

During the term of her agreement, OpBiz could have terminated Ms. Davies' employment at any time without cause upon fifteen (15) days written notice to Ms. Davies of its intent to terminate the employment agreement. If OpBiz terminated Ms. Davies' employment without cause, our obligation to pay any further compensation or other amounts payable under the agreement terminated on the date of termination, other than: (i) severance in the amount of eighteen (18) months, but not to exceed the balance of the term of her employment agreement, of her annual base salary to which she would have been entitled had the employment agreement not been terminated; (ii) base salary earned but unpaid through the date of termination; (iii) bonus earned but unpaid through the date of termination; (iv) nonreimbursed business expenses; (v) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (vi) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). Based on the foregoing, in the event that OpBiz had terminated Ms. Davies' employment without cause on December 31, 2008, OpBiz would have been obligated to pay Ms. Davies $11,070 which represents accrued but unpaid base salary.

During the term of her agreement, upon Ms. Davies' death or disability, her employment agreement terminated immediately. If Ms. Davies' employment was terminated due to her death or disability, our obligation to pay any further compensation or other amounts payable under the agreement terminated on the date of termination, other than (to Ms. Davies, or her estate or legal representative, as applicable): (i) base salary earned but unpaid through the date of termination; (ii) bonus earned but unpaid through the date of termination; (iii) nonreimbursed business expenses; (iv) benefits under benefit plans and programs that have been earned and vested by the date of termination; and (v) options to purchase membership interests in MezzCo that have vested by the date of termination (provided that any vested options are exercised within ninety (90) days of such termination). The term "disability" is defined in Ms. Davies' employment agreement as her incapacity, certified by a licensed physician selected by her and approved by the Company, which precludes her from performing the essential functions of her duties under the employment agreement for forty-five (45) days or more. Based on the foregoing, in the event that Ms. Davies' employment was terminated for death or disability on December 31, 2008, OpBiz would have been obligated to pay Ms. Davies $11,070 which represents accrued but unpaid base salary.

GRANTS OF PLAN BASED AWARDS FOR 2008

	Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(1)

Name	Target
Michael V. Mecca		—
Donna Lehmann		166,375
Mark S. Helm		166,375
Joey Tallone		175,000
Darby Davies		—

(1): The target estimated future payouts under non-equity incentive plan awards represents the maximum amount payable under the Company's bonus plan. The target will be met if all short-term goals detailed in the underlying plan are met. Mr. Mecca and Ms. Davies are no longer employed by the Company and therefore, will not receive any future payouts under their non-equity incentive plan awards.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2008

	Options Awards

Name	Number of Securities Underlying Unexercised Options Exercisable (#)(1)		Number of Securities Underlying Unexercised Options Unexercisable (#)(1)		Option Exercise Price ($)(1)		Option Expiration Date(2)
Michael V. Mecca		3,000		—		1,000.00
Donna Lehmann		300		—		1,000.00
Mark S. Helm		200		—		1,000.00
Joey Tallone		—		—		—
Darby Davies		250		—		1,000.00

(1): MezzCo membership interests have not been unitized. The implied number of units and equity value has been computed based on the MezzCo equity contribution on the grant date. The option exercise price detailed here is based on a $100 million equity value which is subject to change pursuant to the final plan as approved by the Board of Managers. The options are not exercisable until a triggering event occurs. Although the options are not exercisable, they are fully vested.
(2): Participants have 90 days after an event occurs to exercise options.

DIRECTOR COMPENSATION

Name

Robert Earl	—	—
Douglas P. Teitelbaum	—	—
Eugene I. Davis	75,000	75,000
George Barry Hardy	75,000	75,000
Allison Reid	—	—
Thomas M. Smith	—	—

(1): All managers are reimbursed for expenses connected with attendance at meetings of the Board.

Compensation Committee Interlocks and Insider Participation

During the 2008 fiscal year, Douglas P. Teitelbaum, Robert Earl and Thomas M. Smith served as members of the Board's Compensation Committee. For additional information concerning related-party transactions involving Messrs. Teitelbaum and Earl or other members of the Board, see Item 13. "Certain Relationships and Related Transactions, and Director Independence."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The table below sets forth the beneficial ownership of BH/RE's voting and equity membership interests as of March 31, 2009 by:

•: each member of the board of managers of BH/RE;
•: Starwood Nevada Holdings, LLC; and
•: BH/RE's board of managers and executive officers as a group.

In addition, the table below sets forth, as of March 31, 2009, the beneficial ownership of each person known by BH/RE to be the beneficial owner of more than five percent of its voting membership interests, which is the only class of voting securities of BH/RE.

Unless otherwise indicated, each person listed in the table below has sole voting and investment power over the percentage of voting and equity membership interests listed opposite such person's name. Except as indicated below, none of the Company's executive officers or managers own any equity of BH/RE.

	BH/RE

Name	Percent of Voting Membership Interests			Percent of Equity Membership Interests
Douglas P. Teitelbaum(1)		50.00	%		—
Robert Earl(2)		50.00	%		—
BH Casino and Hospitality LLC I(1)		—			43.27	%
BH Casino and Hospitality LLC II(1)		—			15.61	%
OCS Consultants, Inc(2)		—			41.13	%
All members of the board of managers and executive officers as a group (10 persons)		100.00	%		100.00	%

(1): The address for Mr. Teitelbaum, BH Casino and Hospitality LLC I and BH Casino and Hospitality LLC II is 885 Third Avenue, 34th Floor, New York, New York 10022. Mr. Teitelbaum beneficially owns all of the equity membership interests beneficially owned by BH Casino and Hospitality I and II because Mr. Teitelbaum is the sole manager of BH Casino and Hospitality I and II. Mr. Teitelbaum disclaims beneficial ownership of such equity membership interests, except to the extent of his pecuniary interest therein.
(2): The address for Mr. Earl is 7598 West Sand Lake Road, Orlando, Florida 32819. Mr. Earl beneficially owns all of the equity membership interests beneficially owned by OCS because OCS is wholly owned and controlled by Mr. Earl.

Equity Compensation Plan Information

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

	(a)		(b)		(c)
Equity compensation plans approved by security holders		4,600	$	1,000.00		—
Equity compensation plans not approved by security holders		—		—		—

Total		4,600	$	1,000.00		—

(a): MezzCo membership units have not been unitized. The implied number of units has been computed based on the MezzCo equity contribution on the grant date. The total number of membership units outstanding has been computed as 100,000. The number of securities to be issued represents 4.60% of the total units based on the percentage of equity each option holder has been granted.

(b): The exercise price shown here is based on a $100 million equity value which is subject to change pursuant to the final plan as approved by the Board of Managers. Exercise price is computed using the total number of units divided by the stated equity value.
(c): The Board of Managers of BH/RE is currently considering a plan but has not yet adopted one. Once a plan is adopted, the number of securities remaining available for future issuance will be 1,400 based on an approved grant of 6% of total equity.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

Review, Approval and Ratification of Related Person Transactions

The Audit Committee is responsible, pursuant to its written charter, for reviewing and discussing with management any transaction with a related party which the Company would be required to disclose pursuant to Item 404 of Regulation S-K. Each such transaction must be approved by a majority of the Company's disinterested managers.

Related Person Transactions

Transactions with Planet Hollywood

OpBiz, Planet Hollywood and certain of Planet Hollywood's subsidiaries have entered into a licensing agreement pursuant to which OpBiz received a non-exclusive, irrevocable license to use various "Planet Hollywood" trademarks and service marks. Under the licensing agreement, OpBiz also has the right, but not the obligation, to open a Planet Hollywood restaurant and one or more Planet Hollywood retail shops under a separate restaurant agreement with Planet Hollywood. OpBiz will pay Planet Hollywood a quarterly licensing fee of 1.75% of OpBiz's non-casino revenues. If OpBiz opens an attraction with paid admission using the Planet Hollywood marks or memorabilia prior to beginning operations as the PH Resort, it will pay Planet Hollywood a quarterly licensing fee of 1.75% of the revenues of the attraction until OpBiz begins operating as the PH Resort. The initial term of the licensing agreement will expire in 2028. OpBiz can renew the licensing agreement for three successive 10-year terms.

In addition to being a manager of BH/RE, Mr. Earl is the chief executive officer and chairman of the board of directors of Planet Hollywood. Similarly, Mr. Teitelbaum is a manager of BH/RE and a director of Planet Hollywood. Collectively, Mr. Earl, a trust for the benefit of Mr. Earl's children and affiliates of Bay Harbour Management, own substantially all of the equity of Planet Hollywood. Mr. Earl disclaims beneficial ownership of any equity of Planet Hollywood owned by the trust.

Transactions with Starwood

OpBiz and Sheraton have entered into a management contract pursuant to which Sheraton provides hotel management services to OpBiz, assists OpBiz in the management, operation and promotion of the Hotel and permits OpBiz to use the Sheraton brand and trademarks in the promotion of the Hotel. OpBiz pays Sheraton a monthly fee of 4% of gross hotel revenue and certain food and beverage outlet revenues and 2% of rental income from third-party leases in the Hotel. The management contract has a 20-year term commencing on the completion of the Aladdin acquisition and is subject to certain termination provisions by either OpBiz or Sheraton. Sheraton is a wholly owned subsidiary of Starwood, which has a 11.39% equity interest in EquityCo and has the right to appoint two members to the EquityCo board of managers. Thomas M. Smith, who is member of the OpBiz board of managers and the EquityCo board of managers, is an officer of Starwood and was appointed to the board of managers pursuant to the Company's agreement with Starwood.

Planet Hollywood (LV) LLC Lease Agreement

OpBiz and Planet Hollywood (LV) LLC ("Planet Hollywood LV") have entered into a lease agreement pursuant to which Planet Hollywood LV, as tenant, operates a new concept it has developed for an upscale 24-hour diner named "Planet Dailies" within approximately 11,500 square feet of space located on the premises owned by OpBiz. Planet Hollywood LV pays OpBiz base rent in the amount of $500,000 per year (subject to annual increase adjustments), in addition to percentage rent of up to 12% based on annual gross sales (to the extent such percentage rent exceeds base rent). The initial term of the lease agreement will expire in 2017. Planet Hollywood LV can renew the lease agreement for two successive 5-year terms. Planet Dailies began operation on April 1, 2007 and began paying rent pursuant to the lease agreement as of that date. Rent received from Planet Dailies totaled approximately $0.4 million for the year ended December 31, 2008, and $0.3 million for the year ended December 31, 2007.

Earl of Sandwich (Las Vegas), LLC Lease Agreement

Earl of Sandwich is wholly and indirectly owned by a trust for the benefit of Mr. Earl's children. Mr. Earl disclaims beneficial ownership of any equity of Earl of Sandwich owned by the trust.

Guaranty Agreement

In connection with the Loan, the Lender required that Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd. and Bay Harbour Master Ltd., which are affiliates of Bay Harbour Management, execute and deliver a certain Guaranty (see Note 7.—Long-Term Debt). In exchange for executing the Guaranty, OpBiz and PH Fee Owner agreed to pay Trophy Hunter Investments, Ltd. and Bay Harbour Master Ltd. a fee equal to $1,500,000 per year. The fee is accrued and only payable once OpBiz hits certain debt service coverage ratios defined in the Loan Agreement.

Aircraft Charter Arrangements

Director Independence

The Company is not a listed issuer. Using Rule 4200 of the NASDAQ Marketplace Rules (the "NASDAQ Rule"), the board of managers has determined that Eugene I. Davis and George Barry Hardy are "independent directors" because (i) each is not an executive officer or employee of the Company; and (ii) in the opinion of the board of managers, each is not an individual having a relationship which will interfere with the exercise of independent judgment in carrying out the responsibilities of such manager. The board of managers has determined that Eugene I. Davis and George Barry Hardy are also "independent" as that term is defined in the Securities Exchange Act of 1934 and the rules thereunder.

Employment Agreements

For information on the employment agreements for the Company's new executive officer, Mr. McCartney, see Item 10.

Robert Earl and Douglas P. Teitelbaum, who are members of the compensation committee, are not "independent directors" under the NASDAQ Rule. The Company does not have a nominating committee. Of the members of the full board of managers, Robert Earl, Douglas P. Teitelbaum and Thomas M. Smith are not "independent directors" under the NASDAQ Rule for purposes of membership on a nominating committee.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees paid or payable to Ernst & Young LLP, our principal independent auditors, for audit and non-audit services:

	December 31,

	2008		2007
Audit Fees Current	$	284,971	$	273,970
Audit-Related Fees		69,735		74,415
Tax Fees		60,000		55,000
All Other Fees		—		—

Total	$	414,706	$	403,385

"Audit Fees" include fees incurred for the annual audits and the reviews of our Quarterly Reports on Form 10-Q. "Audit-Related Fees" include fees paid for review of gaming regulations and controls and Sarbanes-Oxley control review. "Tax Fees" include fees incurred for the preparation of the income tax returns for BH/RE and its consolidated subsidiaries.

The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax and other services performed by the independent auditor. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. The Audit Committee must approve the permitted service before the independent registered public accounting firm is engaged to perform it. If the pre-approval authority is delegated to one or more members of the Audit Committee, such pre-approval must be presented to the Audit Committee at its next scheduled meeting for ratification. All audit, audit-related, tax and other services performed by the independent registered public accounting firm were approved by the Audit Committee in accordance with the policy described above for fiscal year 2008.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a)(1)		Financial statements (including related notes to Consolidated Financial Statements) filed as Item 8 in Part II of this report are listed below:
		Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2008 and 2007 Years ended December 31, 2008, 2007, and 2006— Consolidated Statements of Operations Consolidated Statements of Members' Equity (Deficit) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements


(a)(2)

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

						Additions			Deductions

Description			Balance at beginning of period			Charge to costs and expense			Accounts written off (recovered)		Balance at end of period
Allowance for doubtful accounts:
	Year ended December 31,:
		2006	$	(4,443	)	$	(2,398	)	$	285	$	(6,556	)
		2007	$	(6,556	)	$	(550	)	$	—	$	(7,106	)
		2008	$	(7,106	)	$	(1,128	)	$	—	$	(8,234	)

We have omitted schedules other than the ones listed above because they are not required or not applicable or the required information is shown in the consolidated financial statements or the notes to the consolidated financial statements.


(a)(3)		Exhibits

All documents referenced below were filed pursuant to the Securities Exchange Act of 1934 by the Company, file number 000-50689, unless otherwise indicated.

Exhibit Number			Description

	3.1		Articles of Organization of BH/RE, L.L.C., as amended (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	3.2		Amended and Restated Operating Agreement of BH/RE, L.L.C. dated March 26, 2004 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on August 16, 2004)
	3.3		Amendment to Amended and Restated Operating Agreement of BH/RE, L.L.C. dated August 9, 2004 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on August 16, 2004, attached to exhibit number 3.1 thereto)
	3.4		Amended and Restated Operating Agreement of EquityCo, L.L.C. dated April 23, 2003 (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	3.5		Second Amended and Restated Operating Agreement of EquityCo, L.L.C. dated August, 31, 2004 (Incorporated by reference to the Company's Current Report on Form 8-K filed on September 7, 2004)
	10.1		Planet Hollywood Hotel & Casino Licensing Agreement dated May 3, 2003, by and among Planet Hollywood International, Inc., Planet Hollywood (Region IV), Inc., Planet Hollywood Memorabilia, Inc. and OpBiz, L.L.C. (Incorporated by reference to the Company's Form 10/A filed on June 15, 2004)
	10.2		Amended and Restated Planet Hollywood Hotel & Casino Licensing Agreement dated August 9, 2004, by and among Planet Hollywood International, Inc., Planet Hollywood (Region IV), Inc., Planet Hollywood Memorabilia, Inc. and OpBiz, L.L.C. (Incorporated by reference to the Company's Current Report on Form 8-K filed on September 7, 2004)
	10.3		Management Contract dated April 23, 2003, by and between Sheraton Operating Corporation and OpBiz, L.L.C. (Incorporated by reference to the Company's Form 10/A filed on June 15, 2004)

Exhibit Number			Description

	10.4		Agreement by and between Starwood Nevada Holding LLC, Sheraton Operating Corporation, BH/RE, L.L.C., EquityCo, L.L.C. and OpBiz, L.L.C. dated August 9, 2004 (Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on August 16, 2004)
	10.5		Construction, Operation and Reciprocal Easement Agreement, dated February 26, 1998, by and among Aladdin Gaming, LLC, Aladdin Bazaar, LLC and Aladdin Music Holdings, LLC; (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.6		Amendment and Ratification of Construction, Operation and Reciprocal Easement Agreement, dated November 20, 2000, by and between Aladdin Gaming, LLC and Aladdin Bazaar, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004; attached to exhibit number 99.2 thereto)
	10.7		Second Amendment of Construction, Operation and Reciprocal Easement Agreement, effective March 31, 2003, by and between Aladdin Gaming, LLC and Aladdin Bazaar, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004; attached to exhibit number 99.2 thereto)
	10.8		Memorandum of Amendment and Ratification of REA, dated November 20, 2000, by and between Aladdin Gaming, LLC and Aladdin Bazaar, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004; attached to exhibit number 99.2 thereto)
	10.9		Findings of Fact and Conclusions of Law Re: Aladdin Bazaar, LLC's Motion for Payment of Administrative Expense, or in the Alternative, for an Order Setting a Deadline for Debtor to Assume or Reject Common Area Parking Agreement, filed October 8, 2002 (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.10		Common Parking Area Use Agreement, dated February 26, 1998, by and between Aladdin Gaming, LLC and Aladdin Bazaar, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.11		Traffic Control Improvements Cost Participation Agreement Commercial Development, dated June 7, 2000, by and between Aladdin Gaming, LLC and Clark County, Nevada (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.12		Energy Service Agreement, dated September 24, 1998, between Aladdin Gaming, LLC and Northwind Aladdin, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.13		Amendment and Agreement, dated September 25, 1998, between Northwind Aladdin, LLC and Aladdin Gaming, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004; attached to exhibit 99.8 thereto)
	10.14		Second Amendment and Agreement, dated May 28, 1999, between Northwind Aladdin, LLC and Aladdin Gaming, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004; attached to exhibit 99.8 thereto)
	10.15		Third Amendment and Agreement, dated May 28, 1999, between Northwind Aladdin, LLC and Aladdin Gaming, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004; attached to exhibit 99.8 thereto)
	10.16		Energy Services Coordination Agreement, dated May 28, 1999, by and among Aladdin Gaming, LLC and Aladdin Bazaar, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.17		Timeshare Purchase Agreement, dated December 10, 2004, between Westgate Resorts, Ltd. and OpBiz, L.L.C. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 15, 2005)

Exhibit Number			Description

	10.18		Subordination, Non-Disturbance and Attornment Agreement and Consent, dated as of June 7, 1999, by and among The Bank of Nova Scotia, Northwind Aladdin, LLC, Aladdin Gaming, LLC, State Street Bank and Trust Company, Aladdin Music, LLC and Aladdin Music Holdings, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.19		Lease, dated December 3, 1997, by and between Aladdin Gaming, LLC and Northwind Aladdin, LLC (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.20		Employment Agreement dated April 11, 2003, by and among OpBiz, L.L.C., Michael Mecca, Robert Earl and Doug Teitelbaum (Incorporated by reference to the Company's Form 10 filed on April 16, 2004)
	10.21		Letter Agreement dated July 13, 2004, by and among MezzCo. L.L.C., OpBiz, L.L.C. and Michael V. Mecca (Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on August 16, 2004)
	10.22		Employment Agreement dated September 1, 2004, by and between OpBiz, L.L.C. and Donna Lehmann (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 15, 2005)
	10.23		Amendment to Employment Agreement dated September 1, 2005, by and between OpBiz, L.L.C. and Donna Lehmann (Incorporated by reference to the Company's Current Report on Form 8-K filed on October 31, 2005)
	10.24		Employment Agreement dated November 2, 2004, by and between OpBiz, L.L.C. and Mark S. Helm (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 15, 2005)
	10.25		Employment Agreement dated August 9, 2004, by and between OpBiz, L.L.C. and Bruce B. Himelfarb (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 15, 2005)
	10.26		Employment Agreement dated November 1, 2005, by and between OpBiz, L.L.C. and Darby Davies (Incorporated by reference to the Company's Current Report on Form 8-K filed on February 9, 2006)
	10.27		Loan Agreement, dated November 30, 2006, by and between OpBiz, PH Fee Owner and Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.28		Deed of Trust, Assignment of Leases and Rents, Financing Statement and Fixture Filing, dated November 30, 2006, by PH Fee Owner and OpBiz to the Trustee named therein for the benefit of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.29		Deed of Trust, Assignment of Leases and Rents, Financing Statement and Fixture Filing, dated November 30, 2006, by TSP Owner to the Trustee named therein for the benefit of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.30		Promissory Note by OpBiz and PH Fee Owner in favor of Column Financial, Inc., dated November 30, 2006 (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.31		Assignment of Leases and Rents made by OpBiz and PH Fee Owner in favor of Column Financial, Inc., dated November 30, 2006 (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.32		Assignment of Contracts, Operating Permits and Construction Permits, dated November 30, 2006, by OpBiz and PH Fee Owner in favor of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)

Exhibit Number			Description

	10.33		Environmental Indemnity Agreement, dated November 30, 2006, by OpBiz and PH Fee Owner in favor of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.34		Collateral Assignment of Timeshare Project Proceeds, dated November 30, 2006, made by TSP Owner in favor of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.35		Collateral Assignment of Interest Rate Cap Agreement, dated November 30, 2006, by OpBiz and PH Fee Owner in favor of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.36		Pledge and Security Agreement, dated November 30, 2006, by MezzCo in favor of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.37		Acknowledgement of Pledge by OpBiz, dated November 30, 2006. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.38		Pledge and Security Agreement, dated November 30, 2006, by PH Fee Owner in favor of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.39		Acknowledgement of Pledge by TSP Owner, dated November 30, 2006. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.40		Security Agreement (Copyrights) by OpBiz in favor of Column Financial, Inc., dated November 30, 2006. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.41		Security Agreement (Trademarks) by OpBiz in favor of Column Financial, Inc., dated November 30, 2006. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.42		Operations and Maintenance Agreement, dated November 30, 2006, between OpBiz and PH Fee Owner and Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.43		Restructuring Agreement, dated November 30, 2006, among Mezzco, EquityCo and the Investors named therein. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.44		Amended and Restated Investor Rights Agreement, dated as of November 30, 2006, among MezzCo, EquityCo, and the Investors specified or referred to therein. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.45		Form of Amended and Restated Warrants. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.46		Guaranty Agreement, dated as of November 30, 2006, made by EquityCo in favor of the Collateral Agent and the Investors. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.47		Pledge Agreement, dated as of November 30, 2006, between EquityCo, the Collateral Agent for the benefit of the Investors, acknowledged and agreed to by MezzCo. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.48		Release, Waiver and Consent Agreement, dated as of November 30, 2006, among the Company, EquityCo, OpBiz, and the Investors specified or referred to therein. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)

Exhibit Number			Description

	10.49		Amended and Restated Planet Hollywood Resort and Casino License Agreement, dated as of November 30, 2006, among Planet Hollywood International, Inc. and Planet Hollywood (Region IV), Inc., Planet Hollywood Memorabilia, Inc. and OpBiz. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.50		Amended and Restated License Subordination Agreement, dated as of November 30, 2006, among the Investors, PHII, PHM and OpBiz. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.51		Indemnification Agreement, dated as of November 30, 2006, between BH/RE and the Investors. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.52		Guaranty Fee Agreement, dated as of November 30, 2006, among Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd., and Bay Harbour Master, Ltd. and PH Fee Owner. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.53		Lease Agreement, dated as of November 30, 2006, by and between PH Fee Owner and OpBiz for Casino space. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.54		Lease Agreement, dated as of November 30, 2006, by and between PH Fee Owner and OpBiz for Hotel space. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.55		Guaranty Agreement, dated as of November 30, 2006, among Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd., and Bay Harbour Master, Ltd. and PH Fee Owner. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.56		Guaranty Agreement, dated as of November 30, 2006, made by Douglas Teitelbaum for the benefit of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.57		Guaranty Agreement, dated as of November 30, 2006, made by Robert Earl for the benefit of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.58		Completion Guaranty, dated as of November 30, 2006, among Trophy Hunter Investments, Ltd., Bay Harbour 90-1, Ltd., and Bay Harbour Master, Ltd. and Robert Earl for the benefit of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.59		Environmental Indemnity Agreement, dated as of November 30, 2006, made by PH Fee Owner and OpBiz in favor of Column Financial, Inc. (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 2, 2007)
	10.60		Omnibus Amendment of Loan Documents, dated July 17, 2007, by and between OpBiz, PH Fee Owner and Column Financial, Inc. (Incorporated by reference to the Company's Current Report on Form 8-K filed on July 25, 2007)
	10.61		First Amendment to Amended and Restated Investor Rights Agreement, dated July 17, 2007, by and among MezzCo, EquityCo and the Mezzanine Investors (Incorporated by reference to the Company's Current Report on Form 8-K filed on July 25, 2007)
	10.62		Second Amendment to Employment Agreement, dated September 7, 2007, by and between OpBiz, L.L.C. and Donna Lehmann (Incorporated by reference to the Company's Current Report on Form 8-K filed on September 14, 2007)

Exhibit Number			Description

	10.63		Modification Agreement Regarding Timeshare Purchase Agreement, dated September 19, 2007, by and between OpBiz, L.L.C., PH Fee Owner, LLC, TSP Owner, LLC, Westgate Resorts, Ltd. and Westgate Planet Hollywood Las Vegas, LLC (Incorporated by reference to the Company's Current Report on Form 8-K filed on September 27, 2007)
	10.64		Timeshare Maintenance and Management Agreement, dated September 19, 2007, by and among Westgate Planet Hollywood Las Vegas, LLC, CFI Resorts Management, Inc. and OpBiz, L.L.C. (Incorporated by reference to the Company's Current Report on Form 8-K filed on September 27, 2007)
	10.65		Amendment to Employment Agreement, dated September 26, 2007, by and between OpBiz, L.L.C. and Mark S. Helm (Incorporated by reference to the Company's Current Report on Form 8-K filed on November 13, 2007)
	10.66		Employment Agreement, dated September 26, 2007, by and between OpBiz, L.L.C. and Scott Messinger (Incorporated by reference to the Company's Current Report on Form 8-K filed on November 13, 2007)
	10.67		Amended and Restated Employment Agreement, dated January 8, 2008, by and between MezzCo, L.L.C. and Michael V. Mecca (Incorporated by reference to the Company's Current Report on Form 8-K filed on January 14, 2008)
	10.68		Employment Agreement, dated February 7, 2008, by and between OpBiz, L.L..C. and Joey Tallone (Incorporated by reference to the Company's Annual Report on Form 10-K filed on March 28, 2008)
	10.69		Employment Agreement, dated March 19, 2008, by and between OpBiz, L.L.C. and Dean DiLullo (Incorporated by reference to the Company's Current Report on Form 8-K filed on March 25, 2008)
	10.70		Separation Agreement, dated January 14, 2009, by and between OpBiz, L.L.C. and Michael V. Mecca (Incorporated by reference to the Company's Current Report on Form 8-K filed January 22, 2009)
	10.71		Employment Agreement, dated January 15, 2009, by and between OpBiz, L.L..C. and Thomas J. McCartney
	10.72		Fifth Amendment to Energy Services Agreement, dated January 30, 2009, between Northwind Aladdin, LLC and OpBiz, L.L.C.
	21.1		List of Subsidiaries of BH/RE, L.L.C.
	31.1		Certification pursuant to §302 of the Sarbanes-Oxley Act of 2002, Thomas J. McCartney
	31.2		Certification pursuant to §302 of the Sarbanes-Oxley Act of 2002, Donna Lehmann
	32.1		Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002, Thomas J. McCartney
	32.2		Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002, Donna Lehmann
	99.1		OpBiz, L.L.C. Compensation Committee Charter (Incorporated by reference to the Company's Annual Report on Form 10-K filed on April 15, 2005)
	99.2		OpBiz, L.L.C. Audit Committee Charter (Incorporated by reference to the Company's Annual Report on Form 10-K filed on March 31, 2006)
	99.3		BH/RE, L.L.C. Code of Ethics (Incorporated by reference to the Company's Annual Report on Form 10-K filed on March 31, 2006)

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BH/RE, L.L.C.
March 31, 2009	By:	/s/ DONNA LEHMANN
	Donna Lehmann Treasurer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date


/s/ ROBERT EARL Robert Earl	Manager of BH/RE and EquityCo and Co-Chairman of OpBiz	March 31, 2009
/s/ DOUGLAS P. TEITELBAUM Douglas P. Teitelbaum	Manager of BH/RE and EquityCo and Co-Chairman of OpBiz	March 31, 2009
/s/ THOMAS J. MCCARTNEY Thomas J. McCartney	President and Chief Executive Officer of OpBiz (Principal Executive Officer)	March 31, 2009
/s/ DONNA LEHMANN Donna Lehmann	Treasurer of BH/RE and Chief Financial Officer of OpBiz (Principal Financial and Accounting Officer)	March 31, 2009
/s/ GEORGE BARRY HARDY George Barry Hardy	Manager of OpBiz	March 31, 2009
/s/ EUGENE I. DAVIS Eugene I. Davis	Manager of OpBiz	March 31, 2009
Allison Reid	Manager of EquityCo and OpBiz
Thomas M. Smith	Manager of EquityCo and OpBiz

BH RE LLC 10-K