Cautionary Statement Regarding Forward-Looking Statements and Risk Factors

We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are making the following statements to do so. Certain statements in this Quarterly Report and our other filings with the SEC constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. You may identify these statements by forward-looking words such as "may," "intend," "expect," "anticipate," "believe", "will," "should," "project," "estimate," "plan" or other comparable terminology or by other statements that do not relate to historical facts. All statements, trend analyses and other information relative to the market for our products, remaining life-of-project sales, our expected future sales, gross margin, financial position, operating results, liquidity and capital resources, our business strategy, financial plan and expected capital requirements as well as trends in our operations, receivables performance or results are forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond our control, including changes in economic conditions, generally, in areas where we operate, or in the travel and tourism industry, availability of financing, increases in interest rates, changes in regulations and other factors discussed throughout our SEC filings, including the Risk Factors section of our Annual Report and this Quarterly Report, all of which could cause our actual results, performance or achievements, or industry trends, to differ materially from any future results, performance, or achievements or trends expressed or implied herein. Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, and no assurance can be given that the plans, estimates and expectations reflected herein will be achieved. Factors that could adversely affect our future results can also be considered general risk factors with respect to our business, whether or not they relate to a forward-looking statement. We wish to caution you that the important factors set forth below and elsewhere in this Quarterly Report in some cases have affected, and in the future could affect our actual results and could cause our actual consolidated results to differ materially from those expressed in any forward-looking statements.

• The state of the economy, generally, interest rates and the availability of financing will affect our ability to market VOIs and residential homesites.

• We would incur substantial losses if the customers we finance default on their obligations, and new credit underwriting standards may not have the favorable impact on performance as anticipated.

• Our business plans historically have depended on our ability to sell or borrow against our notes receivable to support our liquidity and profitability.

• Historically, we depended on additional funding to finance our operations. The material deterioration in the credit markets has had and could continue to adversely affect our liquidity and earnings.

• While we have attempted to restructure our business to reduce our need for and reliance on financing for liquidity in the short term, our business and profitability will depend on our ability to obtain financing to achieve growth and long term profitability.

• We have approximately $81 million of indebtedness which becomes due in less than one year. If we are unable to renew, extend or refinance a significant portion of this debt, our liquidity would be significantly, adversely impacted.

• Continued declines in our common stock price will make it difficult to raise capital and could result in the delisting of our common stock from the New York Stock Exchange.

• Our results of operations and financial condition could be adversely impacted if our estimates concerning our notes receivable are incorrect.

• Our future success depends on our ability to market our products successfully and efficiently.

• We are subject to the risks of the real estate market and the risks associated with real estate development, including the declines in real estate values and the deterioration of real estate sales.

• Claims for development-related defects could adversely affect our financial condition and operating results.

• The resale market for VOIs could adversely affect our business.

• We may be adversely affected by extensive federal, state and local laws and regulations and changes in applicable laws and regulations, including with respect to the imposition of additional taxes on operations.

• Environmental liabilities, including claims with respect to mold or hazardous or toxic substances, could have a material adverse impact on our business.

• Actions by third-party rating agencies could adversely impact our ability to obtain, renew, or extend credit facilities, debt, or otherwise raise capital.

Executive Overview

The increase in net income recognized during the three and six months ended June 30, 2009, as compared to the same period in 2008, reflects higher field operating profit earned from Bluegreen Resorts and the benefit of lower corporate expenditures, partially offset by continued low demand for homesites in our Communities Division. In addition, results during the three and six months ended June 30, 2009 benefited from a one-time credit to income tax expense of $4.6 million, the result of certain book and tax differences (previously temporary differences) becoming permanent.

During the three months ended June 30, 2009, our Resorts Division primarily operated 18 sales offices and completed 5,515 sales transactions. This compares to 28 sales offices and 12,324 completed sales transactions respectively, during the three months ended June 30, 2008. During the six months ended June 30, 2009, our Resorts Division primarily operated 18 sales offices and completed 9,285 sales transactions. This compares to 28 sales offices and 21,700 completed sales transactions during the six months ended June 30, 2008. The reductions reflect the strategic initiatives we implemented during 2008 to reduce our sales levels in order to conserve cash, as discussed in further detail below. Our Communities business continues to be impacted by the prolonged down turn in the real estate market and thus generated lower sales during the three and six months ended June 30, 2009, as compared to the three and six months ended June 30, 2008.

The following table details the contribution to consolidated sales of real estate by the reportable segments for the three and six months ended June 30, 2008 and 2009 (in thousands, expect percentage amounts):

                                      For the Three Months Ended June 30,
                          ------------------------------------------------------------
                                      2008                           2009
                          ----------------------------   -----------------------------
                           Sales of real    % of total    Sales of real       % of
                              estate          sales          estate        total sales
                          ---------------   ----------   ---------------   -----------

  Bluegreen Resorts       $         107.1      89%       $          52.0       92%
  Bluegreen Communities              13.0      11%                   4.6        8%
                          --- -----------                --- -----------
  Total                   $         120.1                $          56.6
                          --- -----------                --- -----------

                                       For the Six Months Ended June 30,
                          ------------------------------------------------------------
                                      2008                           2009
                          ----------------------------   -----------------------------
                           Sales of real    % of total    Sales of real       % of
                              estate          sales          estate        total sales
                          ---------------   ----------   ---------------   -----------
  Bluegreen Resorts       $         197.4      85%       $          95.5       93%
  Bluegreen Communities              33.9      15%                   6.9        7%
                          --- -----------                --- -----------
  Total                   $         231.3                $         102.4
                          --- -----------                --- -----------

There has been and continues to be an unprecedented disruption in the credit markets, which has made obtaining additional and replacement external sources of liquidity more difficult and, if available, more costly. The term securitization market has been severely limited, and, as a result, financial institutions are reluctant to enter into new credit facilities for the purpose of providing financing on consumer receivables. Several lenders to the timeshare industry have announced that they will either be exiting the finance business or will not be entering into new financing commitments for the foreseeable future, including certain of our lenders, although such lenders have to date honored existing commitments. In addition, financing for real estate acquisition and development and the capital markets for corporate debt have been generally unavailable.

As evidenced by Bluegreen Resorts' results of operations during the first six months of 2009, we believe that the market for our Resorts product remains relatively strong, but the uncertainties in the credit markets are requiring us, for the time being, to continue to deemphasize our sales operations to conserve cash. To this end, during the fourth quarter of 2008, we implemented strategic initiatives that have materially reduced resort sales and will continue to maintain a reduced level of sales for the foreseeable future in an effort to conserve cash and availability under our receivables credit facilities. Such initiatives included closing certain sales offices; greatly eliminating what we have identified as lower-efficiency marketing programs; emphasizing cash sales and higher cash down payments as well as our other cash-based services; reducing overhead, including eliminating a significant number of staff positions across a variety of areas at various locations; limiting sales to borrowers who meet newly applied underwriting standards; and increasing interest rates on new sales transactions for which we provide financing. Our goal was and continues to be to reduce the number of sales, while increasing the ultimate profitability of those sales we do make. For more detailed information on our strategic initiatives, see "Liquidity and Capital Resources" below. We believe that we have adequate timeshare inventory to satisfy our projected sales for the remainder of 2009, and based on anticipated reduced sales levels, for a number of years thereafter. We intend to continue to provide high quality vacation experiences to our Bluegreen Vacation Club owners and believe that these initiatives should not have any material impact on owner satisfaction with our products and services.

We continue to actively pursue additional credit facility capacity, capital markets transactions, and alternative financing solutions and we hope that the steps we are taking will position us to maintain existing, strong credit relationships, as well as attract new sources of capital. Regardless of the state of the credit markets, however, we believe that our resorts management and finance operations will continue to represent recurring cash-generating sources of income which do not require material liquidity support from the credit markets.

We are pursuing growth in our sales and marketing, resorts management, mortgage servicing and title businesses by seeking opportunities to use our core competencies in these areas to generate fee income by providing these services to third-parties. We recently entered into four contracts to provide sales, marketing, title and management services to third-parties on a cash fee-for-service basis. We will also be providing resort design and development services and mortgage services, under certain of these arrangements. In addition, although sales levels will be decreased, we believe our resorts management business and mortgage portfolio are sources of recurring cash receipts.

We have historically experienced and expect to continue to experience seasonal fluctuations in our gross revenues and results of operations. This seasonality may result in fluctuations in our quarterly operating results, with the majority of our gross revenues and net earnings historically expected to occur in the quarters ending in September and December of each year. Although we expect to see more potential customers at our sales offices during the quarters ending in June and September, ultimate recognition of the resulting sales during these periods may be delayed due to complex down payment requirements for real estate sales under GAAP or due to the timing of development and the requirement that we use the percentage-of-completion method of accounting.

We believe that inflation and changing prices have had a material impact on our revenues and results of operations. We have increased the sales prices of our VOIs periodically and have experienced increased construction and development costs from time to time during the last five years. The increased construction and development costs in

Our Bluegreen Communities business has been, and continues to be, adversely impacted by deterioration in the real estate markets generally. We have experienced a material decrease in demand, particularly for higher priced premium homesites, and an overall decrease in sales volume. During the second quarter of 2009, we offered new promotions, including reduced prices on certain of our completed homesites, in an attempt to increase sales activity.

We have historically financed a majority of Bluegreen Resorts sales of VOIs, and accordingly, are subject to the risk of defaults by customers. GAAP requires that we reduce sales of VOIs by our estimate of future uncollectible note balances on originated VOI receivables, excluding any benefit for the value of future recoveries.

The allowance for loan losses by segment as of December 31, 2008 and June 30, 2009 was as follows (in thousands):

                                               Bluegreen      Bluegreen
                                                Resorts      Communities      Total
                                               ----------   -------------   ---------
  December 31, 2008:
  Notes receivable                             $  388,014   $       4,659   $ 392,673
  Allowance for loan losses                       (51,785 )          (244 )   (52,029 )
                                               -- -------   -- ----------   - -------
  Notes receivable, net                        $  336,229   $       4,415   $ 340,644
                                               -- -------   -- ----------   - -------

  Allowance as a % of gross notes receivable           13 %             5 %        13 %
                                               -- -------   -- ----------   - -------

  June 30, 2009:
  Notes receivable                             $  371,763   $       4,654   $ 376,417
  Allowance for loan losses                       (48,366 )          (297 )   (48,663 )
                                               -- -------   -- ----------   - -------
  Notes receivable, net                        $  323,397   $       4,357   $ 327,754
                                               -- -------   -- ----------   - -------
  Allowance as a % of gross notes receivable           13 %             6 %        13 %
                                               -- -------   -- ----------   - -------

The table below sets forth the activity in our allowance for uncollectible notes receivable for the six months ended June 30, 2009 (in thousands):

            Balance, December 31, 2008                      $  52,029
            Provision for loan losses (1)                      16,640

            Less: Write-offs of uncollectible receivables     (20,006 )
                                                            - -------
            Balance, June 30, 2009                          $  48,663
                                                            - -------

(1) Includes provision for loan losses on homesite notes receivable

The average annual default rates and delinquency rates (more than 30 days past due) on Bluegreen Resorts' and Bluegreen Communities' receivables owned or serviced by us were as follows:

                                                  12 Month Period
                 Average Annual Default Rates     Ended June 30,
                 ----------------------------   -------------------
                           Division              2008        2009
                 ----------------------------   -------     -------
                 Bluegreen Resorts               8.2%        11.6%
                 Bluegreen Communities           3.4%         6.8%

                   Delinquency Rates*               As of
                  ---------------------   -------------------------
                                          December 31,    June 30,
                        Division              2008          2009
                  ---------------------   -------------   ---------
                  Bluegreen Resorts             5.7%           4.9%
                  Bluegreen Communities        10.7%         15.8%

*The percentage of our serviced VOI notes receivable portfolio that was over 30 days past due as of the dates indicated.

We believe that unemployment in the United States and economic conditions in general have impacted and will continue to adversely impact the performance of our notes receivable portfolio. However, we anticipate that newly implemented credit underwriting standards on new loan originations and increasing customer equity in the existing loan portfolio will have a favorable impact on the performance of the portfolio over time.

Substantially all defaulted vacation ownership notes receivable result in the holder of the note receivable recovering the related VOI that secured the note receivable, typically soon after default and at little or no cost. In cases where Bluegreen has retained ownership of the vacation ownership note receivable, the VOI is recovered and resold in the normal course of business, in most cases partially mitigating the loss from the default, as these recoveries range from approximately 40% to 100% of the defaulted principal balance depending on the age of the receivable defaulted on. We may remarket the defaulted VOI on behalf of the note holder in exchange for a remarketing fee designed to approximate our sales and marketing costs. From time to time, Bluegreen will reacquire a defaulted note receivable from one of its off-balance sheet term securitizations transactions by substituting the defaulted receivable for a performing receivable. The related VOI that secured the defaulted note receivable is reacquired at a price equal to the defaulted principal amount, which typically is well in excess of Bluegreen's historical cost of product. The reacquisition of inventory in this manner has resulted in an increase in Bluegreen Resort's cost of sales.

In advance of new accounting rules, which become effective beginning in 2010, Bluegreen made a decision in 2008 to structure any future sales of notes receivable so they are treated as on-balance sheet borrowings. This impacts the comparability to prior periods as transactions structured in this way do not result in gains on sales of notes receivable. A significant portion of our revenues historically has been comprised of gains on sales of notes receivable. The gains were recorded on our consolidated statement of operations as a component of sales of real estate and the related retained interests in the notes receivable sold have been recorded on our consolidated balance sheet at the time of sale. See discussion below on SFAS No. 167, Amendments to FASB Interpretation No. 46(R) ("SFAS No. 167").

During 2008 and through the first six months of 2009, the deteriorating credit markets negatively impacted our financing activities. Fewer transactions were consummated in the market overall, and those that were consummated, were more difficult to effect and were priced at a higher cost than in prior periods. In addition, recent economic events have resulted in further constrictions in the financial markets to unprecedented low levels. There can be no assurance that we will be able to continue to secure funding or to convert VOI notes receivable on acceptable terms, if at all.

During 2009, we have been renewing or extending certain existing credit facilities and debt maturities. In connection with such renewals and extensions, we have agreed to higher interest rates and fees. In addition, conditions in the commercial credit markets are expected to increase interest rates on new debt we may incur from time to time. Such increased interest rates are expected to increase our cost of capital and may adversely impact our results of operations.

Critical Accounting Policies and Estimates

Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of commitments and contingencies. On an ongoing basis, management evaluates its estimates, including those that relate to the recognition of revenue, including revenue recognition under the percentage-of-completion method of accounting; our reserve for loan losses; the valuation of retained interests in notes receivable sold and the related gains on sales of notes receivable; the recovery of the carrying value of real estate inventories, golf courses, intangible assets and other assets; and the estimate of contingent liabilities related to litigation and other claims and assessments.

Accounting Pronouncements Not Yet Adopted

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 ("SFAS No. 166"), which will become effective for us beginning January 1, 2010. SFAS No. 166 requires more information about transfers of financial assets, including securitization transactions and transactions where companies have continuing exposure to the risks related to the transferred financial assets. It also eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures. We do not currently expect that the adoption of this pronouncement will have a material impact on our financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) ("SFAS No. 167"), which will become effective for us on January 1, 2010. SFAS No. 167 addresses the effects of eliminating the qualifying special-purpose entity ("QSPE") concept from FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ("SFAS 140"), and responds to concerns about the application of certain key provisions of FIN 46(R), including concerns over the transparency of an enterprises' involvement with variable interest entities ("VIEs"). We are currently evaluating the effects that this pronouncement may have on our financial statements, and currently anticipate that we will be required to consolidate our off-balance sheet QSPE described in Note 2. The consolidation of our QSPEs will materially impact our financial statements.

We review financial information, allocate resources and manage our business as two segments, Bluegreen Resorts and Bluegreen Communities. The information reviewed is based on internal reports and excludes an allocation of general and administrative expenses attributable to corporate overhead. The information provided is based on a management approach and is used by us for the purpose of tracking trends and changes in results. It does not reflect the actual economic costs, contributions or results of operations of the segments as standalone businesses. If a different basis of presentation or allocation were utilized, the relative contributions of the segments might differ but the relative trends, in our view, would likely not be materially impacted. The table below sets forth our financial results by segment:

. . .