<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION

                               WASHINGTON, D.C.  20549


                                      FORM 10-Q

                 QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
                         THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended: OCTOBER 31, 1998         Commission File Number: 0-23503

                               EXCEL LEGACY CORPORATION
-------------------------------------------------------------------------------
                (Exact name of registrant as specified in its charter)

           DELAWARE                                    33-0781747
   -------------------------              -----------------------------------
    (State of incorporation)              (IRS Employer Identification Number)

             16955 VIA DEL CAMPO, SUITE 240, SAN DIEGO, CALIFORNIA  92127
-------------------------------------------------------------------------------
                       (Address of principal executive offices)

                    Registrant's telephone number:  (619) 485-9400



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    X    No       
                                         -----     ------

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.  

            Class                              Outstanding at December 7, 1998
----------------------------                   -------------------------------
Common Stock, $.01 par value                             33,457,804


<PAGE>

                               EXCEL LEGACY CORPORATION

                                        INDEX

                                      FORM 10-Q
                                           
                                      ---------

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
PART I.  FINANCIAL INFORMATION:

     Item 1.  Financial Statements:

          Consolidated Balance Sheets
             October 31, 1998 (Unaudited) 
             July 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . .3

          Consolidated Statements of Income
             Three Months Ended October 31, 1998 (Unaudited) . . . . . . . . .4

          Consolidated Statements of Changes in Stockholders' Equity
             Three Months Ended October 31, 1998 (Unaudited) . . . . . . . . .5

          Consolidated Statements of Cash Flows
             Three Months Ended October 31, 1998 (Unaudited) . . . . . . . . .6

          Notes to Financial Statements (Unaudited). . . . . . . . . . . . . .7
  
     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations. . . . . . . . . . . . . . 14

     Item 3.  Quantitative and Qualitative Disclosures About Market Risk . . 19

PART II.  OTHER INFORMATION 

          Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 19

</TABLE>

                                             2

<PAGE>



                      EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                             CONSOLIDATED BALANCE SHEETS
                         (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                   ---------------

<TABLE>
<CAPTION>
                                                                    OCTOBER 31,
                                                                        1998           JULY 31,
                                                                    (UNAUDITED)          1998
                                                                    -----------      ------------

                                      ASSETS

<S>                                                                  <C>             <C>
Real estate:
   Land                                                               $  54,926      $  51,675
   Buildings                                                            135,186        122,669
   Leasehold interests                                                    2,351          2,351
   Accumulated depreciation                                              (1,870)          (939)
                                                                      ---------      ---------
      Net real estate                                                   190,593        175,756

Cash                                                                      3,539         11,491
Accounts receivable, less allowance for bad debts of $24 and 
  and $14 at October 31 and July 31 1998, respectively                      252            732
Notes receivable                                                         23,176         23,171
Investment in partnerships                                               11,257         11,138
Interest receivable                                                       4,762          3,889
Pre-development costs                                                     8,956          6,662
Other assets                                                              9,433          7,757
Deferred tax asset                                                        6,163          6,320
                                                                      ---------      ---------
                                                                      $ 258,131      $ 246,916
                                                                      ---------      ---------
                                                                      ---------      ---------


                               LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
   Mortgage and notes payable                                          $ 87,275       $ 72,714
   Accounts payable and accrued liabilities                               2,423          5,680
   Other liabilities                                                        840            816
   Income taxes payable                                                     241            934
                                                                      ---------      ---------
         Total liabilities                                               90,779         80,144
                                                                      ---------      ---------
Commitments and contingencies                                                -              - 

Minority interests                                                          848            853
                                                                      ---------      ---------
Stockholders' equity:
   Series A Preferred stock, $.01 par value, 50,000,000 shares 
      authorized, 21,281,000 shares issued and outstanding                  213            213
   Common stock, $.01 par value, 150,000,000 shares authorized,
      33,457,804 shares issued and outstanding                              335            335
   Additional paid-in capital                                           174,508        174,508
   Retained earnings                                                      2,320          1,735
   Notes receivable from affiliates for common shares                   (10,872)       (10,872)
                                                                      ---------      ---------
         Total stockholders' equity                                     166,504        165,919
                                                                      ---------      ---------
                                                                      $ 258,131      $ 246,916
                                                                      ---------      ---------
                                                                      ---------      ---------

</TABLE>

                     The accompanying notes are an integral part
                             of the financial statements

                                          3

<PAGE>


                      EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
                     FOR THE THREE MONTHS ENDED OCTOBER 31, 1998
                       (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                      --------------

<TABLE>
<S>                                                      <C>
Revenue:
   Rental                                                $ 3,322
   Operating income                                        4,491
   Interest income                                           977
   Partnership income and other revenues                     156
                                                         -------
      Total revenue                                        8,946
                                                         -------
Operating expenses:
   Interest                                                1,457
   Depreciation and amortization                           1,117
   Property operating expenses                             1,029
   Operating expenses                                      2,900
   General and administrative                              1,529
                                                         -------
      Total operating expenses                             8,032
                                                         -------
Income before income taxes                                   914

Provision for income taxes                                   329
                                                         -------
   Net income                                            $   585
                                                         -------
                                                         -------
Basic net income per share                                 $0.02
                                                         -------
                                                         -------
Diluted net income per share                               $0.01
                                                         -------
                                                         -------

</TABLE>

                The accompanying notes are an integral part
                       of the financial statements.


                                      4


<PAGE>

                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

        CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
                     FOR THE THREE MONTHS ENDED OCTOBER 31, 1998
                       (IN THOUSANDS, EXCEPT NUMBER OF SHARES)

                                    -----------
<TABLE>
<CAPTION>
                                      SERIES A                
                                  PREFERRED STOCK         COMMON STOCK         ADDITIONAL               AFFILIATE       TOTAL
                               ---------------------   -------------------       PAID-IN     RETAINED      NOTES      STOCKHOLDERS'
                                 NUMBER       AMOUNT    NUMBER      AMOUNT       CAPITAL     EARNINGS    RECEIVABLE      EQUITY
                                ----------    ------   ---------    ------      ----------   ---------   ----------   -------------
<S>                             <C>           <C>      <C>          <C>          <C>         <C>         <C>          <C>
Balance at August 1, 1998       21,281,000     $ 213   33,457,804     $ 335      $ 174,508      $ 1,735   $ (10,872)    $ 165,919
Net income                              -         -            -         -              -           585          -            585
                                ----------     -----   ----------     -----      ---------      -------   ---------     ---------
Balance at October 31, 1998     21,281,000     $ 213   33,457,804     $ 335      $ 174,508      $ 2,320   $ (10,872)    $ 166,504
                                ----------     -----   ----------     -----      ---------      -------   ---------     ---------
                                ----------     -----   ----------     -----      ---------      -------   ---------     ---------


</TABLE>





                The accompanying notes are an integral part
                       of the financial statements.


                                      5


<PAGE>

                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
                     FOR THE THREE MONTHS ENDED OCTOBER 31, 1998
                                    (IN THOUSANDS)

                                     ------------

<TABLE>
<S>                                                               <C>
Cash flows from operating activities:

   Net income                                                        $  585
   Adjustments to reconcile net income to net cash
      provided by operations:
         Depreciation and amortization                                1,117
         Provision for bad debts                                         10
         Minority interest in partnerships                               (5)
      Changes in accounts receivable and other assets                (2,270)
      Changes in accounts payable and other liabilities              (3,769)
                                                                     ------
         Net cash used by operating activities                       (4,332)
                                                                     ------
Cash flows from investing activities:

   Real estate construction costs paid                                 (968)
   Investment in partnerships                                          (119)
   Pre-development costs paid                                        (2,294)
                                                                     ------
         Net cash used in investing activities                       (3,381)
                                                                     ------

Cash flows from financing activities:

   Principal payments of mortgages and notes payable                   (239)
                                                                     ------
         Net cash used by financing activities                         (239)
                                                                     ------
         Net decrease in cash                                        (7,952)

Cash at August 1, 1998                                               11,491
                                                                     ------
Cash at October 31, 1998                                             $3,539
                                                                     ------
                                                                     ------
</TABLE>





                The accompanying notes are an integral part
                       of the financial statements.


                                      6


<PAGE>

                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                      -----------

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     The financial statements reflect all adjustments of a recurring nature
     which are, in the opinion of management, necessary for a fair presentation
     of the financial statements.  No adjustments were necessary which were not
     of a normal recurring nature.  Certain footnote disclosures normally
     included in financial statements prepared in accordance with generally
     accepted accounting principles have been omitted pursuant to the quarterly
     reporting rules of the Securities and Exchange Commission.  These financial
     statements should be read in conjunction with the consolidated financial
     statements and accompanying footnotes included in the Company's July 31,
     1998 Form 10-K.

     ORGANIZATION

     Excel Legacy Corporation (the "Company"), a Delaware corporation was formed
     on November 17, 1997.  The Company was originally a wholly-owned subsidiary
     of Excel Realty Trust, Inc. ("Excel"), a Maryland corporation and a
     self-administered, self-managed real estate investment rust ("REIT"), now
     known as New Plan Excel Realty Trust, Inc.  On March 31, 1998, Excel
     effected a spin-off of the Company through a special dividend to the
     holders of common stock of Excel of all of the outstanding common stock of
     the Company held by Excel (the "Spin-off").
          
     The Company was formed to pursue opportunities available to those investors
     that are not restricted by the federal income tax laws governing REITs or
     influenced by Excel's investment and leverage guidelines.  In connection
     with the Spin-off, certain real properties, notes receivable and related
     assets and liabilities were transferred to the Company from Excel 
     (Note 2). Upon completion of the Spin-off, the Company ceased to be a 
     wholly-owned subsidiary of Excel and began operating as an independent 
     public company. 
     
     PRINCIPLES OF CONSOLIDATION

     The accompanying consolidated financial statements include the accounts of
     the Company, its wholly-owned subsidiaries and all significantly owned
     affiliates.  The Company uses the equity method of accounting to account
     for its investment in a Nova Scotia Company and the Company uses the cost
     method to account for its investment in Entercitement LLC.

     REAL ESTATE

     Certain real estate assets were transferred to the Company from Excel and
     recorded at  Excel's cost.  Other real estate assets acquired subsequent to
     the Spin-off were recorded at the Company's cost.  Depreciation is computed
     using the straight-line method over estimated useful lives of 40 years for
     buildings.  Expenditures for maintenance and repairs are charged to expense
     as incurred and significant renovations are capitalized.

     The Company assesses whether there has been a permanent impairment in the
     value of its real estate by considering factors such as expected future
     operating income, trends and prospects, as well as the effects of demand,
     competition and other economic factors.  Such factors include a lessee's
     ability to pay rent under the terms of the lease.  If a property is leased
     at significantly lower rent, the Company may recognize a permanent
     impairment loss if the income stream is not sufficient to recover its
     investment. 


                                       7

<PAGE>


                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                      -----------

 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

     PRE-DEVELOPMENT COSTS

     Pre-development costs that are directly related to specific construction
     projects are capitalized as incurred.  The Company expenses these costs to
     the extent they are unrecoverable or it is determined that the related
     project will not be pursued. 

     MANAGEMENT CONTRACTS

     Management contracts are recorded at cost and amortized over a period of
     seven years.  
     
     INCOME TAXES

     The Company uses the asset and liability method to account for income
     taxes.  Deferred income tax assets have been recorded to reflect the future
     tax benefit of assets acquired from Excel that were recorded at Excel's
     cost for book purposes and fair market value for tax purposes.  

     DEFERRED LEASING AND LOAN ACQUISITION COSTS

     Costs incurred in obtaining tenant leases and long-term financing are
     amortized to other property  expense and interest expense, respectively, on
     the straight-line method over the terms of the related leases or debt
     agreements.
     
     REVENUE RECOGNITION

     Base rental revenue is recognized on  the straight-line basis, which
     averages annual minimum rents over the terms of the leases.  Certain of the
     leases provide for additional rental revenue by way of percentage rents to
     be paid based upon the level of sales achieved by the lessee. 

     USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities at
     the date of the financial statements and the reported amounts of revenues
     and expenses during the period.  Actual results could differ from those
     estimates.     

     RECENT ACCOUNTING PRONOUNCEMENTS
               
     Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
     Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an
     Enterprise and Related Information" are effective for fiscal years
     beginning after December 15, 1997.  SFAS No. 130 establishes standards for
     the reporting and display of comprehensive income and its components in a
     full set of general purpose financial statements and requires restatement
     of earlier periods presented and had no effect on the Company's
     consolidated financial statements.  SFAS No. 131 establishes standards for
     the way that a public enterprise reports information about operating
     segments in annual financial statements, and requires that those
     enterprises report selected information about operating segments in interim
     financial reports to shareholders (Note 8).


                                       8

<PAGE>

                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                      -----------

2.   SPIN-OFF:

     On March 31, 1998, Excel transferred certain real estate assets to the
     Company in exchange for 23,412,580 common shares of the Company, assumption
     of mortgage debt by the Company, and issuance of a note payable to Excel
     from the Company which was subsequently repaid.  This Spin-off took place
     through a dividend distribution to Excel's common stockholders, of all the
     Company's common stock (23,412,580 shares) held by Excel.  The distribution
     consisted of one share of the Company's common stock for each share of
     Excel's common stock held on the record date of March 2, 1998.  The fair
     market value of the distribution was approximately $55,956,000 or $2.39 per
     share.  While the Company has recorded the acquisition of assets and
     liabilities at fair market value for tax purposes, the Company has recorded
     for book purposes, the assets and liabilities at Excel's original book
     value.  The tax effect of the difference between fair market value and book
     value was $6,528,000 and was recorded as a deferred tax asset.

3.   REAL ESTATE:

     In the three months ended October 31, 1998, Millennia Car Wash, LLC
     ("Millennia") acquired nine car wash properties for approximately
     $15,200,000.  The acquisition was made through the assumption of various
     notes payable.  There were no other significant acquisitions during the
     period.

4.   MORTGAGES AND NOTES PAYABLE:

     The Company had $87,275,000 in mortgage and notes payable outstanding at
     October 31, 1998 at 7.37% to 8.53% with an average interest rate of 7.92%. 
     The mortgages and notes are due on various dates through 2018 and monthly
     payments approximate $857,000.  The mortgages and notes are collateralized
     by real estate and an assignment of rents.  The principal payments required
     to be made on mortgages payable over the next five years are as follows (in
     thousands):

   
<TABLE>
<CAPTION>

         YEAR ENDED JULY 31,
         -------------------
      <S>                                          <C>
           YEAR ENDED JULY 31,

               1999 (remaining nine months)              $  2,317
               2000                                         4,149
               2001                                         3,920
               2002                                         4,245
               2003                                         7,879
               Thereafter                                  64,765
                                                         --------
                                                         $ 87,275
                                                         --------
                                                         --------
</TABLE>

     The Company has an unsecured revolving credit facility of $15,000,000 from
     BankBoston, N.A. (the "Credit Facility") which carries an interest rate of
     LIBOR plus 2.5% on any outstanding amounts.  The Credit Facility expires in
     October 1999.  Through December 7, 1998, approximately $3,000,000 was
     outstanding under the Credit Facility.  


                                       9

<PAGE>


                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                      -----------

5.   Income Taxes:

     At October 31, 1998, the Company had a net deferred tax asset of
     $6,163,000.  The deferred tax asset primarily relates to the difference
     between fair market value and book value of the real estate assets acquired
     from Excel in connection with the Spin-off (Note 2) and is non-current. 
     The offsetting portion of the deferred asset relates to timing differences
     in recognizing revenue and expenses for tax purposes through operations of
     the Company.  No valuation allowance has been provided against the deferred
     tax asset as the Company believes future taxable income is more likely than
     not. The provision for income taxes consists of the following:

<TABLE>
<CAPTION>

                                               FEDERAL         STATE
                                              ---------      ---------
               <S>                            <C>            <C>

               Current payable                $ 177,000      $   6,000
               Deferred tax expense             122,000         24,000
                                              ---------      ---------
               Provision for income taxes     $ 299,000      $  30,000
                                              ---------      ---------
                                              ---------      ---------

</TABLE>

6.   CAPITAL STOCK:

     SERIES A PREFERRED SHARES

     On October 31, 1998, the Company had 21,281,000 shares of Series A
     Preferred Stock outstanding (the "Preferred A Shares").  Holders of the
     Preferred A Shares are entitled to receive, when, as and if declared by the
     Board of Directors, cumulative cash dividends payable in an amount per
     share equal to the cash dividends, if any, on the shares of common stock
     into which the Preferred A Shares are convertible.  Holders of the
     Preferred A Shares are also entitled to a liquidation preference of $5.00
     per share, plus a premium of 7% per annum, in the event of any liquidation,
     dissolution or other winding up of the affairs of the Company.  

     The Preferred A Shares are convertible into common stock of the Company at
     the election of the holders at any time, on a one-for-one basis, subject to
     adjustment in certain circumstances.  The Preferred A Shares also are
     convertible into common stock by the Company if the closing price of the
     Company's common stock is equal to or greater than certain milestones for
     30 consecutive trading days.  Such price milestones were met in May 1998
     and on May 18, 1998, the Company took steps to exercise its right to
     convert all of the Preferred A Shares into common stock, which conversion
     was expected to take place on August 18, 1998.

     On August 17, 1998, the Company withdrew its election to convert the
     Preferred A Shares, and instead the holders and the Company agreed to
     modify the terms of the Preferred A Shares.  The Company decided to effect
     such modification through the exchange of the Preferred A Shares for new
     preferred shares of the Company, rather than through an amendment to the
     Preferred A Shares.  The new preferred shares will be substantially similar
     to the Preferred A Shares, except in the following respects: 1)  The new
     preferred shares will be convertible into common stock at the election of
     the Company upon the earlier to occur of six months after the listing of
     the Company's common stock on a national securities exchange (including the
     American Stock Exchange on which the Company began trading on November 17,
     1998), or March 31, 2000.  2).  Certain voting rights provided to the
     holders with respect to future issuances of common stock will be removed.


                                       10

<PAGE>


                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                      -----------

6.   CAPITAL STOCK, CONTINUED:
 
     Earnings Per Share (EPS)

     A reconciliation of the numerator and denominator of basic and diluted EPS
     is provided as follows (in thousands, except per share amounts).           

<TABLE>
<CAPTION>
                                                              THREE MONTHS
                                                                  ENDED 
                                                             OCTOBER 31, 1998
                                                             ----------------
     <S>                                                     <C>
     BASIC EPS

       NUMERATOR:
         Net income                                                 $   585
                                                                    -------
                                                                    -------
       DENOMINATOR:      
         Weighted average of common shares outstanding               33,458
                                                                    -------
                                                                    -------

       EARNINGS PER SHARE:                                           $ 0.02
                                                                    -------
                                                                    -------
     DILUTED EPS

       NUMERATOR:
         Net income                                                 $   585
                                                                    -------
                                                                    -------
       DENOMINATOR:      
         Weighted average of common shares outstanding               33,458

         Effect of diluted securities:
           Preferred A Shares                                        21,281
                                                                    -------
                                                                    -------
                                                                     54,739
                                                                    -------
                                                                    -------
       EARNINGS PER SHARE:                                           $ 0.01
                                                                    -------
                                                                    -------

</TABLE>

7.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE:

     The amount paid for interest in 1998 was approximately $1,648,000.  In the
     three months ended October 31, 1998, Millennia assumed $15,200,000 of debt
     in conjunction with the acquisition of nine car wash properties.


                                       11

<PAGE>


                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                      -----------


8.   SEGMENT REPORTING:

     The Company has a joint venture arrangement with Millennia.  As of October
     31, 1998, Millennia owned eighteen car wash properties in Arizona and
     Texas.  At October 31, 1998, the Company held 100% of the ownership
     interest in Millennia.  Another party manages the daily operations of
     Millennia and can earn up to 50% of the ownership interest in Millennia
     based upon operating results exceeding a 35% return on the Company's
     investment.  The accounts of Millennia are consolidated with the Company's
     financial statements. 

     The Company is a partner in a joint venture, Grand Tusayan, LLC ("Grand
     Hotel") for the operation of a hotel and dinner theater and retail shop
     situated near the south rim entrance to the Grand Canyon National Park in
     Tusayan, Arizona.  At October 31, 1998, the Company's ownership in the
     Grand Hotel was 65% although the Company was entitled to approximately 98%
     of the Grand Hotel's operations based upon its equity contributed. The
     accounts of the Grand Hotel are consolidated with the Company's financial
     statements. 

 .    SFAS No. 131 establishes standards for the way that a public enterprise
     reports information about operating segments in annual financial
     statements, and requires that those enterprises report selected information
     about operating segments in interim financial reports to shareholders (Note
     1).  The following unaudited information has been provided in accordance
     with SFAS No. 131 for operations related to Millennia, the Grand Hotel, and
     all other real estate related activities as of and for the three months
     ended October 31, 1998 (in thousands):

<TABLE>
<CAPTION>

                                                                                       Other
                                                        Millennia    Grand Hotel     Real Estate       Total
                                                        ---------    -----------     -----------      --------
<S>                                                     <C>          <C>             <C>              <C> 
   Total revenues                                        $ 3,688        $   646       $  4,612       $  8,946
                                                         -------        -------       --------       --------
   Depreciation and amortization                             259            153            705          1,117
   General and administrative                                873             -             655          1,528
   Operating expenses                                      2,514            559          2,314          5,387
                                                         -------        -------       --------       --------
   Total operating expenses                                3,646            712          3,674          8,032               
                                                         -------        -------       --------       --------
   Income (loss) before 
     income taxes                                        $    42        $  (66)       $   938        $    914
                                                         -------        -------       --------       --------
                                                         -------        -------       --------       --------

   Real estate, net                                      $30,179        $14,077       $146,337       $190,593
   Other assets                                            5,506          1,498         60,534         67,538
                                                         -------        -------       --------       --------
   Total assets                                          $35,685        $15,575       $206,871       $258,131
                                                         -------        -------       --------       --------
                                                         -------        -------       --------       --------
   Mortgages and notes payable                           $15,235        $    -        $ 72,040       $ 87,275
   Other liabilities                                         450            181          2,873          3,504
                                                         -------        -------       --------       --------
   Total liabilities                                     $15,685        $   181       $ 74,913       $ 90,779
                                                         -------        -------       --------       --------
                                                         -------        -------       --------       --------
</TABLE>

                                       12

<PAGE>



                     EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                      -----------

9. RELATED PARTY TRANSACTIONS:

   In connection with the sale of common stock to certain of the Company's
   officers and employees, the Company issued $10,872,000 of notes receivable
   due from certain of the Company's officers.  The notes bear interest at 7%,
   are recourse obligations of the note holders, and are due in March 2003.  The
   total interest receivable at October 31, 1998 from these notes totaled
   $446,000.  The notes have been offset against stockholders' equity on the
   Company's accompanying Consolidated Balance Sheet.

   The Company shares certain employees with New Plan Excel Realty Trust, Inc.
   ("New Plan Excel"), formerly Excel.  The shared employees are paid by New
   Plan Excel and reimbursed by the Company based upon an Administrative
   Services Agreement which requires the Company to pay New Plan Excel 23% of
   the salary and bonus of the shared employees as compensation for their
   services to the Company.  For the three months ended October 31, 1998,
   approximately $208,000 was paid by the Company for these services. 
   Additionally, approximately $18,000 was paid by the Company to New Plan Excel
   as reimbursement for various operating expenses. 

10.   MINIMUM FUTURE RENTALS:

   The Company leases its operating properties, except the Millenia carwash
   properties and the Grand Hotel property, under noncancelable operating leases
   generally requiring the tenant to pay a minimum rent.  The leases generally
   either (i) require the tenant to pay all expenses of operating the property
   such as insurance, property taxes, and structural repairs and maintenance, or
   (ii) require the tenant to reimburse the Company for the tenant's share of
   real estate taxes and other common area maintenance expenses or for the
   tenant's share of any increase in expenses over a base year.  Minimum future
   rental revenue for the next five years for the retail commercial real estate
   owned at October 31, 1998 and subject to noncancelable operating leases is as
   follows (in thousands):
   
<TABLE>
<CAPTION>

         YEAR ENDED JULY 31,
         -------------------
         <S>                                           <C>
                 1999 (nine months remaining)           $  8,393
                 2000                                     11,536
                 2001                                     11,425
                 2002                                     11,190
                 2003                                     10,971
                 Thereafter                              110,590

</TABLE>


                                       13

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

NATURE OF BUSINESS

Excel Legacy Corporation (the "Company"), a Delaware Corporation, was formed 
on November 17, 1997.  The Company was organized to create and realize value 
by identifying and making opportunistic real estate and other investments 
through the direct acquisition, rehabilitation, development, financing and 
management of real properties and/or participation in these activities 
through the purchase of debt instruments or equity interests of entities in 
real estate and other businesses.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Financial 
Statements and the Notes thereto. As the Company was not formed until 
November 17, 1997, comparative results with 1997 are not provided.

THREE MONTHS ENDED OCTOBER 31, 1998

RENTAL REVENUE was $3.3 million during the period.  Ten single tenant 
properties owned by the Company accounted for $1.2 million of rental revenue. 
 Eight of these properties are leased to Wal-Mart Stores, Inc. ("Wal-Mart") 
and two of these properties are leased to Lowe's Home Centers, Inc. 
("Lowe's").  Two properties in Colorado leased to AMC Multi-Cinema, Inc. 
("AMC") accounted for $1.3 million of rental revenue.  Additionally, $0.4 
million of rental revenue was attributable to a shopping mall located in Palm 
Springs, California and the remaining $0.4 million of rental revenue was 
attributable to three properties which were acquired by the Company in 
conjunction with a redevelopment project in Scottsdale, Arizona.

OTHER OPERATING INCOME totaled $4.5 million in the period.  Of this income, 
$3.7 million related to revenues recognized from Millennia.  The Company also 
recognized $0.6 million of other operating income from the Grand Hotel. 
Finally, TenantFirst Real Estate Service, Inc., which the Company acquired in 
May 1998, accounted for $0.2 million of revenues from various management 
contracts.  

INTEREST INCOME was $1.0 million and primarily related to $0.9 million of 
interest earned on the Company's outstanding notes receivable.  In addition, 
the Company earned $0.1 million of interest income from its cash accounts.  

PARTNERSHIP INCOME AND OTHER REVENUES totaled $0.2 million for the three 
months ended October 31, 1998 and  primarily related to the Company's 
interest in a Nova Scotia unlimited liability company which owns an office 
building in Canada. 

INTEREST EXPENSE was $1.5 million and primarily related to the $87.3 million 
of mortgage and notes payable outstanding at October 31, 1998.  Of the debt 
outstanding, $15.2 million was assumed by Millennia in the three months ended 
October 31, 1998.  

DEPRECIATION AND AMORTIZATION EXPENSE totaled $1.1 million and primarily 
related to the $135.2 million of buildings and the $2.4 million of leasehold 
interests held by the Company at October 31, 1998. 

PROPERTY OPERATING EXPENSES were $1.0 million and primarily related to the 
three properties located in Scottsdale, Arizona and the property located in 
Palm Springs, California.  The other real estate properties owned by the 
Company are subject to triple net leases whereby the Company does not incur 
any significant operating expenses.      

OTHER OPERATING EXPENSES were $2.9 million in the three months ended October 
31, 1998. Expenses of $2.3 million related to Millennia and $0.6 million 
related to the Grand Hotel. 


                                       14

<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES were $1.5 million in the period.  The 
general and administrative expenses include certain costs charged to the 
Company by New Plan Excel pursuant to an administrative services agreement 
providing for the sharing of certain facilities and services.  In the three 
months ended October 31, 1998, such expenses included payment of bonuses paid 
to certain officers shared by the Company and New Plan Excel.  Additionally, 
$0.9 million of the expenses related to Millennia.

PROVISION FOR INCOME TAXES was $0.3 million, of which $0.2 million was 
current expense and $0.1 million was deferred expense primarily relating to 
the utilization of the deferred tax asset. 

The Company calculates EARNINGS BEFORE DEPRECIATION, AMORTIZATION AND 
DEFERRED TAXES ("EBDADT") as net income, plus depreciation and amortization 
on real estate and real estate related assets, amortized leasing commission 
costs and certain non-recurring items.  EBDADT does not represent cash flows 
from operations as defined by generally accepted accounting principles, and 
may not be comparable to other similarly titled measures of other companies. 
The Company believes, however, that to facilitate a clear understanding of 
its operating results, EBDADT should be examined in conjunction with its net 
income as reductions for certain items are not meaningful in evaluating 
income-producing real estate.  The following information is included to show 
the items included in the Company's EBDADT for the three months ended October 
31, 1998 (in thousands):

<TABLE>
<S>                                                      <C>
Net income                                               $   585
Depreciation and amortization (financial statements)       1,117
Less depreciation of non-real estate assets                  (26)
Amortization of leasing commissions (a)                        1
Deferred tax expense                                         146
                                                         -------
EBDADT                                                   $ 1,823
                                                         -------
                                                         -------
EBDADT per share - basic                                  $ 0.05
                                                         -------
                                                         -------
EBDADT per share - diluted                                $ 0.03
                                                         -------
                                                         -------
</TABLE>

(a)  Only amortization of organizational costs and management contracts are 
included as amortization expense in the Consolidated Statements of Income.  
Loan cost amortization is classified as interest expense and not added back 
to EBDADT.  Leasing commission amortization is classified as part of property 
operating expenses in the Consolidated Statements of Income.

LIQUIDITY AND CAPITAL RESOURCES

At October 31, 1998, the total mortgage debt and notes payable of the Company 
consisted of the following: (i) $25.1 million in mortgages on eight 
properties leased to Wal-Mart which have fixed interest rates of 7.9% to 
8.5%.  These mortgages are self-amortizing with the rent being paid by 
Wal-Mart directly to the mortgage holders.  The mortgages will be entirely 
repaid when the initial terms of the leases with Wal-Mart expire (2008 to 
2009). (ii) $7.6 million in mortgages on two properties leased to Lowe's 
which have fixed interest rates of 7.6% and 8.8%.  These mortgages are also 
self-amortizing over the term of the leases with Lowe's and will be repaid 
when the leases expire (2003 and 2014). (iii) A $2.5 million mortgage 
securing an office building in Scottsdale, Arizona, monthly payments of which 
are approximately $25,000 with a balloon payment in the year 2006. (iv) $36.8 
million in mortgages on two properties leased to AMC.  These mortgages 
amortize over a period of twenty years which is equivalent to the term of the 
leases.  The mortgages have fixed rates of 7.48% and 7.52%, respectively and 
mature in 2018.  (v) $15.2 million in notes related to the Millennia 
acquisition of certain car wash properties. Of the notes, $14.8 million have 
fixed interest rates of 8.5% and are due in fifteen years and $0.4 million 
have fixed interest rates of 8.0% and are due in two years.  All of the 
Company's mortgage debt and notes payable are non-recourse to the Company.

On October 31, 1998, the Company had 21,281,000 shares of Series A Preferred
Stock outstanding (the "Preferred A Shares").  Holders of the Preferred A Shares
are entitled to receive, when, as and if declared by the Board of Directors,
cumulative cash dividends payable in an amount per share equal to the cash

                                       15
<PAGE>

dividends, if any, on the shares of common stock into which the Preferred A 
Shares are convertible.  Holders of the Preferred A Shares are also entitled 
to a liquidation preference of $5.00 per share, plus a premium of 7% per 
annum, in the event of any liquidation, dissolution or other winding up of 
the affairs of the Company.  

The Preferred A Shares are convertible into common stock of the Company at 
the election of the holders at any time, on a one-for-one basis, subject to 
adjustment in certain circumstances.  The Preferred A Shares also are 
convertible into common stock by the Company if the closing price of the 
Company's common stock is equal to or greater than certain milestones for 30 
consecutive trading days.  Such price milestones were met in May 1998 and on 
May 18, 1998, the Company took steps to exercise its right to convert all of 
the Preferred A Shares into common stock, which conversion was expected to 
take place on August 18, 1998.

On August 17, 1998, the Company withdrew its election to convert the 
Preferred A Shares, and instead the holders and the Company agreed to modify 
the terms of the Preferred A Shares.  The Company decided to effect such 
modification through the exchange of the Preferred A Shares for new preferred 
shares of the Company, rather than through an amendment to the Preferred A 
Shares.  The new preferred shares will be substantially similar to the 
Preferred A Shares, except in the following respects: 1)  The new preferred 
shares will be convertible into common stock at the election of the Company 
upon the earlier to occur of six months after the listing of the Company's 
common stock on a national securities exchange (including the American Stock 
Exchange on which the Company began trading on November 17, 1998), or March 
31, 2000.  2)  Certain voting rights provided to the holders with respect to 
future issuances of common stock will be removed. 

In October 1998, the Company obtained an unsecured revolving credit facility 
of $15.0 million from BankBoston, N.A. (the "Credit Facility"), of which 
approximately $3.0 million had been borrowed through December 7, 1998.  Any 
amounts borrowed on the Credit Facility carry an interest rate of LIBOR plus 
2.5%.  The Credit Facility expires in October 1999.

Eight of the Company's single tenant properties leased to Wal-Mart do not 
generate cash flow as rent payments are directly used to service outstanding 
debt obligations.  The Company anticipates that existing cash flow from 
operations will be adequate to meet the current cash requirements of its 
operating properties.  The Company expects to meet its long-term liquidity 
requirements, such as property acquisitions and development, mortgage debt 
maturities, and other investment opportunities, through the most advantageous 
sources of capital available to the Company at the time, which may include 
the sale of common stock, preferred stock or debt securities through public 
offerings or private placements, entering into joint venture arrangements 
with financial partners, the incurrence of indebtedness through secured or 
unsecured borrowings and the reinvestment of proceeds from the disposition of 
assets.

YEAR 2000  

The Company currently uses Management Reports Inc. ("MRI") software on a 
Novell local area network.  MRI has been modified to accept four digits as 
the year date and is Year 2000 compliant.  The Company has made an assessment 
of the impact of the Year 2000 issue on its internal operations and has 
developed a plan to bring its computer systems into compliance by the Year 
2000.  The plan addresses the modification or replacement of applications and 
operating systems to achieve timely Year 2000 compliance and also includes 
communication and analysis with outside vendors with whom the Company 
interfaces electronically. Although it is not possible to quantify the 
aggregate cost of such modifications, the Company does not anticipate that 
the cost will have a material adverse effect on its financial position or 
results of operations.  The foregoing discussion of Year 2000 issues contains 
forward-looking statements and actual compliance may be affected by a number 
of factors which include the timing and compliance by the Company's outside 
vendors and suppliers.  This discussion should be read in conjunction with 
the Company's disclosures under the heading "Certain Cautionary Statements" 
below. 


                                       16

<PAGE>

CERTAIN CAUTIONARY STATEMENTS

Certain statements in this Form 10-Q may be deemed to be  "forward-looking 
statements" within the meaning of the Private Securities Litigation Reform 
Act of 1995 which provides a "safe harbor" for these types of statements. 
Forward-looking statements involve known and unknown risks, uncertainties and 
other factors which may cause the actual results of the Company to be 
materially different from historical results or from any results expressed or 
implied by such forward-looking statements.  Such risks, uncertainties and 
other factors include, but are not limited to, the following risks:

RECENTLY FORMED ENTITY; LACK OF INDEPENDENT OPERATING HISTORY.  The Company 
is a recently-formed entity with no prior operating history.  There can be no 
assurance that the Company will not encounter financial, managerial or other 
difficulties as a result of its lack of operating history or inability to 
rely on the financial and other resources of New Plan Excel.  Although the 
Company expects to be able to access capital markets or to seek other 
financing, there can be no assurance that it will be able to do so at all or 
in amounts or on terms acceptable to the Company.

RELIANCE ON MAJOR TENANTS.  As of October 31, 1998, the Company's largest 
tenants were AMC, Wal-Mart, and Lowe's which accounted for approximately 14%, 
10% and 4%, respectively, of the Company's total revenues in 1998.  The 
financial position of the Company may be adversely affected by financial 
difficulties experienced by any  of such tenants, or any other major tenant 
of the Company, including a bankruptcy, insolvency or general downturn in 
business of any such tenant, or in the event any such tenant does not renew 
its leases as they expire.

CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS.  As of October 31, 1998, 
executive officers and directors of the Company beneficially owned or had the 
right to acquire approximately 30% of the Company's outstanding common stock. 
Accordingly, such persons should continue to have substantial influence over 
the Company and on the outcome of matters submitted to the Company's 
stockholders for approval.  In addition, such ownership could discourage 
acquisition of the common stock by potential investors, and could have an 
anti-takeover effect, possibly depressing the trading price of the common 
stock.

DIFFICULTY OF LOCATING SUITABLE INVESTMENTS; COMPETITION.  Identifying, 
completing and realizing on real estate investments has from time to time 
been highly competitive, and involves a high degree of uncertainty.  The 
Company competes for investments with many public and private real estate 
companies, including financial institutions (such as mortgage banks, pension 
funds and REITs) and other institutional investors, as well as individuals.  
There can be no assurance that the Company will be able to locate and 
complete investments which will be profitable or that it will be able to 
fully invest its available capital.  Many of those with whom the Company 
competes for investments are far larger than the Company, may have greater 
financial resources than the Company and may have management personnel with 
more experience than the officers of the Company.

ACQUIRED PROPERTIES MAY FAIL TO PERFORM AS EXPECTED AND CAPITAL EXPENDITURES 
MAY EXCEED ESTIMATES.  The Company intends to acquire existing properties to 
the extent they can be acquired on advantageous terms and meet the Company's 
investment criteria.  Acquisitions of properties entail general investment 
risks associated with any real estate investment, including the risk that 
investments will fail to perform as expected, that estimates of the costs of 
improvements to bring an acquired property up to standards established for 
the intended market position may prove inaccurate and that occupancy rates 
and rents achieved may be less than anticipated.

UNCERTAINTY OF CASH FLOW FROM DEVELOPMENT, CONSTRUCTION AND RENOVATION 
ACTIVITIES.  The Company also intends to pursue the selective development, 
construction and renovation of properties for its own account or the account 
of, or through, entities in which it owns an equity interest as opportunities 
arise, including without limitation long-term, higher-risk, mixed-use retail 
entertainment projects and hospitality projects.  Risks associated with the 
Company's development, construction and renovation activities include risks 
that: the Company may abandon development opportunities after expending 
resources to determine feasibility; construction and renovation costs of a 
project may exceed original estimates; occupancy rates and rents at 


                                       17

<PAGE>
a newly completed property may not be sufficient to make the property 
profitable; and development, construction, renovation and lease-up may not be 
completed on schedule (including risks beyond the control of the Company, 
such as weather or labor conditions or material shortages) resulting in 
increased debt service expense and construction costs.  Development, 
construction and renovation activities also are subject to risks relating to 
the inability to obtain, or delays in obtaining, all necessary zoning, 
land-use, building, occupancy  and other required governmental permits and 
authorizations.  These risks could result in substantial unanticipated delays 
or expenses and, under certain circumstances, could prevent completion of the 
project which could adversely affect the financial condition and results of 
operations of the Company.

DEPENDENCE ON REAL ESTATE CONDITIONS.  The Company's financial condition and 
results of operations may be adversely affected by a number of factors 
affecting the real estate market generally, including downturns in the 
international and domestic general economic climate and local real estate 
conditions (including oversupply of or reduced demand for space and changes 
in market rental rates); energy and supply shortages; and increasing 
operating costs (including real estate taxes and utilities) which may not be 
passed through to tenants.

DEPENDENCE ON RENTAL INCOME FROM REAL PROPERTY.  The Company's cash flow, 
results of operations and value of its assets would be adversely affected if 
a significant number of tenants were unable to meet their lease obligations 
or if the Company or the owner of a property were unable to lease a 
significant amount of space in its properties on economically favorable lease 
terms.  There can be no assurance that any tenant whose lease expires in the 
future will renew such lease or that the Company will be able to re-lease 
space on economically advantageous terms.

ILLIQUIDITY OF REAL ESTATE INVESTMENTS.  Equity real estate investments are 
relatively illiquid and therefore tend to limit the ability of the Company to 
vary its portfolio promptly in response to changes in economic or other 
conditions.  In addition, mortgage payments and, to the extent the properties 
are not subject to triple net leases, certain significant expenditures such 
as real estate taxes and maintenance costs, are generally not reduced when 
circumstances cause a reduction in income from the investment.  Should such 
events occur, the Company's results of operations would be adversely 
affected. A portion of the Company's properties are mortgaged to secure 
payment of indebtedness, and if the Company were unable to meet its mortgage 
payments, a loss could be sustained as a result of foreclosure on such 
properties.

RISK OF BANKRUPTCY OF MAJOR TENANTS.  The bankruptcy or insolvency of a major 
tenant or a number of smaller tenants may have an adverse impact on the 
properties affected and on the income produced by such properties.  Under 
bankruptcy law, a tenant has the option of assuming (continuing) or rejecting 
(terminating) any unexpired lease.  If the tenant assumes its lease with the 
Company, the tenant must cure all defaults under the lease and provide the 
Company with adequate assurance of its future performance under the lease.  
If the tenant rejects the lease, the Company's claim for breach of the lease 
would (absent collateral securing the claim) be treated as a general 
unsecured claim. The amount of the claim would be capped at the amount owed 
for unpaid pre-petition lease payments unrelated to the rejection, plus the 
greater of one years' lease payments or 15% of the remaining lease payments 
payable under the lease (but not to exceed the amount of three years' lease 
payments).

POTENTIAL ENVIRONMENTAL LIABILITY RELATED TO THE PROPERTIES.  Under various 
federal, state and local laws, ordinances and regulations, the Company may be 
considered an owner or operator of real property or may have arranged for the 
disposal or treatment of hazardous or toxic substances and, therefore, may 
become liable for the costs of removal or remediation of certain hazardous 
substances released on or in its property or disposed of by it, as well as 
certain other potential costs which could relate to hazardous or toxic 
substances (including governmental fines and injuries to persons and 
property). Such liability may be imposed whether or not the Company knew of, 
or was responsible for, the presence of such hazardous or toxic substances. 

CHANGES IN POLICIES WITHOUT STOCKHOLDER APPROVAL.  The investment, financing,
borrowing and distribution policies of the Company and its policies with respect
to all other activities, growth, debt, capitalization, and operations, are
determined by the Company's Board of Directors.  Although it has no present
intention to do 

                                       18
<PAGE>

so, the Board of Directors may amend or revise these policies at any time and 
from time to time at its discretion without a vote of the stockholders of the 
Company.  A change in these policies could adversely affect the Company's 
financial condition and results of operations.

DEPENDENCE ON KEY PERSONNEL.  The Company is dependent on the efforts of its 
executive officers and other key personnel.  While the Company believes that 
it could find replacements for these persons, the loss of their services 
could have a temporary adverse effect on the operations of the Company.  
There can be no assurance that the Company will be able to retain these 
persons or to attract suitable replacements or additional personnel if 
required.  The Company has not obtained key-man insurance for any of its 
executive officers or other key personnel.

POSSIBLE CONFLICTS WITH NEW PLAN EXCEL.  Many of the Company's executive 
officers and directors also serve as executive officers and directors of New 
Plan Excel.  Other than four officers, none of the members of management of 
the Company is committed to spending a particular amount of time on the 
Company's affairs, nor do any of them devote their full time to the Company.  
As a result of these dual roles, there is the potential lack of management 
attention to the Company which could have an adverse effect on the Company.
               
The Company and New Plan Excel have entered into certain agreements providing 
for (i) the orderly separation of the Company and New Plan Excel, (ii) the 
sharing of certain facilities and services, and (iii) the allocation of 
certain tax and other liabilities.  Because the Company and New Plan Excel 
share certain members of management, conflicts may arise with respect to the 
operation and effect of these agreements and relationships which could have 
an adverse effect on the Company if not properly resolved.  In this regard, 
the Company and New Plan Excel have adopted certain policies and procedures 
to be followed by the Board of Directors of each company to address potential 
conflicts.  In addition, the Company's charter contains a specific purpose 
clause which identifies at the outset which types of opportunities will be 
pursued by the Company.  This clause provides that the Company's purpose 
includes performing an intercompany agreement between the Company and New 
Plan Excel, which prohibits the Company from engaging in certain activities 
and making certain investments unless New Plan Excel was first offered the 
opportunity and declined to pursue such activities or investments.  It is not 
anticipated that this first right of refusal will hinder the Company since 
its formation was intended to focus on those opportunities which New Plan 
Excel would not otherwise be pursuing.   

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

                             PART II - OTHER INFORMATION


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

               (a) Exhibits
                    
                    27.1 Financial Data Schedule

               (b) Reports on Form 8-K

                     None. 


                                       19

<PAGE>


                                      SIGNATURES


Pursuant to the requirements 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.


                                   EXCEL LEGACY CORPORATION
                                  (Registrant)


DATE:     December 7, 1998          By: /s/ Gary B. Sabin
                                        ----------------------------
                                        GARY B. SABIN
                                        President and Chief Executive Officer



DATE:     December 7, 1998          By: /s/ James Y. Nakagawa
                                        ----------------------------
                                        JAMES Y. NAKAGAWA
                                        Principal Financial Officer


                                       20