<PAGE>   1
                       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: MARCH 31, 1999            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) 675-9400



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 May 7, 1999
------------------------------                   ----------------------------
 Common Stock, $.01 par value                             33,457,804



<PAGE>   2


                            EXCEL LEGACY CORPORATION

                                      INDEX

                                    FORM 10-Q

                                   ----------


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

    Item 1.  Financial Statements:

         Consolidated Balance Sheets (Unaudited)
            March 31, 1999
            December 31, 1998...............................................................3

         Consolidated Statements of Income (Unaudited)
            Three Months Ended March 31, 1999 and 1998......................................4

         Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
            Three Months Ended March 31, 1999 and 1998......................................5

         Consolidated Statements of Cash Flows (Unaudited)
            Three Months Ended March 31, 1999 and 1998......................................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 4.  Submission of Matters to a Vote of Security Holders...........................20

    Item 5.  Other Information.............................................................20

    Item 6.  Exhibits and Reports on Form 8-K..............................................21
</TABLE>










                                        2

<PAGE>   3

                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS - UNAUDITED
                      (in thousands, except share amounts)
                                   ----------


<TABLE>
<CAPTION>
                                                                     MARCH 31,      DECEMBER 31,
                                                                       1999             1998
                                                                     ---------      ------------
<S>                                                                  <C>             <C>      
                                            ASSETS

Real estate:
   Land                                                              $  54,915       $  54,915
   Buildings                                                           137,685         136,118
   Leasehold interests                                                   2,351           2,351
   Accumulated depreciation                                             (3,503)         (2,506)
                                                                     ---------       ---------
      Net real estate                                                  191,448         190,878

Cash                                                                     1,775           1,387
Accounts receivable, less allowance for bad debts of $104 and
  and $14 at March 31, 1999 and December 31, 1998, respectively            169             204
Notes receivable                                                        23,239          23,204
Investment in partnerships                                              12,829          11,423
Interest receivable                                                      6,187           5,341
Pre-development costs                                                   19,302          13,569
Other assets                                                             9,043           9,087
Deferred tax asset                                                       6,146           6,203
                                                                     ---------       ---------
                                                                     $ 270,138       $ 261,296
                                                                     =========       ---------


                           LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
   Mortgage and notes payable                                        $  99,694       $  90,986
   Accounts payable and accrued liabilities                              2,151           2,604
   Other liabilities                                                       631             220
                                                                     ---------       ---------
               Total liabilities                                       102,476          93,810
                                                                     ---------       ---------

Commitments and contingencies                                               --              --

Minority interests                                                         848             846
                                                                     ---------       ---------

Stockholders' equity:
   Series B 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                                                     2,630           2,456
   Notes receivable from affiliates for common shares                  (10,872)        (10,872)
                                                                     ---------       ---------
               Total stockholders' equity                              166,814         166,640
                                                                     ---------       ---------
                                                                     $ 270,138       $ 261,296
                                                                     =========       =========
</TABLE>


                   The accompanying notes are an integral part
                           of the financial statements





                                        3

<PAGE>   4


                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
                   THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                   ----------


<TABLE>
<CAPTION>
                                                           1999           1998
                                                          ------         ------
<S>                                                       <C>            <C>    
Revenue:
   Rental                                                 $3,312             --
   Operating income                                        4,896             --
   Interest income                                           858             --
   Partnership income and other revenues                     151             -- 
                                                          ------         ------
      Total revenue                                        9,217             -- 
                                                          ------         ------

Operating expenses:
   Interest                                                2,025             66
   Depreciation and amortization                           1,196             47
   Property operating expenses                               482             --
   Operating expenses                                      2,511             --
   General and administrative                              2,690              3
                                                          ------         ------
      Total operating expenses                             8,904            116
                                                          ------         ------

Income (loss) before income taxes                            313           (116)


Provision (benefit) for income taxes                         139            (46)
                                                          ------         ------
   Net income (loss)                                      $  174            (70)
                                                          ======         ======

Basic net income per share                                $ 0.01         $   -- 
                                                          ======         ======

Diluted net income per share                              $ 0.00         $   -- 
                                                          ======         ======
</TABLE>


                   The accompanying notes are an integral part
                           of the financial statements





                                        4

<PAGE>   5


                   EXCEL LEGACY CORPORATION AND SUBSIDIARIES

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

                                   ----------


<TABLE>
<CAPTION>
                                         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>      
Three Months Ended March 31, 1999:

Balance at January 1, 1999            21,281,000    $213    33,457,804    $335    $ 174,508     $ 2,456     $(10,872)    $ 166,640
Net income                                    --      --            --      --           --         174           --           174
                                      ----------    ----    ----------    ----    ---------     -------     --------     ---------
Balance at March 31, 1999             21,281,000    $213    33,457,804    $ 33    5$174,508     $ 2,630     $(10,872)    $ 166,814
                                      ==========    ====    ==========    ====    =========     =======     ========     =========

Three Months Ended March 31, 1998:

Balance at January 1, 1998                    --    $ --           100    $ --    $      --     $    --     $     --     $      --
Issuance of preferred stock           21,281,000     213            --      --      106,192          --           --       106,405
Issuance of common stock                      --      --    32,607,704     326       67,469          --           --        67,795
Notes receivable from officers
 for common shares                            --      --            --      --           --          --      (10,872)      (10,872)
Issuance costs                                --      --            --      --       (2,697)         --           --        (2,697)
Net income                                    --      --            --      --           --         (70)          --           (70)
                                      ----------    ----    ----------    ----    ---------     -------     --------     ---------
Balance at March 31, 1998             21,281,000    $213    32,607,804    $326    $ 170,964     $   (70)    $(10,872)    $ 160,561
                                      ==========    ====    ==========    ====    =========     =======     ========     =========
</TABLE>







                   The accompanying notes are an integral part
                           of the financial statements





                                        5

<PAGE>   6

                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
                   THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                                 (IN THOUSANDS)

                                   ----------


<TABLE>
<CAPTION>
                                                             1999           1998
                                                            -------       ---------
<S>                                                         <C>           <C>       
Cash flows from operating activities:

  Net income                                                $   174       $     (70)
  Adjustments to reconcile net income to net cash
     provided by operations:
       Depreciation and amortization                          1,196              47
       Provision for bad debts                                   72              --
       Minority interest in partnerships                          2              --
     Changes in accounts receivable and other assets         (1,073)             --
     Changes in accounts payable and other liabilities           15              90
                                                            -------       ---------
          Net provided by operating activities                  386              67
                                                            -------       ---------
Cash flows from investing activities:

  Real estate acquired and construction costs paid             (973)        (18,571)
  Investment in partnership                                  (1,406)             --
  Pre-development costs paid                                 (5,733)             -- 
                                                            -------       ---------
          Net cash used in investing activities              (8,112)        (18,571)
                                                            -------       ---------

Cash flows from financing activities:

  Proceeds from issuance of preferred stock                      --         106,405
  Proceeds from issuance of common stock                         --          11,104
  Issuance costs paid                                            --          (2,697)
  Principal payments of mortgage payable                       (736)             --
  Borrowings from parent company                                 --          21,191
  Borrowings from notes                                       8,850              -- 
                                                            -------       ---------
          Net cash provided by financing activities           8,114         136,003
                                                            -------       ---------
          Net increase in cash                                  388         117,499

Cash at January 1                                             1,387              -- 
                                                            -------       ---------
Cash at March 31                                            $ 1,775       $ 117,499
                                                            =======       =========
</TABLE>


                   The accompanying notes are an integral part
                           of the financial statements





                                        6

<PAGE>   7


                    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 trust ("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.

     CHANGE IN FISCAL YEAR

     By unanimous consent dated December 11, 1998, the Board of Directors of the
     Company adopted a fiscal year-end of December 31, beginning with a short
     fiscal year ending on December 31, 1998. The Company's previous fiscal
     year-end was July 31.

     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.





                                       7

<PAGE>   8

                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                   ----------



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

     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 an impairment loss
     if the income stream is not sufficient to recover its investment.

     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.





                                       8

<PAGE>   9


                    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. The 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.   MORTGAGES AND NOTES PAYABLE:

     The Company had $99,694,000 in mortgage and notes payable outstanding at
     March 31, 1999 at 7.37% to 8.75% with an average interest rate of 7.87% and
     average maturity of approximately 12 years. The mortgages and notes are due
     on various dates through 2018 and monthly payments approximate $945,000.
     Except for the unsecured revolving credit facility below, the mortgages and
     notes are collateralized by real estate and an assignment of rents.

     The Company has a revolving credit facility of $20,000,000 from BankBoston,
     N.A. (the "Credit Facility") which carries an interest rate of LIBOR plus
     2.5% (7.5% at March 31, 1999). The Credit Facility expires in October 1999.
     Through March 31, 1999, approximately $13,300,000 was outstanding under the
     Credit Facility.

     The principal payments required to be made on mortgages and notes payable
     over the next five years are as follows (in thousands):

<TABLE>
<CAPTION>
         YEAR ENDED
         DECEMBER 31,
         ------------
             <S>                                                        <C>
             1999 (remaining nine months)                               $ 15,559
             2000                                                          4,889
             2001                                                          4,125
             2002                                                          4,461
             2003                                                          4,826
             Thereafter                                                   65,834
                                                                         -------
                                                                        $ 99,694
                                                                        ========
</TABLE>





                                       9

<PAGE>   10


                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                   ----------



4.   INCOME TAXES:

     At March 31, 1999, the Company had a net deferred tax asset of $6,146,000.
     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                     $  62,000     $  20,000
             Deferred tax expense                   54,000         3,000
                                                  --------      --------
             Provision for income taxes          $ 116,000     $  23,000
                                                 =========     =========
</TABLE>

5.   CAPITAL STOCK:

     SERIES B PREFERRED SHARES

     At March 31, 1999, the Company had 21,281,000 shares of Series B Preferred
     Stock outstanding (the "Preferred B Shares"). Holders of the Preferred B
     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 B Shares are convertible. Holders of the Preferred B 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 B 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 B Shares also are
     convertible into common stock by the Company at any time and from time to
     time after the earlier to occur of (i) the date which is six months
     following the date on which the Company's common stock becomes listed or
     admitted for trading on a national securities exchange or (ii) March 31,
     2000. The Company's common stock became listed on the American Stock
     Exchange on November 17, 1998. As a result, the Preferred B Shares will be
     convertible into common stock at the option of the Company any time after
     May 17, 1999.

     The Preferred B Shares were issued in March 1999 in exchange for all of the
     issued and outstanding shares of Series A Preferred Stock of the Company
     (the "Preferred A Shares"). Following such exchange, all Preferred A Shares
     were retired and restored to the status of authorized and unissued shares
     of preferred stock, without designation as to series, and may be reissued
     as shares of any series of preferred stock of the Company.





                                       10

<PAGE>   11


                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                   ----------


5.   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).
     Information regarding the three months ended March 31, 1998 is not provided
     as the Spin-off did not occur until March 31, 1998. Prior to the Spin-off,
     the Company was a wholly-owned subsidiary of Excel.

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                 MARCH 31, 1999
                                                              ------------------
     <S>                                                            <C>    
     Basic EPS

       NUMERATOR:
         Net income                                                 $   174
                                                                    =======
       DENOMINATOR:
         Weighted average of common shares outstanding               33,458
                                                                    =======

       EARNINGS PER SHARE:                                          $  0.01
                                                                    =======

     Diluted EPS

       NUMERATOR:
         Net income                                                 $   174
                                                                    =======
       DENOMINATOR:
         Weighted average of common shares outstanding               33,458
         Effect of diluted securities:
           Preferred B Shares                                        21,281
           Options                                                        8
                                                                    -------
                                                                     54,747
                                                                    =======
       EARNINGS PER SHARE:                                          $  0.00
                                                                    =======
</TABLE>

6.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE:

     The amount paid for interest and income taxes in the three months ended
     March 31, 1999 was approximately $2,215,000 and $622,000, respectively.
     Additionally, the Company assumed $594,000 in debt related to the
     construction of an office building. In the three months ended March 31,
     1998, the Company acquired certain assets in conjunction with the Spin-off
     (Note 2).





                                       11

<PAGE>   12


                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                   ----------



7.   SEGMENT REPORTING:

     The Company has a joint venture arrangement with Millennia. As of March 31,
     1999, Millennia owned eighteen car wash properties in Arizona and Texas. At
     March 31, 1999, 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. In
     March 1999, Millennia entered into an agreement to sell substantially all
     of its assets. The sale is subject to the occurrence of certain events, the
     receipt of certain approvals, and other customary closing conditions.

     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 March 31, 1999, the Company's ownership in the Grand
     Hotel was 65% although the Company was entitled to approximately 98% of the
     Grand Hotel's net income 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 March 31, 1999 (in thousands):

<TABLE>
<CAPTION>
                                                                 Other
                                     Millennia   Grand Hotel  Real Estate     Total   
                                     ---------   -----------  -----------   --------
     <S>                              <C>          <C>          <C>         <C>     
     Total revenues                   $  4,274     $    540     $  4,403    $  9,217
                                      --------     --------     --------    --------

     Interest                              419           --        1,606       2,025
     Depreciation and amortization         334          161          701       1,196
     General and administrative          1,909           --          781       2,690
     Operating expenses                  1,809          703          481       2,993
                                      --------     --------     --------    --------
     Total operating expenses            4,471          864        3,569       8,904
                                      --------     --------     --------    --------
     Income (loss) before
       income taxes                   $   (197)    $   (324)    $    834    $    313
                                      ========     ========     ========    ========

     Real estate, net                 $ 30,058     $ 13,850     $147,540    $191,448
     Other assets                        5,617        1,835       71,238      78,690
                                      --------     --------     --------    --------
     Total assets                     $ 35,675     $ 15,685     $218,778    $270,138
                                      ========     ========     ========    ========

     Mortgages and notes payable      $ 15,108     $     --     $ 84,586    $ 99,694
     Other liabilities                     730          377        1,675       2,782
                                      --------     --------     --------    --------
     Total liabilities                $ 15,838     $    377     $ 86,261    $102,476
                                      ========     ========     ========    ========
</TABLE>





                                       12

<PAGE>   13


                    EXCEL LEGACY CORPORATION AND SUBSIDIARIES


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

                                   ----------


9.   RELATED PARTY TRANSACTIONS:

     In connection with the sale of common stock to ten of the Company's
     officers and employees, the Company issued $10,872,000 of notes receivable
     due from certain of these 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 March 31, 1999 from these notes totaled
     $755,000. The notes have been offset against stockholders' equity on the
     Company's accompanying Consolidated Balance Sheet.

     Following the Spin-off, the Company shared certain employees with New Plan
     Excel Realty Trust, Inc. ("New Plan Excel"), formerly Excel. The shared
     employees were paid by New Plan Excel and reimbursed by the Company based
     upon an Administrative Services Agreement. In April 1999 the Administrative
     Services Agreement was terminated. See "Item 5. Other Information."

10.  MINIMUM FUTURE RENTALS:

     The Company leases its operating properties, except the Millennia 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 real
     estate owned at March 31, 1999 and subject to noncancelable operating
     leases is as follows (in thousands):

<TABLE>
<CAPTION>
                      YEAR ENDED DECEMBER 31,
                      ------------------------
                              <S>                               <C>     
                              1999 (remaining nine months)      $  8,562
                              2000                                11,425
                              2001                                11,331
                              2002                                11,125
                              2003                                10,951
                              Thereafter                         136,840
</TABLE>






                                       13

<PAGE>   14


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. The Company did not own any significant assets
until March 31, 1998 and did not have any significant operating results in the
three months ended March 31, 1998.

Comparison of the three months ended March 31, 1999 to the three months ended
March 31, 1998

Rental revenue was $3.3 million during the three months ended March 31, 1999.
Twelve single tenant properties owned by the Company accounted for $2.5 million
of rental revenue. Eight of these properties are leased to Wal-Mart Stores, Inc.
("Wal-Mart"), two of these properties are leased to Lowe's Home Centers, Inc.
("Lowe's") and two properties in Colorado are leased to AMC Multi-Cinema, Inc.
("AMC"). Additionally, $0.3 million of rental revenue was attributable to a
shopping mall located in Palm Springs, California and the remaining $0.5 million
of rental revenue was primarily attributable to three properties which were
acquired by the Company in conjunction with a redevelopment project in
Scottsdale, Arizona. There were no rental revenue in the three months ended
March 31, 1998.

Other operating income totaled $4.9 million in the three months ended March 31,
1999. Of this income, $4.3 million related to revenues recognized by Millennia
which is under contract to be sold. The Company also recognized $0.5 million of
other operating income by the Grand Hotel. The majority of revenues from this
project is expected to be generated between the months of May and October.
Finally, TenantFirst Real Estate Services, Inc., which the Company acquired in
May 1998, accounted for $0.1 million of revenues from various management
contracts. There was no other operating income in the three months ended March
31, 1998.

Interest income was $0.9 million in the three months ended March 31, 1999 and
primarily related to interest earned on the Company's outstanding notes
receivable. There was no interest income in the three months ended March 31,
1998.

Partnership income and other revenues totaled $0.2 million for the three months
ended March 31, 1999 and primarily related to the Company's interest in a Nova
Scotia unlimited liability company which owns an office building in Canada.
There was no partnership income in the three months ended March 31, 1998.

Interest expense was $2.0 million in the three months ended March 31, 1999 and
primarily related to the $99.7 million of mortgage and notes payable outstanding
at March 31, 1999. In the three months ended March 31, 1998, interest expense
was $66,000 and related to short-term debt incurred in connection with the
Spin-off of assets to the Company.

Depreciation and amortization expense totaled $1.2 million and primarily related
to the $137.7 million of buildings and the $2.4 million of leasehold interests
held by the Company at March 31, 1999. In the three months ended March 31, 1998,
depreciation and amortization was $47,000 and related to assets acquired with
the Spin-off on March 31, 1998.

Property operating expenses were $0.5 million in the three months ended March
31, 1999 and primarily





                                       14

<PAGE>   15

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. There were no property operating expenses
incurred in the three months ended March 31, 1998.

Other operating expenses were $2.5 million in the three months ended March 31,
1999. Expenses of $1.8 million related to Millennia and $0.7 million related to
the Grand Hotel. Both of these investments were acquired subsequent to March 31,
1998 and as such, there were no other operating expenses in the three months
ended March 31, 1998.

General and administrative expenses were $2.7 million in the three months ended
March 31, 1999. 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 which was
terminated in April 1999. Additionally, $1.9 million of the expenses related to
Millennia.

Provision for income taxes was $139,000 in the three months ended March 31, 1999
of which $82,000 was current expense and $57,000 was deferred expense primarily
relating to the change in 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 March 31, 1999 (in thousands):

<TABLE>
<S>                                                                     <C>    
Net income                                                              $   174
Depreciation and amortization (financial statements)                      1,196
  Less depreciation of non-real estate assets                               (22)
Deferred tax expense                                                         57
                                                                        -------
EBDADT                                                                  $ 1,405
                                                                        =======

EBDADT per share - basic                                                $  0.04
                                                                        =======
EBDADT per share - diluted                                              $  0.03
                                                                        =======
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1999, the total mortgage debt and notes payable of the Company
consisted of the following: (i) $24.4 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) $7.5 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 $2.2 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) $36.4 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) $15.1 million in notes related
to the Millennia acquisition of certain car wash properties. Of the notes, $14.6
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. These notes
will be transferred to the pending buyer for these properties upon closing. (vi)
$0.7 million outstanding on a $11.0 million construction loan related to the
construction of an office





                                       15

<PAGE>   16

building. Interest on the construction loan varies based upon the Eurodollar and
was 7.9% at March 31, 1999. All of the above mortgage debt and notes payable are
non-recourse to the Company.(vii) $13.3 million outstanding on the Company's
unsecured $20.0 million credit facility. The facility bears interest at LIBOR
plus 2.5% (7.5% at March 31, 1999) and expires in October 1999.

At March 31, 1999, the Company had 21,281,000 shares of Series B Preferred Stock
outstanding (the "Preferred B Shares"). Holders of the Preferred B 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 B
Shares are convertible. Holders of the Preferred B 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 B 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 B Shares also are convertible
into common stock by the Company at any time and from time to time after the
earlier to occur of (i) the date which is six months following the date on which
the Company's common stock becomes listed or admitted for trading on a national
securities exchange or (ii) March 31, 2000. The Company's common stock became
listed on the American Stock Exchange on November 17, 1998. As a result, the
Preferred B Shares will be convertible into common stock at the option of the
Company any time after May 17, 1999.

The Preferred B Shares were issued in March 1999 in exchange for all of the
issued and outstanding shares of Series A Preferred Stock of the Company (the
"Preferred A Shares"). Following such exchange, all Preferred A Shares were
retired and restored to the status of authorized and unissued shares of
preferred stock, without designation as to series, and may be reissued as shares
of any series of preferred stock of the Company.

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
operating cash flows, 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

Some of the Company's information technology ("IT") systems were originally
written using two digits rather than four to define the applicable year. As a
result, those IT systems had time sensitive software that recognizes dates using
"00" as the Year 1900 rather than the Year 2000. The Company has upgraded its
existing computer software and IT systems and believes that they are able to
recognize the Year 2000 and that the Year 2000 issue will not have a material
impact on the Company's operations.

The Year 2000 issue affects the Company's internal systems, including IT and
non-IT systems. The Company is reviewing its utility systems (heat, light,
telephones, etc.) and other non-IT systems for the impact of Year 2000. The
Company has solicited assurances from its contractors, vendors and other third
parties that their systems (including building management and mechanical
systems) are currently Year 2000 compliant or will be made compliant before the
advent of the Year 2000. No assurances can be made that all contractors and
other third parties will comply with their assurances. The Company intends to
take continuous steps to identify Year 2000 problems related to its vendors and
to formulate a system of working with key third parties, including financial
institutions and utility providers, to understand their ability to continue
providing services and products through the change to Year 2000. The failure to
correct a material





                                       16

<PAGE>   17

Year 2000 problem either within the Company or within a vendor or supplier could
result in an interruption in, or a failure of, certain normal business
activities or operations of the Company. Such interruptions or failures could
materially adversely affect the Company's business, operating results and
financial condition.

The Company's Year 2000 project is expected to be complete by mid-1999, which is
prior to any anticipated impact on the Company's IT systems. As of March 31,
1999, the Company had expended less than $50,000 and expects to expend less than
$10,000 in additional costs in connection with its Year 2000 project, including
the cost of identification, assessment, remediation and testing efforts. The
cost of the Company's Year 2000 project, and the target date on which the
Company expects the Year 2000 modifications to be complete are based upon a
variety of assumptions of future events, including the continued availability of
certain resources. No assurance can be made that these estimates will be
achieved and actual results could materially differ from those anticipated.
Specific factors that might cause material differences include, but are not
limited to, the availability and costs of personnel trained in this area, the
ability to locate and correct relevant computer codes and the timing and
compliance by the Company's outside vendors and suppliers.

A contingency plan has not been developed for dealing with the most reasonably
likely worst case scenario, and such scenario has not yet been clearly
identified. Since the Company has adopted a plan to address these Year 2000
issues, it has not developed a comprehensive contingency plan should Year 2000
issues fail to be addressed successfully or in their entirety. However, if the
Company identifies significant risks or is unable to meet its anticipated time
line, the Company will develop contingency plans as deemed necessary at that
time. This discussion contains forward-looking statements and should be read in
conjunction with the Company's disclosures under the heading "Certain Cautionary
Statements" below.

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 March 31, 1999, the Company's largest tenants
were AMC, Wal-Mart, and Lowe's which accounted for approximately 14%, 10% and
3%, respectively, of the Company's total revenues in the three months ended
March 31, 1999. 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 March 31, 1999, 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 have an anti-takeover effect,
thus discouraging the acquisition of the common stock by potential investors and
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





                                       17

<PAGE>   18

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 which 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 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.





                                       18

<PAGE>   19

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 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.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Company's operations result primarily from changes
in short-term LIBOR interest rates. The Company does not have any derivative
instruments at March 31, 1999 or any other significant market risk.

The Company's exposure to market risk for changes in interest rates relates
primarily to the Credit Facility of which $13.3 million was outstanding at March
31, 1999. The Company has an additional $0.7 million of variable rate debt at
March 31, 1999. The Company continuously evaluates the level of variable rate
debt with respect to total debt and other factors.





                                       19

<PAGE>   20

                           PART II - OTHER INFORMATION


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

           (a) The Company held its Annual Meeting of Stockholders on January
               28, 1999. 

           (b) See paragraph (c) below. 

           (c) The matters voted upon at the meeting and the votes cast with
               respect thereto were as follows:

           Election of Directors

<TABLE>
<CAPTION>
           Nominee for                Votes       Votes                     Broker
             Director               Cast For     Withheld    Abstentions   Non-Votes
           -----------              --------     --------    -----------   ---------
           <S>                     <C>            <C>              <C>         <C>
           Gary B. Sabin           26,053,432     28,793           -           -
           Richard B. Muir         26,052,932     29,293           -           -
           Kelly D. Burt           26,053,310     28,915           -           -
           Richard J. Nordlund     26,053,310     28,915           -           -
           Robert E. Parsons, Jr.  26,053,110     29,115           -           -
           Robert S. Talbott       26,053,310     28,915           -           -
           John H. Wilmot          26,053,310     28,915           -           -
</TABLE>

ITEM 5.    OTHER INFORMATION

           On April 21, 1999, the Company entered into a Master Separation
           Agreement with New Plan Excel and ERT Development Corporation. Under
           the terms of the Master Separation Agreement, the Company and New
           Plan Excel agreed, among other things, to modify the terms of certain
           of their existing agreements, including the termination of the
           Intercompany Agreement, dated as of March 31, 1998 (as amended, the
           "Intercompany Agreement"), and the Administrative Services Agreement,
           dated as of March 31, 1998 9as amended, the "Administrative Services
           Agreement"), in each case except as set forth in the Master
           Separation Agreement.

           In addition, the Master Separation Agreement provides for certain
           interim arrangements between the Company and New Plan Excel as to
           certain office facilities in California, as well as an agreement with
           respect to the non-solicitation of certain New Plan Excel employees
           during the 90-day period following the entering into of the Master
           Separation Agreement.

           The Master Separation Agreement also provides that each of the
           Company and New Plan Excel will, on the terms set forth in the Master
           Separation Agreement, refrain from acquiring any interest in the
           other or seeking to influence or control the other.

           The foregoing description of the Master Separation Agreement is
           qualified in its entirety by reference to the Master Separation
           Agreement, a copy of which is filed as an exhibit to this Form 10-Q
           and is incorporated by reference herein.

           Contemporaneously with the Company and New Plan Excel entering into
           the Master Separation Agreement, on April 21, 1999, six executives of
           the Company, including Gary B. Sabin, Richard B. Muir, Graham R.
           Bullick, Mark T. Burton, S. Eric Ottesen and Ronald H. Sabin, entered
           into separate Resignation and Release Agreements with New Plan Excel.
           The Resignation and Release Agreements provide for the resignation of
           the respective executives from New Plan Excel and its subsidiaries
           and affiliates, the mutual release by New Plan Excel and the
           executive of certain possible claims against the other, and the
           payment by New Plan Excel of certain severance benefits.





                                       20

<PAGE>   21

           In connection with the foregoing matters, and in addition to the
           resignation of Gary B. Sabin and Richard B. Muir from the Board of
           Directors of New Plan Excel (as contemplated by their respective
           Resignation and Release Agreements), two non-executive directors of
           the Company, Robert E. Parsons, Jr. and John H. Wilmot, resigned from
           the Board of Directors of New Plan Excel.


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a) Exhibits

               10.1  Master Separation Agreement, dated as of April 21, 1999,
                     among Excel Legacy Corporation, ERT Development Corporation
                     and New Plan Excel Realty Trust, Inc.

               27.1  Financial Data Schedule

           (b) Reports on Form 8-K

               None  



                                   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:   May 7, 1999                  By: /s/ Gary B. Sabin
                                        --------------------------------------
                                         GARY B. SABIN
                                         President and Chief Executive Officer



DATE:   May 7, 1999                  By: /s/ James Y. Nakagawa
                                        --------------------------------------
                                         JAMES Y. NAKAGAWA
                                         Principal Financial Officer













                                       21