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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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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, 2001

Commission File Number: 0-23503

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

Delaware(State of incorporation)

33-0781747(I.R.S. Employer Identification No.)


17140 Bernardo Center Drive, Suite 300, San Diego, California 92128(Address of principal executive offices) (Zip Code)

Registrant's
telephone number:(858) 675-9400

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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 issuer's classes of common stock, as of the latest practicable date.

Class

Outstanding at May 14, 2001Common Stock, $.01 par value

61,540,849


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EXCEL LEGACY CORPORATION AND SUBSIDIARIES        INDEX        FORM 10-Q

|                               |                                                                                               | Page
|------------------------------ | --------------------------------------------------------------------------------------------- | ----
|PART I. FINANCIAL INFORMATION: |                                                                                               |     
|                               | Item 1. Financial Statements (Unaudited):                                                     |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               |                                                                                               |     
|                               | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |     
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |     
|PART II. OTHER INFORMATION     |                                                                                               |     
|                               | Item 6. Exhibits and Reports on Form 8-K                                                      |     

2

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EXCEL LEGACY CORPORATION AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (in thousands, except share amounts)

|                                                                                                |                                                                                                                                                     | March 31,
2001             |         | December 31,
2000 |        
|----------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ----------------- | -------
|ASSETS                                                                                          |                                                                                                                                                    
|Real estate:                                                                                    |                                                                                                                                                     |                            |         |                   |        
|                                                                                                | Land                                                                                                                                                |                            | $       | 15,476            |        
|                                                                                                | Buildings                                                                                                                                           |                            |         | 26,539            |        
|                                                                                                | Construction in progress                                                                                                                            |                            |         | 63,654            |        
|                                                                                                | Leasehold interest                                                                                                                                  |                            |         | 2,351             |        
|                                                                                                | Accumulated depreciation                                                                                                                            |                            |         | (1,978            | )      
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|                                                                                                |                                                                                                                                                     | Net real estate            |         |                   | 106,042
|Cash                                                                                            |                                                                                                                                                     |                            | 1,074   |                   |        
|Accounts receivable, less allowance for bad debts of $32 and $32 in 2001 and 2000, respectively |                                                                                                                                                     |                            | 883     |                   |        
|Notes receivable                                                                                |                                                                                                                                                     |                            | 45,700  |                   |        
|Investment in securities                                                                        |                                                                                                                                                     |                            | 136,051 |                   |        
|Investment in partnerships                                                                      |                                                                                                                                                     |                            | 15,989  |                   |        
|Interest receivable                                                                             |                                                                                                                                                     |                            | 14,165  |                   |        
|Pre-development costs                                                                           |                                                                                                                                                     |                            | 9,260   |                   |        
|Other assets                                                                                    |                                                                                                                                                     |                            | 6,503   |                   |        
|Deferred tax asset                                                                              |                                                                                                                                                     |                            | 5,049   |                   |        
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|                                                                                                |                                                                                                                                                     | $                          | 340,716 |                   | $      
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                            |                                                                                                                                                    
|Liabilities:                                                                                    |                                                                                                                                                     |                            |         |                   |        
|                                                                                                | Notes payable                                                                                                                                       |                            | $       | 68,347            |        
|                                                                                                | Convertible debentures                                                                                                                              |                            |         | 33,240            |        
|                                                                                                | Senior notes                                                                                                                                        |                            |         | 18,067            |        
|                                                                                                | Mortgages payable                                                                                                                                   |                            |         | 12,018            |        
|                                                                                                | Accounts payable and accrued liabilities                                                                                                            |                            |         | 14,155            |        
|                                                                                                | Other liabilities                                                                                                                                   |                            |         | 371               |        
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|Total liabilities                                                                               |                                                                                                                                                     |                            | 146,198 |                   |        
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|Commitments and contingencies                                                                   |                                                                                                                                                     |                            |         |                   |        
|Minority interests                                                                              |                                                                                                                                                     |                            | 595     |                   |        
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|Stockholders' equity:                                                                           |                                                                                                                                                     |                            |         |                   |        
|                                                                                                | Common stock, $.01 par value, 150,000,000 shares authorized, 61,540,849 and 61,540,849 shares issued and outstanding in 2001 and 2000, respectively |                            |         | 615               |        
|                                                                                                | Additional paid-in capital                                                                                                                          |                            |         | 201,471           |        
|                                                                                                | Accumulated other comprehensive loss, net of tax                                                                                                    |                            |         | (797              | )      
|                                                                                                | Retained earnings                                                                                                                                   |                            |         | 2,322             |        
|                                                                                                | Notes receivable from affiliates for common shares                                                                                                  |                            |         | (9,688            | )      
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|                                                                                                |                                                                                                                                                     | Total stockholders' equity |         |                   | 193,923
|                                                                                                |                                                                                                                                                     |                            |         |                   |        
|                                                                                                |                                                                                                                                                     | $                          | 340,716 |                   | $      
|                                                                                                |                                                                                                                                                     |                            |         |                   |        

The
accompanying notes are an integral part
of the financial statements

3

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EXCEL LEGACY CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF LOSS        (in thousands, except per share amounts)

|                                            |                               | Three Months Ended
March 31, |       
|------------------------------------------- | ----------------------------- | ---------------------------- | ------
|
|Revenues:                                   |                               |                              |       
|                                            | Operating income              |                              | $     
|                                            | Partnership and other income  |                              |       
|                                            | Interest income               |                              |       
|                                            | Rental income                 |                              |       
|                                            |                               |                              |       
|                                            |                               | Total revenue                |       
|                                            |                               |                              |       
|Operating expenses:                         |                               |                              |       
|                                            | Interest                      |                              |       
|                                            | Other operating expenses      |                              |       
|                                            | Property operating expenses   |                              |       
|                                            | General and administrative    |                              |       
|                                            | Depreciation and amortization |                              |       
|                                            |                               |                              |       
|                                            |                               | Total operating expenses     |       
|                                            |                               |                              |       
|Net operating loss                          |                               |                              | (1,193
|Net gain from real estate sales             |                               |                              | 114   
|                                            |                               |                              |       
|Loss before income taxes                    |                               |                              | (1,079
|Benefit for income taxes                    |                               |                              | 506   
|                                            |                               |                              |       
|                                            |                               | Net loss                     |       
|                                            |                               |                              |       
|Basic and diluted net loss per common share |                               | $                            | (0.01 
|                                            |                               |                              |       

The
accompanying notes are an integral part
of the financial statements

4

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EXCEL LEGACY CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY        (in thousands, except number of shares)

|                                            |                                                      | Preferred Stock |   | Common Stock |     |   |            |   |   |     |   |   |         |   |  
|------------------------------------------- | ---------------------------------------------------- | --------------- | - | ------------ | --- | - | ---------- | - | - | --- | - | - | ------- | - | -
|
|
|Three Months Ended March 31, 2001:          |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|Balance at January 1, 2001                  |                                                      |                |   | $            |    |   | 61,540,849 |   | $ | 615 |   | $ | 201,471 |   | $
|Comprehensive income:                       |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|                                            | Net loss                                             |                 |  |              |     |  |            |  |   |     |  |   |         |  |  
|                                            | Unrealized loss on marketable securities, net of tax |                 |  |              |     |  |            |  |   |     |  |   |         |  |  
|                                            |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|Total comprehensive income                  |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|                                            |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|Balance at March 31, 2001:                  |                                                      |                |   | $            |    |   | 61,540,849 |   | $ | 615 |   | $ | 201,471 |   | $
|                                            |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|Three Months Ended March 31, 2000:          |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|Balance at January 1, 2000                  |                                                      | 21,281,000      |   | $            | 213 |   | 36,835,921 |   | $ | 368 |   | $ | 187,699 |   | $
|Conversion of notes payable to common stock |                                                      |                |   |              |    |   | 5,102,181  |   |   | 51  |   |   | 18,012  |   |  
|Issuance of common shares                   |                                                      |                |   |              |    |   | 25,333     |   |   | 1   |   |   | 83      |   |  
|Repayment of notes to affiliates            |                                                      |                |   |              |    |   |           |   |   |    |   |   |        |   |  
|Comprehensive income:                       |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|                                            | Net loss                                             |                 |  |              |     |  |            |  |   |     |  |   |         |  |  
|                                            | Unrealized gain on marketable securities, net of tax |                 |  |              |     |  |            |  |   |     |  |   |         |  |  
|                                            |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|Total comprehensive income                  |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|                                            |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  
|Balance at March 31, 2000                   |                                                      | 21,281,000      |   | $            | 213 |   | 41,963,435 |   | $ | 420 |   | $ | 205,794 |   | $
|                                            |                                                      |                 |   |              |     |   |            |   |   |     |   |   |         |   |  

The accompanying notes are an integral part
of the financial statements

5

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EXCEL LEGACY CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in thousands)

|                                          |                                                                              | Three Months Ended
March 31,     |        
|----------------------------------------- | ---------------------------------------------------------------------------- | -------------------------------- | -------
|
|Cash flows from operating activities:     |                                                                              |                                  |        
|                                          | Net loss                                                                     |                                  | $      
|                                          | Adjustments to reconcile net loss to net cash (used) provided by operations: |                                  |        
|                                          |                                                                              | Gain from real estate sales      |        
|                                          |                                                                              | Depreciation and amortization    |        
|                                          |                                                                              | Earnings from equity investments |        
|                                          | Change in accounts receivable and other assets                               |                                  |        
|                                          | Change in accounts payable and other liabilities                             |                                  |        
|                                          |                                                                              |                                  |        
|Net cash used by operating activities     |                                                                              |                                  | (2,269 
|                                          |                                                                              |                                  |        
|Cash flows from investing activities:     |                                                                              |                                  |        
|                                          | Real estate acquired and construction costs paid                             |                                  |        
|                                          | Notes receivable issued                                                      |                                  |        
|                                          | Investment in partnerships                                                   |                                  |        
|                                          | Proceeds from real estate sales                                              |                                  |        
|                                          | Net pre-development costs reimbursed (paid)                                  |                                  |        
|                                          |                                                                              |                                  |        
|Net cash used in investing activities     |                                                                              |                                  | (17,409
|                                          |                                                                              |                                  |        
|Cash flows from financing activities:     |                                                                              |                                  |        
|                                          | Principal payments of notes and mortgages                                    |                                  |        
|                                          | Borrowings from issuance of notes payable                                    |                                  |        
|                                          |                                                                              |                                  |        
|Net cash provided by financing activities |                                                                              |                                  | 19,283 
|                                          |                                                                              |                                  |        
|Net (decrease) increase in cash           |                                                                              |                                  | (395   
|Cash at the beginning of the period       |                                                                              |                                  | 1,469  
|                                          |                                                                              |                                  |        
|Cash at the end of the period             |                                                                              | $                                | 1,074  
|                                          |                                                                              |                                  |        

The
accompanying notes are an integral part
of the financial statements

6

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EXCEL LEGACY CORPORATION AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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
accounting principles generally accepted in the United States of America 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 Excel Legacy Corporation, Inc.'s December 31, 2000
Form 10-K, as amended.

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 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"). Upon completion of the
Spin-off, the Company ceased to be a wholly owned subsidiary of Excel and began operating as an independent public real estate operating company.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and all affiliates in which the Company
has an ownership interest greater than 50%. The Company uses the equity method of accounting to account for its investments in which its ownership interest is 50% or less, but in which it has
significant influence. The Company accounts for its interest in Price Enterprises, Inc., a Maryland Corporation ("PEI") (Note 2) under the equity method of accounting however, because
the holders of PEI preferred stock, which does not include the Company, have the right to elect a majority of the PEI board of directors.

Real Estate

Certain real estate assets were transferred to the Company from Excel and recorded at Excel's cost basis. 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 its wholly owned properties as well as its investments in partnerships individually for impairment whenever events or changes in circumstances indicate that the
carrying amount of the property may not be recoverable. Recoverability of property to be held and used is measured by comparing the carrying amount of the property to future undiscounted net cash
flows expected to be generated by the property. If the sum of the expected undiscounted future cash flows is less than the carrying amount of the property, the property is considered to be impaired.
If the property is impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property exceeds the fair value of the property.

7

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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 provides for income taxes under the liability method. A current tax asset or liability is recognized for the estimated taxes refundable or payable
for the current year. A deferred tax asset or liability is recognized for the estimated future tax effects attributable to carry forwards and to temporary differences between the tax and financial
reporting basis of assets and liabilities. The measurement of current and deferred tax assets and liabilities is based on enacted tax laws and rates. The measurement of deferred tax assets is reduced,
if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.

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 and effective interest 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 contingent rental revenue based upon the level of sales achieved by the lessee. Contingent rental revenue is recognized when earned.

Comprehensive Income

In 1999, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 130 "Reporting Comprehensive Income." This statement requires that
all components of comprehensive income be reported in the financial statements in the period in which they are recognized. The components of comprehensive income for the Company include net income and
unrealized gains on investments.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Reclassifications

Certain reclassifications have been made to the consolidated financial statements at December 31, 2000 and for the period ended March 31, 2000,
to conform with the current period's presentation.

8

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New Pronouncement

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137, Accounting for Derivative Instruments and Hedging ActivitiesDeferral of the Effective Date of FASB Statement No. 133, an Amendment of FASB Statement
No. 133 and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activitiesan Amendment of FASB Statement No. 133. SFAS No. 133
standardizes the accounting for derivative instruments by requiring that all derivatives be recognized as assets and liabilities and measured at fair value. The Company adopted this standard on
January 1, 2001 and has determined that the adoption of SFAS No. 133 does not have a material impact on the Company's financial statements.

2.  Price Enterprises, Inc.:

In November 1999, the Company completed an exchange offer of $8.50 per share for any and all common shares of PEI, which is operated as a real estate
investment trust. The exchange offer consisted of per share consideration for PEI common stock of $4.25 in cash, $2.75 in principal amount of newly issued 9% Convertible Redeemable Subordinated
Secured Debentures of the Company due in 2004 (convertible at any time into the Company's common stock at $5.50 per share) and $1.50 in newly issued 10% Senior Redeemable Secured Notes of the Company
due in 2004. Approximately, 12.1 million shares of PEI common stock were tendered representing approximately 91% of the outstanding common stock. Below is summarized financial information as of
March 31, 2001 and the quarter then ended for PEI (in thousands):

March 31, 2001Balance SheetReal estate, net of accumulated depreciation

$
570,323Other assets


112,497Total assets

$
682,820Notes and mortgages payable

$
213,991Accounts payable and other liabilities


4,594218,58583/4% Series A Preferred stock


353,404Other stockholders' equity


110,831Total liabilities and stockholders' equity

$
682,820


9

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Three Months
Ended
March 31, 2001Income statement:Total revenue, including interest income and joint venture income

$
19,765Operating expenses


(4,444
)General and administrative


(867
)Interest expense


(3,398
)Depreciation and amortization


(2,226
)Loss on sale of real estate


(91
)Net income


8,739Preferred dividends


(8,358
)Net income available for common shares

$
381


3.  Millennia:

The Company has an investment in a joint venture known as Millennia Car Wash, LLC ("Millennia") which owns approximately 3.75 million shares of common
stock and 62,500 common stock purchase warrants of Mace Security International ("MACE") and 250,000 common shares of US Plastic Lumber Corporation ("USPL"). The Company's common shares
in MACE and USPL are subject to certain sale restrictions. One of the Company's senior officers is a director on the MACE board of directors.

The
Company accounts for Millennia's investment in MACE under the equity method of accounting and owned approximately 15% of MACE at March 31, 2001. The Company classifies its
investment in
USPL as available-for-sale and recognizes changes in the fair value of its investment in USPL in other comprehensive income.

Investment in USPL (in thousands):

March 31
2001

December 31
2000Cost

$
1,000

$
1,000Unrealized loss


(797
)

(695
)Fair value

$
203

$
305


4.  Real Estate:

The Company sold a parcel of land during the first quarter of 2001 for $0.5 million and recorded a net gain of $0.1 million.

10

---

The Company sold the following properties in the first quarter of 2000:

Location

Sold
Date

Sales Price
(000's)

Mortgage
Transferred
(000's)Middletown, OH (1)

2/00

$
6,709

$
3,726Terre Haute, IN (1)

2/00


5,762


3,598San Diego/Rancho Bernardo, CA (1) (2)

2/00


12,381


7,381


---

5.  Notes Receivable:

The Company had $45.7 million in notes receivable outstanding at March 31, 2001 related to various development projects. The notes bear interest
at 10% to 12% per annum and are secured by the related projects. The notes mature on various dates between 2001 and the earlier of the sale of the related projects, or 2003 to 2004.

6.  Notes and Mortgages Payable:

Notes Payable

The Company had the following notes payable outstanding at March 31, 2001 and December 31, 2000 (amounts in thousands):

March 31
2001

December 31
2000Revolving $15.0 million credit facility bearing interest at Libor plus 3.75% (8.8% at March 31, 2001) due June 30, 2001. The facility is secured by some of the Company's PEI common shares.

$
13,080

$
11,481Revolving $40.0 million unsecured line of credit facility with PEI bearing interest at Libor plus 3.75% (8.8% at March 31, 2001) to 12.50% due December 2002.


39,782


25,377Note payable to The Sol and Helen Price Trust bearing interest at Libor plus 1.50% (6.5% at March 31, 2001) due November 2004. The note is secured by some of the Company's PEI common shares.


9,347


9,347Note payable outstanding on a $4.7 million facility related to Newport on the Levee, LLC, bearing interest at Prime plus 0.5% (8.5% at March 31, 2001), due March 2002.


4,738


2,106Other


1,400


750Total

$
68,347

$
49,061


11

---

The
Company has a 65% interest in Newport on the Levee, LLC ("Newport") that is developing an entertainment retail project in Newport, KY. In addition to the $4.7 million note
in the above table, the City of Newport has issued two series of public improvement bonds. The Series 2000a tax exempt bonds total $44.2 million and are broken down as follows:
(a) $18.7 million maturing 2027 with interest at 8.375%; (b) $20.5 million maturing 2018 with interest at 8.5%; and (c) $5.0 million maturing 2027 with
interest at 8.375%. The Series 2000b bonds are taxable and have a par amount of $11.6 million with interest at 11% due 2009. The bonds are guaranteed by Newport, the Company, and the
third party developers of the project. Newport has drawn on $38.9 million of the bonds at March 31, 2001 for construction incurred to date.

The
Company has a 50% interest in a limited liability company that owns land in Orlando, FL. The land has a total book basis of $18.5 million at March 31, 2001 and
mortgage debt of $8.9 million which is guaranteed by the Company.

The
Company also has guaranteed a $15.0 million note payable related to a development project in Scottsdale, AZ and the Company has a note receivable with a participating
interest.

In
April 2001, the Company borrowed an additional $6.0 million from an individual with interest at 12.5%. Proceeds from this note were used to fund certain development
projects and pay-down the line of credit. This note is due in April 2002.

Convertible Debentures

In conjunction with the PEI exchange offer, the Company issued $33.2 million in convertible debentures ("Debentures"). The Debentures bear an interest
rate of 9% per annum and are secured by a first priority security interest in common shares of PEI. The holders of the Debentures are entitled at any time before the day prior to the final maturity
date, subject to prior redemption, to convert any Debentures into the Company's common stock at the conversion price of $5.50 per share. The Debentures mature in November 2004.

Senior Notes

In conjunction with the PEI exchange offer, the Company issued $18.1 million in senior notes ("Senior Notes"). The Senior Notes bear an interest rate of
10% per annum and, along with the Debentures, are secured by a first priority security interest in common shares of PEI. The Senior Notes rank equal to future senior indebtedness of the Company and
are senior to the Debentures. The Senior Notes mature in November 2004.

Mortgages Payable

The Company had $12.0 million in mortgages payable outstanding at March 31, 2001 secured by real estate. The mortgage debt has an average
maturity of 4 years expiring at various dates to 2009. The monthly payment of principal and interest approximates $80,000 bearing an average interest rate of 7.41% at March 31, 2001.

12

---

Maturities

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

Year Ended December 31,2001 (remaining nine months)

$
15,1852002


50,8332003


2004


60,6542005


Thereafter


5,000$
131,672


7.  Income Taxes:

At March 31, 2001, the Company had a net deferred tax asset of $5.0 million. The deferred tax asset primarily relates to certain assets
written-off for book purposes, but not yet deducted for tax purposes. The remaining 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 consisted of the following (in thousands):

Federal

StateThree months ended March 31, 2001:Current payable

$


$
6Deferred tax benefit


(388
)

(124
)Benefit for income taxes

$
(388
)
$
(118
)Three months ended March 31, 2000:Current payable

$


$
35Deferred tax benefit


(187
)

(72
)Benefit for income taxes

$
(187
)
$
(37
)


13

---

8.  Capital Stock:

Common Shares

In March 2000, $18.0 million of notes payable were converted into 5.1 million shares of the Company's common stock.

9.  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):

Three Months Ended
March 31Basic EPS2001

2000Numerator:Net loss

$
(473
)
$
(373
)Denominator:Weighted average common shares outstanding


61,541


36,893Earnings Per Share

$
(0.01
)
$
(0.01
)


Three Months Ended
March 31Diluted EPS2001

2000Numerator:Net loss

$
(473
)
$
(373
)Denominator:Weighted average common shares outstanding


61,541


36,893Effect of diluted securities:Preferred B shares





21,281Common stock options





12Deduct diluted securities for net loss





(21,293
)61,541


36,893Earnings Per Share

$
(0.01
)
$
(0.01
)


10. Statement of Cash FlowsSupplemental Disclosure:

Three Months Ended
March 312001

2000Supplemental disclosure:Cash paid for interest

$
3.6 million

$
4.1 millionNet cash paid for income taxes










14

---



11. Segment Reporting:

The Company's primary business segments consist of the Commercial Property Unit, the Development Unit, and the Investment Unit. The Commercial Property Unit
manages Company held operating properties and includes its investment in PEI. The Development Unit develops real estate projects and the Business Unit pursues and invests in public and private real
estate-related companies and/or their securities. Certain revenues and expenses such as general and administrative not specifically incurred by specific segments, and corporate income taxes have been
grouped with "General and Administrative" for presentation purposes.

|                                   |                          | Commercial
Property Unit |             | Development
Unit |   | Investment
Unit |         | General and
Administrative |            | Total |  
|---------------------------------- | ------------------------ | ------------------------ | ----------- | ---------------- | - | --------------- | ------- | -------------------------- | ---------- | ----- | -
|Three months ended March 31, 2001: |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Total revenues                     |                          | $                        | 934,000     |                  | $ | 1,613,000       |         | $                          | 1,090,000  |       | $
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Interest                           |                          |                          | 9,000       |                  |   | 16,000          |         |                            |           |       |  
|Depreciation and amortization      |                          |                          | 6,000       |                  |   | 65,000          |         |                            | 212,000    |       |  
|General and administrative         |                          |                          |            |                  |   |                |         |                            | 2,000      |       |  
|Operating expenses                 |                          |                          | 351,000     |                  |   | 163,000         |         |                            | 1,300,000  |       |  
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Total operating expenses           |                          |                          | 366,000     |                  |   | 244,000         |         |                            | 1,514,000  |       |  
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Net operating income (loss)        |                          |                          | 568,000     |                  |   | 1,369,000       |         |                            | (424,000   | )     |  
|                                   | Real estate sales        |                          |             |                 |   |                 | 114,000 |                            |            |      |  
|                                   | Benefit for income taxes |                          |             |                 |   |                 |        |                            |            |      |  
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Net income (loss)                  |                          | $                        | 568,000     |                  | $ | 1,483,000       |         | $                          | (424,000   | )     | $
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Total assets                       |                          | $                        | 115,419,000 |                  | $ | 138,674,000     |         | $                          | 61,330,000 |       | $
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Three months ended March 31, 2000: |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Total revenues                     |                          | $                        | 1,268,000   |                  | $ | 1,235,000       |         | $                          | 1,012,000  |       | $
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Interest                           |                          |                          | 127,000     |                  |   |                |         |                            |           |       |  
|Depreciation and amortization      |                          |                          | 59,000      |                  |   | 143,000         |         |                            | 160,000    |       |  
|General and administrative         |                          |                          |            |                  |   |                |         |                            | 14,000     |       |  
|Operating expenses                 |                          |                          | 314,000     |                  |   | 222,000         |         |                            | 1,039,000  |       |  
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Total operating expenses           |                          |                          | 500,000     |                  |   | 365,000         |         |                            | 1,213,000  |       |  
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Net operating income (loss)        |                          |                          | 768,000     |                  |   | 870,000         |         |                            | (201,000   | )     |  
|                                   | Real estate sales        |                          |             | 1,880,000        |   |                 |        |                            |            |      |  
|                                   | Benefit for income taxes |                          |             |                 |   |                 |        |                            |            |      |  
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Net income (loss)                  |                          | $                        | 2,648,000   |                  | $ | 870,000         |         | $                          | (201,000   | )     | $
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  
|Total assets                       |                          | $                        | 130,352,000 |                  | $ | 118,288,000     |         | $                          | 52,309,000 |       | $
|                                   |                          |                          |             |                  |   |                 |         |                            |            |       |  

12. Related Party Transactions:

At March 31, 2001, the Company had $39.8 million payable to PEI on a $40.0 million note. During the first quarter of 2001 the Company
recorded $0.9 million in interest expense related to this note.

15

---

The Company offsets the general and administrative costs with reimbursements received monthly from PEI. In the three months ended March 31, 2001, approximately
$0.8 million was received as reimbursements.

In
February 2001 the Company executed a ground lease with PEI in connection with a development project in Anaheim, CA. The ground lease requires payments of $2.8 million
per year and during the first quarter of 2001 the Company recorded $0.5 million in cost related to this lease.

In
the first quarter of 2000, three properties were sold to PEI. The Company leases back one of the properties for a quarterly amount of $0.2 million.

In
connection with the sale of common stock to certain affiliates in 1998, the Company issued notes receivable of which $9.7 million was outstanding at March 31, 2001.
The notes bear interest at a fixed rate of 7%, and are due in March 2003. The total interest receivable at March 31, 2001 from these notes totaled $2.0 million. The notes have
been offset against stockholders' equity on the Company's accompanying Consolidated Balance Sheets.

In
September 2000, the Company entered into agreements with certain officers to assume $5.1 million in personal debt obligations of the officers in exchange for their
rights to 2.05 million shares of Company common stock. The effective price of the transaction was $2.50 per share, tied to the market price on the day of the transaction. The officer debts were
entered into in connection with their original share purchase. By assuming these third-party debts, the Company also obtained a first lien on all remaining shares currently held by the officers, which
will serve as security for the officers' notes to the Company. The Company paid $4.3 million of the above personal debt in October 2000, upon which the Company recorded
1.71 million shares as repurchased.

Additional
related party information is discussed in notes 2, 4, 6 and 13.

13. Significant Event:

On March 21, 2001, PEI, PEI Merger Sub, Inc., a Maryland corporation ("Merger Sub"), and the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement"). Pursuant to the Merger Agreement and subject to the terms and conditions set forth therein, Merger Sub will be merged with and into the Company (the "Merger"), with the
Company continuing as a wholly-owned subsidiary of PEI. At the effective time of the Merger, each outstanding share of common stock, will be exchanged for 0.6667 of a share of PEI common stock, and
each option to purchase shares of common stock will be exchanged for an option to purchase shares of PEI common stock (with the exercise price and number of shares appropriately adjusted to reflect
the exchange ratio). Following the Merger, PEI will continue to operate as a real estate investment trust under the name Price Legacy Corporation ("Price Legacy"). The Merger, which is structured to
qualify as a tax-free reorganization, is subject to the approval of the stockholders of both PEI and the Company and other customary closing conditions.

Also
on March 21, 2001, PEI entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with Warburg, Pincus Equity Partners, L.P. and certain of its
affiliates ("Warburg Pincus"), pursuant to which PEI agreed to sell to Warburg Pincus (a) 17,985,612 shares of a new class of preferred stock, 9% Series B Junior Convertible Redeemable
Preferred Stock, par value $0.0001 per share (the "Series B Preferred Stock"), and (b) a warrant (the "Warrant") to purchase an aggregate of 2.5 million shares of Price Legacy
common stock at an exercise price of $8.25 per share, for an aggregate purchase price of $100,000,000. The Series B Preferred Stock is junior to the Series A Preferred Stock with respect
to dividend, liquidation and other rights, and is convertible under certain conditions into Price Legacy common stock at $5.56 per share after 24 months from the date of issuance. The 9% coupon
will be paid in kind with additional shares of Series B Preferred Stock for the first 45 months from issuance. Since the Warburg Pincus investment and the Merger are subject to

16

---

substantially the same conditions, it is expected that the two transactions will close concurrently (assuming they are both completed).

On
April 12, 2001, PEI and Sol Price, a significant stockholder of PEI and the Company through various trusts, agreed to convert an existing note payable to a trust controlled
by Sol Price of approximately $9.3 million into 1,681,142 shares of the Series B Preferred Stock and a warrant to purchase 233,679 shares of PEI common stock at an exercise price of
$8.25 per share concurrently with the closing of the Merger with the Company and the sale of the Series B Preferred Stock to Warburg Pincus. These transactions are subject to stockholder
approval and other customary conditions.

17

---



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

Nature of Business

Excel Legacy Corporation ("the Company"), acquires, sells, develops, manages, invests, finances and operates real property and related businesses. The Company
performs within three business units: 1) a commercial property unit which manages Company held properties. In this unit the company has its investment in Price Enterprises, Inc., a REIT,
("PEI") 2) a business investment unit where the Company pursues public and private operating real estate-related companies and/or their securities, and 3) a development unit where the
Company develops signature projects that have unique locations, original concepts and significant competitive entry barriers.

The
following discussion should be read in conjunction with the financial statements and the notes thereto.

Results of Operations (Comparison of the three months ended March 31, 2001 to the three months ended March 31, 2000)

Operating incometotaled $1.2 million in the three months ended March 31, 2001 compared to
$1.1 million in the three months ended March 31, 2000, an increase of $0.1 million. This increase was related to the Grand Hotel which contributed $1.0 in operating income in 2001
compared to $0.9 million in 2000.

Partnership income and other revenueswere approximately $0.3 million in the three months ended March 31, 2001 compared
to $1.0 million in the three months ended March 31, 2000, a decrease of $0.7 million. In 2001, the Company recognized $0.3 million from its investment in PEI compared to
$0.8 million in 2000. The decrease of $0.5 million was primarily related to properties PEI sold in the fourth quarter of 2000. The proceeds from these sales were not yet reinvested in
the first three months of 2001. Also contributing to the decrease in income from PEI were bad debt recoveries in 2000 that related to receivables written off in a previous year. The remaining decrease
of $0.2 million in
partnership income and other revenues primarily related to income from a joint venture in Westminster, CO in 2000 that was subsequently sold to PEI.

Interest incomewas $1.3 million in the three months ended March 31, 2001 compared to $0.9 million in the three
months ended March 31, 2000, which primarily related to higher average note receivable balances in 2001.

Rental incomewas $0.8 million during the three months ended March 31, 2001 compared to $0.6 million in the three
months ended March 31, 2000, an increase of $0.2 million. The increase primarily relates to an office building in San Diego, CA which the Company master leases from PEI. The building was
completed in December 1999 and during the first three months of 2000 was in the process of being leased.

Interest expensewas $2.0 million in the three months ended March 31, 2001 compared to $3.4 million in the three
months ended March 31, 2000, a decrease of $1.4 million. In March 2000, $18.0 million of debt was converted into common shares of the Company. Interest related to this debt
was $0.4 million less in 2001 than in 2000. Also, of the notes payable outstanding in 2001, the Company capitalized approximately $0.4 million of interest expense related to borrowings
directly related to its investment in a joint venture that is constructing an entertainment retail property in Newport, KY. There was no significant interest capitalized in 2000. While the debt
related to the development project in Newport, KY increased, average amounts outstanding on the Company's credit facilities and short-term notes decreased, which contributed an additional
$0.5 million of the decrease. An additional decrease of $0.1 million relates to mortgage debt on properties that were sold in 2000.

18

---

Other operating expenseswere $1.3 million in the three months ended March 31, 2001 compared to $1.0 million in
the three months ended March 31, 2000. The increase primarily relates to $0.2 million of expenses incurred by the Company's project located in Daniel's Head, Bermuda. The project opened
in May 2001 and incurred certain overhead costs during the first quarter of 2001 that it did not incur in 2000. The Grand Hotel also contributed to $0.1 million of the increase.

Property operating expenseswere $0.5 million in the three months ended March 31, 2001 compared to $0.6 million in
the three months ended March 31, 2000, a decrease of $0.1 million. The decrease primarily relates to properties sold in 2000.

General and administrative expensesdid not significantly change and were $0.7 million in the three months ended
March 31, 2001 compared to $0.8 million in the three months ended March 31, 2000.

Depreciation and amortization expensetotaled $0.3 million in the three months ended March 31, 2001 compared to
$0.4 million in the three months ended March 31, 2000. The decrease of $0.1 million relates to properties sold.

The net gain from real estate sales and write-off of real estate related costswas $0.1 million in the three months
ended March 31, 2001 compared to $1.9 million in the three months ended March 31, 2000. In 2001, the Company sold a parcel of land located in Scottsdale, AZ for approximately
$0.5 million. In 2000, the gain related to the sale of two properties to PEI for approximately $24.4 million. An additional property was also sold to PEI which the Company leases back
from PEI.

Benefit for income taxeswas $0.5 million in the three months ended March 31, 2001 compared to a benefit of
$0.2 million in the three months ended March 31, 2000 related to loss before taxes of $1.0 million and a loss of $0.6 million, respectively.

The
Company calculatesEarnings Before Depreciation, Amortization and Deferred Taxes("EBDADT") as net income, plus depreciation and
amortization on real estate and real estate related assets, and deferred income taxes. EBDADT does not represent cash flows from operations as defined by accounting principles generally accepted in
the United States of America, 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 periods ended March 31, 2001 and 2000:

Three Months Ended
March 31,2001

2000Net loss

$
(573
)
$
(373
)Depreciation and amortization (financial statements)


338


411Proportionate share of depreciation and amortization from equity investments:PEI


2,032


2,090Other


133


194Less depreciation of non-real estate assets


(55
)

(49
)Deferred tax expense


(512
)

(224
)EBDADT

$
1,364

$
2,049


The
changes in EBDAT in the first quarter of 2001 compared to the first quarter of 2000 are primarily due to the changes in the Company's results of operations discussed previously,
the most

19

---

significant change being the net gain from real estate of $1.8 million recorded in 2000 compared to $0.1 million in 2001.

Liquidity and Capital Resources

Debt borrowings and cash flow from asset sales were the primary sources of capital to fund the Company's development and ongoing operations in the three months
ended March 31, 2001. In addition, PEI reimburses the Company for certain general and administrative expenses.

In
November 1999, the Company completed an exchange offer for the common stock of PEI. In the exchange offer, the Company acquired approximately 91% of the PEI common stock.
PEI stockholders who tendered their shares of the PEI common stock in the exchange offer received from the Company a total of $8.50 consisting of $4.25 in cash, $2.75 in principal amount of the
Company's 9.0% Convertible Redeemable Subordinated Secured Debentures ("Debentures") due 2004 and $1.50 in principal amount of the Company's 10.0% Senior Redeemable Secured Notes ("Senior Notes") due
2004 for each share of PEI common stock. After expenses, the Company paid approximately $61.0 million in cash and issued approximately $33.2 million in principal amount of the Debentures
and approximately $18.1 million in principal amount of the Senior Notes to acquire the PEI common stock in the exchange offer. Of the cash, $27.4 million was borrowed from The Sol and
Helen Price Trust. In the first quarter of 2000, the Company converted $18.1 million of this note payable into 5.1 million shares of common stock.

In
accordance with the stockholders agreement entered into in connection with the exchange offer, until a certain amount of PEI preferred stock is repurchased or tendered for,
$7.5 million of cash flow, as defined, is required to be reinvested in PEI before dividends can be paid to Legacy's common shareholders. As such, cash available to service the Company's debt
incurred to complete the PEI exchange offer is subject to this restriction. The Company does, however, directly benefit from savings in general and administrative expenses from managing the combined
companies, and would receive its portion of PEI common stock dividends for cash flows in excess of the $7.5 million. In 2000, PEI cash flows were influenced by four properties sold where
replacement properties were not immediately identified and acquired. As such, cash flows, as defined by the stockholders' agreement, did not exceed $7.5 million.

The
Company anticipates that cash flow will be generated from existing properties and from opportunistic trading of assets. The ability to continue to fund its development projects is
dependent on the Company's selling of assets, the procurement of equity or joint venture capital, or the ability to raise additional debt. The Company currently has a $40.0 million revolving
line of credit due in 2002 with PEI of which $39.8 million was outstanding at March 31, 2001 and a $15.0 million revolving credit facility with Fleet National Bank due in
June 2001, of which $13.4 million was outstanding at March 31, 2001. In April 2001, the Company borrowed an additional $6.0 million from an individual with interest
at 12.5%. Proceeds from this note were used to fund certain development projects and pay-down the line of credit. This note is due in April 2002. The Company expects to repay the
short-term debt from asset sales or debt refinancing.

In
addition to using proceeds from asset sales to repay debt and fund development projects, the Company has on file a $300.0 million shelf registration statement for the
purpose of issuing debt securities, preferred stock, depositary shares, common stock, warrants or rights. Currently, there remain $286.5 million of securities available for issuance under this
shelf.

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 from existing properties and the completion of current development projects, the sale of common stock, preferred stock or debt securities through public offerings or private placements,

20

---

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.

The
Company owns 3,750,000 shares of common stock of Mace Security International, Inc. ("MACE"), and a warrant to acquire an additional 62,500 shares of Mace common stock at an
exercise price of $4.00 per share. In addition, the Company owns 250,000 common shares of US Plastic Lumber Corporation ("USPL"). The Mace and USPL common shares are subject to certain
restrictions and not currently available for sale.

In
1999, the City of Newport issued two series of public improvement bonds related to the Newport development project. The Series 2000a tax exempt bonds total
$44.2 million and are broken down as follows: (a) $18.7 million maturing 2027 with interest at 8.375%; (b) $20.5 million maturing 2018 with interest at 8.5%; and
(c) $5.0 million maturing 2027 with interest at 8.375%. The Series 2000b bonds are taxable and have a par amount of $11.6 million with interest at 11% due 2009. The bonds
are guaranteed by Newport, the Company, and the third party developers of the project. As of March 31, 2001 Newport had drawn on $38.9 million of the bonds for construction incurred
prior to that date.

The
Company also has a 50% interest in a limited liability company that owns land in Orlando, Florida. The land has a remaining land basis at March 31, 2001 of
$18.5 million and has mortgage debt of $8.9 million secured by the land and guaranteed by the Company. The Company had $15.0 million of additional guaranteed debt related to a
development project in Scottsdale, AZ.

In
December 2000, the Company converted 21,281,000 shares of Series B Preferred Stock (the "Preferred B Shares") to 21,281,000 shares of common stock. The Preferred B
Shares were convertible into common stock of the Company on a one-for-one basis.

In
September 2000, the Company entered into agreements with certain officers to assume $5.1 million in personal debt obligations of the officers in exchange for their
rights to 2.05 million shares of Company common stock. The effective price of the transaction was $2.50 per share, tied to the market price on the day of the transaction. The officer debts were
entered into in connection with their original share purchase. By assuming these third-party debts, the Company also obtained a first lien on all remaining shares currently held by the officers, which
will serve as security for the officers' notes to the Company. The Company paid $4.3 million of this debt in October 2000, upon which the Company recorded 1.71 million shares as
repurchased. The Company also purchased shares from unaffiliated sellers at $2.50 per share and higher pursuant to a previously announced share repurchase program.

Certain Cautionary Statements

Certain statements in this Quarterly Report on Form 10-Q, including, but not limited to, "Item 2Management's Discussion and
Analysis of Financial Condition and Results of Operations," contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are not historical facts, but rather reflect current expectations concerning future results and events. The words
"believes," "expects," "intends," "plans," "anticipates," "likely," "will" and similar expressions identify such forward-looking statements. These forward-looking statements are subject to risks,
uncertainties and other factors, some of which are beyond the Company's control that could cause actual results to differ materially from those forecast or anticipated in such forward-looking
statements. These factors include, but are not limited to, the Company's development activities, leverage including short term obligations, reliance on major tenants, competition, dependence on
regional economic conditions, fluctuations in operating results, integration of acquired businesses, costs of regulatory compliance, dependence on senior management, and possible stock price
volatility. These factors are discussed in greater detail

21

---

under the caption "Certain Cautionary Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 as amended.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk exposure affecting its market risk sensitive financial instruments is interest rate risk. The Company's balance sheet
contains financial instruments in the form of interest-earning notes receivable and interest-bearing mortgages payable. The Company manages the risk to its cash flow from changes in interest rates by
monitoring its variable rate financial instruments. Although the fair value of its financial instruments may be affected by changes in interest rates, the Company typically does not dispose of them
prior to maturity. Thus, the primary effect of changes in interest rates would occur to the extent that financial instruments mature and are replaced with others at different interest rates. In
addition, the Company owns 3,750,000 common shares of Mace Security International, Inc. ("MACE") and 250,000 common shares of U.S. Plastic Lumber Corp. ("USPL") whose market
value is dependent on the trading prices of the respective security. The Company's investment in MACE common shares has a book value of $22.4 million and a fair value, based upon the closing
stock price at March 31, 2001 of $0.688, of $2.6 million. USPL is marked to market each respective reporting period.

At
March 31, 2001, the Company had debts totaling $47.4 million in variable interest rates. If interest rates increased 100 basis points, the annual effect of such
increase to the Company's financial position and cash flows would be approximately $0.5 million, based on the outstanding balance at March 31, 2001.
The actual fluctuation of interest rates is not determinable; accordingly, actual results from interest rate fluctuation could differ.

The
following table presents (1) the scheduled principal payments on notes receivable, and (2) the scheduled principal repayments on mortgages payable: over the next
five years and thereafter. The table also includes the average interest rates of the financial instruments during each respective year and the fair value of the notes receivable and mortgages payable.
The Company determines the fair value of financial instruments through the use of discounted cash flow analysis using current interest rates for (1) notes receivable with terms and credit
characteristics similar to its existing portfolio and (2) borrowings under terms similar to its existing mortgages payable. Accordingly, the Company has determined that the carrying value of
its financial instruments at March 31, 2001 approximates fair value.

|                                                  |  | Expected Maturity Date
|------------------------------------------------- |  | ----------------------
|
|
|Notes receivable, including notes from affiliates |  | $                     
|Average interest rate                             |  |                       
|Mortgages and notes payable                       |  | $                     
|Average interest rate                             |  |                       

22

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PART IIOTHER INFORMATION

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K





23

---





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
|------------------ |  | ------------------------
|DATE: May 14, 2001 |  | By:                     
|DATE: May 14, 2001 |  | By:                     

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