<PAGE>

                                  UNITED STATES
                       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 0-20449


                             PRICE ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)

           MARYLAND                                              33-0628740
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


                              4649 MORENA BOULEVARD
                           SAN DIEGO, CALIFORNIA 92117
                    (Address of principal executive offices)

                                 (619) 581-4679
              (Registrant's telephone number, including area code)

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
                                       -----    -----

The registrant had 13,298,421 shares of common stock, par value $.0001 per 
share, outstanding at April 28, 1999.

                                       1
<PAGE>

                             PRICE ENTERPRISES, INC.

                               INDEX TO FORM 10-Q

                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>

ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)                                  PAGE
                                                                           ----
<S>                                                                        <C>
        Consolidated Balance Sheets ......................................    3

        Consolidated Statements of Income ................................    4

        Consolidated Statements of Cash Flows ............................    5

        Notes to Consolidated Financial Statements .......................    6

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS .............................   12

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK .....................................................   17


                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS ...............................................   18

ITEM 2 - CHANGES IN SECURITIES ...........................................   18

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES .................................   18

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
         HOLDERS .........................................................   18

ITEM 5 - OTHER INFORMATION ...............................................   18

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K ................................   19
</TABLE>

                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)

                             PRICE ENTERPRISES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                     ASSETS
<TABLE>
<CAPTION>
                                                                            MARCH 31             DECEMBER 31
                                                                              1999                   1998
                                                                      ---------------------- ---------------------
                                                                           (unaudited)              (Note)
<S>                                                                   <C>                    <C>
Real estate assets
   Land and land improvements                                                  $213,785               $210,839
   Building and improvements                                                    261,135                260,709
   Fixtures and equipment                                                           646                    581
   Construction in progress                                                       7,310                  3,744
                                                                      ---------------------- ---------------------
                                                                                482,876                475,873
   Less accumulated depreciation                                                (60,306)               (57,366)
                                                                      ---------------------- ---------------------
                                                                                422,570                418,507

Investment in real estate joint venture                                           4,210                  4,050
Cash and cash equivalents                                                           338                  3,691
Accounts receivable                                                               1,721                  2,699
Income tax receivable                                                             7,740                  7,615
Deferred rents                                                                   15,580                 14,921
Other assets                                                                      5,620                  5,869
                                                                      ---------------------- ---------------------
           Total assets                                                        $457,779               $457,352
                                                                      ---------------------- ---------------------
                                                                      ---------------------- ---------------------

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
   Revolving lines of credit and note payable                                  $108,895               $108,023
   Accounts payable and other liabilities                                         4,796                  4,518
                                                                      ---------------------- ---------------------
      Total liabilities                                                         113,691                112,541

Commitments

Stockholders' equity
   Series A preferred stock                                                     353,404                353,404
   Common stock                                                                       1                      1
   Additional paid-in capital                                                       957                    929
   Accumulated deficit                                                          (10,274)                (9,523)
                                                                      ---------------------- ---------------------
      Total stockholders' equity                                                344,088                344,811
                                                                      ---------------------- ---------------------
           Total liabilities and stockholders' equity                          $457,779               $457,352
                                                                      ---------------------- ---------------------
                                                                      ---------------------- ---------------------
</TABLE>

Note: The balance sheet at December 31, 1998 has been derived from the 
audited financial statements at that date but does not include all of the 
information and footnotes required by generally accepted accounting 
principles for complete financial statements.

SEE ACCOMPANYING NOTES.

                                       3
<PAGE>

                             PRICE ENTERPRISES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
            (UNAUDITED - AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                           FIRST QUARTER
                                                                        THREE MONTHS ENDED
                                                                             MARCH 31
                                                            --------------------------------------------
                                                                    1999                  1998
                                                            --------------------- ----------------------
<S>                                                         <C>                   <C>
Rental revenues                                                     $17,427              $14,486

Expenses
   Operating and maintenance                                          2,144                1,845
   Property taxes                                                     2,151                1,955
   Depreciation and amortization                                      3,274                2,489
   General and administrative                                           769                  789
                                                            --------------------- ----------------------
           Total expenses                                             8,338                7,078
                                                            --------------------- ----------------------

Operating income                                                      9,089                7,408

Interest
   Interest expense                                                  (1,675)                   -
   Interest income                                                      151                  387
                                                            --------------------- ----------------------
           Total interest                                            (1,524)                 387
                                                            --------------------- ----------------------

Net income                                                            7,565                7,795

Dividends paid to preferred stockholders                             (8,316)                   -

                                                            --------------------- ----------------------
Net income (loss) applicable to common stockholders                $   (751)             $ 7,795
                                                            --------------------- ----------------------
                                                            --------------------- ----------------------

Earnings per common share - basic and diluted
       Net income (loss)                                              $(.06)                $.33

Weighted average common shares outstanding
       Basic                                                         13,294                23,741
       Diluted                                                       13,294                23,840

Dividends per preferred share                                         $.35                      -
</TABLE>

SEE ACCOMPANYING NOTES.

                                       4
<PAGE>

                             PRICE ENTERPRISES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (UNAUDITED - AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      FIRST QUARTER
                                                                                   THREE MONTHS ENDED
                                                                                        MARCH 31
                                                                       --------------------------------------------
                                                                               1999                  1998
                                                                       --------------------- ----------------------
<S>                                                                    <C>                   <C>
Operating activities
Net income                                                                       $7,565               $ 7,795
Adjustments to reconcile net income to net cash provided by 
  operating activities:
       Depreciation and amortization                                              3,274                 2,489
       Deferred rents                                                              (659)                 (810)
    Changes in operating assets and liabilities:
       Accounts receivable and other assets                                         919                   710
       Accounts payable and other liabilities                                       278                 1,198
                                                                       --------------------- ----------------------
   Net cash flows provided by operating activities                               11,377                11,382

Investing activities
       Additions to real estate assets                                           (7,154)               (1,321)
       Contributions to real estate joint venture                                  (160)                    -
                                                                       --------------------- ----------------------
   Net cash flows used in investing activities                                   (7,314)               (1,321)

Financing activities
       Advances from revolving lines of credit                                   33,300                     -
       Repayments on revolving lines of credit and note payable                 (32,428)                    -
       Dividends paid                                                            (8,316)               (8,308)
       Proceeds from exercise of stock options                                       28                   215
                                                                       --------------------- ----------------------
   Net cash flows used in financing activities                                   (7,416)               (8,093)
                                                                       --------------------- ----------------------

           Net (decrease) increase in cash                                       (3,353)                1,968

Cash and cash equivalents at beginning of period                                  3,691                27,003
                                                                       --------------------- ----------------------

Cash and cash equivalents at end of period                                     $    338               $28,971
                                                                       --------------------- ----------------------
                                                                       --------------------- ----------------------

Supplemental cash flow information:
       Cash paid for interest                                                    $1,538                     -
</TABLE>

SEE ACCOMPANYING NOTES.

                                       5
<PAGE>

                             PRICE ENTERPRISES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 March 31, 1999

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Price Enterprises, Inc. (PEI) operates as a real estate investment trust 
(REIT) incorporated in the state of Maryland. Our principle business is to 
own, acquire, operate, manage and lease real property, primarily shopping 
centers. We became a REIT in September 1997 after we spun-off our 
merchandising segment and certain other assets to PriceSmart, Inc.

ACCOUNTING PRINCIPLES

We prepared the financial statements following the requirements of the 
Securities and Exchange Commission (SEC) for interim reporting. As permitted 
under those rules, certain footnotes or other financial information that are 
normally required by generally accepted accounting principles (GAAP) can be 
omitted. Certain prior year data have been reclassified to conform to the 
1999 presentation.

We are responsible for the unaudited financial statements included in this 
document. The financial statements include all normal and recurring 
adjustments that are considered necessary for the fair presentation of our 
financial position and operating results. You should also read the financial 
statements and notes in our latest Form 10-K.

Revenues, expenses, assets and liabilities can vary during each quarter of 
the year. Therefore, the results and trends in these interim financial 
statements may not be the same as those for the full year.

CONSOLIDATION

We combine our financial statements with those of our wholly-owned 
subsidiaries and present them on a consolidated basis. The consolidated 
financial statements do not include the results and transactions between us 
and our subsidiaries or among our subsidiaries.

REAL ESTATE ASSETS AND DEPRECIATION

We record real estate assets at historical costs and adjust them for 
recognition of impairment losses. We review long-lived assets for impairment 
when events or changes in business conditions indicate that their full 
carrying value may not be recovered. We determine fair value using the 
present value of the expected associated cash flows. Ordinary repairs and 
maintenance

                                       6
<PAGE>

                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

are expensed as incurred; major replacements and betterments are capitalized 
and depreciated over their estimated useful lives. We compute real estate 
asset depreciation on a straight-line basis over their estimated useful 
lives, as follows:

<TABLE>
<S>                                                 <C>
             Land improvements                      25 years
             Building and improvements              10-25 years
             Tenant improvements                    Term of lease or 10 years
             Fixtures and equipment                 3-5 years
</TABLE>

We capitalize interest incurred during the construction period of certain 
assets and this interest is depreciated over the lives of those assets. The 
following table shows interest expense and the amount capitalized (amounts in 
thousands):

<TABLE>
<CAPTION>
                                                       THREE MONTHS
                                                       ENDED MARCH 31
                                              --------------------------------
                                                   1999            1998
                                              --------------- ----------------
<S>                                           <C>             <C>
           Interest incurred                       $1,886            ---
           Interest capitalized                       211            ---
</TABLE>

INVESTMENTS

We use the "equity method" of accounting for our joint venture, which means 
we carry this investment at cost, adjusted for our share of earnings or 
losses and any distributions received.

RENTAL REVENUE RECOGNITION

Rental revenues include: (1) minimum annual rentals, adjusted for the 
straight-line method for recognition of fixed future increases; (2) 
additional rentals, including recovery of property operating expenses, and 
certain other expenses that we accrue in the period in which the related 
expense occurs; and (3) percentage rents that we accrue on the basis of 
actual sales reported by tenants.

CASH AND CASH EQUIVALENTS

We consider all highly liquid investments with a maturity of less than three 
months when purchased to be cash and cash equivalents.

                                       7
<PAGE>

                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)


NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LEASING COSTS

We capitalize costs associated with leasing space to tenants and amortize 
leasing costs using the straight-line method over the initial terms of the 
related tenant leases.

FINANCIAL INSTRUMENTS

The carrying amounts reflected in our balance sheets for cash and cash 
equivalents, receivables and all liabilities approximate their fair values. 
In making these assessments we used estimates and market rates for similar 
instruments.

INCOME TAXES

We intend to continue meeting all conditions necessary to qualify as a REIT 
under the Internal Revenue Code. To qualify as a REIT, we are required to pay 
dividends of at least 95% of our "REIT taxable income" each year and meet 
certain other criteria. As a qualifying REIT, we will not be taxed on income 
distributed to our stockholders.

USE OF ESTIMATES

Preparing financial statements in conformity with generally accepted 
accounting principles requires we make estimates and assumptions that affect 
the amounts reported in the financial statements and accompanying notes. We 
continually review our estimates and make adjustments as necessary, but 
actual results could differ from what we envisioned when we made these 
estimates.

NEW ACCOUNTING STANDARDS

In 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive 
Income," and SFAS No. 131, "Disclosures About Segments of an Enterprise and 
Related Information." These statements, which are effective for fiscal years 
beginning after December 15, 1997, currently have no impact on our financial 
statements.

NOTE 2 - NET INCOME PER SHARE

In 1997, the Financial Accounting Standards Board issued SFAS No. 128, 
"Earnings Per Share." SFAS No. 128 requires presentation of two calculations 
of earnings per common share. Basic earnings per common share equals net 
income applicable to common stockholders divided by weighted average common 
shares outstanding during the period. Diluted earnings per common share 
equals net income applicable to common stockholders divided by the sum of 
weighted

                                       8
<PAGE>

                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 2 - NET INCOME PER SHARE (CONTINUED)

average common shares outstanding during the period plus common stock 
equivalents. Common stock equivalents are shares assumed to be issued if 
outstanding stock options that are dilutive were exercised. All earnings per 
share amounts for all periods have been presented, and where appropriate, 
restated to reflect these calculations.

<TABLE>
<CAPTION>
                                                                         THREE MONTHS
                                                                        ENDED MARCH 31
                                                              ------------------------------------
                                                                    1999              1998
                                                              ----------------- ------------------
<S>                                                           <C>               <C>
  Weighted average shares outstanding                               13,293,511       23,740,592
  Effect of dilutive securities:
     Employee stock options                                                ---           99,656
                                                              ----------------- ------------------
  Weighted average shares outstanding - assuming dilution           13,293,511       23,840,248
                                                              ----------------- ------------------
                                                              ----------------- ------------------
</TABLE>

NOTE 3 - PROPERTY ACQUISITIONS

During the first quarter of 1999, we acquired a 15 acre parcel of land in 
Tucson, AZ for $2.6 million which we plan to use for future development. We 
funded this acquisition through an advance under our unsecured revolving 
credit facility. There were no acquisitions during the first quarter of 1998.

NOTE 4 - REVOLVING LINES OF CREDIT AND NOTE PAYABLE

Our revolving credit facility activity consists of the following:

     -    In January 1999 we repaid $25 million on our credit facility with
          Morgan Guaranty Trust Company and amended the facility to reduce our
          maximum principal amount from $50.0 million to $25.0 million. We
          repaid this amount through an advance on our unsecured credit facility
          with Wells Fargo Bank, BankOne and AmSouth Bank (described below). The
          Morgan credit facility has a one-year term which expires in September
          1999 and bears interest at LIBOR plus 30 basis points. Sol Price (a
          significant stockholder of our Company and the father of Robert Price,
          our Company's Chairman of the Board), Helen Price (Sol Price's spouse)
          and the Sol & Helen Price Trust entered into a Guaranty and Pledge
          Agreement in which they agreed to guaranty our obligations under this
          credit facility. The Sol and Helen Price Trust also granted the Morgan
          Guaranty Trust Company a continuing security interest in U.S. Treasury
          Notes worth more than the amount outstanding under this credit
          facility to secure their obligations under the guaranty. At March 31,
          1999, $25.0 million was outstanding under this credit facility at an
          interest rate of 5.24%.

                                       9
<PAGE>

                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 4 - CREDIT FACILITIES AND NOTE PAYABLE (CONTINUED)

     -    In December 1998 we obtained a $100 million unsecured credit facility
          with Wells Fargo Bank, AmSouth Bank and Bank One. This facility has a
          term of three years with an initial interest rate of LIBOR plus 135
          basis points. The rate may vary based on our leverage and other
          financial ratios. As of March 31, 1999, we owed $75.0 million on this
          credit facility at a weighted average interest rate of 6.41%.

In conjunction with the San Diego/Murphy Canyon, CA self storage facility 
purchase in May 1998, we assumed an existing $8.9 million note secured by the 
property. The note, payable to a financial institution, matures in July 2004 
and bears an interest rate of 9.0%. Prepayment of the note may not occur 
prior to July 2001.

NOTE 5 - SUBSEQUENT EVENTS

On April 1, 1999, we sold a retail property in Buffalo, NY for $6.1 million. 
On April 22, 1999, we sold a retail property in Dallas, TX for $26.4 million. 
In disposing of these properties we considered their location and long-term 
value prospects and decided they did not meet our desired investment profile.

On May 12, 1999, Excel Legacy Corporation (Legacy) announced that it has 
entered into an Agreement with Sol Price, as trustee, and other major 
stockholders of our Company. Under the terms of the Agreement, Legacy will 
offer to all PEI common stockholders $8.50 per share for all shares of our 
common stock, comprised, at Legacy's election, of:

     -    $8.50 per share in cash or

     -    at least $4.25 in cash, at least $2.75 in principal amount of Legacy's
          9% Convertible Subordinated Debentures due 2004 (Debentures), which
          will be convertible into shares of Legacy Common Stock at $5.50 per
          share, and $1.50 per share in whatever combination Legacy may choose
          of cash, Debentures or Legacy's 10% Senior Notes due 2004.

Our Board of Directors has the right to determine whether the transaction 
will proceed, and if so whether the transaction will proceed as an exchange 
offer for our common stock or a merger with our Company. In either event, our 
preferred stock will remain outstanding but we expect to provide additional 
protections for it. Our Board is expected to act by June 2, 1999.

Under the agreement executed on May 12, 1999, several major stockholders of 
our Company are depositing PEI common stock in escrow. Assuming our Board of 
Directors approves the

                                       10
<PAGE>

                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 5 - SUBSEQUENT EVENTS (CONTINUED)

transaction on or about June 2, 1999, the transaction will involve either an 
exchange offer to stockholders or a merger requiring a vote of stockholders. 
At that time, additional shares of PEI common stock will be deposited in 
escrow such that the aggregate number of shares in escrow will be 
approximately 8,000,000 shares of our common stock representing approximately 
51% of the PEI voting power. These shares will be tendered in an exchange 
offer or voted in favor of a merger, as the case may be. In either case, the 
offering will be made only by means of a prospectus.

The consummation of the transaction is subject to a variety of conditions, 
including the execution by our Company of an agreement to take certain 
actions to facilitate the transaction.






                                       11
<PAGE>


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

INTRODUCTION

Our disclosure and analysis in this report contain "forward-looking 
statements." Forward-looking statements give our current expectations or 
forecasts of future events. You can identify these statements by the fact 
that they do not relate strictly to historic or current facts. They use words 
such as "anticipate," "estimate," "expect," "project," "intend," "plan," 
"believe," and other words and terms of similar meaning in connection with 
any discussion of future operating or financial performance. In particular, 
these include statements relating to future actions or the outcome of 
financial results. From time to time, we also may provide oral or written 
forward-looking statements in other materials we release to the public. Any 
or all of our forward-looking statements in this report and in any other 
public statements we make may turn out to be incorrect. They can be affected 
by inaccurate assumptions we might make or by known or unknown risks and 
uncertainties. Consequently, no forward-looking statement can be guaranteed. 
Actual results may vary materially.

We undertake no obligation to publicly update any forward-looking statements, 
whether as a result of new information, future events or otherwise. You are 
advised, however, to consult any further disclosures we make on related 
subjects in our reports on Forms 10-K, 10-Q and 8-K filed with the SEC. Our 
Form 10-K filing for the 1998 fiscal year listed various important factors 
that could cause actual results to differ materially from expected and 
historic results.

We note these factors for investors as permitted by the Private Securities 
Litigation Reform Act of 1995. Readers can find them in Part I of our 1998 
Form 10-K under the heading "Factors That May Affect Future Performance." We 
incorporate our Form 10-K in this filing and investors should refer to it. 
You should understand that it is not possible to predict or identify all such 
factors. Consequently, you should not consider any such list to be a complete 
set of all potential risks or uncertainties.

In Management's Discussion and Analysis we explain our general financial 
condition and results of operations including: 

     -    why revenues, costs and earnings changed from the prior period
     -    funds from operations (FFO)
     -    how we used cash for capital projects and dividends and how we expect
          to use cash in 1999
     -    where we plan on obtaining cash for future dividend payments and
          future capital expenditures
     -    impact of year 2000 technology issues on our operations

As you read Management's Discussion and Analysis, it may be helpful to refer 
to our financial statements and accompanying notes beginning on page 3. In 
Management's Discussion and Analysis we explain the changes in specific line 
items in the statements of income. Where changes are due to more than one 
reason, we list the reasons in order of importance.

                                       12
<PAGE>

RENTAL REVENUES

<TABLE>
<CAPTION>
                                                  RENTAL                           PERCENT
                                                 REVENUES          CHANGE          CHANGE
                                              ---------------- --------------- ----------------
<S>                                           <C>              <C>             <C>
           1st Quarter 1999                        $17,427          $ 2,941            20%
           1st Quarter 1998                         14,486              ---           ---
</TABLE>

Revenues increased $2.9 million to $17.4 million in the first quarter of 1999
compared to 1998 because:

     -    properties we acquired after the first quarter of 1998 generated $1.7
          million of revenues
     -    expansion of our self storage business provided an additional $1.1
          million of revenue

EXPENSES

<TABLE>
<CAPTION>
                                                                                   PERCENT
                                                  AMOUNT           CHANGE          CHANGE
                                              ---------------- --------------- ----------------
<S>                                           <C>              <C>             <C>
           1st Quarter 1999                        $ 8,338          $ 1,260            18%
           1st Quarter 1998                          7,078              ---           ---
</TABLE>

Expenses increased $1.3 million to $8.3 million in the first quarter of 1999 
compared to 1998 primarily because:

     -    properties we acquired after the first quarter of 1998 increased
          expenses $0.7 million
     -    expansion of our self storage business increased expenses $0.3 million
          in 1999
     -    expenses from properties we owned in both 1998 and 1999 increased $0.3
          million

OPERATING INCOME

<TABLE>
<CAPTION>
                                                                                    PERCENT
                                                  AMOUNT           CHANGE           CHANGE
                                              ---------------- --------------- ----------------
<S>                                           <C>              <C>             <C>
           1st Quarter 1999                         $9,089           $1,681            23%
           1st Quarter 1998                          7,408              ---           ---
</TABLE>

Operating income increased for the first quarter of 1999 compared to the same 
period in the prior year primarily because of the changes in Rental Revenues 
and Expenses discussed above.

INTEREST EXPENSE

<TABLE>
<CAPTION>
                                                                                   PERCENT
                                                  AMOUNT           CHANGE           CHANGE
                                              ---------------- --------------- ----------------
<S>                                           <C>              <C>             <C>
           1st Quarter 1999                         $1,675           $1,675           100%
           1st Quarter 1998                            ---              ---           ---
</TABLE>

Interest expense increased $1.7 million in the first quarter of 1999 compared 
to 1998 because we had no debt during the first quarter of 1998 and during 
the first quarter of 1999 we had an average of $108 million debt outstanding. 
We discuss our outstanding debt further in "Liquidity and Capital Resources" 
located elsewhere in this Form 10-Q.

                                       13
<PAGE>

INTEREST INCOME

<TABLE>
<CAPTION>
                                                                                   PERCENT
                                                  AMOUNT           CHANGE          CHANGE
                                              ---------------- --------------- ----------------
<S>                                           <C>              <C>             <C>
           1st Quarter 1999                           $151            $(236)          -61%
           1st Quarter 1998                            387              ---           ---
</TABLE>

Interest income decreased $0.2 million in the first quarter of 1999 compared 
to 1998 primarily because of lower cash balances.

FUNDS FROM OPERATIONS

<TABLE>
<CAPTION>
                                                                  THREE MONTHS
                                                                 ENDED MARCH 31
                                                         -------------------------------
                                                              1999            1998
                                                         --------------- ---------------
<S>                                                      <C>             <C>
Net income                                                   $   7,565       $   7,795
Depreciation and amortization                                    3,274           2,489
                                                         --------------- ---------------
           Funds from operations                                10,839          10,284
Straight-line rents                                               (659)           (571)
                                                         --------------- ---------------
           Adjusted funds from operations                      $10,180        $  9,713
                                                         --------------- ---------------
                                                         --------------- ---------------

Weighted average common shares outstanding - basic              13,294          23,741
</TABLE>

Real estate industry analysts typically use funds from operations (FFO) as 
another measurement of performance for real estate-oriented companies. In 
general, FFO adjusts net income for noncash charges such as depreciation, 
amortization and most non-recurring gains and losses. The National 
Association for Real Estate Investment Trusts (NAREIT), defines FFO as net 
income, excluding depreciation and amortization expense, and gains (losses) 
from certain sales of property. We also adjust the NAREIT definition to 
eliminate straight-line rents to arrive at adjusted FFO because of their 
significance in our operations. Straight-line rent accruals are noncash 
revenues associated with fixed future minimum rent increases.

FFO during the first quarter of 1999 increased 5.4% to $10.8 million compared 
to 1998 because:

     -    properties acquired after the first quarter of 1998 generated $1.3
          million of FFO
     -    expansion of our self storage business in 1998 generated $0.8 million
          of FFO
     -    partially offsetting these and other increases was the increase in
          interest expense of $1.7 million in 1999. Approximately $0.9 million
          of this interest expense relates directly to the borrowing of $57.6
          million for the common stock repurchase in November 1998

FFO and adjusted FFO do not represent the generally accepted accounting 
principles definition of cash flows from operations and should not be 
considered as an alternative to net income as an indicator of our operating 
performance or to cash flows as a measure of liquidity.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity refers to our ability to generate sufficient cash flows to meet the 
short and long-term cash requirements of our business operations. Capital 
resources represent those funds used or 

                                       14
<PAGE>

available to be used to support our business operations and consist of 
stockholders' equity and debt.

Cash flow from operations has been the principal source of capital to fund 
our ongoing operations and dividend payments, while use of our credit 
facilities and mortgage financing have been the principal sources of capital 
required to fund our growth as well as stock repurchases. While we are 
positioned to finance our business activities through a variety of sources, 
we expect to satisfy short-term liquidity requirements through net cash 
provided by operations and through borrowings.

Through 1999 we anticipate investing:

     -    up to $20 million for commercial real estate development on property
          we own (a portion of this amount represents commitments under executed
          construction contracts)
     -    up to $10 million for development and expansion of our self storage
          business
     -    up to $40 million for real estate acquisitions and development
          opportunities

We cannot guarantee that these estimates will be realized, although we 
believe we have been prudent in our plans and assumptions. Business 
conditions and other risks and uncertainties could cause our actual results 
to differ materially from these estimates, particularly our plan to acquire 
real estate which is primarily dependent on the continued attractiveness of 
real estate values and the available cost of capital for us.

We are currently in various stages of negotiations to purchase additional 
commercial properties and continuing to evaluate various other properties for 
acquisition or development. To the extent that investment opportunities 
exceed available cash flow from the sources mentioned above, we may raise 
additional capital through bank credit facilities and/or secured mortgage 
financing. We also may choose to seek additional funds through future public 
offerings of debt or equity securities.

From time to time we will consider selling properties to better align our 
portfolio with our geographic and tenant composition strategies. We sold two 
properties from our portfolio for approximately $32.3 million after the first 
quarter of 1999. We are also contemplating selling certain other properties. 
These sales may not be completed due to uncertainties associated with 
contract negotiations and buyer due diligence contingencies.

In December 1998 we obtained a $100 million unsecured credit facility from 
Wells Fargo Bank, AmSouth Bank and Bank One. This facility has a three-year 
term with an initial interest rate of LIBOR plus 135 basis points. The rate 
may vary based on our leverage and other financial ratios. At March 31, 1999, 
there was $75.0 million outstanding on the Wells Fargo facility at a 6.41% 
weighted average interest rate.

                                       15
<PAGE>

In September 1998 we announced our intention to purchase approximately 10 
million shares of our common stock for $5.50 per share. To fund this 
purchase, we obtained a $50 million credit facility from Morgan Guaranty 
Trust Company (the Morgan Facility) which was subsequently amended. The 
Morgan Facility has a one-year term with an interest rate of LIBOR plus 30 
basis points. Sol Price (a significant stockholder of our Company and the 
father of Robert Price, our Chairman of the Board), Helen Price (Sol Price's 
spouse) and the Sol & Helen Price Trust entered into a Guaranty and Pledge 
Agreement (the Guaranty) in which they agreed to guaranty our obligations 
under the Morgan Facility. The Sol and Helen Price Trust also granted Morgan 
Guaranty Trust Company a continuing security interest in U.S. Treasury Notes 
worth more than the amount outstanding under the Morgan Facility to secure 
their obligations under the Guaranty. In January we amended the agreement and 
reduced our maximum principal amount to $25 million. At March 31, 1999, $25.0 
million was outstanding under the Morgan Facility at an interest rate of 
5.24%.

In conjunction with the San Diego/Murphy Canyon, CA self storage facility 
purchase in May 1998, we assumed an existing $8.9 million note secured by the 
property. The note, payable to a financial institution, matures in July 2004 
and bears an interest rate of 9.0%. The note does not permit prepayment prior 
to July 2001.

YEAR 2000

Many older computer software programs refer to years in terms of their final 
two digits only. Such programs may interpret the Year 2000 to mean the year 
1900 instead. If not corrected, those programs could cause date-related 
transaction failures. We recognize the significance of ensuring our 
operations and systems are not adversely impacted by Year 2000 problems.

The upgrade of our existing computer software and information technology is 
substantially complete. The project cost was approximately $220,000. We 
believe that with modifications to existing software and conversions to new 
software, the Year 2000 issue will not pose significant operational problems 
for our computer systems.

In connection with our operating properties, we are evaluating all systems 
that contain embedded chips such as security systems, elevators, lighting and 
HVAC systems. We will continue to commit the resources necessary for the 
management and elimination of critical Year 2000 risks. We expect to complete 
our evaluation and make necessary changes by June 30, 1999. Although it is 
not possible to quantify the total cost of all corrections at this time, we 
expect that these costs will not have a material adverse effect on our 
operations or financial condition. We expect all critical internal Year 2000 
issues will be resolved prior to the year 2000.

We are also currently evaluating the Year 2000 readiness of third parties 
that provide services to us and our tenants such as utilities, financial 
institutions, governmental agencies, municipalities and the tenants 
themselves, and the impact, if any, on our company and the operations of our 
properties. However, we cannot quantify or ensure that these external 
systems, whether certified 

                                       16
<PAGE>

to be Year 2000 compliant or not, would not create difficulties for us 
before, on, or after the year 2000.

We intend to develop a contingency plan to handle most likely and worst case 
Year 2000 scenarios. We intend to complete our determination of a worst case 
scenario after receiving and analyzing responses to substantially all 
inquiries we made to third parties. Following our analysis, we intend to 
develop a timetable for completing our contingency plans and expect to 
complete our contingency plan by September 30, 1999.

INFLATION

Because a substantial number of our leases contain provisions for rent 
increases based on changes in various consumer price indices, based on fixed 
rate increases, or based on percentage rent if tenant sales exceed certain 
base amounts, we do not expect inflation to have a material impact on future 
net income or cash flow from developed and operating properties. In addition, 
substantially all leases are triple net, which means specific operating 
expenses and property taxes are passed through to the tenant.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in 
short-term LIBOR interest rates. We do not have any foreign exchange or other 
significant market risk, nor did we have any derivative financial instruments 
at March 31, 1999.

Our exposure to market risk for changes in interest rates relates primarily 
to our unsecured lines of credit. We enter into variable rate debt 
obligations to support general corporate purposes, including acquisitions, 
capital expenditures and working capital needs. We continuously evaluate our 
level of variable rate debt with respect to total debt and other factors, 
including our assessment of the current and future economic environment.

We had $100.0 million in variable rate debt outstanding at March 31, 1999. 
Based upon this debt level, a hypothetical 10% adverse change in interest 
rates would increase interest expense by approximately $0.6 million on an 
annual basis, and likewise decrease our earnings and cash flows. We cannot 
predict market fluctuations in interest rates and their impact on our 
variable rate debt, nor can there be any assurance that fixed rate long-term 
debt will be available to us at favorable rates, if at all. Consequently, 
future results may differ materially from the estimated adverse changes 
discussed above.

                                       17
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

       The Company is not a party to any material legal proceedings.

ITEM 2 - CHANGES IN SECURITIES

       None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

       None.

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

       None.

ITEM 5 - OTHER INFORMATION

On May 12, 1999, Excel Legacy Corporation (Legacy) announced that it has 
entered into an Agreement with Sol Price, as trustee, and other major 
stockholders of our Company. Under the terms of the Agreement, Legacy will 
offer to all PEI common stockholders $8.50 per share for all shares of our 
common stock, comprised, at Legacy's election, of:

     -    $8.50 per share in cash or

     -    at least $4.25 in cash, at least $2.75 in principal amount of Legacy's
          9% Convertible Subordinated Debentures due 2004 (Debentures), which
          will be convertible into shares of Legacy Common Stock at $5.50 per
          share, and $1.50 per share in whatever combination Legacy may choose
          of cash, Debentures or Legacy's 10% Senior Notes due 2004.

Our Board of Directors has the right to determine whether the transaction 
will proceed, and if so whether the transaction will proceed as an exchange 
offer for our common stock or a merger with our Company. In either event, our 
preferred stock will remain outstanding but we expect to provide additional 
protections for it. Our Board is expected to act by June 2, 1999.

Under the agreement executed on May 12, 1999, several major stockholders of 
our Company are depositing PEI common stock in escrow. Assuming our Board of 
Directors approves the transaction on or about June 2, 1999, the transaction 
will involve either an exchange offer to stockholders or a merger requiring a 
vote of stockholders. At that time, additional shares of PEI common stock 
will be deposited in escrow such that the aggregate number of shares in 
escrow will be approximately 8,000,000 shares of our common stock 
representing approximately 51% of the PEI voting power. These shares will be 
tendered in an exchange offer or voted in favor of a merger, as the case may 
be. In either case, the offering will be made only by means of a prospectus.



                                       18
<PAGE>

The consummation of the transaction is subject to a variety of conditions, 
including the execution by our Company of an agreement to take certain 
actions to facilitate the transaction.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are included herein or incorporated by reference:

<TABLE>
<S>            <C>
       (10.1)  Employment Agreement dated June 18, 1997, by and between Price
               Enterprises, Inc. and Jack McGrory (incorporated by reference to
               Exhibit 10.5 to Transition Report on Form 10-K of Price
               Enterprises, Inc. filed with the Commission on March 27, 1998
               (File No. 0-20449))

       (10.2)  Amendment No. 1 to Employment Agreement dated as of August 27,
               1997, by and between Price Enterprises, Inc. and Jack McGrory
               (incorporated by reference to Exhibit 10.6 to Transition Report
               on Form 10-K of Price Enterprises, Inc. filed with the Commission
               on March 27, 1998 (File No. 0-20449))

       (10.3)  Amendment No. 2 to Employment Agreement dated as of February 2,
               1999, by and between Price Enterprises, Inc. and Jack McGrory
               (incorporated by reference to Exhibit 10.14 to Annual Report on
               Form 10-K of Price Enterprises, Inc. filed with the Commission on
               March 29, 1999 (File No. 0-20449))

       (10.4)  Agreement, dated May 12, 1999, by and among Excel Legacy
               Corporation and certain shareholders of Price Enterprises, Inc.
               listed on the signature pages thereto (including the following
               exhibits: Exhibit A - Form of Indenture, Exhibit B - Conditions
               to Offer, and Exhibit C - Form of Agreement between Excel Legacy
               Corporation and Price Enterprises, Inc.) (incorporated by
               reference to Exhibit 10.1 to Current Report on Form 8-K filed May
               14, 1999 by Excel Legacy Corporation)

       (27.1)  Financial Data Schedule
</TABLE>

(b)    Reports on Form 8-K

       No reports on Form 8-K were filed during the quarter ended March 31, 
1999.






                                       19
<PAGE>

                                   SIGNATURES

       Pursuant to the requirements of the Securities Exchange Act of 1934, 
the Registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

                                             PRICE ENTERPRISES, INC.
                                             REGISTRANT


Date: May 12, 1999                           /s/ Jack McGrory
                                             ------------------
                                             Jack McGrory
                                             PRESIDENT & CHIEF EXECUTIVE OFFICER


Date: May 12, 1999                           /s/ Gary W. Nielson
                                             ---------------------
                                             Gary W. Nielson
                                             EXECUTIVE VICE PRESIDENT,
                                             CHIEF FINANCIAL OFFICER






                                       20