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, 1998


                         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 23,754,016 common shares, par value $.0001,
                         outstanding at April 30, 1998.



<PAGE>

                             PRICE ENTERPRISES, INC.
                            
                               INDEX TO FORM 10-Q


                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS                                               Page
                                                                            ----

       Balance Sheets..........................................................3

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

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

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

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS............................10

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
               MARKET RISK....................................................14


                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS....................................................15

ITEM 2 - CHANGES IN SECURITIES................................................15

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES......................................15

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
              HOLDERS.........................................................15

ITEM 5 - OTHER INFORMATION....................................................15

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.....................................15

                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                             PRICE ENTERPRISES, INC.
                                 BALANCE SHEETS
                                 (in thousands)

                                     ASSETS
                                                         March 31    December 31
                                                           1998         1997
                                                         ---------   ----------
                                                        (unaudited)     (Note)
Real estate assets
   Land and land improvements                            $ 194,466    $ 193,881
   Building and improvements                               205,701      204,184
   Fixtures and equipment                                      248          242
   Construction in progress                                    159          946
                                                         ---------    ---------
                                                           400,574      399,253
   Less accumulated depreciation                           (48,568)     (46,197)
                                                         ---------    ---------
                                                           352,006      353,056

Cash and cash equivalents                                   28,971       27,003
Accounts receivable                                          1,299        2,360
Income tax receivable                                        8,165        8,117
Deferred rents                                              13,210       12,400
Leasing costs, net                                           4,670        4,774
Prepaid expenses and other assets                            1,071          768
                                                         ---------    ---------

           Total assets                                  $ 409,392    $ 408,478
                                                         =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Accounts payable and other liabilities                $   3,066    $   1,854

Commitments

Stockholders' equity
   Common stock                                                  2            2
   Additional paid-in capital                              412,536      412,321
   Accumulated deficit                                      (6,212)      (5,699)
                                                         ---------    ---------
      Total stockholders' equity                           406,326      406,624
                                                         =========    =========
           Total liabilities and stockholders' equity    $ 409,392    $ 408,478
                                                         =========    =========

Note: The balance sheet at December 31, 1997 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.
                              STATEMENTS OF INCOME
            (unaudited - amounts in thousands, except per share data)

                                                               First Quarter
                                                            Three Months Ended
                                                                March 31
                                                           -------------------
                                                             1998       1997
                                                           --------   --------

Rental revenues                                            $ 14,486   $ 13,663
                                                           
Expenses                                                   
   Operating and maintenance                                  1,845      2,125
   Property taxes                                             1,955      1,697
   Depreciation and amortization                              2,489      2,446
   General and administrative                                   789      1,005
                                                           --------   --------
           Total expenses                                     7,078      7,273
                                                           --------   --------
                                                           
Operating income                                              7,408      6,390
                                                           
Interest and other                                         
   Interest income, net                                         387      2,139
   Loss on sale of real estate, net                              --       (132)
   Gain on sale of investment                                    --         60
                                                           --------   --------
           Total interest and other                             387      2,067
                                                           --------   --------
                                                           
Income before provision for income taxes                      7,795      8,457
                                                           
Provision for income taxes                                       --      3,527
                                                           --------   --------
                                                           
Net income from continuing operations                         7,795      4,930
                                                           
Discontinued operations (Note 2):                          
   Net loss from operations of discontinued                
      merchandising segment                                      --       (435)
                                                           --------   --------
                                                           
Net income                                                 $  7,795   $  4,495
                                                           ========   ========
                                                           
Net income per share from continuing operations -          
   basic and diluted                                       $    .33   $    .21
                                                           ========   ========
                                                           
Net income per share - basic and diluted                   $    .33   $    .19
                                                           ========   ========
                                                           
Weighted average number of shares outstanding                23,740     23,330
                                                           
Dividends per share                                        $    .35   $    .30
                                                           




                                                        
See accompanying notes.

                                       4

<PAGE>

                             PRICE ENTERPRISES, INC.
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                              First Quarter
                                                                                       Three Months Ended March 31
                                                                                       ---------------------------
                                                                                           1998          1997
                                                                                          -------      -------
<S>                                                                                       <C>          <C>    
  Operating activities
  Net income                                                                              $ 7,795      $ 4,495
  Adjustments to reconcile net income to net cash provided by operating activities:
         Depreciation and amortization                                                      2,489        2,446
         Deferred rents                                                                      (810)        (363)
         Deferred income taxes                                                                 --          (99)
         (Gain) loss on sale of real estate, net                                               --          132
      Changes in operating assets and liabilities:
         Accounts receivable and other assets                                                 710        3,547
         Leasing costs                                                                         --          (51)
         Accounts payable and other liabilities                                             1,198         (210)
         Net assets of discontinued segment                                                    --        2,819
                                                                                          -------      -------
     Net cash flows provided by operating activities                                       11,382       12,716

  Investing activities
         Additions to real estate assets                                                   (1,321)        (499)
         Proceeds from sale of real estate assets                                              --        2,671
         Payments of notes receivable                                                          --          365
         Net investing activities of discontinued segment                                      --       (6,358)
                                                                                          -------      -------
     Net cash flows used in investing activities                                           (1,321)      (3,821)

  Financing activities
         Dividends paid                                                                    (8,308)      (6,999)
         Proceeds from exercise of stock options including tax benefits                       215          269
                                                                                          -------      -------
     Net cash flows used in financing activities                                           (8,093)      (6,730)
                                                                                          -------      -------

             Net increase in cash                                                           1,968        2,165

  Cash and cash equivalents at beginning of period                                         27,003       35,831
                                                                                          -------      -------

  Cash and cash equivalents at end of period                                              $28,971      $37,996
                                                                                          =======      =======
</TABLE>


  See accompanying notes.

                                       5

<PAGE>

                             PRICE ENTERPRISES, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 March 31, 1998

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

Price Enterprises, Inc. (PEI or the Company) became a publicly-traded company on
December  21,  1994,  following an exchange  offer in which  approximately  23.2
million shares of PriceCostco,  Inc. were exchanged for shares of PEI.  However,
since August 31, 1994 PEI has operated as a separate company. On August 29, 1997
PEI  transferred  its   merchandising   segment  and  certain  other  assets  to
PriceSmart,  Inc.  ("PriceSmart")  and distributed  shares of PriceSmart  common
stock  to PEI  stockholders.  Since  September  2,  1997  the  Company  has been
operating as a real estate investment trust ("REIT").

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial information
and  with the  instructions  to Form  10-Q and  Article  10 of  Regulation  S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results for the 3 months  ended  March 31,  1998 are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
1998. For further  information,  refer to the financial statements and footnotes
thereto  included  in PEI's  transition  report on Form 10-K for the period from
September 1, 1997 to December 31, 1997.
 
The  preparation  of the  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Fiscal Year

Effective September 1, 1997, the Company changed its fiscal year end from August
31 to December 31 as required by the Internal Revenue Service for REITs.

Real Estate Assets and Depreciation

Real estate  assets are  recorded at PEI's  historical  costs,  as adjusted  for
recognition of impairment losses. Depreciation of real estate assets is computed
on a straight-line basis over their estimated useful lives, as follows:

      Land improvements                        25 years
      Building and improvements                10-25 years
      Tenant improvements                      Term of lease or 10 years
      Fixtures and equipment                   3-5 years

                                       6

<PAGE>

                             PRICE ENTERPRISES, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies
(continued)

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,  based on common area  maintenance  ("CAM")  expenses and certain other
expenses,  which are  accrued  in the  period in which the  related  expense  is
incurred;  and (3)  percentage  rents which are accrued on the basis of reported
tenant sales.

Cash and Cash Equivalents

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

Deferred Leasing Costs

Costs  incurred in  connection  with  leasing  space to tenants are deferred and
amortized using the straight-line method over the lives of the related leases.

Financial Instruments

Statement of Financial  Accounting  Standards  No. 107,  "Disclosure  about Fair
Value of Financial  Instruments,"  requires that the Company disclose  estimated
fair  values  for  its  financial  instruments,  as  well  as  the  methods  and
significant  assumptions used to estimate fair values. The Company believes that
the  carrying  values  reflected  in the  balance  sheets at March 31,  1998 and
December  31,  1997  reasonably  approximate  the fair  values for cash and cash
equivalents,  receivables and all liabilities.  In making such assessments,  the
Company used estimates and market rates for similar instruments.

Income Taxes

The Company intends to meet all conditions necessary to qualify as a real estate
investment  trust under the Internal  Revenue  Code. To qualify as a real estate
investment  trust,  the Company is required to pay  dividends of at least 95% of
its "REIT  taxable  income"  each year and meet  certain  other  criteria.  As a
qualifying real estate investment trust, the Company will not be taxed on income
distributed  to  its  stockholders.  As a  result,  the  accompanying  financial
statements  contain no  provision  for income  taxes for the three  months ended
March 31, 1998.

In prior years,  income taxes have been provided for in accordance with SFAS No.
109,  "Accounting for Income Taxes." That standard requires companies to account
for deferred taxes using the asset and liability method.  Accordingly,  deferred
income taxes are provided to reflect temporary differences between financial and
tax reporting,  including:  asset write-downs of real estate and related assets,
deferred gains on sales of real estate,  accelerated tax  depreciation  methods,
and accruals for straight-line rents.

                                       7

<PAGE>

                             PRICE ENTERPRISES, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies 
(continued)

Restatement

Prior year  financial  statements  have been  restated to conform to the current
fiscal year quarter ending March 31.

Note 2 - Discontinued Operations

As  discussed  in Note 1, on August 29,  1997,  Price  Enterprises  completed  a
distribution of its merchandising segment and certain other assets. Accordingly,
results of operations and cash flows of the Company's merchandising segment have
been reported as a discontinued  segment for the first quarter of 1997 presented
in the financial  statements.  The results of operations and cash flows of other
assets  and  liabilities  transferred  to  PriceSmart  that were not part of the
merchandising segment are included in the Company's continuing operations.

Summarized results of operations of the discontinued  merchandising  segment for
the first quarter of 1997 were as follows (amounts in thousands except per share
data):

                                                                    Three Months
                                                                       Ended
                                                                      March 31
                                                                    ------------
                                                                         1997
                                                                      --------  

Sales                                                                 $ 11,651
Other revenues                                                           1,704
Cost of sales                                                          (10,427)
Operating expenses                                                      (3,556)
Minority interest                                                         (109)
Income tax benefit                                                         302
                                                                      ========  
                                                                      $   (435)
                                                                      ========  
Discontinued operations loss per share - basic and diluted               $(.02)
                                                                      ========  

Note 3 - Net Income Per Share

In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
Per Share." SFAS No. 128 replaced the  calculation  of primary and fully diluted
earnings  per share with basic and diluted  earnings per share.  Unlike  primary
earnings per share,  basic earnings per share  excludes any dilutive  effects of
options, warrants and convertible securities. Diluted earnings per share is very
similar to the previous fully diluted earnings per share. All earnings per share
amounts for both periods have been presented, and where appropriate, restated to
conform to the SFAS No.128 requirements.

                                       8

<PAGE>

                             PRICE ENTERPRISES, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

Note 3 - Net Income Per Share (continued)

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31
                                                            ---------------------------
                                                              1998             1997
                                                             ----------      ----------
<S>                                                          <C>             <C>       
Weighted average shares outstanding                          23,740,592      23,330,401
Effect of dilutive securities:
   Employee stock options                                        99,656         138,639
                                                             ==========      ==========
Weighted average shares outstanding - assuming dilution      23,840,248      23,469,040
                                                             ==========      ==========
</TABLE>

Note 4 - Line of Credit Facility

The Company has an unsecured  revolving  credit  facility with a commercial bank
for up to $75 million in unsecured advances.  The facility has a three year term
with an  initial  interest  rate of LIBOR  plus 80 basis  points.  There were no
outstanding borrowings on this facility as of March 31, 1998.

Note 5 - Subsequent Events

Subsequent  to March 31, 1998 the Company  declared a cash dividend of $0.35 per
share,  totaling  approximately  $8.3  million,  payable  on  May  15,  1998  to
stockholders of record on May 1, 1998.

On May 1,  1998,  the  Company  acquired  from a related  party a  four-building
300,000 square foot office complex in Sacramento,  California for $35.6 million.
The Company  funded this  acquisition  through  available cash and an advance of
$14.6 million under its unsecured revolving credit facility.

On April 20, 1998 the Company filed with the Securities and Exchange  Commission
(the  "Commission")  a  Registration  Statement  on Form  S-3 (the  "Form  S-3")
registering  for resale a total of  1,500,000  shares  owned by the Price Family
Charitable  Trust,  the Price Family  Charitable  Fund and the Price  Charitable
Remainder  Trust.  On May 6, 1998 the Company filed  Amendment No. 1 to the Form
S-3 and the Form S-3 was declared effective by the Commission.

                                       9

<PAGE>

                             PRICE ENTERPRISES, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

Note 5 - Subsequent Events (continued)

The selling  stockholders  requested the  registration  to assist the Company in
complying  with  ownership  limitations  applicable  to real  estate  investment
trusts,  including  the  requirement  that no more than 50% in value of a REIT's
outstanding  shares of stock be owned by five or fewer  individuals  during  the
last half of a taxable year. The selling  stockholders  have agreed to reimburse
the Company for its expenses in connection with the registration of such shares.

Although the shares  registered  for resale may be sold in market  transactions,
the selling stockholders have advised Price Enterprises that they expect to sell
shares in negotiated  transactions with unaffiliated third parties.  All or part
of such  shares  may be sold at one time or from time to time for so long as the
Form S-3 remains  effective,  but it is expected that all sales to be made under
the Form S-3 will be completed  by June 30,  1998.  The Company will not receive
any proceeds from the sale of the shares covered by the Form S-3.


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

This Quarterly Report on Form 10-Q contains certain "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act of 1995 which
provides a "safe harbor" for these types of statements. To the extent statements
in this Form 10-Q involve,  without limitation,  the Company's  expectations for
growth, estimates of future revenue,  expenses, profit, cash flow, balance sheet
items  or  any  other  guidance  on  future   periods,   these   statements  are
forward-looking   statements.   Forward-looking  statements  contain  risks  and
uncertainties,  which include those identified in the Company's Annual Report on
Form 10-K for the  transition  period  ended  December  31, 1997 and other risks
identified  from time to time in the Company's  filings with the  Securities and
Exchange  Commission,  press  releases  and other  communications.  The  Company
assumes no obligation to update forward-looking statements.

The following discussion and analysis compares the results of operations for the
first quarter of 1998 to the first quarter of 1997 ended March 31, 1998 and 1997
respectively, and it should be read in conjunction with the financial statements
and the accompanying notes. Due to the change in fiscal reporting periods,  1997
has been  restated to a calendar  year with  quarters  ending March 31, June 30,
September  30, and  December  31.  Because of this  restatement,  variations  in
quarterly  results  may not be  indicative  of results  for the full fiscal year
ending  December  31, 1998.  The analysis  below  reflects the  distribution  of
PriceSmart and the  presentation  of the  merchandising  segment as discontinued
operations  for the  first  quarter  of  1997.  See  Note 1 of the  notes to the
financial  statements.  In those  instances where changes are attributed to more
than one factor,  the factors are presented in descending  order of  importance.
All dollar amounts are in thousands.

                                       10

<PAGE>

Rental Revenues
                           Rental                                   Percent
                          Revenues               Change              Change
                          --------               ------             -------
1st Quarter - 1998        $14,486                 $823                 6%
1st Quarter - 1997         13,663                    -                 -

The  increase  in revenue  for the first  quarter of 1998  compared to the first
quarter of 1997 was primarily due to revenues generated by the current portfolio
of properties in place during both periods which  increased  $1.2 million or 9%.
This increase was primarily a result of increased rents at New Britain,  CT from
a new  lease  with a  significant  tenant,  as well  as the  timing  of  expense
reimbursements  at several  other  properties.  In addition to the increase from
properties  operating in both periods,  revenues were  increased by $0.5 million
from a property  acquired  subsequent to the first  quarter of last year.  These
increases  were  partially  offset by a decrease  because  prior  year  revenues
included $0.9 million from properties sold or transferred to PriceSmart prior to
the first quarter of 1998.

Operating Income
                         Operating                                 Percent
                           Income               Change              Change
                         ---------              ------             -------
1st Quarter - 1998         $7,408               $1,018                 16%
1st Quarter - 1997          6,390                    -                  -

The increase in operating  income for the first  quarter of 1998 compared to the
first quarter of 1997 was primarily a result of increased  operating income from
the 27  properties  existing in both  quarters of $0.8 million  reduced by a bad
debt  reserve of $0.3  million.  This  increase  is  primarily  attributable  to
increased rental  revenues,  as discussed above. In addition to the net increase
of $0.5 million from  existing  properties,  the recently  acquired  property in
Roseville, CA generated $0.3 million in operating income.  Operating income also
increased  due  to a  reduction  in  general  and  administrative  expenses,  as
discussed  below.  These  increases were partially  offset by a decrease of $0.1
million of operating  income  generated from  properties  sold or transferred to
PriceSmart prior to the first quarter of 1998.

General and Administrative Expenses
                                                                    Percent
                           Amount               Change               Change
                           ------               ------               ------
1st Quarter - 1998         $  789                $(216)               -21%
1st Quarter - 1997          1,005                    -                  -

The decrease in expenses  for the three months ended March 31, 1998  compared to
the three  months  ended March 31,  1997 was  primarily  due to a  reduction  in
executive management and related payroll and benefits.

Interest Income (net)
                                                                    Percent
                           Amount               Change               Change
                           ------              -------               ------
1st Quarter - 1998         $  387              $(1,752)               -82%
1st Quarter - 1997          2,139                    -                  -


                                       11

<PAGE>

Interest Income (net) (continued)

The  decrease in net  interest  income for the three months ended March 31, 1998
compared to the three months ended March 31, 1997 was due to the  repayment of a
$41 million  note  receivable  and a transfer  of certain  notes  receivable  to
PriceSmart  in August  1997,  as well as the  utilization  of cash for  property
acquisition and development opportunities.

Loss on Sale of Real Estate

The loss of $132,000  recognized during the first quarter of 1997 related to the
sale of properties in Suitland, MD and Sacramento, CA (Rancho Cordova).

Gain on Sale of Investment

The gain on sale of  investment  of $60,000 in the first quarter of 1997 related
to the sale of the  Company's  options to  purchase  stock in a  privately  held
automobile broker.

Provision for Income Taxes

Because the Company has been operating as a REIT since September 1, 1997,  there
is no income  tax  expense  for the three  months  ended  March  31,  1998.  The
provision  for income taxes during the first  quarter of 1997 was provided at an
effective tax rate of 41%.

Adjusted Funds From Operations
                                                  Three Months Ended
                                                       March 31
                                               -------------------------
                                                  1998             1997
                                               --------          -------

Income before provision for income taxes       $  7,795          $ 8,457
Depreciation and amortization                     2,489            2,446
(Gain) loss on sale of real estate, net               -              132
(Gain) loss on sale of investment                     -              (60)
                                               --------          -------
           Funds from operations                 10,284           10,975
Straight-line rents                                (571)            (362)
                                               ========          =======
           Adjusted funds from operations      $  9,713          $10,613
                                               ========          =======

FFO  generated,  excluding  interest  income,  during the first  quarter of 1998
increased  $1.1 million or 12%  compared to the first  quarter of 1997 from $8.8
million to $9.9  million.  This  increase was  primarily a result of  additional
operating  income from  existing and  acquired  properties.  Total  reported FFO
decreased $0.7 million from $11.0 million to $10.3 million primarily as a result
of a decrease in interest income of $1.8 million.

Real estate industry analysts  generally  consider funds from operations ("FFO")
to be a supplemental measure 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. As defined by the National
Association  for Real Estate  Investment  Trusts  ("NAREIT"),  FFO is net income
determined in accordance with generally accepted accounting principles ("GAAP"),
excluding  depreciation and amortization  expense, and gains (losses) from sales
of  property.  The  Company  has  historically  excluded  provisions  for  asset
impairment  and gains  (losses) from sale of investment in  determining  FFO. In
addition,  due  to  the  significance  of  straight-line  rent  accruals,  which
represent noncash revenues  associated with fixed future minimum rent increases,
the Company has adjusted the NAREIT definition to eliminate  straight-line rents
when computing its adjusted FFO.

                                       12

<PAGE>

Adjusted Funds From Operations (continued)

FFO and adjusted FFO do not represent  cash flows from  operations as defined by
GAAP  and  should  not be  considered  as an  alternative  to net  income  as an
indicator of the Company's  operating  performance or to cash flows as a measure
of liquidity.

Liquidity and Capital Resources

As of March 31, 1998 the  Company had $29 million in cash.  While the Company is
well positioned to finance its business activities through a variety of sources,
it  expects  to  satisfy  short-term  liquidity  requirements  through  net cash
provided by operations and through borrowings under the unsecured revolving line
of credit facility. To the extent that investment opportunities exceed available
cash flow from these sources, the Company believes that it will raise additional
capital through other bank credit facilities and/or  securitized debt offerings.
The Company  also may choose to seek  additional  funds  through  future  public
offerings of debt or equity securities.

The Company has a revolving credit facility with a commercial bank for up to $75
million  in  unsecured  advances.  The  facility  has a three  year term with an
initial interest rate of LIBOR plus 80 basis points. The agreement requires that
the Company maintain,  at all times, certain financial covenants,  pay an annual
administration fee and certain fees based on usage of the facility.  The Company
is also restricted from certain transactions  involving mergers, sales of assets
and acquisitions of minority interest.

Consistent with historical trends,  operating income from real estate activities
increases as properties  are developed and declines as properties  are sold. The
Company's  liquidity is primarily affected by the timing and magnitude of rental
property acquisition,  development and disposition.  In addition,  the Company's
liquidity may be affected by the anticipated payment of quarterly cash dividends
to stockholders in the future.

The Company is also  currently  in various  stages of  negotiations  to purchase
additional  commercial  properties as well as evaluating  various properties for
acquisition. It is anticipated that any completed acquisitions will be funded by
a portion of the Company's existing cash balances with the remainder, if needed,
provided  by  proceeds  from an advance  under the  unsecured  revolving  credit
facility.

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<PAGE>

Year 2000

The Company is in the process of upgrading  its existing  computer  software and
information technology and recognizes the need to ensure its operations will not
be adversely impacted by Year 2000 software  failures.  Software failures due to
processing errors potentially arising from calculations using the Year 2000 date
are a known risk. The project cost is approximately  $220,000 and is expected to
be completed not later than December 31, 1998, which is prior to any anticipated
impact on the  Company's  operating  systems.  The  Company  believes  that with
modifications  to existing  software and  conversions to new software,  the Year
2000 issue  will not pose  significant  operational  problems  for its  computer
systems.

Inflation

Because a substantial number of the Company's 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,  inflation  is not  expected  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," whereby specific  operating  expenses
and  property  taxes are  passed  through  to the  tenant.  

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       Not applicable.

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<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 1, 1998, the Company  acquired a  four-building  300,000 square foot
office  complex on the  Highway  50  corridor  of  Sacramento,  California.  The
project, completed in 1995, is fully occupied under long term leases by two AT&T
subsidiaries and Level One Communications,  Inc., a well-capitalized  technology
company.  The property was acquired from a limited liability company  controlled
by Sol Price, a major stockholder.  The all-cash purchase price of $35.6 million
was  approximately 8% below the value  determined by an  independently  prepared
appraisal  commissioned  by the  Company.  The Company  funded this  acquisition
through  available  cash and an advance of $14.6 million under its $75.0 million
unsecured revolving credit facility with Union Bank of Switzerland.  The initial
interest rate is LIBOR plus 80 basis points (initially 6.46%).

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

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

          (10.1) Form of Indemnity Agreement

          (10.2) Employment  Agreement  dated  January 6, 1998,  by  and between
                 Price Enterprises, Inc. and Gary W. Nielson.

          (10.3) Form of Revolving Credit Agreement  between Price  Enterprises,
                 Inc. and Union Bank of Switzerland dated as of March 31, 1998.

          (10.4) Ratable  Loan Note dated March 31,  1998 by and  between  Price
                 Enterprises, Inc. and Union Bank of Switzerland.

          (10.5) Bid Rate Loan Note dated March 31,  1998 by and  between  Price
                 Enterprises, Inc. and Union Bank of Switzerland.

          (27)   Financial Data Schedule

     (b)  No reports on Form 8-K were filed for the three months ended March 31,
          1998.

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<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:                                        /s/ Jack McGrory
      -----------------------                -----------------------------------
                                             Jack McGrory
                                             President & Chief Executive Officer


Date:                                        /s/ Gary W. Nielson
      -----------------------                -----------------------------------
                                             Gary W. Nielson
                                             Executive Vice President,
                                             Chief Financial Officer



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