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 June 30, 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  23,758,282  shares of  common  stock,  par  value  $.0001,
outstanding at July 31, 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)

<TABLE>
<CAPTION>
                                     ASSETS
                                                              June 30     December 31
                                                               1998          1997
                                                             ---------    ---------
                                                             (unaudited)    (Note)
<S>                                                          <C>          <C>
Real estate assets
   Land and land improvements                                $ 210,229    $ 193,881
   Building and improvements                                   247,100      204,184
   Fixtures and equipment                                          369          242
   Construction in progress                                      1,181          946
                                                             ---------    ---------
                                                               458,879      399,253
   Less accumulated depreciation                               (51,289)     (46,197)
                                                             ---------    ---------
                                                               407,590      353,056

Cash and cash equivalents                                        1,442       27,003
Accounts receivable                                              1,899        2,360
Income tax receivable                                            7,615        8,117
Deferred rents                                                  13,647       12,400
Leasing costs, net                                               4,715        4,774
Prepaid expenses and other assets                                  957          768
                                                             ---------    ---------

         Total assets                                        $ 437,865    $ 408,478
                                                             =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Revolving line of credit and note payable                 $  28,943    $    --
   Accounts payable and other liabilities                        3,716        1,854
                                                             ---------    ---------
     Total liabilities                                          32,659        1,854

Commitments

Stockholders' equity
   Common stock                                                      2            2
   Additional paid-in capital                                  412,041      412,321
   Accumulated deficit                                          (6,837)      (5,699)
                                                             ---------    ---------
     Total stockholders' equity                                405,206      406,624
                                                             ---------    ---------
         Total liabilities and stockholders' equity          $ 437,865    $ 408,478
                                                             =========    =========
</TABLE>

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)
<TABLE>
<CAPTION>
                                                          Second Quarter         Year-to-Date
                                                       Three Months Ended      Six Months Ended
                                                            June 30                June 30
                                                      --------------------    -------------------
                                                        1998        1997        1998       1997
                                                      --------    --------    --------   --------
<S>                                                   <C>         <C>         <C>        <C>     
Rental revenues                                       $ 15,287    $ 14,509    $ 29,773   $ 28,172

Expenses
   Operating and maintenance                             1,658       2,057       3,503      4,182
   Property taxes                                        2,207       2,125       4,162      3,822
   Depreciation and amortization                         2,863       2,466       5,352      4,912
   General and administrative                              723       1,688       1,512      2,693
                                                      --------    --------    --------   --------
         Total expenses                                  7,451       8,336      14,529     15,609
                                                      --------    --------    --------   --------

Operating income                                         7,836       6,173      15,244     12,563

Interest and other
   Interest (expense) income, net                         (147)      2,018         240      4,157
   Loss on sale of real estate and investments, net       --          (401)       --         (473)
                                                      --------    --------    --------   --------
         Total interest and other                         (147)      1,617         240      3,684
                                                      --------    --------    --------   --------

Income before provision for income taxes                 7,689       7,790      15,484     16,247

Provision for income taxes                                --         3,136        --        6,663
                                                      --------    --------    --------   --------

Income from continuing operations                        7,689       4,654      15,484      9,584

Discontinued operations (Note 2):
   Net loss from operations of discontinued
     merchandising segment                                --          (650)       --       (1,085)
                                                      --------    --------    --------   --------

Net income                                            $  7,689    $  4,004    $ 15,484   $  8,499
                                                      ========    ========    ========   ========


Net income per share from continuing operations -
   basic and diluted                                  $    .32    $    .20    $    .65   $    .41
                                                      ========    ========    ========   ========

Net income per share - basic and diluted              $    .32    $    .17    $    .65   $    .36
                                                      ========    ========    ========   ========


Weighted average number of shares outstanding           23,754      23,351      23,747     23,341

Dividends per share                                   $    .35    $    .30    $    .70   $    .60
</TABLE>


See accompanying notes.


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                         Six Months Ended
                                                                             June 30
                                                                       --------------------
                                                                         1998        1997
                                                                       --------    --------
<S>                                                                    <C>         <C>
Operating activities
Net income                                                             $ 15,484    $  8,499
Adjustments to reconcile net income to net cash provided by
    operating activities:
      Depreciation and amortization                                       5,352       4,912
      Deferred rents                                                     (1,247)       (943)
      Deferred income taxes                                                --          (743)
      Loss on sale of real estate and investments, net                     --           473
    Changes in operating assets and liabilities:
      Accounts receivable and other assets                                  210       6,387
      Leasing costs                                                        (187)        (83)
      Accounts payable and other liabilities                              1,862      (2,091)
      Net assets of discontinued segment                                   --         4,203
                                                                       --------    --------
  Net cash flows provided by operating activities                        21,474      20,614

Investing activities
      Additions to real estate assets                                   (50,683)     (1,602)
      Proceeds from sale of real estate assets                             --        11,801
      Payments of notes receivable                                         --        42,405
      Net investing activities of discontinued segment                     --        (6,605)
                                                                       --------    --------
  Net cash flows (used in) provided by investing activities             (50,683)     45,999

Financing activities
      Advances to revolving line of credit                               20,000        --
      Dividends paid                                                    (16,622)    (14,003)
      Proceeds from exercise of stock options including tax benefits        270         620
                                                                       --------    --------
  Net cash flows provided by (used in) financing activities               3,648     (13,383)
                                                                       --------    --------

         Net (decrease) increase in cash                                (25,561)     53,230

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

Cash and cash equivalents at end of period                             $  1,442    $ 89,061
                                                                       ========    ========


Supplemental cash flow information:
      Cash paid for interest                                           $    117    $   --
      Cash paid for income taxes                                           --         2,086
Supplemental schedule of noncash operating and financing activities:
      Assumption of note payable to acquire real estate assets            8,943        --
      Adjustment to special dividend - distribution of PriceSmart           550        --
</TABLE>

See accompanying notes.


                                       5
<PAGE>

                             PRICE ENTERPRISES, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  June 30, 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 three  months and six months  ended June 30, 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  cost,  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 June 30,  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 six months ended June
30, 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 were 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.

Restatement

In order to conform  to the  current  fiscal  reporting  periods,  1997 has been
restated to a calendar  year with quarters  ending March 31, June 30,  September
30, and December 31.


                                       7
<PAGE>

                             PRICE ENTERPRISES, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

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 second quarter and year-to-date
period 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 second quarter and  year-to-date  period of 1997 were as follows (amounts in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                                    Three Months      Six Months
                                                                        Ended           Ended
                                                                    June 30, 1997   June 30, 1997
                                                                    -------------   -------------
<S>                                                                   <C>             <C>     
     Sales                                                            $ 14,466        $ 26,117
     Other revenues                                                      1,026           2,730
     Cost of sales                                                     (13,641)        (24,068)
     Operating expenses                                                 (2,989)         (6,545)
     Minority interest                                                      36             (73)
     Income tax benefit                                                    452             754
                                                                      --------        --------
                                                                      $   (650)       $ (1,085)
                                                                      ========        ========
     Discontinued operations loss per share - basic and diluted       $   (.03)       $   (.05)
                                                                      ========        ========
</TABLE>

Note 3 - Real Estate Acquisitions and Dispositions

Acquisitions

During the second quarter of 1998, the Company acquired three properties:  (1) a
four-building 300,000 square foot office complex in Sacramento/Bradshaw,  CA for
$35.6 million from a related party;  (2) a 1,550 unit self storage facility with
approximately  242,000  square  feet in San  Diego/Murphy  Canyon,  CA for $17.8
million including an $8.9 million existing note payable secured by the property;
and (3) a non-operating  property on approximately 11 acres for $3.5 million for
future  development.  The Company funded these  acquisitions  through  available
cash,  advances under its unsecured  revolving credit facility,  and the assumed
note payable. There were no acquisitions of properties during the prior year.

Dispositions

No  properties  were sold  during the second  quarter and  year-to-date  periods
ending June 30, 1998. For the same period in the prior year, the properties sold
included  Houston,   TX,   Sacramento/65th   Expwy,  CA,  Suitland,   MD,  Chula
Vista/Oxford St., CA and Sacramento/North Highlands, CA. All properties held for
sale in the prior year were  transferred to PriceSmart  subsequent to the second
quarter of 1997.



                                       8
<PAGE>

                             PRICE ENTERPRISES, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

Note 4 - 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 all periods have been presented, and where appropriate,  restated to
conform to the SFAS No. 128 requirements.
<TABLE>
<CAPTION>
                                                Three Months Ended June 30        Six Months Ended June 30
                                               ---------------------------       ---------------------------
                                                  1998             1997             1998             1997
                                               ----------       ----------       ----------       ----------
<S>                                            <C>              <C>              <C>              <C>       
     Weighted average shares outstanding       23,753,703       23,350,665       23,747,184       23,340,590
     Effect of dilutive securities:
         Employee stock options                    70,448          161,460           89,334          115,873
                                               ----------       ----------       ----------       ----------
     Weighted average shares
         outstanding - assuming dilution       23,824,151       23,512,125       23,836,518       23,456,463
                                               ==========       ==========       ==========       ==========
</TABLE>

Note 5 - Line of Credit Facility and Note Payable

The Company  maintains 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. As of June 30,
1998,  $20.0 million was  outstanding  under this credit  facility at a weighted
average  interest rate of 6.45%.  In  conjunction  with the purchase of the self
storage  facility in San  Diego/Murphy  Canyon,  CA, the Company assumed an $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 6 - Subsequent Events

Subsequent  to June 30, 1998 the Company  declared a cash  dividend of $0.35 per
common share, totaling approximately $8.3 million, payable on August 17, 1998 to
stockholders of record on July 30, 1998.

On July  8,  1998  the  Company  declared  a  distribution  of 8 3/4%  Series  A
Cumulative  Redeemable Preferred Stock.  Stockholders of record on July 30, 1998
will  receive  one share of 8 3/4%  Series A  Preferred  Stock for each share of
Common Stock held by them.

On July 13, 1998 the Company  acquired a retail complex in San  Diego/Rancho San
Diego,  CA for $11.3  million.  The  Company  funded  this  acquisition  through
available  cash and an advance of $10.0 million  under its  unsecured  revolving
credit facility.

On July 29, 1998 the Company acquired  approximately 15 acres of land in Fresno,
CA from PriceSmart for $4.0 million. The property was contributed by the Company
to Blackstone  Venture I  ("Blackstone"),  a partnership  formed with River Park
Properties to develop a 173,000  square foot retail and commercial  center.  The
Company funded this  acquisition  through  available cash and an advance of $2.1
million under its unsecured revolving credit facility.


                                       9
<PAGE>

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
second  quarter  and  year-to-date  periods  of 1998 ended June 30 to the second
quarter and  year-to-date  periods of 1997, 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.  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 second quarter and  year-to-date  periods 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.

Rental Revenues
                                     Rental                           Percent
                                    Revenues           Change          Change
                                    --------           ------          ------
2nd Quarter - 1998                  $ 15,287          $    778             5%
2nd Quarter - 1997                    14,509               --             --

Year-to-Date - 1998                   29,773             1,601             6%
Year-to-Date - 1997                   28,172               --             --

During  the  second  quarter  of 1998,  revenues  increased  $1.5  million  from
properties  acquired  subsequent to the second quarter of last year.  Prior year
revenues  also  included  $0.7  million  of  revenues  from  properties  sold or
transferred  to  PriceSmart  prior  to the  second  quarter  of  1998.  Revenues
generated by the portfolio of properties in place during both periods  decreased
$0.3  million or 2%. The decrease  was  primarily  due to the loss of revenue of
approximately  $230,000  from the Dallas,  TX property due to the  bankruptcy of
Homeplace.

The increase in revenue for the six month  year-to-date  period of 1998 compared
to the prior year was  primarily due to  properties  acquired  subsequent to the
second  quarter of last year which  generated  $2.0  million in  revenues.  This
increase was partially offset by a decrease of $1.5 million from properties sold
or  transferred  to  PriceSmart  prior to the second  quarter of 1998.  Revenues
generated by the portfolio of properties in place during both periods  increased
$0.8 million or 3%. This  increase was  primarily a result of new leases and was
somewhat offset by a decrease in revenues of  approximately  $230,000 due to the
bankruptcy at Dallas, TX.


                                       10
<PAGE>

Expenses
                                                                       Percent
                                     Amount           Change            Change
                                     ------           ------            ------
2nd Quarter - 1998                  $  7,451       $    (885)            -11%
2nd Quarter - 1997                     8,336             --               --

Year-to-Date - 1998                   14,529          (1,080)             -7%
Year-to-Date - 1997                   15,609             --               --

The most  significant  factor in the  decrease in  expenses  is the  decrease in
general and  administrative  expenses.  These expenses  decreased for the second
quarter and  year-to-date  periods of 1998 compared to the prior year  primarily
due to a reduction in executive management and related payroll and benefits,  of
$600,000 and $840,000 respectively,  as well as a reduction in professional fees
of $250,000 and $320,000 respectively, related to the PriceSmart distribution.

The decrease in operating and maintenance  expense and property taxes during the
second quarter and year-to-date  periods of 1998 was primarily due to properties
sold or transferred to PriceSmart in the  distribution,  which  decreased  these
expenses  $350,000 and  $970,000,  respectively.  This  decrease,  plus a slight
reduction  in expenses  from the  portfolio of  properties  in place during both
periods,  were  partially  offset by an  increase in  expenses  from  properties
acquired subsequent to second quarter last year of $330,000 and $350,000 for the
second quarter and year-to-date periods of 1998, respectively.

The increase in depreciation  compared to the prior year is primarily due to the
properties acquired subsequent to the second quarter of 1997.

Operating Income
                                 Operating                             Percent
                                   Income             Change            Change
                                   ------             ------            ------
2nd Quarter - 1998               $   7,836            $ 1,663            27%
2nd Quarter - 1997                   6,173                --             --

Year-to-Date - 1998                 15,244              2,681            21%
Year-to-Date - 1997                 12,563                --             --

The increase in operating income for the second quarter and year-to-date periods
of 1998  compared  to the prior year were  primarily  a result of the changes in
revenues and expenses discussed above.


                                       11
<PAGE>

Interest (Expense) Income, net                                            
                                                                       Percent
                                    Amount           Change            Change
                                    ------           ------            ------
2nd Quarter - 1998                  $  (147)      $ (2,165)            -107%
2nd Quarter - 1997                    2,018            --                --

Year-to-Date - 1998                     240         (3,917)             -94%
Year-to-Date - 1997                   4,157            --                --

The decrease in net  interest  for the second  quarter and six months ended June
30, 1998 resulted from a decrease in interest income and an increase in interest
expense compared to the same period in 1997. Prior to the second quarter of 1998
the  Company  had no debt  outstanding.  During  the  second  quarter of 199 the
Company  incurred  $351,000 in interest cost related to its unsecured  revolving
credit facility and assumed note payable  associated with the Company's recently
acquired  self  storage  facility.  Of that  amount,  approximately  $27,000 was
capitalized to real estate  assets.  At the same time,  interest  income for the
second  quarter  and six months  ended June 30, 1998  decreased  compared to the
prior year due to the repayment of a $41 million note  receivable and a transfer
of cash and 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 and Investments, net

During the second quarter of 1997, the loss of $401,000 related primarily to the
sale of property in Houston,  TX. The 1997  year-to-date  amount also includes a
loss on the sale of property in  Suitland,  MD as well as a gain  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  second  quarter  and six month  year-to-date
periods  ended June 30, 1998.  The  provision  for income taxes during the prior
year was provided at an effective tax rate of 41%.

Adjusted Funds From Operations   

<TABLE>
<CAPTION>
                                                           Three Months Ended              Six Months Ended
                                                                June 30                        June 30
                                                       ------------------------        ------------------------
                                                         1998            1997            1998            1997
                                                       --------        --------        --------        --------

<S>                                                    <C>             <C>             <C>             <C>     
Income before provision for income taxes               $  7,689        $  7,790        $ 15,484        $ 16,247
Depreciation and amortization                             2,863           2,466           5,352           4,912
Loss on sale of real estate and investments, net           --               401            --               473
                                                       --------        --------        --------        --------
         Funds from operations                           10,552          10,657          20,836          21,632
Straight-line rents                                        (701)           (674)         (1,272)         (1,036)
                                                       --------        --------        --------        --------
         Adjusted funds from operations                $  9,851        $  9,983        $ 19,564        $ 20,596
                                                       ========        ========        ========        ========
</TABLE>

Total funds from operations  ("FFO") during the second quarter of 1998 decreased
$0.1 million, from $10.7 million to $10.6 million. Net interest income decreased
$2.2 million,  while FFO excluding net interest income increased $2.1 million or
24% compared to the second  quarter of 1997 from $8.6 million to $10.7  million.
This   increase   was   primarily  a  result  of  a  reduction  in  general  and
administrative expenses as well as additional operating income from existing and
acquired  properties.  Total FFO for the six month year-to-date period decreased
from $21.6 million to $20.8 million. Net interest income decreased $3.9 million,
while FFO  excluding  net interest  income  increased  18% from $17.5 million to
$20.6 million for the year-to-date period.


                                       12
<PAGE>

Real  estate  industry  analysts  generally  consider  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.

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

Cash flow from  operations has been the principal  source of capital to fund the
Company's  ongoing  operations  and the payment of  dividends,  while use of the
company's credit facility and mortgage financing have been the principal sources
of capital  required to fund its  growth.  While the  Company is  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.

The  Company  is  currently  in  various  stages  of  negotiations  to  purchase
additional  commercial  properties as well as evaluating  various properties for
acquisition.  To the extent that investment  opportunities exceed available cash
flow from the sources  mentioned  above, 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  interests.  As of June 30, 1998, $20.0 million was
outstanding  under this credit facility at a weighted  average  interest rate of
6.45%.  In  conjunction  with the purchase of the self  storage  facility in San
Diego/Murphy Canyon, CA, the Company assumed an $8.9 million note secured by the
property.  The note payable with 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.

Operating  income  from real  estate  activities  increases  as  properties  are
acquired  and/or  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
will be affected by the  anticipated  payment of  quarterly  cash  dividends  to
stockholders in the future.


                                       13
<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.


                                       14
<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 

     None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

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

     (3.1)   Articles of Incorporation of Price Enterprises,  Inc. (incorporated
             herein  by   reference  to  Exhibit  3.1  to  Form  10-K  of  Price
             Enterprises, Inc. filed with the Commission on March 27, 1998 (File
             No. 0-20449))

     (3.2)   Articles  Supplementary  Classifying  26,000,000  Shares of Capital
             Stock as 8 3/4% Series A Cumulative  Redeemable  Preferred Stock of
             Price  Enterprises,  Inc.  (incorporated  herein  by  reference  to
             Exhibit 3.2 to Form 8-A of Price  Enterprises,  Inc. filed with the
             Commission on August 7, 1998 (File No. 0-20449))

     (4.1)   Form of Series A Preferred Stock Certificate of Price  Enterprises,
             Inc.  (incorporated  herein by reference to Exhibit 4.1 to Form 8-A
             of Price  Enterprises,  Inc. filed with the Commission on August 7,
             1998 (File No. 0-20449))

     (10.1)  Purchase  and Sale  Agreement  as Amended  for  Sacramento/Bradshaw
             Business   Park  dated  April  6,  1998,   by  and  between   Price
             Enterprises, Inc. and Ivanhoe - Bradshaw, L.L.C.

     (27)    Financial Data Schedule

(b)  Reports on Form 8-K

     1.   On June 18,  1998,  the  Company  filed a Current  Report on Form 8-K,
          reporting  pursuant to Item 2, the acquisition of an office complex in
          Sacramento/Bradshaw, CA, from a related party and the acquisition of a
          self storage facility in San Diego/Murphy  Canyon, CA. The date of the
          earliest event reported was May 1, 1998.

     2.   On July 23,  1998,  the  Company  filed  Amendment  No. 1 to the above
          referenced Form 8-K. The Form 8-K, as amended,  included the pro forma
          financial  information  relating to the  acquisitions,  as required by
          Item 7.


                                       15
<PAGE>

                                   SIGNATURES

     Pursuantto 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: August 5, 1998                       /s/ Jack McGrory
      --------------                       --------------------------------
                                           Jack McGrory
                                           President & Chief Executive Officer


Date: August 10, 1998                      /s/ Gary W. Nielson
      ---------------                      --------------------------------
                                           Gary W. Nielson
                                           Executive Vice President,
                                           Chief Financial Officer




                                       16