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                              EMPLOYMENT AGREEMENT
                              --------------------

          THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered 
into as of the 18th day of June, 1997, by and between Price Enterprises, 
Inc., a Delaware corporation ("Employer"), and Jack McGrory Executive").

                                   RECITALS
                                   --------

          A.   Employer desires to employ Executive as an Executive Officer 
of Employer.

          B.   Executive desires to accept such position upon the terms and 
subject to the conditions herein provided.

                            TERMS AND CONDITIONS
                            --------------------

     NOW, THEREFORE, in consideration of the foregoing premises and mutual 
covenants and conditions hereinafter set forth, and for other good and 
valuable consideration, the receipt and adequacy of which are hereby 
acknowledged, the parties hereto agree as follows:

                                ARTICLE I
                                ---------
                         EMPLOYMENT AND DUTIES
                         ---------------------

     1.1  POSITION AND DUTIES.  Executive shall serve as Executive Vice 
President of Employer and Chief Operating Officer of Employer's real estate 
division and, after an anticipated reorganization of Employer (whereby the 
Employer's merchandising businesses will be spun off into a separate public 
company), Executive shall serve as the Chief Executive Officer of Employer.  
Executive's responsibilities shall include management of Employer's real 
estate portfolio.  Executive shall have such other duties and authority as 
are customary for, and commensurate with, such positions, and such other 
related duties and authority as may from time to time be delegated or 
assigned to him by the Chief Executive Officer or the Board of Directors of 
Employer.  In addition, it is anticipated that after the aforementioned 
reorganization is effectuated, Executive shall serve as a Director of 
Employer and as an

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Ex-Officio Director of the separate merchandising public company.  Executive 
shall discharge his duties in a diligent and professional manner.

     1.2  OUTSIDE BUSINESS ACTIVITIES PRECLUDED.  During his employment, 
Executive shall devote his full energies, interest, abilities and productive 
time to the performance of this Agreement.  Executive shall not, without the 
prior written consent of Employer, perform other services of any kind or 
engage in any other business activity, with or without compensation, that 
would interfere with the performance of his duties under this Agreement.  
Executive shall not, without the prior written consent of Employer, engage in 
any activity adverse to Employer's interests.

     1.3  PLACE OF EMPLOYMENT.  Unless the parties agree otherwise in 
writing, during the Employment Term (as defined in Section 3.1 below) 
Executive shall perform the services he is required to perform under this 
Agreement at Employer's offices located in San Diego, California; provided, 
however, that Employer may from time to time require Executive to travel 
temporarily to other locations on Employer's business.

                                ARTICLE II

                               COMPENSATION
                               ------------

     2.1  SALARY.  For Executive's services hereunder, Employer shall pay as 
base salary to Executive the amount of $200,000 during the first year of the 
Employment Term and the amount of $250,000 during each of the second and 
third year of the Employment Term.  Said salary shall be payable in equal 
installments in conformity with Employer's normal payroll period.  
Executive's salary shall be reviewed by Employer's Board of Directors from 
time to time at its discretion, and Executive shall receive such salary 
increases, if any, as Employer's Board of Directors, in its sole discretion, 
shall determine.

     2.2  BONUS.  In addition to the salary set forth in Section 2.1 above, 
upon completion of the first year of the Employment Term Executive shall 
receive a bonus in the amount of $50,000; thereafter, Executive shall 
participate in Employer's bonus plan for executive

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management personnel. All decisions regarding said bonus plan shall be made 
in the sole discretion of Employer's Board of Directors, or the Compensation 
Committee thereof.

     2.3  OTHER BENEFITS.  Executive shall be entitled to participate in and 
receive benefits under Employer's standard company benefits practices and 
plans for officers of Employer, including medical insurance, long-term 
disability, life insurance, profit sharing and retirement plan, and 
Employer's other plans, subject to and on a basis consistent with the terms, 
conditions and overall administration of such practices and plans.  Executive 
shall be entitled to a paid vacation each year, which will accrue and be paid 
out in conformity with Employer's normal vacation pay practices.  Employer 
may in its sole discretion grant such additional compensation or benefits to 
Executive from time to time as Employer deems proper and desirable.

     2.4  EXPENSES.  During the term of his employment hereunder, Executive 
shall be entitled to receive prompt reimbursement for all reasonable 
business-related expenses incurred by him, in accordance with the policies 
and procedures from time to time adopted by Employer, provided that Executive 
properly accounts for such business expenses in accordance with Employer 
policy.

     2.5  STOCK OPTION PLAN.  Employer has adopted The Price Enterprises 1995 
Combined Stock Grant and Stock Option Plan (the "Stock Plan").  Effective as 
of the first date of the Employment Term, Executive will receive a grant of 
options to purchase shares of Employer's Common Stock, the number of such 
options equating to 1% of Employer's then-issued and outstanding shares of 
Common Stock.  Said options will be exercisable at a price equal to the fair 
market value of the Common Stock as of the effective date of the grant (i.e., 
the first date of the Employment Term), with such options vesting at twenty 
percent (20%) per year over a period of five (5) years and expiring six (6) 
years from the effective date of grant.  Said grant of options shall provide, 
among other things, that in the event of any merger, consolidation or 
reorganization of Employer with any other entity or entities not affiliated 
with

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Employer, where Employer is not the surviving entity, occurring within three 
(3) years of the commencement of the Employment Term, 60% of the total 
options granted shall be deemed vested and the remaining 40% shall be deemed 
cancelled.  In addition, such options shall otherwise be granted in 
accordance with and subject to all other terms, conditions and restrictions 
set forth in the Stock Plan.

     2.6  DEDUCTIONS AND WITHHOLDINGS.  All amounts payable or which become 
payable under any provision of this Agreement shall be subject to any 
deductions authorized by Executive and any deductions and withholdings 
required by law.

                                  ARTICLE III

                              TERM OF EMPLOYMENT
                              ------------------

     3.1  TERM.  The term of Executive's employment hereunder shall commence 
on September 2, 1997 and shall continue until September 1, 2000, unless sooner 
terminated or extended as hereinafter provided (the "Employment Term").

     3.2  EXTENSION OF TERM.  The Employment Term may be extended by written 
amendment to this Agreement signed by both parties.

     3.3  EARLY TERMINATION BY EXECUTIVE.  Executive may terminate this 
Agreement at any time by giving Employer written notice of his resignation 
ninety (90) days in advance; provided, however, that the Board of Directors 
may determine upon receipt of such notice that the effective date of such 
resignation shall be immediate or some time prior to the expiration of the 
ninety-day notice period. Executive's employment shall terminate as of the 
effective date of his resignation as determined by the Board of Directors.

     3.4  TERMINATION FOR CAUSE.  Prior to the expiration of the Employment 
Term, Executive's employment may be terminated for Cause by the Board of 
Directors of Employer, immediately upon delivery of notice thereof.  In such 
event, Executive will be informed in writing as to the basis for such 
termination and will be given an opportunity to address the Board of 
Directors of Employer and request an opportunity to remedy such basis for 

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termination.  For these purposes, termination for "Cause" shall mean 
termination because of Executive's (a) personal dishonesty, willful 
misconduct, or breach of fiduciary duty involving personal profit; or (b) 
intentional failure to perform his stated duties.

     3.5  TERMINATION DUE TO DEATH OR DISABILITY. Executive's employment 
hereunder shall terminate immediately upon his death.  In the event that by 
reason of injury, illness or other physical or mental impairment Executive 
shall be: (a) completely unable to perform his services hereunder for more 
than three (3) consecutive months, or (b) unable to perform his services 
hereunder for fifty percent (50%) or more of the normal working days 
throughout six (6) consecutive months, then Employer may terminate 
Executive's employment hereunder immediately upon delivery of notice thereof. 
Executive's beneficiaries, estate, heirs, representatives, or assigns, as 
appropriate, shall be entitled to the proceeds, if any, due under any 
Employer-paid life insurance policy held by Executive, as determined by and 
in accordance with the terms of any such policy, as well as any vested 
benefits and accrued vacation benefits.

                                 ARTICLE IV

                  BENEFITS AFTER TERMINATION OF EMPLOYMENT
                  ----------------------------------------

     4.1  BENEFITS UPON TERMINATION.  Upon termination of this Agreement 
under Section 3.3 (Early Termination by Executive), Section 3.4 (Termination 
for Cause) or Section 3.5 (Termination Due to Death or Disability), all 
salary and benefits of Executive hereunder shall cease immediately. Upon 
termination of this Agreement by Employer for any reason other than those set 
forth in Section 3.4 or Section 3.5, Executive shall be entitled to the 
continuation of Executive's base salary for the remainder of the Employment 
Term, payable in equal installments in conformity with Employer's normal 
payroll period.  During the period of this severance pay, Executive shall 
cooperate with Employer in providing for the orderly transition of 
Executive's duties and responsibilities to other individuals, as reasonably 
requested by Employer.

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     4.2  RIGHTS AGAINST EMPLOYER.  The benefits payable under this Article 
IV are exclusive, and no amount shall become payable to any person (including 
the Executive) by reason of termination of employment for any reason, with or 
without Cause, except as provided in this Article IV. Employer shall not be 
obligated to segregate any of its assets or procure any investment in order 
to fund the benefits payable under this Article IV.

                                    ARTICLE V

                            CONFIDENTIAL INFORMATION
                            ------------------------

     5.1  Executive acknowledges that Employer holds as confidential, and 
Executive may have access to during the Employment Term, certain information 
and knowledge respecting the intimate and confidential affairs of Employer in 
the various phases of its business, including, but not limited to, trade 
secrets, data and know-how, improvements, inventions, techniques, marketing 
plans, strategies, forecasts, pricing information, and customer lists.  
During his employment by Employer and thereafter, Executive shall not 
directly or indirectly disclose such information to any person or use any 
such information, except as required in the course of his employment during 
the Employment Term. All records, files, keys, documents, and the like 
relating to Employer's business, which Executive shall prepare, copy or use, 
or come into contact with, shall be and remain Employer's sole property, 
shall not be removed from Employer's  premises without its written consent, 
and shall be returned to Employer upon the termination of this Agreement.

                                   ARTICLE VI

                               GENERAL PROVISIONS
                               ------------------

     6.1  ENTIRE AGREEMENT.  This Agreement contains the entire understanding 
and sole and entire agreement between the parties with respect to the subject 
matter hereof, and supersedes any and all prior agreements, negotiations and 
discussions between the parties hereto with respect to the subject matter 
covered hereby.  Each party to this Agreement acknowledges that no 
representations, inducements, promises or agreements, oral or 

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otherwise, have been made by any party, or anyone acting on behalf of any 
party, which are not embodied herein, and that no other agreement, statement 
or promise not contained in this Agreement shall be valid or binding.  This 
Agreement may not be modified or amended by oral agreement, but rather only 
by an agreement in writing signed by Employer and by Executive which 
specifically states the intent of the parties to amend this Agreement.

     6.2  ASSIGNMENT AND BINDING EFFECT.  Neither this Agreement nor the 
rights or obligations hereunder shall be assignable by the Executive.  
Employer may assign this Agreement to any successor or affiliate of Employer, 
and upon such assignment any such successor or affiliate shall be deemed 
substituted for Employer upon the terms and subject to the conditions hereof. 
 In the event of any merger of Employer or the transfer of all (or 
substantially all) of Employer's assets, the provisions of this Agreement 
shall be binding upon, and inure to the benefit of, the surviving business 
entity or the business entity to which such assets shall be transferred.

     6.3  ARBITRATION.  The parties hereto agree that any and all disputes 
(contract, tort, or statutory, whether under federal, state or local law) 
between Executive and Employer (including Employer's employees, officers, 
directors, stockholders, members, managers and representatives) arising out 
of Executive's employment with Employer, the termination of that employment, 
or this Agreement, shall be submitted to final and binding arbitration.  Such 
arbitration shall take place in the County of San Diego, and may be compelled 
and enforced according to the California Arbitration Act (Code of Civil 
Procedure SectionSection 1280 ET SEQ.).  Unless the parties mutually agree 
otherwise, such arbitration shall be conducted before the American 
Arbitration Association, according to its Commercial Arbitration Rules.  
Judgment on the award the arbitrator renders may be entered in any court 
having jurisdiction over the parties.  Arbitration shall be initiated in 
accordance with the Commercial Arbitration Rules of the American Arbitration 
Association.

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     6.4  NO WAIVER.  No waiver of any term, provision or condition of this 
Agreement, whether by conduct or otherwise, in any one or more instances 
shall be deemed or be construed as a further or continuing waiver of any such 
term, provision or condition, or as a waiver of any other term, provision or 
condition of this Agreement.

     6.5  GOVERNING LAW; RULES OF CONSTRUCTION.  This Agreement has been 
negotiated and executed in, and shall be governed by and construed in 
accordance with the laws of, the State of California.  Captions of the 
several Articles and Sections of this Agreement are for convenience of 
reference only, and shall not be considered or referred to in resolving 
questions of interpretation with respect to this Agreement.

     6.6  NOTICES.  Any notice, request, demand or other communication 
required or permitted hereunder shall be deemed to be properly given when 
personally served in writing, or when deposited in the United States mail, 
postage pre-paid, addressed to Employer or Executive at his last known 
address.  Each party may change its address by written notice in accordance 
with this Section.

     Address for Employer:

          Price Enterprises, Inc.
          4649 Morena Boulevard
          San Diego, CA.  92117

     Address for Executive:

          Price Enterprises, Inc.
          4649 Morena Boulevard
          San Diego, CA.  92117

     6.7  SEVERABILITY.  The provisions of this Agreement are severable.  If 
any provision of this Agreement shall be held to be invalid or otherwise 
unenforceable, in whole or in part, the remainder of the provisions or 
enforceable parts hereof shall not be affected thereby and shall be enforced 
to the fullest extent permitted by law.

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     6.8  ATTORNEYS' FEES.  In the event of any arbitration or litigation 
brought to enforce or interpret any part of this Agreement, the prevailing 
party shall be entitled to recover reasonable attorneys' fees, as well as all 
other litigation costs and expenses as an element of damages.

     IN WITNESS WHEREOF, this Agreement has been executed and delivered by 
the parties hereto as of the date first above written.

EMPLOYER                                     EXECUTIVE
--------                                     ---------

PRICE ENTERPRISES, INC.                      /s/ JACK McGRORY
                                             --------------------
                                             Jack McGrory
By:    /s/ ROBERT PRICE
       -------------------------
Name:      ROBERT E. PRICE
       -------------------------
Title:     PRESIDENT
       -------------------------

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