<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              ---------------------


                                    FORM 10-Q

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1999


                         COMMISSION FILE NUMBER 0-20449


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


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


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

                                 (858) 581-4679
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES   X   NO
                                        -----    -----

The registrant had 13,309,006 shares of common stock, par value $.0001 per
share, outstanding at October 31, 1999.

<PAGE>

                             PRICE ENTERPRISES, INC.


                               INDEX TO FORM 10-Q


                         PART I - FINANCIAL INFORMATION


ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)                           PAGE
                                                                    ----

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

       Consolidated Statements of Operations .............           4

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

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

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

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
             MARKET RISK .................................          19


                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS ...............................          20

ITEM 2 - CHANGES IN SECURITIES ...........................          20

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES .................          20

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
             HOLDERS .....................................          20

ITEM 5 - OTHER INFORMATION ...............................          20

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K ................          20

                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)

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

<TABLE>
<CAPTION>
                                     ASSETS
                                                                                      SEPTEMBER 30       DECEMBER 31
                                                                                          1999               1998
                                                                                   --------------------------------------
                                                                                      (unaudited)           (Note)
<S>                                                                                   <C>                 <C>
Real estate assets
   Land and land improvements                                                             $211,512           $210,839
   Building and improvements                                                               254,182            260,709
   Fixtures and equipment                                                                      704                581
   Construction in progress                                                                  7,451              3,744
                                                                                          --------           --------
                                                                                           473,849            475,873
   Less accumulated depreciation                                                           (62,087)           (57,366)
                                                                                          --------           --------
                                                                                           411,762            418,507

Investment in real estate joint venture                                                      4,336              4,050
Cash and cash equivalents                                                                    1,172              3,691
Accounts receivable                                                                          1,262              2,699
Income tax receivable                                                                        7,940              7,615
Deferred rents                                                                              16,517             14,921
Other assets                                                                                 4,659              5,869
                                                                                          --------           --------
         Total assets                                                                     $447,648           $457,352
                                                                                          --------           --------
                                                                                          --------           --------

                                       LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Revolving lines of credit and note payable                                             $ 98,059           $108,023
   Accounts payable and other liabilities                                                    3,008              4,518
                                                                                          --------           --------
     Total liabilities                                                                     101,067            112,541

Commitments

Stockholders' equity
   Series A preferred stock                                                                353,404            353,404
   Common stock                                                                                  1                  1
   Additional paid-in capital                                                                1,044                929
   Accumulated deficit                                                                      (7,868)            (9,523)
                                                                                          --------           --------
     Total stockholders' equity                                                            346,581            344,811
                                                                                          --------           --------
                                                                                          --------           --------
         Total liabilities and stockholders' equity                                       $447,648           $457,352
                                                                                          --------           --------
                                                                                          --------           --------
</TABLE>

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

SEE ACCOMPANYING NOTES.

                                       3

<PAGE>


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

<TABLE>
<CAPTION>
                                                                    THIRD QUARTER                     YEAR-TO-DATE
                                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                                                     SEPTEMBER 30                     SEPTEMBER 30
                                                            ------------------------------- -------------------------------
                                                                 1999            1998              1999            1998
                                                            --------------- --------------- --------------- ---------------
<S>                                                            <C>            <C>                <C>            <C>
Rental revenues                                                $ 15,602       $ 15,915           $ 49,883       $ 45,688

Expenses
   Operating and maintenance                                      2,078          2,002              6,148          5,505
   Property taxes                                                 1,632          1,477              6,249          5,639
   Depreciation and amortization                                  3,099          3,345              9,457          8,697
   General and administrative                                       763            682              2,208          2,194
                                                               --------       --------           --------       --------
         Total expenses                                           7,572          7,506             24,062         22,035
                                                               --------       --------           --------       --------

Operating income                                                  8,030          8,409             25,821         23,653

Interest and other
   Interest expense                                              (1,353)        (1,096)            (4,388)        (1,420)
   Interest income                                                  100             39                452            603
   Gain on sale of real estate                                        -            184              4,717            184
                                                               --------       --------           --------       --------
         Total interest and other                                (1,253)          (873)               781           (633)
                                                               --------       --------           --------       --------

Net income                                                        6,777          7,536             26,602         23,020

Dividends paid to preferred stockholders                         (8,316)             -            (24,947)             -

                                                               --------       --------           --------       --------
Net income (loss) applicable to common stockholders            $ (1,539)      $  7,536           $  1,655       $ 23,020
                                                               --------       --------           --------       --------
                                                               --------       --------           --------       --------


Earnings (loss) per common share
      Basic                                                    $   (.12)      $    .32           $    .12       $    .97
      Diluted                                                  $   (.12)      $    .32           $    .12       $    .96

Weighted average common shares outstanding
      Basic                                                      13,304         23,758             13,299         23,751
      Diluted                                                    13,304         23,900             13,576         23,920

Dividends per preferred share                                  $    .35              -           $   1.05              -
</TABLE>

SEE ACCOMPANYING NOTES.

                                       4

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                              NINE MONTHS ENDED
                                                                                                 SEPTEMBER 30
                                                                                    --------------------------------------
                                                                                            1999                1998
                                                                                    ------------------- ------------------
  <S>                                                                                     <C>                 <C>
  Operating activities
  Net income                                                                              $ 26,602            $ 23,020
  Adjustments to reconcile net income to net cash provided by operating activities:
        Depreciation and amortization                                                        9,457               8,697
        Deferred rents                                                                      (1,596)             (1,999)
        Gain on sale of real estate                                                         (4,717)               (184)
      Changes in operating assets and liabilities:
        Accounts receivable and other assets                                                 1,926                 578
        Accounts payable and other liabilities                                              (1,510)              1,755
                                                                                          --------            --------
    Net cash flows provided by operating activities                                         30,162              31,867

  Investing activities
        Additions to real estate assets                                                    (27,984)            (62,986)
        Proceeds from sale of real estate assets                                            30,385               1,206
        Contributions to real estate joint venture                                            (286)             (3,990)
                                                                                          --------            --------
    Net cash flows provided by (used in) investing activities                                2,115             (65,770)

  Financing activities
        Advances from revolving lines of credit                                             81,900              37,400
        Repayments on revolving lines of credit and note payable                           (91,864)             (2,400)
        Dividends paid                                                                     (24,947)            (24,938)
        Proceeds from exercise of stock options                                                115                 323
                                                                                          --------            --------
    Net cash flows (used in) provided by financing activities                              (34,796)             10,385
                                                                                          --------            --------

           Net decrease in cash                                                             (2,519)            (23,518)

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

  Cash and cash equivalents at end of period                                              $  1,172            $  3,485
                                                                                          --------            --------
                                                                                          --------            --------

  Supplemental cash flow information:
        Cash paid for interest (net of amount capitalized)                                $  4,666            $    808
  Supplemental schedule of non-cash 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 CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                               September 30, 1999


NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

                                       6

<PAGE>


                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

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

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED           NINE MONTHS ENDED
                                                    SEPTEMBER 30               SEPTEMBER 30
                                                ------------------          -------------------
                                                1999          1998          1999           1998
                                                ----          ----          ----           ----
         <S>                                    <C>           <C>           <C>            <C>
         Interest incurred                      $1,700        $1,215        $5,146         $1,566
         Interest capitalized                      347           119           758            146
</TABLE>

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

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

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

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

                                       7

<PAGE>

                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

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

NEW ACCOUNTING STANDARDS
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," and SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information."
These statements currently have no impact on our financial statements.

NOTE 2 - NET INCOME PER SHARE

In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
Per Share." SFAS No. 128 requires presentation of two calculations of earnings
per common share. Basic earnings per common share equals net income applicable
to common stockholders divided by the weighted average common shares outstanding
during the period. Diluted earnings per common share equals net income
applicable to common stockholders divided by the sum of the weighted average
common shares outstanding during the period plus common stock equivalents.
Common stock equivalents are shares assumed to be issued if outstanding stock
options that are dilutive were exercised. All earnings per share amounts for all
periods have been presented, and where appropriate, restated to reflect these
calculations.

                                       8

<PAGE>


                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 2 - NET INCOME PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                              SEPTEMBER 30                 SEPTEMBER 30
                                                                      ----------------------------- -----------------------------
                                                                           1999          1998           1999           1998
                                                                      ----------------------------- -------------- --------------
 <S>                                                                     <C>            <C>            <C>            <C>
 Weighted average shares outstanding                                     13,304,473     23,757,628     13,298,884     23,750,703
 Effect of securities:
     Employee and Director stock options                                          -        142,447        276,937        169,477
                                                                         ----------     ----------     ----------     ----------
 Weighted average shares outstanding - assuming dilution                 13,304,473     23,900,075     13,575,821     23,920,180
                                                                         ----------     ----------     ----------     ----------
                                                                         ----------     ----------     ----------     ----------
</TABLE>

NOTE 3 - REAL ESTATE PROPERTIES

ACQUISITIONS
In July 1999 we purchased 47.5 acres of land in Temecula, CA for $12.5 million
for a proposed shopping center development. In January 1999 we acquired a 15
acre parcel of land in Tucson, AZ for $2.6 million which we plan to use for
future development. We funded these acquisitions through advances under our
unsecured revolving credit facility.

During the year-to-date period of 1998, we acquired the following properties:

<TABLE>
<CAPTION>
                                                                                             GROSS LEASABLE     PURCHASE PRICE
LOCATION                                  DESCRIPTION                     DATE ACQUIRED       SQUARE FEET           (000'S)
----------------------------------------  ------------------------------  ---------------  -------------------  --------------
<S>                                       <C>                               <C>                 <C>                 <C>
Sacramento, CA                            office complex                      5/1/98            300,000             $35,551
San Diego/Murphy Canyon, CA               self-storage facility              5/26/98            242,000              17,750
Solana Beach, CA                          land (future development)          6/22/98               -                  3,450
San Diego/Rancho San Diego, CA            retail complex                     7/13/98            100,000              11,300
Fresno, CA                                land (future development)          7/29/98               -                  3,950
</TABLE>

We funded these acquisitions through available cash, advances under our
unsecured revolving credit facility, and by assuming a note payable in
conjunction with the San Diego/Murphy Canyon, CA self storage facility purchase.

In May 1998, we entered into a 50/50 joint venture with River Park Properties
to develop a 173,000 square foot retail and commercial center in Fresno, CA. We
purchased the land from PriceSmart at an appraised value of $3.95 million and
contributed the land to the joint venture.

DISPOSITIONS
We sold the following properties during the first nine months of 1999 (amounts
in thousands):

<TABLE>
<CAPTION>
    LOCATION             DESCRIPTION                   DATE           SALES PRICE            GAIN
------------------  ---------------------------  -----------------  -----------------  ------------------
<S>                 <C>                                <C>               <C>                  <C>
Buffalo, NY         Retail Building (vacant)           4/1/99            $  6,100             $1,333
Dallas, TX          Shopping Center                    4/22/99             26,400              3,384
</TABLE>

                                       9

<PAGE>

                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 3 - REAL ESTATE PROPERTIES (CONTINUED)

We used the net proceeds from the sale of these properties to reduce the amount
outstanding on our unsecured revolving credit facility.

During the first nine months of 1998, we sold a free-standing restaurant
building at our Azusa, CA site resulting in a gain of $184,000. This building
was considered incidental to our main business.

NOTE 4 - REVOLVING LINES OF CREDIT AND NOTE PAYABLE

Our revolving credit facility activity consists of the following:

     -    In September 1999 we repaid the remaining $25 million owed on our
          credit facility with Morgan Guaranty Trust Company and terminated the
          facility. We repaid this amount through an advance on our unsecured
          credit facility with Wells Fargo Bank, AmSouth Bank and Bank One
          (described below).

     -    In December 1998 we obtained a $100 million unsecured credit facility
          with Wells Fargo Bank, AmSouth Bank and Bank One. This facility has a
          term of three years with an initial interest rate of LIBOR plus 135
          basis points. The rate may vary based on our leverage and other
          financial ratios. As of September 30, 1999, we owed $89.2 million on
          this credit facility at an interest rate of 6.79%.

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

NOTE 5 - SIGNIFICANT EVENT

On November 5, 1999 Excel Legacy Corporation (Legacy) announced that it has
completed its exchange offer for our common stock at $8.50 per share, comprised
of $4.25 per share in cash, $2.75 per share in principal amount of Legacy's 9%
Convertible Redeemable Subordinated Secured Debentures (Debentures) due 2004,
which will be convertible at any time into shares of Legacy common stock at
$5.50 per share, and $1.50 per share in principal amount of Legacy's 10% Senior
Redeemable Secured Notes due 2004. Legacy has applied for listing of the
Debentures on the American Stock Exchange. Legacy's common stock trades on the
American Stock Exchange under the symbol XLG.

                                      10

<PAGE>


                             PRICE ENTERPRISES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 5 - SIGNIFICANT EVENT (CONTINUED)

The offer expired by its terms at 12:00 Midnight, New York City time, on Nov. 3,
1999. Based on information provided by Norwest Bank Minnesota, N.A., as exchange
agent, 12,154,289 shares of our common stock, representing approximately 91.3%
of the outstanding common stock, were tendered by stockholders (including shares
subject to guaranteed delivery) prior to the offer's expiration.

Our Company's preferred stock will remain outstanding. Legacy has agreed that
the preferred stock will be entitled to elect a majority of PEI's Board of
Directors and to have one designee on Legacy's Board of Directors, until such
time as (i) less than 2,000,000 shares of our preferred stock remain
outstanding or (ii) Legacy completes a tender offer to acquire any and all
outstanding shares of our preferred stock at a cash price of $16.00 per
share, or in certain other circumstances. As part of the exchange offer and
related agreements, Legacy has agreed that no common stock dividend may be
paid from PEI to Legacy until all our obligations for interest expense on
debt and preferred stock dividends are paid and a $7.5 million annual reserve
is in place. The $7.5 million annual reserve may be used for improvement
and/or acquisition of properties, the repurchase of our preferred stock or
the reduction of our debt.

In connection with the completion of Legacy's exchange offer on November 8,
1999, Legacy acquired control of our Company. As part of the acquisition of
control, our Board of Directors was reduced from six members to five members and
reconstituted as shown below, and executive officers and certain employees of
our Company were terminated and received severance payments and cash payments
for their accelerated vested common stock options. Effective November 8, 1999
our new executive officers and Board of Directors are as follows:

   -  Jack McGrory, Chairman of the Board of Directors
   -  Gary B. Sabin, President, Chief Executive Officer and Director
   -  Richard B. Muir, Executive Vice President, Chief Operating Officer and
      Director
   -  James F. Cahill, Director
   -  Simon M. Lorne, Director
   -  S. Eric Ottesen, Senior Vice President, General Counsel and Secretary
   -  James Y. Nakagawa, Chief Financial Officer

You can read more about our agreement with Legacy and the exchange offer in
our Current Report on Form 8-K filed with the SEC on November 15, 1999 and in
Legacy's Offer to Exchange/Prospectus dated October 6, 1999 filed as Exhibit
(a)(1) to Legacy's Tender Offer Statement on Schedule 14D-1 as filed with the
SEC on October 6, 1999.

                                      11

<PAGE>

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

INTRODUCTION

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

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

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

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

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

                                       12

<PAGE>

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

RENTAL REVENUES

<TABLE>
<CAPTION>
                                                             RENTAL                      PERCENT
                                                            REVENUES       CHANGE         CHANGE
                                                            --------       ------        -------
         <S>                                                 <C>           <C>              <C>
         3rd Quarter 1999                                    $15,602       $  (313)           -2%
         3rd Quarter 1998                                     15,915            --            --

         Year-to-Date 1999                                    49,883         4,195             9%
         Year-to-Date 1998                                    45,688            --            --
</TABLE>

Revenues decreased $0.3 million to $15.6 million in the third quarter of 1999
compared to the same period in 1998 primarily because:
   -  revenues from two properties we sold in the second quarter of 1999
      contributed $0.7 million of revenues in the same period of the prior year
   -  a reduction in revenues of $0.3 million due to the Caldors bankruptcy, a
      former tenant at our Moorestown, NJ location
   -  partially offsetting these decreases were:
      -  expansion of our self storage business which provided an additional
         $0.4 million of revenues and
      -  an increase in revenues from properties existing in both years of
         $0.3 million

Revenues increased $4.2 million to $49.9 million in the nine month year-to-date
period of 1999 compared to the same period in 1998 primarily because:

   -  properties we acquired after the first quarter of 1998 generated $2.6
      million of additional revenues
   -  expansion of our self storage business provided an additional $2.1 million
      of revenues
   -  revenues from properties we owned in both 1998 and 1999 increased $1.4
      million excluding intercompany rental revenues from our self storage
      facilities
   -  partially offsetting these increases were:
      -  revenues from two properties which we sold in the second quarter of
         1999 which contributed $1.5 million of revenues in the prior year and
      -  a reduction in revenues of $0.4 million due to the Caldors bankruptcy,
         a former tenant at our Moorestown, NJ location

                                      13

<PAGE>

EXPENSES

<TABLE>
<CAPTION>
                                                                                         PERCENT
                                                             AMOUNT        CHANGE         CHANGE
                                                            --------       ------        -------
         <S>                                                <C>            <C>             <C>
         3rd Quarter 1999                                   $  7,572       $    66             1%
         3rd Quarter 1998                                      7,506            --            --

         Year-to-Date 1999                                    24,062         2,027             9%
         Year-to-Date 1998                                    22,035            --            --
</TABLE>

Expenses increased $0.1 million to $7.6 million in the third quarter of 1999
compared to the same period in 1998 primarily because:

   -  expansion of our self storage business increased expenses $0.3 million
      excluding intercompany rent expense

   -   properties we sold in the second quarter of 1999 reduced expenses,
       offsetting the increase

Expenses increased $2.0 million to $24.1 million in the nine month year-to-date
period of 1999 compared to the same period in 1998 primarily because:

   -  properties we acquired after the first quarter of 1998 increased expenses
      $1.3 million
   -  expansion of our self storage business increased expenses $1.0 million
      excluding intercompany rent expense
   -  expenses from properties we owned in both 1998 and 1999 increased $1.0
      million
   -  these increases in expenses were partially offset by:
      -  properties we sold in the second quarter of 1999 which reduced
         expenses by $0.7 million and
      -  by the reduction of bad debt expense of $0.4 million resulting from
         recovery of amounts previously written off related to the Bradlee's
         bankruptcy, a former tenant at our Seekonk, MA property

OPERATING INCOME

<TABLE>
<CAPTION>
                                                                                         PERCENT
                                                              AMOUNT        CHANGE        CHANGE
                                                              -------       ------       -------
         <S>                                                  <C>          <C>             <C>
         3rd Quarter 1999                                     $ 8,030      $   (379)          -5%
         3rd Quarter 1998                                       8,409            --           --

         Year-to-Date 1999                                     25,821         2,168            9%
         Year-to-Date 1998                                     23,653            --           --
</TABLE>

The change in operating income for the third quarter and year-to-date periods of
1999 from the same periods in the prior year is principally a result of the
changes in Rental Revenues and Expenses discussed above.

                                      14

<PAGE>


INTEREST EXPENSE

<TABLE>
<CAPTION>
                                                                                         PERCENT
                                                             AMOUNT        CHANGE         CHANGE
                                                             ------        ------        -------
         <S>                                                 <C>           <C>           <C>
         3rd Quarter 1999                                     $1,353       $   257            23%
         3rd Quarter 1998                                      1,096            --            --

         Year-to-Date 1999                                     4,388         2,968           209%
         Year-to-Date 1998                                     1,420            --            --
</TABLE>

Interest expense increased $0.3 million in the third quarter of 1999 compared to
the same period in 1998 because our average debt outstanding during the third
quarter of 1999 was higher than the prior year. Interest expense increased $3.0
million in the nine month year-to-date period of 1999 compared to the same
period in 1998 because our average debt outstanding during the first nine months
of 1999 was $99.5 million compared to an average of $14.4 million for the same
period in 1998. This increase in debt was primarily a result of borrowing $57.6
million to fund the repurchase of our common stock in November 1998. We discuss
our outstanding debt further in "Liquidity and Capital Resources" located
elsewhere in this Form 10-Q.

INTEREST INCOME

<TABLE>
<CAPTION>
                                                                                         PERCENT
                                                             AMOUNT        CHANGE         CHANGE
                                                             ------        ------        -------
         <S>                                                 <C>           <C>           <C>
         3rd Quarter 1999                                       $100        $   61           156%
         3rd Quarter 1998                                         39            --            --

         Year-to-Date 1999                                       452          (151)          -25%
         Year-to-Date 1998                                       603            --            --
</TABLE>

Interest income did not change significantly in the third quarter of 1999
compared to the same period in the prior year primarily because cash balances
did not change significantly. Interest income decreased $0.2 million for the
nine month year-to-date period of 1999 compared to the same period in 1998
primarily because of lower cash balances in 1999 as we used available cash and
began borrowing in the second quarter of 1998 to fund acquisitions.

GAIN ON SALE OF REAL ESTATE

During 1999 we sold the following properties for a gain of $4.7 million:

<TABLE>
<CAPTION>
   LOCATION                  DESCRIPTION                   DATE           SALES PRICE              GAIN
------------------  --------------------------------  -----------------  -----------------  ------------------
<S>                 <C>                                     <C>               <C>                  <C>
Buffalo, NY         Retail Building (vacant)                4/1/99            $  6,100             $1,333
Dallas, TX          Shopping Center                         4/22/99             26,400              3,384
</TABLE>

During the first nine months of 1998, we sold a free-standing restaurant
building at the Azusa, CA site resulting in a gain of $184,000. This building
was considered incidental to our main business.

In disposing of these properties we considered their location and long-term
value prospects and decided they did not meet our desired investment profile.

                                      15

<PAGE>

FUNDS FROM OPERATIONS

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                        SEPTEMBER 30                 SEPTEMBER 30
                                                                     -------------------          ------------------
                                                                     1999           1998          1999          1998
                                                                     ----           ----          ----          ----
<S>                                                                 <C>           <C>           <C>           <C>
Net income                                                          $6,777        $ 7,536       $26,602       $23,020
Depreciation and amortization                                        3,099          3,345         9,457         8,697
Gain on sale of real estate                                              -              -        (4,717)            -
Other                                                                    -            430             -           430
                                                                    ------        -------       -------       -------
         Funds from operations                                       9,876         11,311        31,342        32,147
Straight-line rents                                                   (507)          (751)       (1,766)       (2,023)
                                                                    ------        -------       -------       -------
         Adjusted funds from operations                             $9,369        $10,560       $29,576       $30,124
                                                                    ------        -------       -------       -------
                                                                    ------        -------       -------       -------
</TABLE>

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

FFO during the third quarter of 1999 decreased 13% to $9.9 million, compared to
$11.3 million in the third quarter of 1998. The loss of FFO from two properties
we sold in the second quarter of 1999 and the increase in interest expense
offset the increase in FFO from properties acquired after the first quarter of
1998 and expansion of our self storage business. The increase in interest
expense relates directly to the borrowing of $57.6 million for our common stock
repurchase in November 1998.

FFO during the nine month year-to-date period of 1999 decreased 3% to $31.3
million compared to $32.1 million during the same nine month period in 1998. The
slight decrease was a result of the factors mentioned above, although the
properties acquired in 1998 and the expansion of our self storage business had a
much greater positive effect in the year-to-date period. Approximately $2.9
million of the increase in interest expense year-to-date relates directly to the
borrowing for our common stock repurchase, discussed above.

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity refers to our ability to generate sufficient cash flows to meet the
short and long-term cash requirements of our business operations. Capital
resources represent those funds used or available to be used to support our
business operations and consist of stockholders' equity and debt.

                                      16

<PAGE>

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

During the remainder of 1999 we anticipate investing:

   -  up to $3 million for commercial real estate development on property we own
      (a portion of this amount represents commitments under executed
      construction contracts)
   -  up to $3 million for development and expansion of our self storage
      business
   -  up to $20 million for real estate acquisitions and development
      opportunities

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

We continue to evaluate various properties for acquisition or development. To
the extent that investment opportunities exceed available cash flow from the
sources mentioned above, we may raise additional capital through bank credit
facilities and/or secured mortgage financing.

From time to time we will consider selling properties to better align our
portfolio with our geographic and tenant composition strategies. We sold two
properties from our portfolio for $32.5 million during the second quarter of
1999. We are also contemplating selling certain other properties. These sales
may not be completed due to uncertainties associated with contract negotiations
and buyer due diligence contingencies.

In December 1998 we obtained a $100 million unsecured credit facility from Wells
Fargo Bank, AmSouth Bank and Bank One. This facility has a three-year term with
an initial interest rate of LIBOR plus 135 basis points. The rate may vary based
on our leverage and other financial ratios. At September 30, 1999, there was
$89.2 million outstanding on the Wells Fargo facility at an interest rate of
6.79%.

In November 1998 we purchased 10.5 million shares of our common stock for $5.50
per share. To fund this purchase, we obtained a $50 million credit facility from
Morgan Guaranty Trust Company (the Morgan Facility) which was subsequently
amended to $25 million. In September 1999 we repaid the remaining $25 million on
our Morgan Facility and terminated the facility.

                                      17

<PAGE>

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

YEAR 2000

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

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

In connection with our operating properties, we are evaluating all systems that
contain embedded chips such as security systems, elevators, lighting and HVAC
systems. We will continue to commit the resources necessary for the management
and elimination of critical Year 2000 risks. We completed our evaluation and
expect to make necessary changes by December 31, 1999. Although it is not
possible to quantify the total cost of all corrections at this time, we expect
that these costs will not have a material adverse effect on our operations or
financial condition. We expect all critical internal Year 2000 issues will be
resolved prior to the year 2000.

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

We intend to develop a contingency plan to handle most likely and worst case
Year 2000 scenarios. We intend to complete our determination of a worst case
scenario after receiving and analyzing responses to substantially all inquiries
we have made to third parties. Following our analysis, we intend to develop a
timetable for completing our contingency plan and expect to complete our
contingency plan by December 31, 1999.

INFLATION

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

                                      18

<PAGE>

substantially all leases are triple net, which means specific operating expenses
and property taxes are passed through to the tenant.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in
short-term LIBOR interest rates. We do not have any foreign exchange or other
significant market risk, nor did we have any derivative financial instruments at
September 30, 1999.

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

We had $89.2 million in variable rate debt outstanding at September 30, 1999.
Based upon this debt level, a hypothetical 10% adverse change in interest rates
would increase interest expense by approximately $0.6 million on an annual
basis, and likewise decrease our earnings and cash flows. We cannot predict
market fluctuations in interest rates and their impact on our variable rate
debt, nor can there be any assurance that fixed rate long-term debt will be
available to us at favorable rates, if at all. Consequently, future results may
differ materially from the estimated adverse changes discussed above.

                                      19

<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:

      (2.1) Agreement dated June 2, 1999, by and between Price Enterprises, Inc.
            and Excel Legacy Corporation (incorporated by reference to Exhibit
            10.1 to Current Report on Form 8-K filed June 4, 1999 by Price
            Enterprises, Inc.)

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

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

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

                                      20

<PAGE>

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

      (10.5) Settlement and Termination Agreement dated May 24, 1999, by and
            between Price Enterprises, Inc. and Gary W. Nielson (incorporated by
            reference to Exhibit 10.5 to Quarterly Report on Form 10-Q filed
            with the Commission on August 4, 1999 (File No. 0-20449))

      (10.6) Second Amendment to the Price Enterprises 1995 Combined Stock Grant
            and Stock Option Plan (incorporated by reference to Exhibit 10.6 to
            Quarterly Report on Form 10-Q filed with the Commission on August 4,
            1999 (File No. 0-20449))

      (10.7) Third Amendment to the Price Enterprises Directors 1995 Stock
            Option Plan (incorporated by reference to Exhibit 10.7 to Quarterly
            Report on Form 10-Q filed with the Commission on August 4, 1999
            (File No. 0-20449))

      (27.1) Financial Data Schedule

(b)   Reports on Form 8-K

           We did not file any reports on Form 8-K during the quarter ended
           September 30, 1999. We filed a Current Report on Form 8-K under
           Item 1 thereof on November 15, 1999, relating to the acquisition
           of control of our company by Excel Legacy Corporation (Legacy) as
           a result of the consummation by Legacy of an exchange offer for
           our common stock.

                                      21

<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: November 15, 1999                    /S/ GARY B. SABIN
                                           -----------------
                                           Gary B. Sabin
                                           PRESIDENT & CHIEF EXECUTIVE OFFICER


Date: November 15, 1999                    /S/ JAMES Y. NAKAGAWA
                                           ---------------------
                                           James Y. Nakagawa
                                           CHIEF FINANCIAL OFFICER


                                      22