THE UNAUDITED CONDENSED CONSOLIDATED BALANCE

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements
- -----------------------------


The Price REIT, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)
September 30, December 31,
1997 1996
--------- ---------
ASSETS (In Thousands)

Rental property, net $534,467 $380,482
Investment in joint ventures 21,201 19,202
Cash and cash equivalents 15,097 11,369
Deferred rent receivable 9,506 8,489
Secured note receivable 1,313 1,346
Other assets 10,773 7,183
--------- ---------
Total assets $592,357 $428,071
========= =========

LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES

Accounts payable and accrued liabilities 12,674 4,474
Senior Notes payable 204,038 154,114
Unsecured line of credit 19,000 19,000
Secured notes payable 26,301 11,794
--------- ---------
Total liabilities 262,013 189,382

Minority interest 2,293 1,707

STOCKHOLDERS' EQUITY

Preferred stock, $.01 par value; 2,000,000 shares
authorized, no shares issued or outstanding - -
Common stock, $.01 par value, 25,000,000 shares
authorized: 11,692,793 and 9,069,249 shares
issued and outstanding 117 91
Additional paid-in capital 354,624 259,518
Accumulated deficit (26,690) (22,627)
--------- ---------
Total stockholders' equity 328,051 236,982
--------- ---------
Total liabilities and stockholders' equity $592,357 $428,071

========= =========


See notes to condensed consolidated financial statements.
3


The Price REIT, Inc.

Condensed Consolidated Statements of Income
(Unaudited)



Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
-------- -------- -------- --------
(In Thousands, except
per share data)
REVENUE
Rental income $17,696 $12,620 $48,450 $37,453
Management fees 82 270 226 809
Equity in earnings of joint ventures 391 411 1,276 1,149
Interest and other income 294 61 1,090 265
Net gain from sale of rental property 2,787 - 2,787 -
-------- -------- -------- --------
Total revenue 21,250 13,362 53,829 39,676
-------- -------- -------- --------

EXPENSES

Rental operations 1,489 1,037 4,075 3,300
Real estate taxes 1,843 1,311 5,172 3,755
General and administrative 885 824 2,815 2,485
Depreciation 4,252 3,031 11,201 8,823
Interest 4,002 3,056 10,667 9,017
-------- -------- -------- --------
Total expenses 12,471 9,259 33,930 27,380
-------- -------- -------- --------


NET INCOME 8,779 4,103 19,899 12,296
======== ======== ======== ========


Net income per share $0.78 $0.48 $1.85 $1.47
------ ------ ------ ------
Dividends paid per share of
Common Stock $0.725 $0.70 $2.18 $2.10
------ ------ ------ ------
Weighted average number of
shares outstanding 11,240 8,505 10,742 8,392

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




See notes to condensed consolidated financial statements.
4

The Price REIT, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
1997 1996
--------- --------
(In Thousands)
OPERATING ACTIVITIES
Net income $19,899 $12,296
Adjustments to reconcile net income to net
cash provided by operating activities:
Net gain on sale of rental property (2,787) -
Depreciation 11,201 8,823
Amortization of loan fees and discount 623 512
Equity in earnings of joint ventures (1,276) (1,149)
Deferred rent (1,017) (1,774)
Changes in operating assets and liabilities:
Other assets (4,860) (915)
Accounts payable and accrued liabilities 8,198 2,047
--------- ---------
Net cash provided by operating activities 29,981 19,840

INVESTING ACTIVITIES
Purchases of rental property (145,475) -
Additions to rental property (19,186) (15,780)
Payment received on secured note receivable 33 -
Investments in joint ventures (2,456) (6,339)
Distributions from joint ventures 2,134 1,443
Gross proceeds from sale of rental property 17,400 -
--------- ---------
Net cash used in investing activities (147,550) (20,676)

FINANCING ACTIVITIES
Proceeds from Senior Notes payable 49,779 -
Proceeds from unsecured line of credit 90,000 22,000
Repayment of unsecured line of credit (90,000) (26,000)
Repayment of secured notes payable (238) -
Minority interest contribution 585 -
Gross proceeds from issuance of common stock 97,890 23,598
Common stock issuance costs (3,452) (1,381)
Dividends paid, net of dividends reinvested (23,267) (17,338)
--------- --------
Net cash provided by financing activities 121,297 879
--------- --------


Increase in cash and cash equivalents 3,728 43
Cash and cash equivalents at beginning of period 11,369 1,241
--------- --------
Cash and cash equivalents at end of period $15,097 $1,284
========= ========

5


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $6,160 $6,963
========= ========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Common Stock issued in accordance with
the dividend reinvestment plan $694 $673
======== ========

In conjunction with the acquisition of the Farmington, Connecticut property, a
non-recourse loan of $14.7 million was assumed.




See notes to condensed consolidated financial statements.
6


The Price REIT, Inc.

Notes to Condensed Consolidated Financial Statements
September 30, 1997
(Unaudited)


NOTE 1 - BASIS OF PRESENTATION
- ------------------------------

The accompanying unaudited condensed consolidated financial statements of The
Price REIT, Inc. (the "Company") 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- and nine-month periods ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1997. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for

the year ended December 31, 1996.

The preparation of the Company's financial statements 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 financial
statement date and the reported amounts of revenue and expenses during the
reporting period. Due to uncertainties inherent in the estimation process, it is
reasonably possible that actual results could differ from these estimates.


NOTE 2 - PROPERTY ACQUISITIONS
- ------------------------------

PURCHASE OF SHOPPING CENTERS AND UNDEVELOPED LAND

On January 29, 1996, the Company purchased a 9.7 acre parcel of undeveloped land
that is adjacent and contiguous to the Webster, Texas center for $1.25 million.
The Company intends to use such land for expansion of the center and development
for new tenants. The Company financed this acquisition with operating cash.

7

In July 1996, the Company acquired a 210,000 square foot shopping center in
Mesquite, Texas (Dallas area) at a cost of $12.7 million. The Company financed
this acquisition with borrowings under its unsecured line of credit (the "Line
of Credit").

On November 20, 1996, the Company acquired a 234,000 square foot shopping center
in Oklahoma City, Oklahoma. The purchase price was $16.7 million, of which $11.8
million was evidenced by the assumption of two non-recourse loans (subject to
customary exceptions) secured by the property. The balance of the purchase price
was financed with $4.9 million of operating cash.

On January 16, 1997, the Company acquired Westgate Market, a 134,000 square foot
shopping center in Wichita, Kansas for $9.8 million. The Company financed this
acquisition with borrowings under its Line of Credit.

On March 19, 1997, the Company acquired Broadmoor Village Shopping Center, a
62,000 square foot shopping center in Garland, Texas for $4.75 million. The
Company financed this acquisition with operating cash.

On March 20, 1997, the Company acquired Richardson Plaza Shopping Center, a
116,000 square foot shopping center in Richardson, Texas for $8.5 million. The
Company financed this acquisition with operating cash.

On March 28, 1997, the Company acquired City Place Market, an 84,000 square foot
shopping center in Dallas, Texas for $8.75 million. The Company financed this
acquisition with operating cash.

On March 31, 1997, the Company acquired Wendover Ridge Retail Center, a 41,000
square foot shopping center in Greensboro, North Carolina for $4.975 million.
The Company financed this acquisition with operating cash.


On April 1, 1997, the Company acquired Arboretum Crossing, a 187,000 square foot
shopping center in Austin, Texas for $23.4 million. The Company financed this
acquisition with borrowings of $14 million under its Line of Credit and $9.4
million of operating cash.

On May 14, 1997, the Company acquired Smoketown Stations Center, a 483,000
square foot shopping center in Woodbridge, Virginia

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for $46.5 million. The Company financed this acquisition with borrowings
under its Line of Credit.

On August 28, 1997, the Company acquired West Farms Shopping Center, a 185,000
square foot shopping center in Farmington, Connecticut for $20 million. As of
September 30, 1997, the shopping center was 99% leased and is anchored by The
Sports Authority, T.J. Maxx, Linen N Things and Petco. The acquisition was
financed through the assumption of an existing $14.7 million non-recourse loan
secured by the property and $5.3 million of proceeds from the sale of the
Cerritos property.


HAYDEN PLAZA NORTH JOINT VENTURE ACQUISITION

On April 23, 1996, the Company formed a partnership (the "Partnership") with
Kimco Realty Corporation ("Kimco"), a major New York-based retail real estate
investment trust, to purchase a 191,000 square foot shopping center in Phoenix,
Arizona at a cost of $3,490,000. The acquisition was completed by the
Partnership on May 3, 1996. The Company holds a 50% interest in the Partnership
and Kimco holds the remaining 50% interest. The Company's 50% share of the
acquisition cost was funded by borrowings of $1 million under the Line of Credit
and $750,000 of operating cash. The operations of the Partnership are accounted
for under the equity method of accounting.


CENTREPOINT ASSOCIATES JOINT VENTURE ACQUISITION

On March 21, 1997, Centrepoint Associates (the "Joint Venture"), a partnership
in which the Company owns a 50% interest, acquired a parcel of property
containing 25,000 rentable square feet of buildings ("Talavi III") within an
existing shopping center in Glendale, Arizona. The Joint Venture currently owns
three additional parcels within this existing shopping center: two parcels
containing 85,000 rentable square feet of buildings and a vacant pad parcel for
future development. Talavi III was purchased for $3 million. The Joint Venture
financed this acquisition with borrowings under a $13.5 million line of credit
obtained from Wells Fargo Bank ("Wells Fargo Line"). The Wells Fargo Line is
secured by the new Talavi III acquisition and a 236,000 square foot power center
located in Tempe, Arizona which is owned by the Joint Venture.

As of September 30, 1997, the Joint Venture owned several shopping center
properties located in Glendale and Tempe,

9



Arizona which contain an aggregate of 495,000 square feet of building area and a
40 acre vacant land parcel in Goodyear, Arizona for future development. The
operations of the Joint Venture are accounted for under the equity method of
accounting.

SMITHTOWN VENTURE

On October 2, 1996, the Company purchased an approximate 80% ownership interest
in Smithtown Venture LLC ("Smithtown Venture"). The remaining approximate 20%
ownership was held by King Kullen Grocery Co., Inc. ("King Kullen"), a major
Long Island, New York grocery chain. Smithtown Venture is currently constructing
a power center located in Commack, New York (Long Island) which is anticipated
to contain 270,000 leasable square feet of space when completed on land which is
subject to a forty-nine year ground lease with four ten year renewal options.
The shopping center is anchored by King Kullen, Borders Books & Music,
HomePlace, Babies "R" Us (Toys "R" Us) and The Sports Authority. In addition,
Target plans to open a 125,000 square foot store on a contiguous parcel of land.
As of September 30, 1997, all anchor tenants except Babies "R" Us have opened
for business. The center is in its final construction phase and the Company
expects that it will be completed by the end of the fourth quarter of 1997,
although no assurance can be given that it will be completed on schedule. The
construction cost is estimated at $23 million. The Company's share of
construction and development costs will be funded by borrowings under the
Company's Line of Credit and operating funds to the extent such funds are
available. As of September 30, 1997, the Company has cumulatively funded
$18,931,000 for its share of the Smithtown Venture construction costs.

On March 26, 1997, King Kullen was granted a put option to reduce its capital
interest in the joint venture from approximately 20% to 10%. On April 23, 1997,
King Kullen elected to exercise its put option to reduce its equity interest in
Smithtown Venture from approximately 20% to 10%. The Company paid King Kullen
$1,232,000 pursuant to the put option agreement. The Company presently holds an
ownership interest of 90% in Smithtown Venture and King Kullen holds the
remaining interest of 10%.

PRICE/FRY LLC JOINT VENTURE

In February 1997, Price/Baybrook, Ltd. (a wholly-owned subsidiary of the
Company) formed a joint venture with I-10/Fry Road 27, Ltd. and I-10/Park Row
40, Ltd. (the "Outside

10


Partners") to develop an approximately 470,000 square foot retail power center
in Houston, Texas. The joint venture agreement provides for the Outside Partners
to contribute the land with a net fair market value of $4.225 million and
Price/Baybrook, Ltd. to contribute $4.225 million as needed to fund development
costs. After Price/Baybrook, Ltd. has funded its share of capital, it is
anticipated that the joint venture will seek construction financing to complete

the center.

The development will be located on 47 acres of land at the intersection of
Interstate 10 and Fry Road in the western part of Houston. The Company will be
the managing partner with a 50% joint venture interest, and the remaining 50%
will be owned by the Outside Partners.

The new power center will be anchored by Home Depot, which purchased
approximately ten acres from the joint venture for the construction of a 106,000
square foot store and a 30,000 square foot garden center. The sale of land to
Home Depot was completed on July 31, 1997. The joint venture intends to develop
the balance of the 470,000 square foot center, with multiple national value
retailers and an entertainment component. The Home Depot construction is near
completion, with opening anticipated by mid-January 1998, and it is anticipated
that the balance of the center will be completed in phases over the next two
years. There can be no assurance, however, that construction of Home Depot or
the balance of the center will commence or be completed on schedule. The
operations of the joint venture will be accounted for under the equity method of
accounting.

PRICE REIT RENAISSANCE PARTNERSHIP

On August 29, 1997, the Company formed a limited partnership (the "Limited
Partnership") with Altamonte Joint Venture ("Altamonte") to acquire the
Renaissance Centre, a 271,000 square foot shopping center in Altamonte Springs
(Orlando), Florida. The Company acquired a 99% interest in the Limited
Partnership for $33.5 million. The Company is the managing General Partner with
a 99% interest and Altamonte, a limited partner holding the remaining 1%
interest. As of September 30, 1997, the Center was 99% leased and is anchored by
Uptons, Michael's, Ross Stores, General Cinema, Blockbuster and Portfolio Home
Furnishing. The Company's share of the acquisition was financed with borrowings
of $13 million under its Line of Credit and $20.5 million of operating cash.

11


K & F DEVELOPMENT COMPANY

Effective January 1, 1997, the Company acquired the assets and assumed the
liabilities of its affiliate K & F Development Company (the "Development
Company") and elected certain of the officers of the Development Company to
serve as officers of the Company. The Company acquired the assets pursuant to a
distribution to the Company as owner of 100% of the non-voting preferred stock
of the Development Company.


NOTE 3 - PROPERTY DISPOSITIONS
- ------------------------------

On July 9, 1997, the Company sold its Cerritos, California property for $17.4
million in a transaction designed to enable the sale to qualify as a tax-
deferred exchange under Section 1031 of the Internal Revenue Code (the "Code").
The Company used the sale proceeds to acquire the Farmington, Connecticut

property on August 28, 1997 and the Minnetonka, Minnesota property on October 8,
1997. The Company realized a gain on sale of the Cerritos shopping center in the
amount of $3,643,000. This gain was partially offset by an impairment loss of
$856,000 relating to the sale of property in Copiague, New York which closed on
October 22, 1997.


NOTE 4 - NOTES PAYABLE
- ----------------------

SENIOR NOTES PAYABLE

In November 1995, the Company issued unsecured 7.25% Senior Notes in the
aggregate principal amount of $100 million which are due November 2000. Interest
on the 7.25% Senior Notes is payable semi-annually in arrears on May 1 and
November 1. The notes were priced at an aggregate amount of $99,050,000 and have
an effective interest rate of 7.48%.

On November 5, 1996, the Company completed an underwritten public offering
("1996 Offering") of $55 million aggregate principal amount of the Company's
Senior Notes at an interest rate of 7.50%. The 7.50% Senior Notes were priced at
an aggregate of $54,870,000. The net proceeds from the 1996 Offering were used
to repay $50 million of indebtedness outstanding under the Company's Line of
Credit. The remaining net proceeds were used for general corporate purposes. The
7.50% Senior Notes provide for semi-annual payment of interest only due on May 5
and November 5 of each year until the maturity date

12


of November 5, 2006 at which time the principal is due.

On June 19, 1997, the Company issued unsecured 7.125% Senior Notes in the
aggregate principal amount of $50 million which are due June 15, 2004 pursuant
to its $175 million shelf registration statement. Interest on the 7.125% Senior
Notes is payable semi-annually in arrears on June 15 and December 15. The notes
were priced at an aggregate amount of $49,778,000 and have an effective interest
rate of 7.21%. The Company used the net proceeds to repay indebtedness under the
Line of Credit.

UNSECURED LINE OF CREDIT

On July 1, 1997, the Company amended its $75 million Line of Credit (i) to
modify certain restrictive covenants, including the secured and unsecured debt
incurrence restrictions, (ii) to provide the Company with an option, subject to
consent of its lenders and certain other conditions, to increase the
availability under the Line of Credit to $100 million and (iii) to extend the
maturity to June 30, 2000 with a Company option, subject to consent of its
lenders and certain other conditions, to extend it one additional year to June
30, 2001.

The agreement requires the Company to maintain certain minimum net operating
income and net worth levels, as defined, and provides that the Company will not

pay dividends in excess of 95% of its annual net income plus depreciation. The
Company is required to pay a commitment fee of 0.25% per annum of the unused
portion of the Line of Credit.

On October 23, 1996 the Company modified its Line of Credit to reduce the LIBOR
interest rate margin from 1.4% to 1.25%.

The effective rate of interest at September 30, 1997 from the borrowings under
the Line of Credit was 6.9375%. Interest on the outstanding balance of the Line
of Credit is payable periodically, but at least quarterly.

The Company typically funds short-term financing for its acquisition and
development activities through its $75 million Line of Credit. On January 22,
1997, the Company used the net proceeds from sale of Common Stock to repay $19
million of indebtedness under the Line of Credit. During the second quarter of
1997, the Company borrowed $60 million to purchase the Austin and Woodbridge
properties. The Company borrowed an additional $11 million to replenish
operating funds. On June 20, 1997, the Company used the net proceeds from the
sale of Senior Notes to

13


repay $50 million of indebtedness outstanding under the Company's Line of
Credit. On August 11, 1997, the Company used the net proceeds from the sale of
common stock to repay $21 million of indebtedness outstanding under the
Company's Line of Credit. On August 28, 1997, the Company borrowed $13 million
to purchase the Renaissance Center. On September 28, 1997, The Company borrowed
an additional $6 million to replenish operating funds. At September 30, 1997,
the outstanding balance under the Line of Credit was $19 million.


NOTE 5 - COMMON STOCK
- ---------------------

On January 22, 1997, the Company issued and sold 1,600,000 shares of Common
Stock at a price to the public of $37.625 per share pursuant to its $175 million
shelf registration statement. The Company used the net proceeds of approximately
$57 million for repayment of indebtedness under the Company's Line of Credit, to
fund its property acquisition activities and for general corporate purposes.

On August 11, 1997, the Company issued and sold 1,000,000 shares of Common Stock
at a price to the public of $37.50 per share pursuant to its $175 million shelf
registration statement. The Company used the proceeds of $37.5 million for
repayment of indebtedness under the Company's Line of Credit, to fund its
property acquisition activities and for general corporate purposes.

NOTE 6 - NET INCOME PER SHARE
- -----------------------------

Net income per share was calculated by dividing net income by the weighted
average number of shares outstanding. The assumed exercise of outstanding stock
options, using the treasury stock method, is not materially dilutive to the

earnings per share computation.

In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
The Company has not yet determined what the impact of Statement 128 will be on
the calculation of fully diluted earnings per share.

NOTE 7 - SUBSEQUENT EVENTS
- --------------------------

On October 8, 1997, the Company completed the acquisition of the Ridgedale
Festival Shopping Center in Minnetonka (Minneapolis),

14


Minnesota. The purchase price was $11.9 million. Ridgedale shopping center
contains 120,000 rentable square feet, is anchored by Office Max, Toys `R' Us,
Golfsmith, and Schmidt Music and was 100% leased. The Company financed this
acquisition with the proceeds from the tax-deferred sale of the Cerritos
property.

On October 17, 1997, the Company acquired the Cordata Centre located in
Bellingham, Washington. The purchase price was $20.25 million. The center
contains 174,000 rentable square feet and is anchored by Costco (not part of
purchase), Office Depot, Bon Marche Home, T.J. Maxx, Drug Emporium, Future Shop,
and other retail tenants. The Company financed the acquisition with borrowings
of $18 million under the Line of Credit and the remainder from operating cash.

On October 22, 1997, the Company completed the sale of approximately nine acres
of land in its Copiague, New York shopping center for $10.25 million. The land
was sold to Dayton Hudson Corp. which intends to develop a 133,000 square foot
Target store within the center. The Company used the sale proceeds to repay
borrowings under its Line of Credit.

On October 31, 1997, the Company acquired a 97,000 square foot shopping center
in Piscataway, New Jersey. The purchase price was $15.1 million. The center is
100% leased and anchored by Shop Rite Supermarket, Applebee's, Lauriat's and
other retail tenants. The Company financed this acquisition by the assumption of
a $11.4 million non-recourse loan secured by the property maturing in August
2000, and the remainder with borrowings under its Line of Credit.