SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended:		Commission File Number:
September 30, 2003		33-2320

EXCEL PROPERTIES, LTD.

(Exact name of registrant as specified in its charter)

CALIFORNIA		87-0426335
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

17140 Bernardo Center Drive, Suite 300 San Diego, California 92128
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (858) 675-9400

Securities registered pursuant to Section 12(b) of the Act: NONE

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, and (3) is an accelerated filer (as defined in Exchange Act Rule 12 b-2).

(1)	Yes	ý	No	o

(2)	Yes	ý	No	o

(3)	Yes	o	No	ý

EXCEL PROPERTIES, LTD.

INDEX TO FINANCIAL STATEMENTS

PART I. FINANCIAL INFORMATION:

	Item 1. Financial Statements:

		Balance Sheets
			September 30, 2003 (Unaudited)
			December 31, 2002

		Statements of Income
			Three Months Ended September 30, 2003 (Unaudited)
			Three Months Ended September 30, 2002 (Unaudited)
			Nine Months Ended September 30, 2003 (Unaudited)
			Nine Months Ended September 30, 2002 (Unaudited)

		Statements of Changes in Partners’ Equity
			Nine Months Ended September 30, 2003 (Unaudited)
			Nine Months Ended September 30, 2002 (Unaudited)

		Statements of Cash Flows
			Nine Months Ended September 30, 2003 (Unaudited)
			Nine Months Ended September 30, 2002 (Unaudited)

		Notes to Financial Statements

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

PART II. OTHER INFORMATION

EXCEL PROPERTIES, LTD.

BALANCE SHEETS

	September 30, 2003		December 31, 2002
	(Unaudited)
ASSETS

Real estate:
Land	$	—	$	599,460
Buildings	—		1,169,216
Less: accumulated depreciation	—		(556,664		)
Net real estate	—		1,212,012

Cash	961,446		1,181,015
Accounts receivable, less allowance for bad debts of $0 in both 2003 and 2002	—		8,983
Notes receivable, net of allowance of $50,000 in 2002	165,750		856,817
Interest receivable and other assets	200		5,314

Total assets	$	1,127,396	$	3,264,141

LIABILITIES AND PARTNERS’ EQUITY

Liabilities:
Accounts payable:
Affiliates	$	15,200	$	466
Other	528		—
Total liabilities	15,728		466

Partners’ equity:
General partner’s equity	4,103		17,035
Limited partners’ equity, 235,308 units authorized, 135,199 units issued and outstanding in 2003 and 2002, respectively.	1,107,565		3,246,640
Total partners’ equity	1,111,668		3,263,675

Total liabilities and partners’ equity	$	1,127,396	$	3,264,141

The accompanying notes are an integral part
of the financial statements.

EXCEL PROPERTIES, LTD.

STATEMENTS OF INCOME - UNAUDITED

	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
Revenue:
Rental income	$	216	$	70,629	$	68,965	$	208,290
Interest income	13,462		17,988		48,190		55,001

Total revenue	13,678		88,617		117,155		263,291

Expenses:
Bad Debts	—		50,000		—		50,000
Depreciation	3,000		12,294		17,734		36,882
Administrative	2,700		2,700		8,100		8,100
Accounting and legal	3,052		2,688		30,232		30,215
Other property and office expenses	1,814		1,284		7,094		4,477
Management fees	90		706		773		2,119
Total expenses	10,656		69,672		63,933		131,793

Income before real estate sales	3,022		18,945		53,222		131,498

Gain on sale of real estate	199,117		—		229,622		—

Net income	$	202,139	$	18,945	$	282,844	$	131,498

Net income allocated to:
General partner	$	2,052	$	312	$	3,006	$	1,684
Limited partners	200,087		18,633		279,838		129,814

Total	$	202,139	$	18,945	$	282,844	$	131,498

Net income per weighted average limited partnership unit	$	1.48	$	0.14	$	2.07	$	0.96

The accompanying notes are an integral part
of the financial statements.

EXCEL PROPERTIES, LTD.

STATEMENTS OF CHANGES IN PARTNERS’ EQUITY - UNAUDITED

	Nine Months Ended September 30
	2003			2002

Balance at January 1	$	3,263,675		$	3,700,201
Net income	282,844			112,553
Partner distributions	(2,434,851		)	(750,002		)
Balance at September 30	$	1,111,668		$	3,062,752

The accompanying notes are an integral part
of the financial statements.

EXCEL PROPERTIES, LTD.

STATEMENTS OF CASH FLOWS - UNAUDITED

	Nine Months Ended September 30,
	2003			2002
Cash flows from operating activities:
Net income	$	282,844		$	131,498
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	17,734			36,882
Provision for bad debts	—			50,000
Gain on sale of real estate	(229,622		)	—
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable	8,983			3,595
Interest receivable and other assets	5,114			(1,854		)
Increase (decrease) in liabilities:
Accounts payable	15,262			(18,664		)
Net cash provided by operating activities	100,315			201,457

Cash flows from investing activities:
Collection of notes receivable	691,067			17,418
Proceeds from real estate sales	1,423,900			—

Net cash provided by investing activities	2,114,967			17,418

Cash flows from financing activities:
Cash distributions	(2,434,851		)	(750,002		)

Net cash used by financing activities	(2,434,851		)	(750,002		)

Net decrease in cash	(219,569		)	(531,127		)

Cash at January 1	1,181,015			917,409

Cash at September 30	$	961,446		$	386,282

The accompanying notes are an integral part
of the financial statements.

EXCEL PROPERTIES, LTD.

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

1. Summary of Significant Accounting Policies:

The financial statements reflect all adjustments of a recurring nature which are, in the opinion of management, necessary for a fair presentation of the financial statements. No adjustments were necessary which were not of a recurring nature. These financial statements should be read in conjunction with the financial statements and accompanying footnotes included in the Partnership’s December 31, 2002 Form 10-K.

Organization

Excel Properties, Ltd. (“the Partnership”) was formed in the State of California on September 19, 1985, for the purpose of, but not limited to, acquiring real property and syndicating such property.

Real Estate

Land and buildings are recorded at cost. Buildings are depreciated using the straight-line method over the tax life of 31.5 years. The tax life does not differ materially from the economic useful life. Expenditures for maintenance and repairs are charged to expense as incurred. Significant renovations are capitalized. The cost and related accumulated depreciation of real estate are removed from the accounts upon disposition. Gains and losses arising from dispositions are reported as income or expense.

The Partnership assesses whether there has been an impairment in the value of its real estate by considering factors such as expected future operating income, trends, and prospects, as well as the effects of the demand, competition and other economic factors. Such factors include a lessee’s ability to pay rent under the terms of the lease. If a property is leased at a significantly lower rent, the Partnership may recognize a permanent impairment loss if the income stream is not sufficient to recover its investment.

Cash Deposits

At September 30, 2003, the carrying amount of the Partnership’s cash deposits total $1,843,786 of which $200,000 was covered by federal depository insurance.

Statement of Cash Flows - Supplemental Disclosure

There was no interest or taxes paid for the nine months ended September 30, 2003 or 2002. The Partnership also had no non-cash investing or financing transactions for the nine months ended September 30, 2003 or 2002.

Income Taxes

The Partnership is not liable for payment of any income taxes because as a partnership, it is not subject to income taxes. The tax effects of its activities accrue directly to the partners.

Accounts Receivable

All net accounts receivable are deemed to be collectible within the next 12 months. A note receivable of $50,000 was deemed uncollectible during the year ended December 31, 2002, as the debtor has filed for bankruptcy. An allowance for bad debts of $50,000 was established in 2002 and in 2003, the note was written-off.

Financial Statement Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Recognition of revenue is dependent upon the quality and ability of the tenants to pay their rent in a timely manner. Rental revenues include minimum annual rentals, adjusted for the straight-line method for recognition of fixed future increases. Gain or loss on sale of real estate is recognized when the sales contract is executed, title has passed, payment is received, and the Partnership no longer has continuing involvement in the asset.

Derivative Instruments and Hedging Activities

The Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 establishes a new model for accounting for derivatives and hedging activities, where all derivatives must be recognized as assets and liabilities and measured at fair value. The Partnership adopted this standard on January 1, 2001 and it did not have a significant impact on the financial statements.

Asset Disposal

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting for the impairment or disposal of long-lived assets and is effective in fiscal years beginning after December 15, 2001. The Partnership’s last property was sold in the three months ended September 30, 2003. Since there are no other real estate properties, operations from discontinued operations have not been separately identified.

2. Fees Paid to General Partner

The Partnership has paid the General Partner or its affiliates the following fees for the nine months ended September 30, 2003 and 2002:

	2003		2002

Management fees	$	773	$	2,119
Administrative fees	8,100		8,100
Accounting	4,860		4,860

3. Sale of Property

In August 2003, the Partnership sold a property leased to Mountain Jack’s Restaurant which was located in Lafayette, Indiana. The net sales price for the property was $897,181 and a gain of $199,117 was recognized on the sale. In March 2003, the Partnership sold a property leased to Autoworks, which was located in Bellevue, Nebraska. The net sales price for the building was $543,893 and a gain of $30,505 was recognized on the sale.

There were no property sales in the nine months ended September 30, 2002.

The following unaudited Pro Forma Condensed Statements of Income have been presented as if the property dispositions that occurred since January 1, 2002 had occurred on January 1, 2002. This information is presented for comparative purposes only and may not be indicative of the actual results had the property dispositions occurred on January 1, 2002.

	Three Months Ended
	September 30, 2003			September 30, 2003			September 30, 2002			September 30, 2002
	Actual			Proforma			Actual			Proforma

Rental Revenue:	$	216		$	—		$	70,629		$	—
Other revenue:	13,462			13,462			17,988			17,988
Operating expenses:	(10,656		)	(7,656		)	(69,672		)	(57,378		)
Net Income (loss) before real estate sales:	$	3,022		$	5,806		$	18,945		$	(39,390	)

	Nine Months Ended
	September 30, 2003			September 30, 2003			September 30, 2002			September 30, 2002
	Actual			Proforma			Actual			Proforma

Rental Revenue:	$	68,965		$	—		$	208,290		$	—
Other revenue:	48,190			48,190			55,001			55,001
Operating expenses:	(63,933		)	(46,199		)	(131,793		)	(94,911		)
Net Income (loss) before real estate sales:	$	53,222		$	1,991		$	131,498		$	(39,910	)

4. Notes Receivable

The Company had the following notes receivable at September 30, 2003 and December 31, 2002:

	2003		2002

Note from the sale of land, interest at 10%. Due upon the occurrence of certain events.	$	165,750	$	165,750

Note from sale of building, interest only receipts of $5,366 per month at 8.5% interest. Secured by building sold. Repaid in September 2003.	—		691,067

$50,000 note from sale of building, payable in two installments of $25,000 plus 10% interest. Fully reserved for in 2002 and written-off in 2002.	—		50,000

Total notes receivable	165,750		906,817

Allowance for bad debts	—		(50,000		)

	$	165,750	$	856,817

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

Nature of Business

Excel Properties, Ltd., a California limited partnership (the Partnership”), was organized to purchase commercial real estate properties for cash and to hold these assets for investment. The general partners of the Partnership are New Plan Excel Realty Trust, Inc., a Maryland corporation (“New Plan”), formerly known as Excel Realty Trust and Gary B. Sabin, an individual. The Partnership was formed on September 19, 1985 and will continue in existence until December 31, 2015, unless dissolved earlier under certain circumstances. In 1999, Excel Legacy Corporation, now known as Price Legacy Corporation, (the “Company”) began managing the assets of the Partnership when certain officers of New Plan resigned. The Company has indemnified New Plan of any general partner liability in exchange for an assignment of their partnership interest.

Properties that have been acquired by the Partnership have been primarily subject to long-term triple-net leases. Such leases require the lessee to pay the prescribed minimum rental plus all costs and expenses associated with the operations and maintenance of the property. These expenses include real property taxes, property insurance, repairs and maintenance and similar expenses. Certain leases also provide some form of inflation hedge which calls for the minimum rent to be increased, based upon adjustments in the consumer price index, fixed rent escalation, or by receipt of a percentage of the gross sales of the tenant.

The principal investment objectives of the Partnership were originally to provide to its limited partners: (1) preservation, protection and eventual return of the investment, (2) distributions of cash from operations, some of which may be a return of capital for tax purposes rather than taxable income, and (3) realization of long-term appreciation in value of properties. In recent years, the Partnership has been attempting to sell all of its assets. As of September 30, 2003, the Partnership sold all of its real estate properties and has one remaining note receivable. The Partnership is attempting to collect this final note receivable that is secured by land.

Critical Accounting Policies and Estimates

General

The financial statements including in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Preparation of our financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related notes. The Partnership believes that the following accounting policies are critical because they affect the more significant judgments and estimates used in the preparation of our financial statements. Actual results may differ from these estimates under different assumptions or conditions. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to the Financial Statements in the Form 10-K for 2002 and this Form 10-Q.

Revenue Recognition

Recognition of revenue has been dependent upon the quality and ability of the tenants to pay their rent in a timely manner. Rental revenues include minimum annual rentals, adjusted for the straight-line method for the recognition of fixed future increases. Gain or loss on sale of real estate is recognized when the sales contract is executed, title has passed, payment is received, and the

Partnership no longer has continuing involvement in the asset. The Partnership only has one remaining note receivable that is secured by land. The Partnership does not recognize interest income on this note receivable since it does not receive interest payments and the land, which secures this note receivable, does not produce income.

Real Estate Assets

Real estate assets were recorded at historical costs and adjusted for recognition of impairment losses. Buildings are depreciated using the straight-line method over the tax life of 31.5 years. The tax life does not differ materially from the economic useful life. Expenditures for maintenance and repairs were charged to expense as incurred. Significant renovations were capitalized. The cost and related accumulated depreciation of real estate were removed from the accounts upon disposition. Gains and losses arising from dispositions were reported as income or expense.

The Partnership reviews long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recovered. We consider assets to be impaired and write them down to fair value if their expected associated future undiscounted cash flows are less than their carrying amounts.

Asset Disposal

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting for the impairment or disposal of long-lived assets and is effective in fiscal years beginning after December 15, 2001. The Partnership adopted this statement but had no longer has any operating assets. Since there are no remaining operating properties, operations from discontinued operations have not been separately identified.

Liquidity and Capital Resources

The Partnership has $961,446 in cash at September 30, 2003 and no debt. The Partnership has no remaining operating assets which generate income but will have on-going general and administrative expenses until the Partnership is dissolved. The Partnership intends to make a distribution of the cash available while maintaining some reserves for the on-going expenses. The Partnership has one remaining note receivable that does not require payments until the asset securing the note, which is land located in Las Vegas, NV is sold. Once the Partnership collects on this note receivable, it intends to distribute the remaining available cash and dissolve the Partnership.

The balance of the Partnership’s remaining note receivable at September 30, 2003 was $165,750. Although the note bears interest at 10%, the Partnership has not recognized any interest income from the note since no interest payments have been made and the underlying asset does not produce any income. It is the intent of the Partnership is to cause the property to be marketed for sale in order to receive payment per the terms of the note.

Prior to 2002, the Partnership has paid quarterly distributions to the limited partners of the actual cash earned by the Partnership in the preceding quarter. In 2002, the Partnership adopted a policy of paying distributions when it receives cash from a significant capital event. Once the remaining note receivable is collected, the Partnership will make a final distribution.

Inflation is not expected to negatively impact the operations of the Partnership as there are minimal

operational expenses.

Results of Operations

The following discussion should be read in conjunction with the financial statements and the notes thereto.

Comparison of the three months ended September 30, 2003 to the three months ended September 30, 2002

Rental income decreased $68,749 or 97% from the previous year. The net decrease was due to the property sales in 2003 and 2002. The Partnership sold its last operating property in the three months ended September 30, 2003 and no longer receives any rents.

Overall operating expenses decreased by $59,016 in the three months ended September 30, 2003 from the three months ended September 30, 2002. Of this amount, $50,000 related to bad debts from a note receivable from Steakhouse Partners, Inc. The obligor had stopped making interest payments on this note and filed bankruptcy. Depreciation expense decreased $9,294 or 73%, which was attributable to the property sales in 2003 and 2002. Other expenses and other income did not vary significantly between the two accounting periods.

In the three months ended September 30, 2003, the Partnership recognized a gain of $199,117 from the sale of a property leased to Mountain Jack’s Restaurant, which was located in Lafayette, Indiana. There were no sales in the three months ended September 30, 2002.

Comparison of the nine months ended September 30, 2003 to the nine months ended September 30, 2002

Base rent decreased $139,325 or 67% from the previous year. The net decrease was due to the property sales in 2003 and 2002.

In March 2003, the company recognized a gain of $30,505 relating to the sale of a building leased to Autoworks, in Bellevue, Nebraska. There were no sales in the Nine months ended September 30,2002.

Operating expenses decreased by $67,860 or 51%. Depreciation expense decreased $19,148 or 52% and management fee expenses decreased $1,346 or 64% to the nine months ended September 30, 2003 from the nine months ended September 30, 2002. These decreases are attributable to the property sales in 2002. Other expenses and other income did not vary significantly between the two accounting periods.

In the nine months ended September 30, 2003, the property recognized a gain of $229,622 on the sale of two properties. There were no sales in the nine months ended September 30, 2003.

Management does not expect inflation to significantly impact the operations of the Partnership since it only has one remaining note receivable. To the extent the collection of this final note receivable takes several years, on-going general and administrative expenses may increase due to inflation.

Certain Cautionary Statements

Certain statements in this Quarterly Report on Form 10-Q, including, but not limited to, “Item 2 –

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not historical facts, but rather reflect current expectations concerning future results and events. The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions identify such forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, some of which are beyond the Partnership’s control that could cause actual results to differ materially from those forecast or anticipated in such forward-looking statements. These factors include, but are not limited to, the Partnership’s market effect on property sales, reliance on tenants, and environmental risks. These factors are discussed in greater detail under the caption “Certain Cautionary Statements” in the Partnership’s annual Report on Form 10-K for the year ended December 31, 2002.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Partnership’s balance sheet contains financial instruments a note receivable. The note contains a fixed interest rate and are thus not subject to changes in market interest rates. The Partnership estimates that the fair value of this note approximates market value at September 30, 2003.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our General Partner and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Within 90 days prior to the date of this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our General Partner and Principal Accounting Officer, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures. Based on the foregoing, our General Partner and Principal Accounting Officer concluded that the Partnership’s disclosure controls and procedures were effective.

There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date we completed our evaluation.

PART II. OTHER INFORMATION

Items 1 through 5 have been omitted since no events occurred with respect to these items.

Item 6. Exhibits and Reports on Form 8-K

	(a)	Exhibits:

		Exhibit 31.1 and 31.2. 302 Officers' Certifications

		Exhibit 32.1 and 32.2. 906 Officers' Certifications


	(b)	Reports on Form 8-K

	The Partnership filed no reports on Form 8-K during the quarter ended September 30, 2003.

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.

Dated: October 27, 2003	EXCEL PROPERTIES, LTD.
	(Registrant)


	By:	/s/ Gary B.Sabin
		Gary B. Sabin
		General Partner


	By:	/s/ James Y. Nakagawa
		James Y. Nakagawa
		Principal Accounting Officer

EXCEL PROPERTIES LTD 10-Q