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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file Number 033-20018

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

in respect of

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

(Exact name of registrant as specified in its charter)


New Jersey		22-2426091
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

213 Washington Street, Newark, New Jersey 07102-2992

(Address of principal executive offices) (Zip Code)

(973) 802-6000

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO þ

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 75 days. YES þ NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ
(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of this Act) YES o NO þ

DOCUMENTS INCORPORATED BY REFERENCE

INFORMATION REQUIRED TO BE FURNISHED PURSUANT TO PART III OF THIS FORM 10-K IS SET FORTH IN, AND IS HEREBY INCORPORATED BY REFERENCE HEREIN FROM, THE DEFINITIVE PROXY STATEMENT OF PRUDENTIAL FINANCIAL, INC., FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 12, 2009, TO BE FILED BY PRUDENTIAL FINANCIAL, INC. WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO REGULATION 14A NOT LATER THAN 120 DAYS AFTER DECEMBER 31, 2008.

Forward-Looking Statement Disclosure

Certain of the statements included in this Annual Report on Form 10-K, including but not limited to those in Management’s Discussion and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Pruco Life Insurance Company of New Jersey, or the “Company”, or the Pruco Life of New Jersey Variable Contract Real Property Account, or the “Real Property Account”. There can be no assurance that future developments affecting the Company and the Real Property Account will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (1) general economic, market and political conditions, including the performance and fluctuations of fixed income, equity, real estate and other financial markets, particularly in light of the stress experienced by the financial markets that began in the second half of 2007 and has continued and substantially increased since then; (2) interest rate fluctuations; (3) re-estimates of our reserves for future policy benefits and claims; (4) differences between actual experience regarding mortality, morbidity, persistency, surrender experience, interest rates, or market returns and the assumptions we use in pricing our products, establishing liabilities and reserves or for other purposes; (5) changes in our assumptions related to deferred policy acquisition costs and valuation of business acquired; (6) changes in our claims-paying or credit ratings; (7) investment losses and defaults; (8) competition in our product lines and for personnel; (9) changes in tax law; (10) regulatory or legislative changes, including government actions in response to the stress experienced by the financial markets; (11) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities; (12) domestic or international military actions, natural or man-made disasters including terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; (13) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; and (14) changes in statutory or “U.S. GAAP” accounting principles, practices or policies. As noted above, the adverse market and economic conditions that began in the second half of 2007 have continued and substantially worsened since then. The forgoing risks are even more pronounced in these unprecedented market and economic conditions. The Company and the Real Property Account do not intend, and are under no obligation, to update any particular forward-looking statement included in this document. See “Risk Factors” included in this Annual Report on Form 10-K for discussion of certain risks relating to the operation of the Partnership and investment in our securities.

PART I

Item 1. Business

The Pruco Life of New Jersey Variable Contract Real Property Account (the “Real Property Account” or the “Registrant”) was established on October 30, 1987, the Real Property Account was established as a separate investment account of Pruco Life of New Jersey Insurance Company (“Pruco Life of New Jersey”). The Real Property Account was established to provide a real estate investment option offered in connection with the funding of benefits under certain variable life insurance and variable annuity contracts (the “Contracts”) issued by Pruco Life of New Jersey.

The assets of the Real Property Account are invested in The Prudential Variable Contract Real Property Partnership (the “Partnership”). The Partnership, a general partnership organized under New Jersey law on April 29, 1988, was formed through an agreement among Prudential, Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey, to provide a means for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts issued by the respective companies to be invested in a commingled pool.

The Partnership has an investment policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. The largest portion of these real estate investments are direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments, or industrial properties. Approximately 10% of the Partnership’s assets are generally held in cash or invested in liquid instruments and securities although the Partners reserve discretion to increase this amount to meet partnership liquidity requirements.

Office Properties — The Partnership owns office properties in Lisle, Illinois; Brentwood, Tennessee; and Beaverton, Oregon. Total square footage owned is approximately 370,550, of which 85%, or 315,116 square feet, are leased between 1 and 10 years.

Apartment Complexes — The Partnership owns apartment properties in Atlanta, Georgia; Austin, Texas; Charlotte, North Carolina; and Raleigh, North Carolina, comprising a total of 855 apartment units, of which 92%, or 785 units, are leased. Leases range from month to month to one year.

Retail Property — The Partnership owns retail properties in Roswell, Georgia; Ocean City, Maryland; Hampton, Virginia; Dunn, North Carolina; and Westminster, Maryland. Total square footage owned is approximately 953,095 of which 79%, or 751,877 square feet, are leased between 1 and 30 years.

Hotel Property — The Partnership owns a hotel property in Lake Oswego, Oregon. This joint venture investment has 161 rooms. Occupancy for the year ended 2008 averaged 71%.

Investment in Real Estate Trust — The Partnership liquidated its entire investment in REIT shares in December 2001. The Partnership does, however, maintain a preferred equity investment in an existing private real estate investment trust, or “REIT” (See Item 7).

The Partnership’s investments are maintained so as to meet the diversification requirements set forth in treasury regulations issued pursuant to Section 817(h) of the Internal Revenue Code relating to the investments of variable life insurance and variable annuity separate accounts. Section 817(h) requires, among other things, that the partnership will have no more than 55% of the assets invested in any one investment, no more than 70% of the assets will be invested in any two investments, no more than 80% of the assets will be invested in any three investments, and no more than 90% of the assets will be invested in any four investments. To comply with regulatory requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of the Partnership’s gross assets as of the prior fiscal year.

For information regarding the Partnership’s investments, operations, and other significant events, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Financial Statements and Supplementary Data.

The following is a description of general conditions in the U.S. real estate markets. It does not relate to specific properties held by the Partnership. The Partnership does not have widely diversified holdings; therefore, the discussions of vacancy rates, property values and returns in this section are not necessarily relevant to the Partnership’s portfolio. These results are not indicative of future performance.

Market Conditions

The commercial real estate market suffered through its worst returns in decades in the fourth quarter of 2008. Deteriorating economic conditions have continued to undermine real estate fundamentals. With unemployment rising, consumer spending falling and home prices dropping, the recession is impacting all sectors of the real estate market. At the same time, commercial mortgage debt has become less readily available, as commercial mortgage backed securities (“CMBS”) programs are not lending and commercial banks and insurance companies are trying to preserve capital. Deleveraging is working its way through the system as the market adjusts from a high-leverage system to one in which debt is scarce. The lack of reasonably priced debt has made it difficult to complete transactions.

Debt Markets

Notwithstanding the massive infusions of capital into the banking system through the Troubled Asset Relief Program (“TARP”), the banking community has remained preoccupied with survival, which has meant, by and large, preserving capital to shore up balance sheets. They have shown no proclivity to resume real estate lending in any meaningful way. To the extent financings are getting done, they are often simply extensions of existing loans that have come due. The global credit crunch will limit the activity of commercial banks and life insurance companies. The only sources of debt that remain consistently available are Fannie Mae and Freddie Mac, which essentially have become part of the federal government. Lenders have adopted more conservative underwriting practices than were prevalent in recent years. Loans will carry lower leverage and will be more expensive for borrowers. These dynamics will make it more difficult to complete property sales without assumable financing or seller financing.

REIT Market

The Morgan Stanley Real Estate Investment Trust index dropped 38% during 2008, and that marked a recovery of sorts after being down more than 50% at some points in the fourth quarter. The pricing of real estate investment trust (“REIT”) stocks is heavily dependent on balance sheet issues. Companies with significant near-term refinancing volume were hard-hit due to concerns that they will have trouble replacing debt that is rolling over. Higher-cost debt for REITs could create cash-flow issues or increase the possibility of technical defaults, such as violating the debt-service covenants of long-term debt that is not maturing.

The REIT market experienced unprecedented volatility in 2008. The 23 worst days in the Morgan Stanley REIT Index’s 13-year history all took place in 2008, all but two of those between September and December. Similarly, all of the index’s 30 most positive days occurred during the year, with most of those in the fourth quarter. The National Association of Real Estate Investment Trusts (“NAREIT”) US Real Estate Index declined 32% in October and 23% in November before rising 16% in December. In tandem with the drop in equity prices, REIT dividends rose to an attractive level, although they are subject to being cut or reconstituted as common stock. NAREIT’s average dividend for an equity REIT on January 2 was 7.8%, up from less that 5% a year ago and 3.7% in January 2007. REIT operating fundamentals weakened in 2008. Overall occupancy of REIT properties dropped to approximately 93% in third quarter 2008, down from the fourth quarter 2007 peak of 94.3%, according to Citigroup.

Property Markets

Office: Nearly 2 million jobs were lost in the U.S. between September and December, bringing the yearly total to 2.6 million. The U.S. unemployment rate rose to 7.2% at year-end, its highest peak since January 1993, according to the Labor Department. According to Reis, a provider of commercial real estate market information, the national office vacancy rate rose to 14.4% at yearend, up from 13.7% at the end of September. Negative net absorption was nearly 20 million square feet for the quarter and 42 million square feet for the year, the largest one-year decline since 2001. Rents slipped 1.2% in the quarter, the first decline since first quarter 2004. The slowdown is broad-based, with office vacancies rising in 71 of the 79 markets tracked by Reis.

Industrial/warehouse: Rising job losses, falling sales of everything from automobiles to housing goods, and weak demand for imports due to the global recession have reduced demand for industrial space. The Institute for Supply Management’s factory index, which measures a range of factors that include prices, production and employment, fell to 32.9 in December, its lowest level since 1980.

Hotel: According to Smith Travel, a provider of hotel benchmarking information, the average occupancy rate for all hotels dropped to 51.9% in November, down from 58.1% in November 2007. Revenue per available room (RevPAR) fell 12.9% year-over-year, to $52.86 in November, from $60.68 in November 2007. The performance of all types of hotels declined, but luxury and resort hotels fared the worst. The average occupancy of luxury hotels fell 15%, to 59.2% in November from 69.7% in November 2007. Meanwhile, luxury hotel RevPAR dropped 20.7%, to $165 in November from $208 in November 2007.

Retail: With families saving more and tapping home equity lines less, consumer spending is at its weakest level in decades. The International Council of Shopping Centers estimates that retail sales fell by 1.5% to 2.0% in November and December, the worst performance since the trade group began compiling statistics in 1970. According to Reis, vacancy rates of neighborhood and community shopping centers rose to 8.9% in the fourth quarter, up from 8.4% three months earlier. The 4.1 million square feet of space vacated during the quarter brought the national shopping center vacancy rate to its highest level since 1994.

Multi-family: According to Reis, the national apartment vacancy rate rose from 6.2% in the fourth quarter to 6.6% at year-end, while effective rents fell 0.4% during the quarter. The S&P/Case-Shiller index, which measures house prices in 20 cities, declined 18.5% in December from a year earlier, the biggest drop in the history of the index. Fannie Mae and Freddie Mac have continued to provide a source of debt that is not available for other property types.

Item 1A. Risk Factors

You should carefully consider the following risks. These risks could materially affect our business, results of operations or financial condition, or cause our actual results to differ materially from those expected or those expressed in any forward looking statements made by or on behalf of the Company. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” above and the risks of our businesses described elsewhere in this Annual Report on Form 10-K.

Current difficult conditions in the global financial markets and the economy generally may materially adversely affect our business and results of operations.

Our results of operations are materially affected by conditions in the global financial markets and the economy generally, both in the U.S. and elsewhere around the world. The stress experienced by global financial markets that began in the second half of 2007 continued and substantially heightened since then. The volatility, disruption and dislocation of the global financial markets have reached unprecedented levels. The availability and cost of credit, or capital, has been materially affected. These factors, combined with volatile oil prices, depressed home prices and increasing foreclosures, falling equity market values, declining business and consumer confidence and the risks of increased inflation and unemployment, have precipitated an economic slowdown and fears of a severe recession.

The global fixed-income markets are experiencing a period of both extreme volatility and illiquid market conditions, which has affected a broad range of asset classes and investment sectors. As a result, the market for fixed income instruments has experienced decreased liquidity, increased price volatility, credit downgrade events, and increased probability of default. Global equity markets have also been experiencing heightened volatility. These events and the continuing market upheavals have had and may continue to have an adverse effect on our business. Our revenues are likely to decline in such circumstances, the cost of meeting our obligations to our customers may increase, and our profit margins could erode. In addition, in the event of a prolonged economic downturn, we could incur significant losses in our investment portfolio.

The demand for our products could be adversely affected in an economic downturn characterized by higher unemployment, lower family income, lower consumer spending, lower corporate earnings and lower business investment. We also may experience a higher incidence of claims and lapses or surrenders of policies. Our policyholders may choose to defer or stop paying insurance premiums. We cannot predict whether or when such actions may occur, or what impact, if any, such actions could have on our business, results of operations, cash flows and financial condition.

In response to the market dislocation affecting the banking system and financial markets, on October 3, 2008, President Bush signed the Emergency Economic Stabilization Act of 2008, or EESA, into law. Pursuant to the EESA, the U.S. Treasury has the authority to, among other things, purchase up to $700 billion of mortgage-backed and other securities from financial institutions for the purpose of stabilizing the financial markets. On October 14, 2008, the U.S. Treasury announced that it would use EESA authority to invest an aggregate of $250 billion (of the first $350 billion released under EESA) in capital issued by qualifying U.S. financial institutions under the U.S. Treasury’s Capital Purchase Program, which is part of the Troubled Asset Relief Program, or TARP. The TARP Capital Purchase Program involves the issuance by qualifying institutions of preferred stock and warrants to purchase common stock to the U.S. Treasury. Concurrently, in coordination with the U.S. Treasury, the FDIC announced the Temporary Liquidity Guarantee Program, through which it guarantees certain newly issued senior unsecured debt issued by FDIC insured institutions and their qualifying holding companies, as well as funds over $250,000 in non-interest-bearing transaction deposit accounts. In addition, since March 2008, the Federal Reserve has created several lending facilities to stabilize financial markets. Most recently, on November 25, 2008, the Federal Reserve announced the Term Asset-Backed Securities Loan Facility, or TALF. The TALF has not yet been implemented but is designed to provide secured financing for newly issued asset-backed securities backed by certain types of consumer and small business loans.

On February 10, 2009, the U.S. Treasury announced a Financial Stability Plan to build upon existing programs and earmark the second $350 billion of funds that were authorized under the EESA and released in January 2009. The elements of the Financial Stability Plan, as described by the U.S. Treasury, are a Capital Assistance Program and Financial Stability Trust to make capital available to financial institutions through additional purchases of preferred stock, a Public-Private Investment Fund to buy legacy loans and assets from financial institutions, a Consumer and Business Lending Initiative to restart securitization markets for loans to consumers and businesses by expanding upon TALF, and a comprehensive housing program to, among other things, help reduce mortgage payments and interest rates. The U.S. Treasury has stated that the Financial Stability Plan will require high levels of transparency and accountability standards and dividend, acquisition and executive compensation restrictions for financial institutions that receive government assistance going forward.

Pruco Life of New Jersey Insurance Company’s ultimate parent, Prudential Financial, has applied to participate in the Capital Purchase Program, although no determination with respect to its participation has been made. Prudential Financial also continues to evaluate other government sponsored programs for which it may be eligible.

The U.S. federal government has taken or is considering taking other actions to address the financial crisis that could further impact our business. We cannot predict with any certainty whether these actions will be effective or the effect they may have on the financial markets or on our business, results of operations, cash flows and financial condition.

Continuing adverse financial market conditions may significantly affect our ability to meet liquidity needs, our access to capital and our cost of capital, including capital that may be required by our subsidiaries.

Adverse capital market conditions have affected and may continue to affect the availability and cost of borrowed funds and could impact our ability to refinance existing borrowings, thereby ultimately impacting our ability to support or grow our businesses. We need liquidity to pay our operating expenses, interest on our debt and replace certain maturing debt obligations. Without sufficient liquidity, we could be forced to curtail certain of our operations, and our business could suffer. The principal sources of our liquidity are insurance premiums, annuity considerations, deposit funds and cash flow from our investment portfolio and assets, consisting mainly of cash or assets that are readily convertible into cash.

In the normal course of business, the Partnership enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the Partnership’s borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates. At December 31, 2008, the Partnership had no outstanding matured loans.

A decline in market value of the Partnership’s assets may also have particular adverse consequences in instances where the Partnership borrowed money based on the fair value of specific assets. A decrease in market value of these assets may result in the lender requiring the Partnership to post additional collateral or otherwise repay these loans.

In the event the Partnership’s current investment obligations are not refinanced or extended when they become due and/or the Partnership is required to repay such borrowings and obligations, management anticipates that the repayment of these obligations, will be provided by operating cash flow, new debt refinancing, and real estate investment sales.

Market fluctuations and general economic, market and political conditions may adversely affect our business and profitability.

Even under relatively more favorable market conditions (such as those prevailing before the second half of 2007), our insurance products and certain of our investment products, as well as our investment returns and our access to and cost of financing, are sensitive to fixed income, equity, real estate and other market fluctuations and general economic, market and political conditions. These fluctuations and conditions could adversely affect our results of operations, financial position and liquidity, including in the following respects:

	•		All real estate investments are subject to varying degrees of risk. The yields available from investments depend on the amounts of income generated and expenses incurred. If investment properties do not generate revenues sufficient to meet operating expenses, including debt service and capital expenditures, cash flow will be adversely affected.

	•		The revenues and value of a particular real estate investment may be adversely affected by a number of factors, including, but not limited to: the cyclical nature of the real estate market, availability of credit and debt, general national economic conditions, local economic conditions, local real estate conditions, and fluctuations in operating costs, including real estate taxes and utilities. Certain significant expenditures associated with each equity investment, such as mortgage payments, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investment. If a property is mortgaged to secure payment of indebtedness, and if the mortgaged property is unable to produce enough revenue to cover its mortgage or other debt payments, a loss could be sustained as a result of foreclosure on the property or the exercise of other remedies by the lender. In addition, a property’s revenues and real estate value may also be affected by such factors as potential liability under applicable federal, state and local laws and regulations, which may vary widely depending upon location, including tax laws, environmental laws, Americans with Disabilities Act accessibility requirements, and rent stabilization laws.

			The dramatic deterioration in the capital markets and increasing weakness in the overall economy may adversely affect all sectors of the real estate market and may lead to declines in property values. Adverse capital market conditions could impact the liquidity of our investments, affecting their value and potentially resulting in higher realized and/or unrealized losses. These events may have an adverse affect on our investment results.

	•		The estimated fair value of real estate and real estate related assets is determined through an appraisal process. There continues to be significant disruptions in the global capital, credit and real estate markets. These disruptions have led to, among other things, a significant decline in the volume of transaction activity, in the fair value of many real estate and real estate related investments, and a significant contraction in short-term and long-term debt and equity funding sources. The decline in liquidity and prices of real estate and real estate related investments, as well as the availability of observable transaction data and inputs, may have made it more difficult to determine the fair value of such investments. As a result, these estimated fair values may vary significantly from the prices at which the real estate investments would sell, since market prices of real estate investments can only be determined by negotiation between a willing buyer and seller and could be material to the Financial Statements.

			Regardless of market conditions, certain investments we hold, including the properties in the Account, are relatively illiquid. If we needed to sell these investments, we may have difficulty in selling them for acceptable prices.

	•		Disruptions, uncertainty or volatility in the financial markets may limit our access to capital required to operate our business. These market conditions may limit our ability to replace, in a timely manner, maturing obligations and access the capital necessary to replace assets withdrawn by customers.

	•		Market conditions could also impact our ability to fund foreseen and unforeseen cash and collateral requirements, potentially inhibiting our ability to perform under our counterparty obligations, support business initiatives and increasing realized losses.

			A change in market conditions, including prolonged periods of high inflation, could cause a change in consumer sentiment adversely affecting persistency of our life insurance and annuity products, including those offering the Account as an investment option.

The occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition.

			The occurrence of natural disasters, including hurricanes, floods, earthquakes, tornadoes, fires, explosions, pandemic disease and man-made disasters, including acts of terrorism and military actions, could adversely affect our results of operations or financial condition, including in the following respects:

	•		A natural or man-made disaster could result in losses in our investment portfolio or the failure of our counterparties to perform, or cause significant volatility in global financial markets.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Owners of the Contracts may participate by allocating all or part of the net premiums or purchase payments to the Real Property Account. Contract values vary with the performance of the Real Property Account’s investments through the Partnership. Participating interests in the Real Property Account are not traded in any public market; therefore a discussion of market information is not relevant.

As of December 31, 2008 approximately 2,237 contract owners of record held investments in the Real Property Account.

Item 6. Selected Financial Data

Prudential Variable Contract Real Property Partnership Results of Operations and Financial Position are summarized as follows:

RESULTS OF OPERATIONS:

Year Ended December 31,

2008

2007

2006

2005

2004

Total Investment Income

32,124,390

31,700,063

28,623,487

28,644,271

29,076,163

Net Investment Income

11,138,184

12,663,580

11,161,728

9,219,171

7,799,606

Net Realized and Unrealized Gain (Loss) on Real Estate Investments

(44,233,635

)

5,453,595

18,352,005

15,460,619

3,280,394

Net Increase (Decrease) in Net Assets Resulting From Operations

(33,095,451

)

18,117,175

29,513,733

24,679,790

11,080,000

FINANCIAL POSITION:

Year Ended December 31,

2008

2007

2006

2005

2004

Total Assets

263,665,273

290,166,898

272,136,819

246,015,115

240,575,611

Long Term Lease Obligation

—

Investment Level Debt

40,047,827

32,121,712

32,710,488

33,195,607

43,773,767

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All of the assets of the Real Property Account, or the “Account” are invested in the Partnership. Accordingly, the liquidity and capital resources and results of operations for the Account are contingent upon those of the Partnership. Therefore, this management’s discussion and analysis addresses these items at the Partnership level. The partners in the Partnership are Prudential, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey, or collectively, the “Partners”.

The following discussion and analysis of the liquidity and capital resources and results of operations of the Partnership should be read in conjunction with the audited Consolidated Financial Statements of the Account and the Partnership and the related Notes included in this filing.

(a) Liquidity and Capital Resources

As of December 31, 2008, the Partnership’s liquid assets, consisting of cash and cash equivalents, were approximately $27.7 million, an increase of approximately $9.5 million from $18.2 million at December 31, 2007. The increase was primarily due to cash flows received from the Partnership’s operating activities and the repayment of the Partnership’s preferred equity investment, as discussed below. Partially offsetting this increase was a contribution to an existing retail property in Dunn, North Carolina as well as capital expenditures to existing properties, as detailed below. Sources of liquidity included net cash flow from property operations, financings, and interest from short-term investments. The Partnership uses cash for its real estate investment activities and for its distributions to its partners. As of December 31, 2008, approximately 10.5% of the Partnership’s total assets consisted of cash and cash equivalents.

During 2008, the Partnership made an additional $2.6 million preferred equity investment in an existing retail property located in Ocean City, Maryland to fund costs associated with the redevelopment of the center. This investment was repaid with interest on April 1, 2008 with proceeds to the Partnership totaling $4.0 million in conjunction with the refinancing of the existing loan as discussed below.

The Partnership did not have any dispositions or acquisitions for the year ended December 31, 2008. The Partnership refinanced two existing loans during the year ended December 31, 2008. The retail property in Ocean City, Maryland was refinanced for loan proceeds of $16.6 million, of which $9.8 million represents additional indebtedness. $1.6 million of the loan remains to be funded for future costs associated with the redevelopment of the property. The apartment property in Raleigh, North Carolina was refinanced for the amount of $9.0 million.

During the year ended December 31, 2008, the Partnership spent approximately $3.7 million on capital improvements to various existing properties. Approximately $1.2 million was associated with the renovation of the hotel property in Lake Oswego, Oregon; approximately $0.7 million funded renovation and tenant improvements costs at the office property in Lisle, Illinois; approximately $0.7 million contributed to interior renovations at one of the office properties in Brentwood, Tennessee; and approximately $0.4 million financed tenant improvements at the retail property in Dunn, North Carolina. The remaining $0.7 million was associated with minor capital improvements and transaction costs associated with leasing expenses related to other properties in the Partnership. Additionally, $6.3 million of capital improvements was funded at the retail property in Ocean City, Maryland through the aforementioned third party loan.

(b) Results of Operations

The following is a comparison of the Partnership’s results of operations for the years ended December 31, 2008, and 2007.

Net Investment Income Overview

The Partnership’s net investment income for the year ended December 31, 2008 was approximately $11.1 million, a decrease of approximately $1.5 million from the prior year. The decrease in net investment income was primarily attributable to a $1.4 million increase in other net investment loss from the prior year. Additionally, the retail, office, and hotel sectors’ net investment income declined approximately $0.9 million, $0.1 million, and $0.1 million, respectively during the year ended December 31, 2008 from the prior year. Partially offsetting these decreases was an increase in the apartment sector’s net investment income of approximately $1.0 million from the prior year. The industrial sector’s net investment income remained relatively unchanged. The components of this net investment income are discussed below by investment type.

Valuation Overview

The Partnership did not have any realized gains for the year ended December 31, 2008, compared with a net realized gain of approximately $0.7 million for the prior year. The Partnership recorded a net unrealized loss of approximately $44.2 million for the year ended December 31, 2008, compared with a net unrealized gain of approximately $4.8 million for the prior year. The Partnership recorded a net realized and unrealized loss of approximately $44.2 million for the year ended December 31, 2008, compared with a net realized and unrealized gain of approximately $5.5 million for the prior year. The net unrealized loss of approximately $44.2 million for the year ended December 31, 2008 was attributable to valuation declines in every sector primarily due to increased investment rates suggesting an industry-wide repricing. Investment rates include direct and terminal capitalization rates, and discount rates, which reflect investors’ yield requirements on investments. The increase in investment rates was caused by the national economic downturn, frozen credit markets, weakening market fundamentals, and deteriorated demand for commercial real estate. The components of these valuation losses are discussed below by investment type.

The following table presents a comparison of the Partnership’s sources of net investment income, and realized and unrealized gains or losses by investment type for the years ended December 31, 2008 and 2007.


	Twelve Months Ended December 31,
	2008			2007
*Net Investment Income:*

Office properties	$	3,893,422		$	3,945,096
Apartment properties		3,129,457			2,119,681
Retail properties		6,062,399			6,998,954
Industrial property		—			49,279
Hotel property		1,213,328			1,343,200
Other (including interest income, investment mgt fee, etc.)		(3,160,422	)		(1,792,630	)

Total Net Investment Income	$	11,138,184		$	12,663,580


*Net Realized Gain (Loss) on Real Estate Investments:*

Retail properties		—			323,649
Industrial property		—			345,832

Net Realized Gain (Loss) on Real Estate Investments		—			669,481


*Net Unrealized Gain (Loss) on Real Estate Investments:*

Office properties		(6,677,199	)		1,967,086
Apartment properties		(12,344,133	)		3,123,154
Retail properties		(23,864,965	)		(2,716,050	)
Hotel property		(1,347,338	)		2,409,924


Net Unrealized Gain (Loss) on Real Estate Investments		(44,233,635	)		4,784,114


Net Realized and Unrealized Gain (Loss) on Real Estate Investments		($44,233,635	)	$	5,453,595

OFFICE PROPERTIES


	Net Investment		Net Investment		Unrealized			Unrealized
Year Ended December 31, 2008	Income/(Loss) 2008		Income/(Loss) 2007		Gain/(Loss) 2008			Gain/(Loss) 2007		Occupancy 2008			Occupancy 2007

Property
Lisle, IL	$	767,766	$	650,916	$	(2,664,209	)	$	804,870		70	%		67	%
Brentwood, TN		972,063		1,153,443		(83,142	)		9,918		83	%		100	%
Beaverton, OR		1,090,039		1,093,305		(2,911,733	)		990,238		88	%		88	%
Brentwood, TN		1,063,554		1,047,432		(1,018,115	)		162,060		100	%		100	%

	$	3,893,422	$	3,945,096	$	(6,677,199	)	$	1,967,086

Net Investment Income

Net investment income for the Partnership’s office properties was approximately $3.9 million for the year ended December 31, 2008, relatively unchanged from the prior year. The net investment income at the property in Lisle, Illinois increased $0.1 million due to an increase in occupancy. This increase was offset by a net investment loss of $0.1 million at a property in Brentwood, Tennessee due to reduced occupancy.

Unrealized Gain/(Loss)

The office properties owned by the Partnership recorded a net unrealized loss of approximately $6.7 million during the year ended December 31, 2008, compared with a net unrealized gain of approximately $2.0 million for the prior year. The net unrealized loss of approximately $6.7 million for the year ended December 31, 2008 was primarily due to increased investment rates across the office sector that caused each property to decline in value. Additionally, at the office property in Lisle, Illinois notification from the property’s largest tenant to vacate upon lease expiration in January 2009 resulted in decreased projected cash flows, which contributed to its net unrealized loss of $2.7 million.

APARTMENT PROPERTIES


	Net Investment		Net Investment		Unrealized			Unrealized
Year Ended December 31, 2008	Income/(Loss) 2008		Income/(Loss) 2007		Gain/(Loss) 2008			Gain/(Loss) 2007			Occupancy 2008			Occupancy 2007

Property
Atlanta, GA	$	480,064	$	447,290	$	(4,362,625	)	$	(530,277	)		91	%		92	%
Raleigh, NC		608,481		613,122		(3,258,506	)		(687,270	)		87	%		94	%
Jacksonville, FL⁽¹⁾		—		17,342		—			—			N/A			N/A
Austin, TX⁽²⁾		1,440,973		860,746		(2,108,514	)		4,376,151			92	%		92	%
Charlotte, NC⁽³⁾		599,939		181,181		(2,614,488	)		(35,450	)		90	%		87	%

	$	3,129,457	$	2,119,681	$	(12,344,133	)	$	3,123,154


⁽¹⁾		The Jacksonville, Florida apartment property was sold on November 30, 2005 but certain post-closing adjustments were recognized during the year ended December 31, 2007.

⁽²⁾		Net investment income for the year ended December 31, 2007 reflects partial period results for the Austin, Texas apartment property acquired on May 8, 2007.

⁽³⁾		Net investment income for the year ended December 31, 2007 reflects partial period results for the Charlotte, North Carolina apartment property acquired on September 6, 2007.

Net Investment Income

Net investment income for the Partnership’s apartment properties was $3.1 million for the year ended December 31, 2008, an increase of approximately $1.0 million from the prior year. The increase in net investment income for the year ended December 31, 2008 was primarily due to the additional rental income generated from the acquisition of the apartment properties in Austin, Texas and Charlotte, North Carolina on May 8, 2007 and September 6, 2007, respectively.

Unrealized Gain/(Loss)

The apartment properties owned by the Partnership recorded a net unrealized loss of approximately $12.3 million for the year ended December 31, 2008, compared with a net unrealized gain of approximately $3.1 million for the prior year. The net unrealized loss for the year ended December 31, 2008 was primarily due to increased investment rates and decreased market rents across the apartment sector that caused each property to decline in value.

RETAIL PROPERTIES


									Realized/
	Net Investment			Net Investment		Unrealized			Unrealized
	Income/(Loss)			Income/(Loss)		Gain/(Loss)			Gain/(Loss)			Occupancy			Occupancy
Year Ended December 31, 2008	2008			2007		2008			2007			2008			2007

Property
Roswell, GA	$	1,674,996		$	2,072,194	$	(10,610,373	)	$	(3,807,895	)		38	%		82	%
Kansas City, KS ⁽¹⁾		(15,941	)		158,664		—			323,649			N/A			N/A
Hampton, VA		1,318,984			1,299,715		(3,160,726	)		492,521			98	%		100	%
Ocean City, MD		820,593			702,556		(686,899	)		(122,583	)		95	%		67	%
Westminster, MD		1,181,465			1,576,148		(3,394,988	)		69,981			100	%		100	%
Dunn, NC ⁽²⁾		81,363			215,118		(3,484,491	)		651,926			34	%		90	%
CARS Preferred Equity		1,000,939			974,559		(2,527,488	)		—			N/A			N/A

	$	6,062,399		$	6,998,954	$	(23,864,965	)	$	(2,392,401	)


⁽¹⁾		The Kansas City, Kansas retail property was sold on June 29, 2007 but certain post-closing adjustments were recognized during the year ended December 31, 2008. Net investment income for the year ended 2007 reflectspartial period results to the June 29, 2007 sale.

⁽²⁾		Net investment income for the year ended December 31, 2007 reflects partial period results for Dunn, North Carolina retail property acquired on August 17, 2007.

Net Investment Income

Net investment income for the Partnership’s retail properties was approximately $6.1 million for the year ended December 31, 2008, a decrease of approximately $0.9 million from the prior year. The decrease was primarily due to (a) the allowance for accrued income that was deemed uncollectible at the retail property in Westminster, MD; (b) increased vacancy at the Roswell, Georgia retail property; (c) lost rent related to the Kansas City, Kansas retail property sold on June 29, 2007; and (d) a one-time occurrence related to bad debt expense at the retail property in Dunn, North Carolina. Partially offsetting these losses was an increase in net investment income at the property in Ocean City, Maryland due to completion of renovation and increased occupancy.

Realized and Unrealized Gain/(Loss)

The retail properties owned by the Partnership recorded a net unrealized loss of approximately $23.9 million for the year ended December 31, 2008, compared with a net realized and unrealized loss of approximately $2.4 million for the prior year. The net unrealized loss for the year ended December 31, 2008 was primarily due to increased investment rates across the retail sector based on declining national consumption, which caused each property to decline in value. The aggregate net unrealized loss was also partially attributable to the $10.6 million loss recorded at the retail property in Roswell, Georgia, which is consistent with the most recent offers received in connection with the continued sale efforts of the property.

INDUSTRIAL PROPERTY

Net Investment

Realized

Income/(Loss)

Gain/(Loss)

Occupancy

Year Ended December 31, 2008

2008

2007

2008

2007

2008

2007

Property

Aurora, CO (1)

—

49,279

—

345,832

N/A


⁽¹⁾		The Partnership sold the property on February 7, 2007.

Net Investment Income

The Partnership sold its industrial property on February 7, 2007. Therefore no net investment income was received for the year ended December, 2008, reflecting a minimal decrease from the prior year.

Realized Gain/(Loss)

The Partnership’s industrial property was sold on February 7, 2007. Therefore no realized gains and/or losses were recorded for the year ended December 31, 2008, compared with realized gains of $0.3 million during the prior year.

HOTEL PROPERTY


	Net Investment		Net Investment		Unrealized			Unrealized
	Income/(Loss)		Income/(Loss)		Gain/(Loss)			Gain/(Loss)		Occupancy			Occupancy
Year Ended December 31, 2008	2008		2007		2008			2007		2008			2007

Property
Lake Oswego, OR	$	1,213,328	$	1,343,200	$	(1,347,338	)	$	2,409,924		71	%		76	%

Net Investment Income

Net investment income for the Partnership’s hotel property was approximately $1.2 million for the year ended December 31, 2008, reflecting a decrease of $0.1 million from the prior year due to lost occupancy.

Unrealized Gain/(Loss)

The hotel property owned by the Partnership recorded an unrealized loss of approximately $1.3 million for the year ended December 31, 2008, compared with an unrealized gain of approximately $2.4 million for the prior year. The unrealized loss for the year ended December 31, 2008 reflects increased investment rates and decreased average daily rate growth projections.

Other

Other net investment loss increased approximately $1.4 million during the year ended December 31, 2008 from the prior year. Other net investment loss includes interest income from short-term investments, investment management fees, and portfolio level expenses.

(c) Inflation

A majority of the Partnership’s leases with its commercial tenants provide for recoveries of expenses based upon the tenant’s proportionate share of, and/or increases in, real estate taxes and certain operating costs, which may partially reduce the Partnership’s exposure to increases in operating costs resulting from inflation.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or “U.S. GAAP”, requires the application of accounting policies that often involve a significant degree of judgment. Management reviews critical estimates and assumptions on an ongoing basis. If management determines, as a result of its consideration of facts and circumstances, that modifications in assumptions and estimates are appropriate, results of operations and financial position as reported in the audited Consolidated Financial Statements of the Account and the Partnership may change significantly.

The following sections discuss those critical accounting policies applied in preparing the unaudited Consolidated Financial Statements of the Account and the Partnership that are most dependent on the application of estimates and assumptions.

Accounting Pronouncements Adopted

The Partnership adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” an Interpretation of FASB Statement No. 109 as of January 1, 2007. This interpretation prescribes a comprehensive model for how a Partnership should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Partnership has taken or expects to take on a tax return. The adoption of FIN 48 had no effect to the financial position and result of operations of the Partnership.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value measurements. This statement does not require any new fair value measurements, but the application of this statement could change current practices in determining fair value. Adoption did not change the methodology used to fair value our real estate investments.

SFAS No. 157 and SFAS No. 159 are effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership adopted SFAS No. 157 and SFAS No. 159 effective January 1, 2008, however, the Partnership did not make a fair value option election for its existing debt. The adoption does not have any effect on the Partnership’s consolidated financial position and results of operations. Please refer to Notes 2D and 5 for details.

New Accounting Pronouncements

FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), was issued in January 2003. In December 2003, FASB issued a revised interpretation of FIN 46 (“FIN 46-R”) that supersedes FIN 46. FIN 46-R defers the effective date for applying the provisions of FIN 46 for those companies currently accounting for their investments in accordance with the AICPA Audit and Accounting Guide, “Audits of Investment Companies” (the “Audit Guide”). The FASB is currently considering modifying FIN 46-R to provide an exception for companies that apply the Audit Guide. The Partnership is awaiting further guidance from the FASB in order to evaluate the extent in which, if any, its investments may need to be consolidated as a result of this FIN 46-R.

In June 2007, the Accounting Standards Executive Committee issued Statement of Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1 provides guidance for determining whether an entity is within the scope of the Audit Guide. SOP 07-1 was originally determined to be effective for fiscal years beginning on or after December 15, 2007, however, on February 6, 2008, FASB issued a Staff Position indefinitely deferring the effective date.

In December 2007, FASB issued SFAS No. 141 (revised 2007) (“SFAS 141R”), “Business Combinations”, and SFAS No. 160, “Non-controlling interests in Consolidated Financial Statements, an Amendment to ARB No. 51” (“SFAS 160”). SFAS 141R expands the definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing SFAS 141, including changes to acquisition related contingent consideration, pre-acquisition contingencies, non-controlling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. SFAS 160 requires the non-controlling interest to be reported as a separate component of equity. It also changes the allocation of losses and accounting in step acquisitions. The provisions in SFAS 160 should be applied prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. SFAS 141R and SFAS 160 are effective for the acquisitions closing after the first annual reporting period beginning after December 15, 2008. The Partnership is currently reviewing the provisions in SFAS 141R and SFAS 160, and assessing whether the changes would be material to its financial statements upon adoption.

Valuation of Investments

Real Estate Investments — Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases, in-place leases, and tenant relationships at the time of acquisition.

In general fair value estimates are based upon property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter. The Chief Real Estate Appraiser of Prudential Investment Management, Inc. (“PIM”), which is an indirectly owned subsidiary of Prudential Financial, Inc. (“PFI”), is responsible to assure that the valuation process provides independent and reasonable property fair value estimates. An unaffiliated third party has been appointed by PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments.

The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. In accordance with SFAS 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to come up with the approximated value for the type of real estate in the market.

In general, the input values used in the appraisal process are unobservable, therefore unless indicated otherwise; real estate investments are classified as Level 3 under SFAS 157 fair value hierarchy.

Unconsolidated real estate partnerships and preferred equity investments are carried at fair value and are generally valued at the Partnership’s equity in net assets as reflected in the partnerships’ financial statements with properties valued as described above. Under the equity method, the investment is initially recorded at the original investment amount, plus or minus additional amounts invested or distributed, and is subsequently adjusted for the Partnership’s share of undistributed earnings or losses, including unrealized appreciation and depreciation, from the partnership.

As described above, the estimated fair value of real estate and real estate related assets is determined through an appraisal process. There continues to be significant disruptions in the global capital, credit and real estate markets. These disruptions have led to, among other things, a significant decline in the volume of transaction activity, in the fair value of many real estate and real estate related investments, and a significant contraction in short-term and long-term debt and equity funding sources. The decline in liquidity and prices of real estate and real estate related investments, as well as the availability of observable transaction data and inputs, may have made it more difficult to determine the fair value of such investments. As a result, these estimated fair values may vary significantly from the prices at which the real estate investments would sell, since market prices of real estate investments can only be determined by negotiation between a willing buyer and seller and could be material to the financial statements. Although the estimated fair values represent subjective estimates, management believes these estimated fair values are reasonable approximations of market prices and the aggregate estimated value of investments in real estate is fairly presented as of December 31, 2008 and December 31, 2007.

Other Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the audited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk — The Partnership’s exposure to market rate risk for changes in interest rates relates to approximately 31.68% of its investment portfolio as of December 31, 2008, which consists primarily of short-term fixed rate commercial paper and fixed and variable interest rate debt. The Partnership does not use derivative financial instruments. In accordance with its policy, the Partnership places its investments with high quality debt security issuers, limits the amount of credit exposure to any one issuer, limits duration by restricting the term, and holds investments to maturity except under unusual circumstances.

The table below presents the amounts and related weighted interest rates of the Partnership’s cash equivalents and short-term investments at December 31, 2008:

Estimated Market

Value

Average

Maturity

(in $ millions)

Interest Rate

Cash and cash equivalents

0-3 months

27.7

1.96

The table below discloses the Partnership’s debt as of December 31, 2008. All of the Partnership’s long-term debt bears interest at fixed rates and therefore the fair value of these instruments is affected by changes in market interest rates. The following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt.


Investment level debt (in $ thousands),																						Estimated
including current portion	2009			2010			2011			2012			2013			Thereafter			Total			Fair Value

Average Fixed Interest Rate		6.75	%		6.75	%		6.75	%		6.75	%		6.75	%		6.75	%		6.75	%
Fixed Rate	$	9,277		$	566		$	604		$	646		$	463		$	4,475		$	16,031		$	16,332
Variable Rate		—		$	15,043			—			—		$	9,000		$	0		$	24,043		$	24,053
Premium/(Discount) on Mortgage Loans Payable		—			—			—			—			—			($26	)		($26	)		—

Total Mortgage Loans Payable	$	9,277		$	15,609		$	604		$	646		$	9,463		$	4,449		$	40,048		$	40,384

The Partnership is exposed to market risk from tenants. While the Partnership has not experienced any significant credit losses, in the event of significant increases in interest rates and/or an economic downturn, delinquencies could increase and result in losses to the Partnership and the Account that could adversely affect its operating results and liquidity.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data are listed in the accompanying Index to the Financial Statements and Supplementary Data on F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

In order to ensure that the information we must disclose in our filings with the SEC is recorded, processed, summarized, and reported on a timely basis, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), under the Securities Exchange Act of 1934, as amended as of December 31, 2008. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2008, our disclosure controls and procedures were effective in timely alerting them to material information relating to us required to be included in our periodic SEC filings. There has been no change in our internal control over financial reporting during the quarter ended December 31, 2008, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

JAMES J. AVERY, JR., Director — President, Individual Life Insurance, Prudential since 1998. Age 57.

HELEN M. GALT, Director — Senior Vice President, Company Actuary and Chief Risk Officer, Prudential since 2007; prior to 2007, Senior Vice President and Company Actuary, Prudential. Age 62.

BERNARD J. JACOB, Director and Treasurer— Senior Vice President and Treasurer, Prudential since 2006. Age 53.

SCOTT D. KAPLAN, Director, Chief Executive Officer and President — Vice President, Finance, Prudential since 2006. Age 44.

SCOTT G. SLEYSTER, Director — Senior Vice President, Prudential since 1999. Age 49.

STEPHEN P. PELLETIER, Director, — President, Prudential Annuities since 2008, prior to 2008, Chairman and Chief Executive Officer , Prudential International Investments. Age 55.

TUCKER I. MARR, Vice President, Chief Financial Officer and Chief Accounting Officer — Vice President, Financial Reporting. Age 53.

THOMAS C. CASTANO, Vice President, Corporate Counsel, Chief Legal Officer and Secretary — Vice President and Corporate Counsel, Insurance Law , Prudential. Age 61.

JAMES M. O’CONNOR, Senior Vice President and Actuary — Vice President, Guaranteed Products since 2001. Age 52.

PHILLIP J. GRIGG, Senior Vice President and Chief Actuary — Vice President, Actuary, Prudential since 1987. Age 53.

KENT D. SLUYTER, Senior Vice President — Vice President and Chief Actuary, Individual Life Insurance, Prudential since 2002. Age 49.

The business address of all directors and officers of Pruco Life of New Jersey is 213 Washington Street, Newark, New Jersey 07102-2992. Pruco Life of New Jersey directors and officers are elected annually.

Code of Ethics

We have adopted a code of business conduct and ethics, known as “Making the Right Choices,” which applies to our Chief Executive Officer, Chief Financial Officer, as well as to our directors and other employees. Making the Right Choices is posted on our website at www.investor.prudential.com. Our code of business conduct and ethics, any amendments and any waiver granted to any of our directors or executive officers are available free of charge on our website at www.investor.prudential.com.

In addition, we have adopted Corporate Governance Guidelines, which we refer to as our “Corporate Governance Principles and Practices.” Our Corporate Governance Principles and Practices are available free of charge on our website at www.investor.prudential.com.

The Board of Directors has not designated a separate audit committee, and therefore the full Board serves as the Company’s audit committee. None of the members of the Board of Directors is independent of management within the meaning of SEC rules. The Board of Directors has determined that at least one of its members, Mr. Kaplan, has the requisite experience to be designated an audit committee financial expert as that term is defined by rules of the SEC. Specifically, Mr. Kaplan has accounting and financial management expertise, which he gained through his experience as Vice President, Finance, of Prudential Financial, Inc., the New York Stock Exchange listed parent of the Company, as well as experience in senior financial management positions and other similar positions. Mr. Kaplan also received an M.B.A. degree in Finance from the New York University Stern School of Business.

Item 11. Executive Compensation

The Real Property Account does not pay any fees, compensation or reimbursement to any Director or Officer of the Registrant.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Not applicable.

Item 13. Certain Relationships and Related Transactions, and Director Independence

See Related Transactions in Note 10 of Notes to Financial Statements of the Partnership on page F—23.

The Registrant is an indirect wholly-owned subsidiary of Prudential, which, in turn, is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. All Directors and Executive Officers of the Registrant are employees and officers of Prudential.

Item 14. Principal Accounting Fees and Services

The Audit Committee of the Board of Directors of Prudential Financial, Inc. has appointed PricewaterhouseCoopers LLP as the independent registered public accounting firm of Prudential Financial, Inc. and certain of its domestic and international subsidiaries, including the Registrant. The Audit Committee has established a policy requiring its pre-approval of all audit and permissible non-audit services provided by the independent auditor. The specific information called for by this item is hereby incorporated by reference to the section entitled “Item 2 — Ratification of the Appointment of Independent Auditors” in the definitive proxy statement of Prudential Financial, Inc. for the Annual Meeting of Shareholders to be held on May 12, 2009, to be filed with the SEC pursuant to Regulation 14A within 120 days after the year ended December 31, 2008.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)

The following documents are filed as part of this report:

	1.		Financial Statements

			See the Index to Financial Statements and Supplementary Data on page F-1.

	2.		Financial Statement Schedules

			The following financial statement schedules of The Prudential Variable Contract Real Property Partnership should be read in conjunction with the financial statements in Item 8 of this Annual Report on Form 10-K:

			Schedule III. Real Estate Owned: Properties

			Schedule IV — Mortgage Loans On Real Estate

			See the Index to Financial Statements and Supplementary Data on page F-1.

	3.		Documents Incorporated by Reference

			See the following list of exhibits.

	4.		Exhibits

			See the following list of exhibits.

(b)

None.

(c)

The following is a list of Exhibits to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The Registrant will furnish a copy of any Exhibit listed below to any security holder of the Registrant who requests it upon payment of a fee of 15 cents per page. All Exhibits are either contained in this Annual Report on Form 10-K or are incorporated by reference as indicated below.

	3.1		Amended Articles of Incorporation of Pruco Life Insurance Company of New Jersey filed as Exhibit 1.A.(6)(a) in Post Effective Amendment No. 26 to Form S-6, Registration Statement No. 2-89780, filed April 28, 1997, and incorporated herein by reference.

	3.2		Certificate of Amendment of the Articles of Incorporation of Pruco Life Insurance Company of New Jersey, filed as Exhibit (3B) in Post-Effective Amendment No. to Form S-6, Registration Statement No.12 to Form S-1, Registration No. 33-20018, filed April 16, 1999,, and incorporated herein by reference.

	3.3		Amended By-Laws of Pruco Life Insurance Company of New Jersey, filed as Exhibit 1.A.(6)(c) to Form S-6, Registration Statement No. 333-85117, filed August 13, 1999, and incorporated herein by reference.

	3.4		Resolution of the Board of Directors establishing the Pruco Life of New Jersey Variable Contract Real Property Account, filed as Exhibit (3C) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20018, filed April 9, 1997, and incorporated herein by reference.

	4.1		Variable Life Insurance Contract filed as Exhibit 1.A.(5) in Post-Effective Amendment No. 24 to Form s-6, Registration Statement No. 2-81243, filed April 29, 1997, and incorporated herein by reference.

	4.2		Revised Variable Appreciable Life Insurance Contract with fixed death benefit, filed as Exhibit 1.A.(5)(c) in Post-Effective Amendment No. 26 to Form S-6, Registration Statement No. 2-89780, filed April 28,1997, and incorporated herein by reference.

	4.3		Revised Variable Appreciable Life Insurance Contract with variable death benefit, filed as Exhibit 1.A.(5)(d) in Post-Effective Amendment No. 26 to Form S-6, Registration Statement No. 2-89780, filed April 28, 1997, and incorporated herein by reference.

	4.4		Single Premium Variable Annuity Contract, filed as Exhibit (4C) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20018, filed April 9, 1997, and incorporated herein by reference.

	4.5		Flexible Premium Variable Life Insurance Contract, filed as Exhibit (4D) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20018, filed April 9, 1997, and incorporated herein by reference.

	9.		None.

	10.1		Investment Management Agreement between Prudential Investment Management, Inc. and The Prudential Variable Contract Real Property Partnership, filed in Post-Effective Amendment No. 16 to Form S-1, Registration Statement No. 33-20083-01, filed April 10, 2003, and incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
in respect of
Pruco Life of New Jersey Variable Contract Real Property Account
(Registrant)



Date: March 20, 2009	By:	/s/ Scott D. Kaplan
		Scott D. Kaplan
		President and Director (Principal Executive Officer)


Date: March 20, 2009	By:	/s/ Tucker I. Marr
		Tucker I. Marr
		Chief Accounting Officer (Principal Accounting and Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Signature	Title	Date

* James J. Avery, Jr. James J. Avery, Jr.	Director	March 20, 2009

* Bernard J. Jacob Bernard J. Jacob	Director	March 20, 2009

* Helen M. Galt Helen M. Galt	Director	March 20, 2009

* Stephen Pelletier Stephen Pelletier	Director	March 20, 2009

* Scott G. Sleyster Scott G. Sleyster	Director	March 20, 2009



	*By:	/s/ Thomas C. Castano
		Thomas C. Castano
		(Attorney-in-Fact)

Management’s Annual Report on Internal Control Over Financial Reporting

Management of Pruco Life of New Jersey is responsible for establishing and maintaining adequate internal control over financial reporting. Management conducted an assessment of the effectiveness, as of December 31, 2008, of the Company’s internal control over financial reporting, based on the framework established in Internal Control — Integrated Framework Issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment under that framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2008.

Our internal control over financial reporting is a process designed by or under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

March 20, 2009

F-2

Report of Independent Registered Public Accounting Firm

To the Contract Owners of the
Pruco Life of New Jersey Variable Contract Real Property Account
and the Board of Directors of
Pruco Life Insurance Company of New Jersey

In our opinion, the accompanying statements of net assets and the related statements of operations and of changes in net assets present fairly, in all material respects, the financial position of Pruco Life of New Jersey Variable Contract Real Property Account at December 31, 2008 and 2007, and the results of its operations and the changes in its net assets for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of Pruco Life Insurance Company of New Jersey. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
March 20, 2009

F-3

FINANCIAL STATEMENTS OF PRUCO LIFE OF
NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS
December 31, 2008 and 2007


	2008		2007
ASSETS
Investment in The Prudential Variable Contract Real Property Partnership	$	9,322,498	$	10,764,653

Net Assets	$	9,322,498	$	10,764,653


NET ASSETS, representing:
Equity of contract owners	$	6,493,703	$	7,715,262
Equity of Pruco Life Insurance Company of New Jersey		2,828,795		3,049,391

	$	9,322,498	$	10,764,653


Units outstanding		3,353,044		3,333,399


Portfolio shares held		294,526		294,526
Portfolio net asset value per share	$	31.65	$	36.55

STATEMENTS OF OPERATIONS
For the years ended December 31, 2008, 2007 and 2006


	2008			2007		2006
INVESTMENT INCOME
Net investment income from Partnership operations	$	485,353		$	551,823	$	485,430


EXPENSES
Charges to contract owners for assuming mortality risk and expense risk and for administration		43,595			44,386		40,852

NET INVESTMENT INCOME		441,758			507,437		444,578


NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments in Partnership		(1,927,508	)		208,471		794,887
Net realized gain on sale of investments in Partnership		0			29,173		2,947


NET GAIN (LOSS) ON INVESTMENTS		(1,927,508	)		237,644		797,834

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(1,485,750	)	$	745,081	$	1,242,412

STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2008, 2007 and 2006


	2008			2007			2006
OPERATIONS
Net investment income	$	441,758		$	507,437		$	444,578
Net change in unrealized gain (loss) on investments in Partnership		(1,927,508	)		208,471			794,887
Net realized gain on sale of investments in Partnership		0			29,173			2,947


NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(1,485,750	)		745,081			1,242,412

CAPITAL TRANSACTIONS
Net withdrawals by contract owners		(170,768	)		(339,677	)		(226,211	)
Net contributions by Pruco Life Insurance Company of New Jersey		214,363			384,063			34,026

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS		43,595			44,386			(192,185	)

TOTAL INCREASE (DECREASE) IN NET ASSETS		(1,442,155	)		789,467			1,050,227
NET ASSETS
Beginning of period		10,764,653			9,975,186			8,924,959

End of period	$	9,322,498		$	10,764,653		$	9,975,186

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

F-4

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2008

Note 1: General

Pruco Life of New Jersey Variable Contract Real Property Account (the “Account”) was established on October 30, 1987 by resolution of the Board of Directors of Pruco Life Insurance Company of New Jersey (“Pruco Life of New Jersey” or the “Company”), a wholly-owned subsidiary of The Prudential Insurance Company of America (“Prudential”), an indirect wholly-owned subsidiary of Prudential Financial, Inc. (“PFI”) as a separate investment account pursuant to New Jersey law and is registered under the Securities Act of 1933, as amended. The assets of the Account are segregated from Pruco Life of New Jersey’s other assets. The Account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by Pruco Life of New Jersey. These products are Appreciable Life (“VAL”), Variable Life (“VLI”), Discovery Plus (“SPVA”), and Discovery Life Plus (“SPVL”).

The assets of the Account are invested in The Prudential Variable Contract Real Property Partnership (the “Partnership”). The Partnership is the investment vehicle for assets allocated to the real estate investment option under certain variable life insurance and annuity contracts. The Account, along with the Pruco Life Variable Contract Real Property Account and The Prudential Variable Contract Real Property Account, are the sole investors in the Partnership. These financial statements should be read in conjunction with the financial statements of the Partnership.

The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans.

Note 2: Summary of Significant Accounting Policies and Pronouncements

A. Basis of Accounting

The accompanying financial statements are prepared in conformity with U.S. GAAP. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value measurements. This Statement does not require any new fair value measurements, but the application of this Statement could change current practices in determining fair value. The Account adopted this guidance effective January 1, 2008. The adoption of SFAS No. 157 has no effect on the Account’s financial position and results of operations. See Note 9 for more information on SFAS No. 157.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” including an amendment of FASB Statement No. 115. This statement provides companies with an option to report selected financial assets and liabilities at fair value. This statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Account adopted this guidance effective January 1, 2008. The Account did not make a fair value option election for its existing debt. The adoption of SFAS No. 159 has no effect on the Account’s financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations.” This statement, which addresses the accounting for business acquisitions, is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited, and generally applies to business acquisitions completed after December 31, 2008. Among other things, the new standard requires that all acquisition-related costs be expensed as incurred, and that all restructuring costs related to acquired operations be expensed as incurred. This new standard also addresses the current and subsequent accounting for assets and liabilities arising from contingencies acquired or assumed and, for acquisitions both prior and subsequent to December 31, 2008, requires the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. The Account is currently assessing the impact of SFAS No. 141R on its financial position and results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.” SFAS No. 160 will change the accounting for minority interests, which will be recharacterized as noncontrolling interests and classified by the parent company as a component of equity. This statement is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. Upon adoption, SFAS No. 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests and prospective adoption for all other requirements. The Account is currently assessing the impact of SFAS No. 160 on its financial position and results of operations.

F-5

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2008

B. Investment in Partnership Interest

The investment in the Partnership is based on the Account’s proportionate interest of the Partnership’s market value. At December 31, 2008 and 2007 the Account’s interest in the Partnership was 4.3% or 294,526 shares.

C. Income Recognition

Net investment income and realized and unrealized gains and losses are recognized daily. Amounts are based upon the Account’s proportionate interest in the Partnership.

D. Equity of Pruco Life Insurance Company of New Jersey

Pruco Life of New Jersey maintains a position in the Account for liquidity purposes, including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not affect contract owners’ accounts or the related unit values.

Note 3: Taxes

Pruco Life of New Jersey is taxed as a “life insurance company”, as defined by the Internal Revenue Code. The results of operations of the Account form a part of PFI’s consolidated federal tax return. Under current federal law, no federal income taxes are payable by the Account. As such, no provision for the tax liability has been recorded in these financial statements.

Note 4: Net Contributions (Withdrawals) by Contract Owners

Net contract owner contributions (withdrawals) for the real estate investment option in Pruco Life of New Jersey’s variable insurance and variable annuity products for the years ended December 31, 2008, 2007 and 2006 were as follows:


2008:	VAL			VLI			SPVA		SPVL			TOTAL
Contract Owner Net Payments:	$	333,669		$	49,893		$	0	$	0		$	383,562
Policy Loans:		(152,837	)		(14,315	)		0		(608	)		(167,760	)
Policy Loan Repayments and Interest:		160,137			22,545			0		3,590			186,272
Surrenders, Withdrawals, and Death Benefits:		(304,860	)		(57,980	)		0		(7,581	)		(370,421	)
Net Transfers From/To Other Subaccounts or Fixed Rate Option:		(1,169	)		7,657			32,000		0			38,488
Administrative and Other Charges:		(200,188	)		(39,870	)		0		(849	)		(240,907	)

Net Contributions (Withdrawals) by Contract Owners	$	(165,248	)	$	(32,070	)	$	32,000	$	(5,448	)	$	(170,766	)


2007:	VAL			VLI			SPVA		SPVL			TOTAL
Contract Owner Net Payments:	$	262,694		$	52,362		$	0	$	3		$	315,059
Policy Loans:		(148,314	)		(21,253	)		0		(872	)		(170,439	)
Policy Loan Repayments and Interest:		140,844			14,441			0		5,383			160,668
Surrenders, Withdrawals, and Death Benefits:		(371,717	)		(65,896	)		0		0			(437,613	)
Net Transfers From/To Other Subaccounts or Fixed Rate Option:		27,721			3,778			0		(6,855	)		24,644
Administrative and Other Charges:		(193,372	)		(37,783	)		0		(841	)		(231,996	)

Net Contributions (Withdrawals) by Contract Owners	$	(282,144	)	$	(54,351	)	$	0	$	(3,182	)	$	(339,677	)


2006:	VAL			VLI			SPVA			SPVL			TOTAL
Contract Owner Net Payments:	$	276,168		$	53,311		$	0		$	0		$	329,479
Policy Loans:		(135,583	)		(13,945	)		0			(683	)		(150,211	)
Policy Loan Repayments and Interest:		196,678			16,870			0			791			214,339
Surrenders, Withdrawals, and Death Benefits:		(278,015	)		(40,286	)		(2,456	)		0			(320,757	)
Net Transfers From/To Other Subaccounts or Fixed Rate Option:		(34,125	)		(7,264	)		(23,223	)		0			(64,612	)
Administrative and Other Charges:		(197,510	)		(36,128	)		0			(811	)		(234,449	)

Net Contributions (Withdrawals) by Contract Owners	$	(172,387	)	$	(27,442	)	$	(25,679	)	$	(703	)	$	(226,211	)

F-6

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2008

Note 5: Unit Activity

Transactions in units for the years ended December 31, 2008, 2007 and 2006 were as follows:

2008:


				VAL			VLI			SPVA		SPVL
Company Contributions:	131,790		Contract Owner Contributions:		148,198			26,598			11,244		1,293
Company Redemptions:	(59,871	)	Contract Owner Redemptions:		(200,157	)		(36,205	)		0		(3,252	)

2007:


				VAL			VLI			SPVA		SPVL
Company Contributions:	164,691		Contract Owner Contributions:		143,947			21,788			0		1,941
Company Redemptions:	(39,046	)	Contract Owner Redemptions:		(232,502	)		(38,018	)		0		(3,220	)

2006:


				VAL			VLI			SPVA			SPVL
Company Contributions:	150,849		Contract Owner Contributions:		179,582			24,372			0			318
Company Redemptions:	(130,023	)	Contract Owner Redemptions:		(240,611	)		(33,689	)		(10,732	)		(605	)

Note 6: Purchases and Sales of Investments

The aggregate costs of purchases and proceeds from sales of investments in the Partnership for the years ended December 31, 2008, 2007 and 2006 were as follows:


	December 31, 2008		December 31, 2007		December 31, 2006
Purchases:	$	0	$	0	$	0
Sales:	$	0	$	0	$	(233,036	)

F-7

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2008

Note 7: Financial Highlights

Pruco Life of New Jersey sells a number of variable annuity and variable life insurance products. These products have unique combinations of features and fees that are charged against the contract owner’s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns.

The following table was developed by determining which products offered by Pruco Life of New Jersey have the lowest and highest total expense ratio. The summary may not reflect the minimum and maximum contract charges offered by the Company as contract owners may not have selected all available and applicable contract options as discussed in Note 1. The table reflects contract owner units only.


	At year end						For the year end
							Investment
	Units		Unit Value Lowest-				Income			Expense Ratio**	Total Return***
	(000’s)		Highest		Net Assets (000’s)		Ratio*			Lowest-Highest	Lowest-Highest
December 31, 2008		2,330	$	2.40304 to $2.93018	$	6,494		4.55	%	0.35% to 1.25%	-14.47% to -13.70%
December 31, 2007		2,382	$	2.80966 to $3.39532	$	7,715		5.28	%	0.35% to 1.25%	6.58% to 7.54%
December 31, 2006		2,489	$	2.63621 to $3.15740	$	7,511		5.10	%	0.35% to 1.25%	13.05% to 14.06%
December 31, 2005		2,570	$	2.33181 to $2.76817	$	6,812		4.64	%	0.35% to 1.25%	11.76% to 12.76%
December 31, 2004		2,563	$	2.08645 to $2.45484	$	6,042		4.15	%	0.35% to 1.25%	4.74% to 5.68%

The table above reflects information for units held by contract owners. Pruco Life of New Jersey also maintains a position in the Real Property Account, to provide for property acquisitions and capital expenditure funding needs. Pruco Life of New Jersey held 1,022,622, 950,695, 825,050, 804,224 and 875,413 units representing $2,828,795, $3,049,391, $2,464,171, $2,112,648 and $2,040,688 of net assets as of December 31, 2008, 2007, 2006, 2005 and 2004, respectively. Charges for mortality risk, expense risk and administrative expenses are used by Pruco Life of New Jersey to purchase additional units in its account resulting in no impact of its net assets.


*		This amount represents the proportionate share of the net investment income from the underlying Partnership divided by the total average assets of the Account. This ratio excludes those expenses, such as mortality risk, expense risk and administrative charges that result in direct reductions in the unit values.

**		These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Partnership are excluded.

***		These amounts represent the total return for the periods indicated, including changes in the value of the underlying Partnership, and reflect deductions for all items included in the expense ratio. The total return does not include any expense assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.

Charges and Expenses

A. Mortality Risk and Expense Risk Charges

Mortality risk and expense risk charges are determined daily using an effective annual rate of 0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and SPVL, respectively. Mortality risk is the risk that life insurance contract owners may not live as long as estimated or annuitants may live longer than estimated and expense risk is the risk that the cost of issuing and administering the policies may exceed related charges by Pruco Life of New Jersey. The mortality risk and expense risk charges are assessed through reduction in unit values.

B. Administrative Charges

Administrative charges are determined daily using an effective annual rate of 0.35% applied daily against the net assets representing equity of contract owners held in each subaccount for SPVA and SPVL. Administrative charges include costs associated with issuing the contract, establishing and maintaining records, and providing reports to contract owners. The administrative charge is assessed through reduction in unit values.

F-8

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2008

C. Cost of Insurance and Other Related Charges

Contract owner contributions are subject to certain deductions prior to being invested in the Account. The deductions for VAL and VLI are (1) state premium taxes; (2) sales charges, not to exceed 5% for VAL and 9% for VLI, which are deducted in order to compensate Pruco Life of New Jersey for the cost of selling the contract and (3) transaction costs, applicable to VAL, which are deducted from each premium payment to cover premium collection and processing costs. Contracts are subject to charges on each basic premium for assuming a guaranteed minimum death benefit risk. This charge compensates Pruco Life of New Jersey for the risk that an insured may die at a time when the death benefit exceeds the benefit that would have been payable in the absence of a minimum guarantee. These charges are assessed through the redemption of units.

D. Deferred Sales Charge

A deferred sales charge is imposed upon surrenders of certain variable life insurance contracts to compensate Pruco Life of New Jersey for sales and other marketing expenses. The amount of any sales charge will depend on the number of years that have elapsed since the contract was issued but will not exceed 45% of one scheduled annual premium for VAL and 9% of the initial premium payment for SPVL. No sales charge will be imposed after the sixth and tenth year of the contract for SPVL and VAL, respectively. No sales charge will be imposed on death benefits. This deferred sales charge is assessed through the redemption of units.

E. Partial Withdrawal Charge

A charge is imposed by Pruco Life of New Jersey on partial withdrawals of the cash surrender value for VAL. A charge equal to the lesser of $15 or 2% will be made in connection with each partial withdrawal of the cash surrender value of a contract. This charge is assessed through the redemption of units.

Note 8: Related Party

Prudential and its affiliates perform various services on behalf of the Partnership in which the Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, preparation, postage, fund transfer agency and various other record keeping and customer service functions.

F-9

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2008

Note 9: Fair Value Disclosure

SFAS No. 157 establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 — Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. These generally provide the most reliable evidence and should be used to measure fair value whenever available.

Level 2 — Fair value is based on inputs, other than Level 1 inputs, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data.

Level 3 — Fair value is based on significant unobservable inputs for the asset or liability. These inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.

The investment in the Partnership is based on the Account’s proportionate interest of the Partnership’s fair value which approximates the Partnership’s net asset value. Properties owned by the Partnership are illiquid and based on estimated fair value from property appraisal reports prepared by independent real estate appraisers as discussed in the notes to the Partnership’s audited financial statements.

The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. In the reconciliation of these three approaches, the one most heavily relied upon is the one then recognized as the most appropriate by the independent appraiser for the type of real estate in the market.

In general, the input values used in the appraisal process are unobservable, therefore unless indicated otherwise; real estate investments and debt are classified as Level 3 under SFAS157 fair value hierarchy. The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

F-10

Table 1:


	($ in 000’s)
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Amounts Measured at		Identical Assets		Observable Inputs		Unobservable Inputs
Assets:	Fair 12/31/2008		(Level 1)		(Level 2)		(Level 3)

Investment in The Prudential Variable Contract Real Property Partnership	$	9,322	$	—	$	—	$	9,322


Total Assets	$	9,322	$	—	$	—	$	9,322

Table 2:


	($ in 000’s)
	Fair Value
	Measurements Using
	Significant
	Unobservable Inputs
	(Level 3)

Beginning balance @ 12/31/07	$	10,765

Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership operations	$	(1,928	)
Net Investment Income from Partnership operations	$	485
Acquisition/Additions		—
Equity Income		—
Contributions		—
Disposition/Settlements		—
Equity losses		—
Distributions		—

Ending balance @ 12/31/08	$	9,322


The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date relating to assets still held at the reporting date	$	(1,928	)

F-11

Report of Independent Registered Public Accounting Firm

To the Partners of
The Prudential Variable Contract Real Property Partnership:

In our opinion, the accompanying consolidated statements of assets and liabilities, including the schedule of real estate investments, and the related consolidated statements of operations, of changes in net assets and of cash flows present fairly, in all material respects, the financial position of The Prudential Variable Contract Real Property Partnership (the “Partnership”) at December 31, 2008 and 2007, and the results of its operations, the changes in its net assets and its cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of The Prudential Insurance Company of America. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 23, 2009

F-12

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


	December 31, 2008		December 31, 2007
ASSETS

REAL ESTATE INVESTMENTS — At estimated fair value:
Real estate and improvements (cost: 12/31/2008 — $245,808,214; 12/31/2007 — $236,466,116)	$	221,196,000	$	254,394,053
Real estate partnerships and preferred equity investments (cost: 12/31/2008 — $14,324,204; 12/31/2007 — $14,523,934)		11,796,716		14,523,934


Total real estate investments	$	232,992,716	$	268,917,987

CASH AND CASH EQUIVALENTS		27,736,520		18,215,871

OTHER ASSETS, NET		2,936,037		3,033,040


Total assets	$	263,665,273	$	290,166,898


LIABILITIES & PARTNERS’ EQUITY

INVESTMENT LEVEL DEBT (net of unamortized discount: 12/31/08 $26,480; 12/31/07 $—)	$	40,047,827	$	32,121,712

ACCOUNTS PAYABLE AND ACCRUED EXPENSES		2,924,938		2,184,812

DUE TO AFFILIATES		851,595		901,371

OTHER LIABILITIES		978,342		920,454

MINORITY INTEREST		4,924,263		7,004,790


Total liabilities		49,726,965		43,133,139


COMMITMENTS AND CONTINGENCIES

PARTNERS’ EQUITY		213,938,308		247,033,759


Total liabilities and partners’ equity	$	263,665,273	$	290,166,898


NUMBER OF SHARES OUTSTANDING AT END OF PERIOD		6,758,960		6,758,960


PER SHARE NET ASSET VALUE AT END OF PERIOD	$	31.65	$	36.55

The accompanying notes are an integral part of these consolidated financial statements.

F-14

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended December 31,
	2008			2007			2006
INVESTMENT INCOME:
Revenue from real estate and improvements	$	30,723,626		$	29,094,968		$	25,460,860
Equity in income of real estate partnerships		994,333			1,136,936			1,181,772
Interest and equity income on mortgage and other loans receivable		—			—			125,510
Interest on short-term investments		406,431			1,468,159			1,855,345


Total investment income		32,124,390			31,700,063			28,623,487


INVESTMENT EXPENSES:
Operating		7,193,577			6,954,999			6,355,543
Investment management fee		3,447,030			3,380,090			3,075,176
Real estate taxes		2,957,947			2,466,704			2,069,169
Administrative		5,927,773			4,056,557			3,923,413
Interest expense		1,970,462			2,019,937			1,814,686
Minority interest		(510,583	)		158,196			223,772


Total investment expenses		20,986,206			19,036,483			17,461,759


NET INVESTMENT INCOME		11,138,184			12,663,580			11,161,728


REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net proceeds from real estate investments sold		—			18,353,122			67,770
Less: Cost of real estate investments sold		—			19,063,985			—

Gain (loss) realized from real estate investments sold		—			(710,863	)		67,770

Less: Reversal of prior periods’ unrealized gain (loss) on real estate investments sold		—			(1,380,344	)		—


Net gain (loss) recognized on real estate investments sold		—			669,481			67,770


Unrealized gain (loss) on investments:
Change in unrealized gain (loss) on real estate investments		(45,661,694	)		5,620,864			20,294,808
Less: Minority interest in unrealized gain (loss)		(1,428,059	)		836,750			2,010,573


Net unrealized gain (loss) on real estate investments		(44,233,635	)		4,784,114			18,284,235


NET REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS		(44,233,635	)		5,453,595			18,352,005


INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($33,095,451	)	$	18,117,175		$	29,513,733

The accompanying notes are an integral part of these consolidated financial statements.

F-15

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2008			2007			2006

CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets from operations		($33,095,451	)	$	18,117,175		$	29,513,733
Adjustments to reconcile net increase (decrease) in net assets to net cash from operating activities
Net realized and unrealized loss (gain)		44,233,635			(5,453,595	)		(18,352,005	)
Amortization of deferred financing costs		94,554			193,594			—
Distributions in excess of (less than) equity in income of real estate partnerships operations		199,730			35,287			(87,396	)
Minority interest in consolidated partnerships		(510,583	)		158,196			223,772
Bad debt expense		1,139,238			101,185			(239,380	)
(Increase) decrease in:
Other assets		(1,136,791	)		166,010			37,951
Increase (decrease) in:
Accounts payable and accrued expenses		740,126			(907,118	)		546,878
Due to affiliates		(49,776	)		111,482			28,963
Other liabilities		57,888			43,967			404,151


Net cash flows from (used in) operating activities		11,672,570			12,566,183			12,076,667


CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from real estate investments sold		—			18,353,122			67,770
Acquisition of real estate and improvements		—			(42,218,143	)		(14,797,730	)
Additions to real estate and improvements		(9,936,151	)		(3,554,451	)		(3,417,034	)
Contributions to real estate partnerships		—			—			(7,289,487	)
Return of investment in real estate partnerships		—			—			3,620,455
Collection of mortgage loan receivable		—			—			4,277,769


Net cash flows from (used in) investing activities		(9,936,151	)		(27,419,472	)		(17,538,257	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		—			—			(6,000,000	)
Proceeds from investment level debt		24,016,161			—			—
Principal payments on investment level debt		(16,090,046	)		(588,776	)		(485,119	)
Contributions to minority interest partners		80,000			294,143			—
Distributions to minority interest partners		(221,885	)		(35,739	)		(121,244	)


Net cash flows from (used in) financing activities		7,784,230			(330,372	)		(6,606,363	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		9,520,649			(15,183,661	)		(12,067,953	)

CASH AND CASH EQUIVALENTS — Beginning of period		18,215,871			33,399,532			45,467,485


CASH AND CASH EQUIVALENTS — End of period	$	27,736,520		$	18,215,871		$	33,399,532

The accompanying notes are an integral part of these consolidated financial statements.

F-17

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS


					2008 Total Rentable
					Square Feet			December 31,
					Unless Otherwise			2008				2007
	December 31, 2008				Indicated					Estimated Fair				Estimated Fair
Property Name	Ownership		City, State		(Unaudited)			Cost		Value		Cost		Value


OFFICES
750 Warrenville	WO	:	Lisle, IL			103,193		$	25,218,777	$	9,542,046	$	24,512,521	$	11,500,000
Summit @ Cornell Oaks	WO	:	Beaverton , OR			72,109			12,512,985		11,000,000		12,401,252		13,800,000
Westpark	WO		Nashville, TN			97,199			12,060,981		13,753,954		11,323,885		13,100,000
Financial Plaza	WO		Brentwood, TN			98,049			12,389,207		12,700,000		12,371,092		13,700,000

			Offices % as of 12/31/08			22	%		62,181,950		46,996,000		60,608,750		52,100,000

APARTMENTS
Brookwood Apartments	WO	:	Atlanta, GA	240 Units					19,810,918		16,100,000		19,548,293		20,200,000
Dunhill Trace Apartments	WO	:	Raleigh, NC		250 Units				16,433,544		16,600,000		16,375,037		19,800,000
Broadstone Crossing	WO		Austin, TX		225 Units				22,732,363		25,000,000		22,723,849		27,100,000
The Reserve At Waterford Lakes	WO	:	Charlotte, NC		140 Units				13,649,938		11,000,000		13,535,450		13,500,000

			Apartments % as of 12/31/08			32	%		72,626,763		68,700,000		72,182,629		80,600,000

RETAIL
King’s Market	WO	:	Rosewell, GA			314,358			37,893,595		14,100,000		37,883,222		24,700,000
Hampton Towne Center	WO		Hampton, VA			174,540			18,110,816		23,400,000		18,050,090		26,500,000
White Marlin Mall	CJV		Ocean City, MD			186,016			23,271,014		28,600,000		17,016,325		23,900,000
Westminster Crossing East, LLC	CJV		Westminster, MD			89,890			15,044,721		17,700,000		15,637,841		21,094,053
Kansas City Portfolio	EJV		Kansas City, KS;MO			487,660			13,595		13,595		140,911		140,911
CARS Preferred Equity	PE		Various			N/A			14,310,609		11,783,121		14,383,023		14,383,023
Harnett Crossing	CJV		Dunn, NC			193,235			6,366,767		3,900,000		5,958,844		7,200,000

			Retail % as of 12/31/08			47	%		115,011,117		99,496,716		109,070,256		117,917,987

HOTEL
Portland Crown Plaza	CJV		Portland, OR		161 Rooms				10,312,588		17,800,000		9,128,415		18,300,000

			Hotel % as of 12/31/08			8	%		10,312,588		17,800,000		9,128,415		18,300,000

Total Real Estate Investments as a Percentage of Net Assets as of 12/31/08						109	%	$	260,132,418	$	232,992,716	$	250,990,050	$	268,917,987

WO — Wholly Owned Investment
CJV — Consolidated Joint Venture
EJV — Joint Venture Investment accounted for under the equity method
PE — Preferred equity investments accounted for under the equity method

The accompanying notes are an integral part of these consolidated financial statements.

F-18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 1: Organization

On April 29, 1988, The Prudential Variable Contract Real Property Partnership (the “Partnership”), a general partnership organized under New Jersey law, was formed through an agreement among The Prudential Insurance Company of America (“Prudential”), Pruco Life Insurance Company (“Pruco Life”), and Pruco Life Insurance Company of New Jersey (“Pruco Life of New Jersey”). The Partnership was established as a means by which assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts issued by the respective companies could be invested in a commingled pool. The partners in the Partnership are Prudential, Pruco Life and Pruco Life of New Jersey. The Partners may make additional daily cash contributions to or withdrawals from the Partnership in accordance with the provisions of the Partnership Agreement.

The Partnership’s policy is to invest at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans.

The per share net asset value of the Partnership’s shares is determined daily, consistent with the Partnership Agreement. On each day during which the New York Stock Exchange is open for business, the net asset value of the Partnership is estimated using the estimated fair value of its assets, principally as described in Notes 2A, 2B and 2C below, reduced by any liabilities of the Partnership. The periodic adjustments to property values described in Notes 2A, 2B and 2C below and other adjustments to previous estimates are made on a prospective basis. There can be no assurance that all such adjustments to estimates will be made timely.

Shares of the Partnership are held by The Prudential Variable Contract Real Property Account, Pruco Life Variable Contract Real Property Account and Pruco Life of New Jersey Variable Contract Real Property Account (the “Real Property Accounts”) and may be purchased and sold at the then current per share net asset value of the Partnership’s net assets. Per share net asset value is calculated by dividing the net asset value of net assets of the Partnership as determined above by the number of shares outstanding. A contract owner participates in the Partnership through interests in the Real Property Accounts.

PREI ® is the real estate advisory unit of Prudential Investment Management, Inc. (“PIM”), which is an indirectly owned subsidiary of Prudential Financial Inc. (“PFI”). PREI provides investment advisory services to the Partnership’s partners pursuant to the terms of the Advisory Agreement as described in Note 12.

Note 2: Summary of Significant Accounting Policies

	A.		Basis of Presentation — The accompanying consolidated financial statements of the Partnership have been presented on the fair value basis of accounting in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements of Partnership include wholly owned entities, and those real estate partnerships in which the Partnership has a controlling interest. All significant inter-company balances and transactions have been eliminated in consolidation.

	B.		Management’s Use of Estimates in the Financial Statements — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

F-20

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 2: Summary of Significant Accounting Policies (continued)

	C.		Accounting Pronouncements Adopted— The Partnership adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” an Interpretation of FASB Statement No. 109 as of January 1, 2007. This interpretation prescribes a comprehensive model for how a Partnership should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Partnership has taken or expects to take on a tax return. The adoption of FIN 48 had no effect to the financial position and result of operations of the Partnership.

			In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value measurements. This statement does not require any new fair value measurements, but the application of this statement could change current practices in determining fair value.

			In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” including an amendment of FASB Statement No. 115. This statement provides partnerships with an option to report selected financial assets and liabilities at fair value.

			SFAS No. 157 and SFAS No. 159 are effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership adopted SFAS No. 157 and SFAS No. 159 effective January 1, 2008, however, the Partnership did not make a fair value option election for its existing debt. The adoption of SFAS No. 157 and SFAS No. 159 did not have any effect on the Partnership’s consolidated financial position and results of operations. Please refer to Notes 2D and 5 for details.

	D.		Real Estate Investments — Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases, in-place leases, and tenant relationships at the time of acquisition.

			In general fair value estimates are based upon property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter. The Chief Real Estate Appraiser of PIM, which is an indirectly owned subsidiary of PFI, is responsible to assure that the valuation process provides independent and reasonable property fair value estimates. An unaffiliated third party been appointed by PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments.

F-21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 2: Summary of Significant Accounting Policies (continued)

	D.		Real Estate Investments (continued)

			The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. In accordance with SFAS 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to come up with the approximated value for the type of real estate in the market.

			In general, the input values used in the appraisal process are unobservable, therefore unless indicated otherwise; real estate investments are classified as Level 3 (see Note 5 for detail) under SFAS 157 fair value hierarchy.

			Unconsolidated real estate partnerships and preferred equity investments are carried at fair value and are generally valued at the Partnership’s equity in net assets as reflected in the partnerships’ financial statements with properties valued as described above. Under the equity method, the investment is initially recorded at the original investment amount, plus or minus additional amounts invested or distributed, and is subsequently adjusted for the Partnership’s share of undistributed earnings or losses, including unrealized appreciation and depreciation, from the partnership.

			As described above, the estimated fair value of real estate and real estate related assets is determined through an appraisal process. There continues to be significant disruptions in the global capital, credit and real estate markets. These disruptions have led to, among other things, a significant decline in the volume of transaction activity, in the fair value of many real estate and real estate related investments, and a significant contraction in short-term and long-term debt and equity funding sources. The decline in liquidity and prices of real estate and real estate related investments, as well as the availability of observable transaction data and inputs, may have made it more difficult to determine the fair value of such investments. As a result, these estimated fair values may vary significantly from the prices at which the real estate investments would sell, since market prices of real estate investments can only be determined by negotiation between a willing buyer and seller. These differences could be material to the financial statements. Although the estimated fair values represent subjective estimates, management believes these estimated fair values are reasonable approximations of market prices and the aggregate estimated value of investments in real estate is fairly presented as of December 31, 2008 and December 31, 2007.

F-22

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 2: Summary of Significant Accounting Policies (continued)

	E.		Cash and Cash Equivalents — Cash and cash equivalent are comprised of all short-term investments and investments in money market funds with a maximum maturity of three months. Cash equivalents consist of investments in the Prudential Investment Liquidity Pool offered and managed by an affiliate of PFI and are accounted for at fair value.

	F.		Other Assets — Restricted cash of $207,343 and $186,736 was maintained by the wholly owned and consolidated properties at December 31, 2008 and 2007, respectively, for tenant security deposits and is included in Other Assets on the Consolidated Statements of Assets and Liabilities. Other assets also include tenant receivables and are net of allowance for uncollectible accounts of $1,028,539 and $39,764 at December 31, 2008 and 2007, respectively.

	G.		Investment Level Debt — Investment level debt is generally stated at the principal amount of the obligations outstanding, except for debt assumed. At times the Partnership may assume debt in connection with the purchase of real estate. For debt assumed, the Partnership allocates a portion of the purchase price to the below/above market debt and amortizes the premium/discount over the remaining life of the debt. Deferred financing costs related to debt were capitalized and amortized over the terms of the related obligations.

	H.		Revenue and Expense Recognition — Revenue from real estate is recognized when earned in accordance with the terms of the respective leases. Operating expenses are recognized as incurred. Revenue from certain real estate investments is net of all or a portion of related real estate expenses, as lease arrangements vary as to responsibility for payment of these expenses between tenants and the Partnership. Since real estate investments are stated at estimated fair value, net income is not reduced by depreciation or amortization expense. Interest expenses are accrued periodically based on the contractual interest rate and terms of the loans, which approximates the effective interest method. Interest expenses are included in Net Investment Income in the Statement of Operations.

	I.		Equity in Income of Real Estate Partnerships — Equity in income of real estate partnerships represents the Partnership’s share of the current year’s partnership income as provided for under the terms of the partnership agreements. As is the case with real estate investments, partnerships’ net income are not reduced by depreciation or amortization expense. Frequency of distribution of income is determined by formal agreements or by the executive committee of the partnership. Any cash in excess of the amount of income generated from the underlying joint venture is treated as a return of the Partnership’s equity investment.

	J.		Federal Income Taxes — The Partnership is not a taxable entity under the provisions of the Internal Revenue Code. The income and capital gains and losses of the Partnership are attributed, for federal income tax purposes, to the Partners in the Partnership. The Partnership may be subject to state and local taxes in jurisdictions in which it operates.

F-23

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 2: Summary of Significant Accounting Policies (continued)

	K.		New Accounting Pronouncements — FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), was issued in January 2003. In December 2003, FASB issued a revised interpretation of FIN 46 (“FIN 46-R”) that supersedes FIN 46. FIN 46-R defers the effective date for applying the provisions of FIN 46 for those companies currently accounting for their investments in accordance with the AICPA Audit and Accounting Guide, “Audits of Investment Companies” (the “Audit Guide”). The FASB is currently considering modifying FIN 46-R to provide an exception for companies that apply the Audit Guide. The Partnership is awaiting further guidance from the FASB in order to evaluate the extent in which, if any, its investments may need to be consolidated as a result of this FIN 46-R.

			In June 2007, the Accounting Standards Executive Committee issued Statement of Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1 provides guidance for determining whether an entity is within the scope of the Audit Guide. SOP 07-1 was originally determined to be effective for fiscal years beginning on or after December 15, 2007, however, on February 6, 2008, FASB issued a Staff Position indefinitely deferring the effective date.

			In December 2007, FASB issued SFAS No. 141 (revised 2007) (“SFAS 141R”), “Business Combinations”, and SFAS No. 160, “Non-controlling interests in Consolidated Financial Statements, an Amendment to ARB No. 51” (“SFAS 160”). SFAS 141R expands the definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing SFAS 141, including changes to acquisition related contingent consideration, pre-acquisition contingencies, non-controlling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. SFAS 160 requires the non-controlling interest to be reported as a separate component of equity. It also changes the allocation of losses and accounting in step acquisitions. The provisions in SFAS 160 should be applied prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. SFAS 141R and SFAS 160 are effective for the acquisitions closing after the first annual reporting period beginning after December 15, 2008. The Partnership is currently reviewing the provisions in SFAS 141R and SFAS 160, and no significant impact is expected from the adoption.

Note 3: Reclassification

Certain prior period balances have been reclassified to conform with current period presentation. Such reclassifications had no effect on previously reported net assets.

Note 4: Disclosure of Supplemental Cash Flow Information and Non-Cash Investing and Financing Activity

Cash paid for interest during the years ended December 31, 2008, 2007 and 2006, was $1,878,870, $1,746,115 and $1,806,320, respectively.

F-24

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 5: Fair Value Measurements

Fair Value Measurements:

SFAS 157 establishes a fair value measurement framework, provides a single definition of fair value and requires expanded disclosure summarizing fair value measurements. This statement provides a three-level hierarchy based on the inputs used in the valuation process. The level in the fair values hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows;

Level 1 — Fair values is based on unadjusted quoted prices inactive markets that are accessible to the company for identical assets or liabilities. These generally provide the most reliable evidence and should be used tom measure fair value whenever available.

Level 3 — Fair value is based on significant unobservable inputs for the asset or liability. These inputs reflect the company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.

For items classified as Level 3, a reconciliation of the beginning and ending balances, as shown in table 2 below, is also required.

Please refer to Note 2D for discussion of valuation methodology.

F-25

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 5: Fair Value Measurements (continued)

Table 1 below summarizes the assets measured at fair value on a recurring basis and their respective position in the fair value hierarchy.

Table 1

(in 000’s)

Fair value measurements at December 31, 2008 using


	Amounts		Quoted prices in
	measured at		active markets for		Significant other		Significant
	fair value		identical assets		observable		unobservable inputs
Assets:	12/31/2008		(level 1)		inputs (level 2)		(level 3)

Real estate and improvements	$	221,196	$	—	$	—	$	221,196
Real estate partnerships and preferred equity investments		11,797		—		—		11,797

Total	$	232,993	$	—	$	—	$	232,993

As required under SFAS 157, table 2 below present a reconciliation of the beginning and ending balances for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2008.

Table 2

(in 000’s)

Fair value measurements using significant unobservable inputs

(Level 3)


				Real estate and
				partnerships and
	Real estate and			preferred equity
	improvements			investments			Total

Beginning balance @ 1/1/08	$	254,394		$	14,524		$	268,918
Net gains (losses) realized/unrealized included in earnings (or changes in net assets)		(43,134	)		(2,527	)		(45,661	)
Equity income (losses)/interest income		—			994			994
Acquisitions/issuances/contributions		9,936			—			9,936
Dispositions/settlements/distributions		—			(1,194	)		(1,194	)

Ending balance @ 12/31/08	$	221,196		$	11,797		$	232,993

Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date	$	(43,134	)	$	(2,527	)	$	(45,661	)

F-26

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 6: Investment Level Debt

Investment level debt includes mortgage loans payable as summarized below (in 000’s):


	As of 12/31/08					As of 12/31/07		As of 12/31/08
				(Unaudited)
				Partnership’s
	100% Principal			Share of		100% Principal
	Balance			Principal Balance		Balance		Interest			Maturity
	Outstanding			Outstanding¹		Outstanding		Rate^{2, 3}			Date		Terms⁴
Mortgages of Wholly Owned Properties & Consolidated Partnerships
Hampton, VA	$	7,284		$	7,284	$	7,778		6.75	%		2018	PP, P&I
Ocean City, MD		15,044			12,105		6,847	Libor +225				2010		I
Raleigh, NC		9,000			9,000		8,750	DMBS +142				2013		I
Atlanta, GA		8,746			8,746		8,747		4.90	%		2009	PP, P&I
Unamortized Premium (Discount)		(26	)		—		—

Total	$	40,048		$	37,135	$	32,122


1.		Represents the Partnership’s interest in the loan based upon the estimated percentage of net assets which would be distributed to the Partnership if the partnership were liquidated at December 31, 2008. It does not represent the Partnership’s legal obligation.

2.		The Partnership’s weighted average interest rate was 5.78% and 6.14% at December 31, 2008 and 2007, respectively. The weighted average interest rates were calculated using the Partnership’s annualized interest expense for each loan (derived using the same percentage as that in (1) above) divided by the Partnership’s share of total debt.

3.		At December 31, 2008, the 30 day LIBOR is .43625% and the DMBS is 3.28%.

4.		Loan Terms PP=Prepayment penalties applicable to loan, I=Interest only, P&I=Principal and Interest

F-27

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 6: Investment Level Debt (continued)

As of December 31, 2008 principal amounts of mortgage loans payable on wholly owned properties and consolidated partnerships are payable as follows:


Year Ending December 31,	(in 000’s)
2009	$	9,277
2010		15,609
2011		604
2012		646
2013		9,463
Thereafter		4,475

Total Principal Balance Outstanding	$	40,074
Premium (Discount)		(26	)

Principal Balance Outstanding, net of premium (discount)	$	40,048

The mortgage loans payable of wholly owned properties and consolidated partnerships are secured by real estate investments with an estimated fair value of $84.7 million.

Based on borrowing rates available to the Partnership at December 31, 2008 for loans with similar terms and average maturities, the Partnership’s mortgages on wholly owned properties and consolidated partnerships have an estimated fair value of approximately $40 million, and a carrying value of $40 million. Different assumptions or changes in future market conditions could significantly affect estimated fair value.

Note 7: Financing, Covenant, and Repayment Risks:

F-28

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 8: Significant Transactions

During 2008, the Partnership did not have any significant transactions in excess of $10 million.

Note 9: Concentration of Risk on Real Estate Investments

Concentration of risk on real estate investments represents the risk associated with investments that are concentrated in certain geographic regions and industries. The Partnership mitigates this risk by diversifying its investments in various regions and different types of real estate investments. Please refer to the Schedule of Investments for the Partnership’s diversification on the types of real estate investments.

At December 31, 2008, the Partnership had real estate investments located throughout the United States. The diversification of the Partnership’s holdings based on the estimated fair values and established NCREIF regions is as follows:


	Estimated
	Fair Value
Region	(in 000’s)		Region %
East North Central	$	11,485		4.93	%
Mideast		103,704		44.51	%
Mountain		1,408		0.60	%
Northeast		243		0.10	%
Pacific		29,774		12.78	%
Southeast		58,602		25.15	%
Southwest		27,731		11.90	%
West North Central		46		0.02	%


Total	$	232,993		100.00	%

The allocations above are based on (1) 100% of the estimated fair value of wholly-owned properties and consolidated joint ventures, and (2) the estimated fair value of the Partnership’s net equity in non-consolidated ventures and preferred equity investments.

F-29

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 10: Leasing Activity

The Partnership leases space to tenants under various operating lease agreements. These agreements, without giving effect to renewal options, have expiration dates ranging from January 1, 2009 to March 31, 2025. At December 31, 2008, the aggregate future minimum base rental payments under non-cancelable operating leases for wholly owned and consolidated joint venture properties by year are as follows:


Year Ending December 31,	(in 000’s)
2009	$	12,990
2010		11,774
2011		9,239
2012		6,833
2013		5,387
Thereafter		21,735


Total	$	67,958

Note 11: Commitments and Contingencies

In 1986, Prudential committed to fund up to $100 million to enable the Partnership to acquire real estate investments. Contributions to the Partnership under this commitment have been utilized for property acquisitions, and were to be returned to Prudential on an ongoing basis from contract owners’ net contributions and other available cash. The amount of the commitment has been reduced by $10 million for every $100 million in current value net assets of the Partnership. As of December 31, 2008, the cost basis of Prudential’s equity interest in the Partnership under this commitment (held through the Real Property Accounts) was $44.2 million. Prudential terminated this commitment on December 31, 2002.

The Partnership is subject to various legal proceedings and claims arising in the ordinary course of business. These matters are generally covered by insurance. In the opinion of Partnership’s management, the outcome of such matters will not have a significant effect on the financial position of the Partnership.

Note 12: Related Party Transactions

Pursuant to an investment management agreement, PIM charges the Partnership a daily investment management fee at an annual rate of 1.25% of the average daily gross asset valuation of the Partnership. For the years ended December 31, 2008, 2007 and 2006 management fees incurred by the Partnership were $3.4 million, $3.4 million and $3.1 million, for each of the years, respectively. The Partnership also reimburses PIM for certain administrative services rendered by PIM. The amounts incurred for the years ended December 31, 2008, 2007, and 2006 were $53,630, $53,630 and $146,930; respectively, and are classified as administrative expenses in the Consolidated Statements of Operations.

During the years ended December 31, 2008, 2007 and 2006, the Partnership made the following distributions to the Partners:


Year Ended December 31,	(000’s)
2008	$	—
2007	$	—
2006	$	6,000

F-30

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006

Note 13: Financial Highlights


	For The Twelve Months Ended December 31,
	2008			2007			2006			2005			2004
Per Share(Unit) Operating Performance:
Net Asset Value, beginning of period	$	36.55		$	33.87		$	29.59		$	26.15		$	24.66
Income From Investment Operations:
Net investment income, before management fee		2.15			2.37			2.07			1.67			1.44
Investment Management fee		(0.51	)		(0.50	)		(0.45	)		(0.40	)		(0.36	)
Net realized and unrealized gain (loss) on investments		(6.54	)		0.81			2.66			2.17			0.41

Net Increase in Net Assets Resulting from Operations		(4.90	)		2.68			4.28			3.44			1.49


Net Asset Value, end of period	$	31.65		$	36.55		$	33.87		$	29.59		$	26.15


Total Return, before Management Fee:		-12.14	%		9.44	%		16.03	%		14.76	%		7.61	%
Total Return, after Management Fee (a):		-13.40	%		7.91	%		14.46	%		13.15	%		6.06	%
Ratios/Supplemental Data:
Net Assets, end of period (in millions)	$	214		$	247		$	229		$	205		$	187
Ratios to average net assets for the year ended (b):
Total Portfolio Level Expenses		1.44	%		1.55	%		1.51	%		1.46	%		1.43	%
Net Investment Income, before Management Fee		5.87	%		6.76	%		6.58	%		4.89	%		5.76	%

(a)

Total Return, after management fee is calculated by geometrically linking quarterly returns which are calculated using the formula below:

Net Investment Income + Net Realized and Unrealized Gains/(Losses)
Beg. Net Asset Value + Time Weighted Contributions — Time Weighted Distributions



(b)		Average net assets are based on beginning of quarter net assets.

F-31

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE III — REAL ESTATE OWNED: PROPERTIES
DECEMBER 31, 2008



				Initial Costs				Costs
				to the Partnership				Capitalized			Gross Amount at Which Carried at Close of Year
	Encumbrances					Building &		Subsequent to					Building &		2008				Year of		Date
Description	at 12/31/08			Land		Improvements		Acquisition			Land		Improvements		Sales		Total		Construction		Acquired
Properties:
Office Building Lisle, IL	None				1,780,000		15,743,881		7,694,896			1,949,206		23,269,571				25,218,777		1985	Apr., 1988
Garden Apartments Atlanta, GA		8,746,000			3,631,212		11,168,904		5,010,802	(b)		4,937,369		14,873,549				19,810,918		1987	Apr., 1988
Retail Shopping Center Roswell, GA	None				9,454,622		21,513,677		6,925,296			11,135,593		26,758,002				37,893,595		1988	Jan., 1989
Garden Apartments Raleigh, NC		8,973,520	(c)		1,623,146		14,135,553		674,845			1,785,544		14,648,000				16,433,544		1995	Jun., 1995
Hotel Portland, OR		—			1,500,000		6,508,729		2,303,859			1,500,000		8,812,588				10,312,588		1989	Dec., 2003
Office Building Nashville, TN	None				1,797,000		6,588,451		3,675,530			1,855,339		10,205,642				12,060,981		1982	Oct., 1995
Office Building Beaverton, OR	None				816,415		9,897,307		1,799,263			845,887		11,667,098				12,512,985		1995	Dec., 1996
Office Complex Brentwood, TN	None				2,425,000		7,063,755		2,900,452			2,463,601		9,925,606				12,389,207		1987	Oct., 1997
Retail Shopping Center Hampton, VA		7,284,195			2,339,100		12,767,956		3,003,760			4,839,418		13,271,398				18,110,816		1998	May, 2001
Retail Shopping Center Westminster, MD		—			3,031,735		9,326,605		2,686,381			3,031,735		12,012,986				15,044,721		2005	June, 2006
Retail Shopping Center Ocean City, MD		15,044,112			1,517,099		8,495,039		13,258,876			1,517,099		21,753,915				23,271,014		1986	Nov., 2002
Garden Apartments Austin, TX		—			2,577,097		20,125,169		30,097			2,577,097		20,155,266				22,732,363		2007	May, 2007
Retail Shopping Center Dunn, NC	None				586,500		5,372,344		407,923			586,500		5,780,267				6,366,767		1984	Aug., 2007
Garden Apartments Charlotte, NC		—			1,350,000		12,184,750		115,188			1,350,000		12,299,938				13,649,938		1998	Sep., 2007

		40,047,827			34,428,926		160,892,120		50,487,168			40,374,388		205,433,826		—		245,808,214


	2008			2007			2006
(a) Balance at beginning of year		236,466,116			199,124,056			183,767,148
Additions:
Acquistions		—			42,218,143			12,358,340
Improvements, etc.		9,936,151			3,179,960			2,998,568
Reclass of other real estate investments		—			3,232,337			—
Deletions:
Sale		—			(11,288,380	)		—
Write off of uncollectible interest receivable		(594,053	)		—			—

Balance at end of year		245,808,214			236,466,116			199,124,056


(b) Net of $1,000,000 settlement received from lawsuit

(c) Net of an unamortized discount of $26,480

F-32

	10.2		Administrative Service Agreement among PIM, Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey, filed as Exhibit (10B) in Post-Effective Amendment No. 17 to Form S-1, Registration Statement No. 33-20083-01, filed April 14, 2004, and incorporated herein by reference.

	10.3		Partnership Agreement of The Prudential Variable Contract Real Property Partnership filed as Exhibit (10C) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20083-01, filed April 9, 1997, and incorporated herein by reference.

	11.		Not applicable.

	12.		Not applicable.

	16.		None.

	18.		None.

	22.		Not applicable.

	23.		None.

	24.		Powers of Attorney are filed herewith.

	31.1		Section 302 Certification of Chief Executive Officer.

	31.2		Section 302 Certification of Chief Accounting Officer.

	32.1		Section 906 Certification of Chief Executive Officer.

	32.2		Section 906 Certification of Chief Accounting Officer.


	Page

A. PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

Financial Statements:

Management’s Annual Report on Internal Control Over Financial Reporting		F-2

Report of Independent Registered Public Accounting Firm		F-3

Statements of Net Assets — December 31, 2008 and 2007		F-4

Statements of Operations — Years Ended December 31, 2008, 2007 and 2006		F-4

Statements of Changes in Net Assets — Years Ended December 31, 2008, 2007 and 2006		F-4

Notes to Financial Statements		F-5

B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

Financial Statements:

Report of Independent Registered Public Accounting Firm		F-12

Report of Independent Registered Public Accounting Firm on Financial Statement Schedules		F-13

Consolidated Statements of Assets and Liabilities — December 31, 2008 and 2007		F-14

Consolidated Statements of Operations — Years Ended December 31, 2008, 2007 and 2006		F-15

Consolidated Statements of Changes in Net Assets — Years Ended December 31, 2008, 2007 and 2006		F-16

Consolidated Statements of Cash Flows — Years Ended December 31, 2008, 2007 and 2006		F-17

Consolidated Schedule of Investments — December 31, 2008 and 2007		F-18

Notes to Financial Statements		F-20

Financial Statement Schedules:

For the period ended December 31, 2008

Schedule III — Real Estate Owned: Properties		F-32


			December 31, 2008					December 31, 2007
					Estimated					Estimated
	Face Amount		Cost		Fair Value			Cost		Fair Value
CASH AND CASH EQUIVALENTS — Percentage of Net Assets						13.0	%				7.4	%
Federal Home Loan Bank, 0 coupon bond, January, 2009	$	1,000,000	$	1,000,000	$	1,000,000		$	2,065,813	$	2,065,813
Federal Home Loan Bank, 0 coupon bond, January, 2009		4,446,932		4,446,932		4,446,932			4,998,313		4,998,313
Federal Home Loan Bank, 0 coupon bond, January, 2009		1,999,985		1,999,985		1,999,985			9,997,633		9,997,633
Federal Home Loan Bank, 0 coupon bond, February, 2009		18,831,977		18,831,977		18,831,977			—		—



Total Cash Equivalents				26,278,894		26,278,894			17,061,759		17,061,759

Cash				1,457,626		1,457,626			1,154,112		1,154,112


Total Cash and Cash Equivalents			$	27,736,520	$	27,736,520		$	18,215,871	$	18,215,871


Item		Page
No.		No.
	Cover Page
	Index	2
	Forward-Looking Statement Disclosure	3
PART I
1.	Business	4
1A.	Risk Factors	6
1B.	Unresolved Staff Comments	9
2.	Properties	9
3.	Legal Proceedings	9
4.	Submission of Matters to a Vote of Security Holders	9
PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
6.	Selected Financial Data	10
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
7A.	Quantitative and Qualitative Disclosures About Market Risk	20
8.	Financial Statements and Supplementary Data	21
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	21
9A.	Controls and Procedures	21
9B.	Other Information	21
PART III
10.	Directors, Executive Officers and Corporate Governance	22
11.	Executive Compensation	23
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	23
13.	Certain Relationships and Related Transactions, and Director Independence	23
14.	Principal Accountant Fees and Services	23
PART IV
15.	Exhibits and Financial Statement Schedules	24
	Exhibit Index	24
	Signatures	26