Pruco Life Variable Contract Real Property Account 10K 2007 Annual report

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, 2007

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

Commission file Number 033-08698

PRUCO LIFE INSURANCE COMPANY

in respect of

PRUCO LIFE VARIABLE CONTRACT
REAL PROPERTY ACCOUNT

(Exact name of registrant as specified in its charter)


Arizona		22-1944557
(State or other jurisdiction of		(IRS Employer Identification No.)
incorporation or organization)

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 90 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	Smaller reporting company o
	(Do not check if a smaller reporting company)

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 13, 2008, 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, 2007.

PRUCO LIFE VARIABLE CONTRACT
REAL PROPERTY ACCOUNT
(Registrant)

INDEX


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		6
2.	Properties		6
3.	Legal Proceedings		6
4.	Submission of Matters to a Vote of Security Holders		6

PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		7
6.	Selected Financial Data		7
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
7A.	Quantitative and Qualitative Disclosures About Market Risk		16
8.	Financial Statements and Supplementary Data		17
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		17
9A.	Controls and Procedures		17
9B.	Other Information		17

PART III
10.	Directors, Executive Officers and Corporate Governance		18
11.	Executive Compensation		19
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		19
13.	Certain Relationships and Related Transactions, and Director Independence		19
14.	Principal Accountant Fees and Services		19

PART IV
15.	Exhibits and Financial Statement Schedules		20
	Exhibit Index		20
	Signatures		22

Forward-Looking Statement Disclosure

Some 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, or the “Company”, or the Prudential 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; (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, valuation of business acquired or goodwill; (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; (11) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities, including in connection with our divestiture or winding down of businesses; (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; (14) effects of acquisitions, divestitures and restructurings, including possible difficulties in integrating and realizing the projected results of acquisitions; and (15) changes in statutory or accounting principles generally accepted in the United States of America, or “U.S. GAAP”, accounting principles, practices or policies. 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” 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 Variable Contract Real Property Account (the “Real Property Account” or the “Registrant”) was established on August 27, 1986. Pursuant to New Jersey law, the Real Property Account was established as a separate investment account of The Prudential Insurance Company of America (“Prudential”). 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 Prudential.

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 87%, or 321,410 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 94%, or 802 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 942,056 of which 85%, or 805,415 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 2007 averaged 76%.

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

Commercial property market fundamentals remained generally healthy in 2007 despite the ongoing turmoil in the credit market stemming from the collapse of the subprime mortgage market. Although transaction volume and leasing activity for the year as a whole remained robust, property sales and leasing slowed sharply over the second half of the year due to the still-deepening troubles in the capital markets and increasing uncertainty about the near-term trajectory of the U.S. economy. With the slowing economy likely to weigh on tenant demand in the near term and with liquidity throughout the debt markets still receding, the risks in the commercial real estate markets in 2008 are clearly weighted to the downside.

Debt Market

The commercial real estate debt markets could not escape the fallout from the subprime mortgage debacle that disrupted the financial markets over the second half of 2007. As mounting losses in securities backed by subprime loans undermined investor confidence, investor demand for commercial mortgage-backed securities (CMBS) and commercial real estate CDOs fell sharply, causing spreads to widen dramatically. Although new issuance of CMBS still managed to reach another record high domestically and globally, with more than $230 billion issued in the United States and about $315 billion issued worldwide, most of the volume involved deals that were completed in the first half of the year. Balance sheet lenders (e.g., insurance companies) and commercial banks remain active and continue to lend on a wide range of commercial real estate opportunities, including new development. However, with conduit lenders on the sidelines, there is simply less capital available than at this time last year.

Public Real Estate Securities

The U.S. REIT market struggled through a difficult and volatile year in 2007. After reaching an all-time high in February, equity REITs whipsawed investors over the rest of the year. On several occasions, it appeared as though the REIT market had finally found the bottom and was beginning to stabilize. The ensuing rallies, which were fueled mostly by investors covering short positions rather than building long positions, invariably lost momentum, however, and REITs resumed their downward slide. By the time 2007 mercifully came to a close, the FTSE NAREIT equity REIT index had delivered a dismal —15.7% total return. It marked the first time since 1999, the last year in which the REIT index posted negative total returns, that equity REITs have underperformed the S&P 500.

Property Markets

Office: The office sector continued to attract significant investor interest in 2007. According to Real Capital Analytics, or “RCA,” office transaction volume soared to more than $211 billion in 2007, an increase of nearly 55% over the volume in 2006. Office space market fundamentals in most markets remain balanced in part because high replacement costs have kept new supply very modest and office employment has continued to grow. Vacancy rates have been edging higher in suburban markets; but in most central business districts (CBDs), availability remains tight and large blocks of space often are scarce. According to Torto Wheaton Research, or “TWR,” the average office vacancy rate in its 56 market coverage universe fell from 12.6% at year-end 2006 to 12.5% in 4Q07, its lowest level since 2Q01.

Industrial: Investor demand for warehouse properties also remained fairly strong in 2007, despite a modest slowdown in leasing activity in 4Q07. According to RCA, industrial transaction volume totaled nearly $46 billion in 2007, a 7% increase over the total in 2006. As in other property types, however, transaction volumes declined over the final months in 2007. Industrial space market fundamentals remained mostly stable last year despite steady additions to supply. Deliveries of new space outpaced absorption in the fourth quarter, causing a modest increase in vacancy. According to Torto Wheaton Research, the average warehouse vacancy rate increased to 9.7% from 9.6% last year, but most markets remain at or near equilibrium today.

Residential: The sharp downturn in the housing market is having mixed effects on the apartment market. In cities and regions where housing was booming and where new development was most active, excess inventory of housing units has caused apartment vacancy rates to rise and rent growth to stall. But in most markets, home prices still have farther to fall before the gap between the costs of owning and renting begin to favor ownership. Although apartment transaction volume increased slightly last year, a handful of large transactions, including the privatization of one of the largest apartment REITs, Archstone-Smith, accounted for much of the total activity.

Retail: Concerns about the consumer continue to weigh on the near-term outlook for retail real estate. Retail sales growth has slowed noticeably since this time last year, and after backing out gas and food — non-discretionary expenses that have been growing much faster than “core” inflation — retail sales growth is much weaker even than headlines might suggest. Although retail transaction activity increased more than 34% in 2007, the volume and velocity of deals slowed sharply over the second half of the year as large transactions became very difficult to finance.

Hotel: The lodging sector appears to have been the least affected so far by the recent hesitation in business and consumer spending. Hotel occupancies were little changed in 2007. According to Smith Travel Research, the average occupancy rate across the U.S. hotel market was about 63% in 2007, roughly the same as in 2006. With stable occupancy and a 5.9% increase in average daily rates, revenue per available room (RevPAR) grew at a healthy 5.7% pace in 2007. Luxury hotels in urban markets continued to outperform all other segments, thanks in part to an undersupply of rooms in a few major markets and to strong demand from foreign travelers in gateway cities.


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.

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, 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.


Item 1B.		Unresolved Staff Comments

None.


Item 2.		Properties

Not Applicable.


Item 3.		Legal Proceedings

None.


Item 4.		Submission of Matters to a Vote of Security Holders

Contract owners participating in the Real Property Account have no voting rights with respect to the Real Property Account.

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, 2007, approximately 25,782 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,
	2007		2006		2005		2004		2003
Total Investment Income	$	31,700,063	$	28,623,487	$	28,644,271	$	29,076,163	$	27,060,494

Net Investment Income	$	12,663,580	$	11,161,728	$	9,219,171	$	7,799,606	$	10,613,409
Net Realized and Unrealized Gain (Loss) on Real Estate Investments		5,453,595		18,352,005		15,460,619		3,280,394		(6,467,364	)

Net Increase in Net Assets Resulting From Operations	$	18,117,175	$	29,513,733	$	24,679,790	$	11,080,000	$	4,146,045


FINANCIAL POSITION:

	Year Ended December 31,
	2007		2006		2005		2004		2003
Total Assets	$	290,166,898	$	272,136,819	$	246,015,115	$	240,575,611	$	235,627,852

Long Term Lease Obligation	$	—	$	—	$	—	$	—	$	—

Investment Level Debt	$	32,121,712	$	32,710,488	$	33,195,607	$	43,773,767	$	43,934,494

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 of 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, 2007, the Partnership’s liquid assets, consisting of cash and cash equivalents, were approximately $18.2 million, a decrease of approximately $15.2 million from approximately $33.4 million at December 31, 2006. The decrease was primarily due to the acquisition of the Partnership’s retail investment in Dunn, North Carolina and apartment investments in Charlotte, North Carolina and Austin, Texas, as described below. Partially offsetting this decrease was the sale of the Partnership’s industrial investment in Aurora, Colorado and retail investment in Kansas City, Kansas, as described below. In addition, sources of liquidity included net cash flow from property operations. The Partnership uses cash for its real estate investment activities and for its distributions to its partners. As of December 31, 2007, approximately 6% of the Partnership’s total assets consisted of cash and cash equivalents.

Acquisitions for the year ended December 31, 2007 included the purchase of three properties. In May, the Partnership invested approximately $22.7 million to acquire a 225-unit garden apartment property located in Austin, Texas. In August, the Partnership made a contribution of approximately $6.0 million to fund the purchase of a 193,235 square foot neighborhood/community shopping center located in Dunn, North Carolina. In September, the Partnership invested approximately $13.5 million to acquire a 140-unit garden apartment property located in Charlotte, North Carolina.

Dispositions for the year ended December 31, 2007 included the sale of two properties. On February 7, 2007 the Partnership’s industrial property located in Aurora, Colorado was sold, resulting in net proceeds of approximately $14.7 million to the Partnership. On June 29, 2007 the Partnership sold the retail investment in Kansas City, Kansas, which resulted in net proceeds of approximately $3.7 million after the repayment of debt.

The Partnership spent approximately $3.2 million on capital improvements to various existing properties during 2007. Approximately $1.5 million was associated with redevelopment costs at the retail property in Ocean City, Maryland, approximately $0.6 million funded the renovation of the apartment property in Atlanta, Georgia, approximately $0.3 million was associated with capital improvements at the office properties in Nashville, Tennessee and approximately $0.3 million was associated with leasing costs at the office property in Beaverton, Oregon. The remaining $0.5 million was associated with minor capital improvements and transaction costs related to leasing expenses of various other properties.

(b) Results of Operations

The following is a comparison of the Partnership’s results of operations for the periods ended December 31, 2007 and 2006.

Net Investment Income Overview

The Partnership’s net investment income for the year ended December 31, 2007 was approximately $12.7 million, an increase of approximately $1.5 million from approximately $11.2 million from the prior year. The office, apartment, retail and hotel sector investments posted increases of approximately $0.5 million, $1.0 million, $0.9 and $0.1 million, respectively, from the prior year. Partially offsetting this increase was a decrease in net investment income in the industrial sector of approximately $0.7 million. Other net investment income (loss) increased approximately $0.3 million during the year ended December 31, 2007 from the prior year. The components of this net investment income are discussed below by property type sector.

Valuation Overview

The Partnership recorded a net realized gain of approximately $0.7 million for the year ended December 31, 2007, compared to a net realized gain of approximately $0.1 million for the prior year. The Partnership recorded a net unrealized gain of approximately $4.8 million for the year ended December 31, 2007, compared to a net unrealized gain of approximately $18.3 million for the prior year. The Partnership recorded a net realized and unrealized gain of approximately $5.5 million for the year ended December 31, 2007, compared to a net realized and unrealized gain of approximately $18.4 million for the prior year. The net realized and unrealized gain of approximately $5.5 million for the year ended December 31, 2007 was attributable to valuation gains in the office, apartment and hotel sectors. Partially offsetting these gains for the year ended December 31, 2007 was a loss recorded in the retail sector. The components of these valuation gains and/or losses are discussed below by property type sector.

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, 2007 and 2006.


	Twelve Months Ended December 31,
	2007			2006
*Net Investment Income:*
Office properties	$	3,945,096		$	3,407,082
Apartment properties		2,119,681			1,059,134
Retail properties		6,998,954			6,128,671
Industrial property		49,279			773,668
Hotel property		1,343,200			1,288,716
Land		—			(36,582	)
Other (including interest income, investment mgt fee, etc.)		(1,792,630	)		(1,458,961	)

Total Net Investment Income	$	12,663,580		$	11,161,728

*Net Realized Gain (Loss) on Real Estate Investments:*
Apartment properties		—			70,689
Retail properties		323,649			—
Land		—			(2,919	)
Industrial property		345,832			—

Total Net Realized Gain (Loss) on Real Estate Investments		669,481			67,770

*Net Unrealized Gain (Loss) on Real Estate Investments:*
Office properties		1,967,086			2,514,348
Apartment properties		3,123,154			3,588,692
Retail properties		(2,716,050	)		6,265,806
Industrial property		—			2,132,560
Hotel property		2,409,924			3,782,829

Total Net Unrealized Gain (Loss) on Real Estate Investments		4,784,114			18,284,235

Net Realized and Unrealized Gain (Loss) on Real Estate Investments	$	5,453,595		$	18,352,005

OFFICE PROPERTIES


	Net Investment		Net Investment		Unrealized		Unrealized
	Income/(Loss)		Income/(Loss)		Gain/(Loss)		Gain/(Loss)			Occupancy		Occupancy
Year Ended December 31,	2007		2006		2007		2006			2007		2006
Property
Lisle, IL	$	650,916	$	376,939	$	804,870	$	(644,356	)		67%		38%
Brentwood, TN		1,153,443		1,084,255		9,918		69,832			100%		100%
Oakbrook Terrace, IL (1)		—		1,323		—		—			N/A		N/A
Beaverton, OR		1,093,305		940,713		990,238		1,888,872			88%		79%
Brentwood, TN		1,047,432		1,003,852		162,060		1,200,000			100%		100%

	$	3,945,096	$	3,407,082	$	1,967,086	$	2,514,348


(1)		The Oakbrook Terrace, Illinois office property was sold on June 8, 2005 but certain post-closing adjustments were recognized in the year ended December 31, 2006.

Net Investment Income

Net investment income for the Partnership’s office properties was approximately $3.9 million for the year ended December 31, 2007, an increase of approximately $0.5 million from the prior year. The increase was primarily due to increased occupancy at the office properties in Lisle, Illinois and Beaverton, Oregon and stabilized occupancy and increased rents at the office properties in Brentwood, Tennessee.

Unrealized Gain/(Loss)

The office properties owned by the Partnership recorded a net unrealized gain of approximately $2.0 million during the year ended December 31, 2007, compared to a net unrealized gain of approximately $2.5 million for the prior year. The net unrealized gain of approximately $2.0 million for the year ended December 31, 2007 was primarily due to increased occupancy at the office properties in Lisle, Illinois and Beaverton, Oregon and continued improving market fundamentals at the office properties in Brentwood, Tennessee.

APARTMENT PROPERTIES


									Realized /
	Net Investment		Net Investment			Unrealized			Unrealized
	Income/(Loss)		Income/(Loss)			Gain/(Loss)			Gain/(Loss)		Occupancy		Occupancy
Year Ended December 31,	2007		2006			2007			2006		2007		2006

Property
Atlanta, GA	$	447,290	$	505,136		$	(530,277	)	$	2,507,734		92%		90%
Raleigh, NC		613,122		589,289			(687,270	)		1,080,958		94%		92%
Jacksonville, FL (1)		17,342		(25,126	)		—			70,520		N/A		N/A
Gresham/Salem, OR (2)		—		(10,165	)		—			169		N/A		N/A
Austin, TX (3)		860,746		—			4,376,151			—		92%		N/A
Charlotte, NC(4)		181,181		—			(35,450	)		—		87%		N/A

	$	2,119,681	$	1,059,134		$	3,123,154		$	3,659,381


	(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 and 2006.

	(2)		The Gresham, Oregon and Salem, Oregon apartment properties were sold on August 10, 2005 and March 10, 2005, respectively, but certain post-closing adjustments were recognized during the year ended December 31, 2006.

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

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

Net Investment Income

Net investment income for the Partnership’s apartment properties was $2.1 million for the year ended December 31, 2007, an increase of approximately $1.0 million from the prior year. The increase in net investment income for the year ended December 31, 2007 was primarily due to the acquisition of the apartment properties in Austin, Texas and Charlotte, North Carolina on May 8, 2007 and September 6, 2007, respectively.

Total Realized and Unrealized Gain/(Loss)

The apartment properties owned by the Partnership recorded a net unrealized gain of approximately $3.1 million for the year ended December 31, 2007, compared to a net realized and unrealized gain of approximately $3.7 million for the prior year. The net unrealized gain for the year ended December 31, 2007 was primarily due to the acquisition of the apartment property in Austin, Texas that resulted in approximately $4.4 million in valuation gains. Partially offsetting this gain were unrealized losses of approximately $0.7 million at the apartment property in Raleigh, North Carolina, due to continued soft market conditions and $0.5 million at the apartment property in Atlanta, Georgia, due to capital improvements expended in connection with the renovation of the property.

RETAIL PROPERTIES


						Realized/
	Net Investment		Net Investment			Unrealized			Unrealized
	Income/(Loss)		Income/(Loss)			Gain/(Loss)			Gain/(Loss)			Occupancy		Occupancy
Year Ended December 31,	2007		2006			2007			2006			2007		2006

Property
Roswell, GA	$	2,072,194	$	2,096,974		$	(3,807,895	)	$	1,071,439			82%		93%
Kansas City, KS; MO (1)		158,664		(34,810	)		323,649			(164,205	)		N/A		90%
Hampton, VA		1,299,715		1,307,686			492,521			(107,277	)		100%		100%
Ocean City, MD		702,556		746,520			(122,583	)		79,619			67%		92%
Westminster, MD (2)		1,576,148		908,788			69,981			5,386,230			100%		98%
Dunn, NC (3)		215,118		—			651,926			—			90%		N/A
CARS Preferred Equity (4)		974,559		979,151			—			—			N/A		N/A
Westminster, MD (5)		—		124,362			—			—			N/A		N/A

	$	6,998,954	$	6,128,671		$	(2,392,401	)	$	6,265,806


(1)		Net investment income (loss) for the year ended December 31, 2007 reflects partial period results for the remaining retail property in Kansas City, Kansas that was sold on June 29, 2007. Net investment income for the year ended December 31, 2006 reflects results for all four retail properties located in Kansas City, Kansas and Kansas City, Missouri, prior to the sale of three out of the four centers on May 15, 2006.

(2)		Net investment income for the year ended December 31, 2006 reflects partial period results for the Westminster, Maryland retail property that was acquired on June 13, 2006.

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

(4)		Net investment income for the year ended December 31, 2006 reflects partial period results for the second funding of the Partnership’s preferred equity investment, which occurred on February 14, 2006.

(5)		Mortgage Loan Receivable (mortgage paid in full on March 3, 2006).

Net Investment Income

Net investment income for the Partnership’s retail properties was approximately $7.0 million for the year ended December 31, 2007, an increase of approximately $0.9 million from the prior year. The increase was primarily due to the additional net investment income generated by the Westminster, Maryland and Dunn, North Carolina retail properties that were acquired on June 13, 2006, and August 17, 2007, respectively, and reduced expenses at the Kansas City, Kansas retail property prior to the sale.

Total Realized and Unrealized Gain/(Loss)

The retail properties owned by the Partnership recorded a net realized and unrealized loss of approximately $2.4 million for the year ended December 31, 2007, compared to a net realized and unrealized gain of approximately $6.3 million for the prior year. The net realized and unrealized loss for the year ended December 31, 2007 was primarily due to the $3.8 million loss recorded at the retail property in Roswell, Georgia, which reflects revised offers received in connection with the continued sale marketing efforts of the property. In addition, redevelopment and leasing expenses amounted to approximately $0.1 million in unrealized losses for the retail property in Ocean City, Maryland. Partially offsetting these unrealized losses were (a) unrealized gains at the retail property in Dunn, North Carolina subsequent to its acquisition on August 17, 2007 at a discount to replacement cost, which resulted in approximately $0.7 million in valuation gains; (b) unrealized gains of approximately $0.5 million at the retail property in Hampton, Virginia due to continued investor demand; (c) realized gains of $0.3 million due to the disposition of the retail property in Kansas City, Kansas on June 29, 2007; and (d) unrealized gains of $0.1 million at the retail property in Westminster, Maryland due to improving market fundamentals.

INDUSTRIAL PROPERTY

Net Investment

Realized

Unrealized

Income/(Loss)

Gain/(Loss)

Occupancy

Year Ended December 31,

2007

2006

2007

2006

2007

2006

Property

Aurora, CO (1)

49,279

773,668

345,832

2,132,560

N/A


(1)		Net investment income (loss) for the year ended December 31, 2007 reflects partial period results for the Aurora, Colorado industrial property that was sold on February 7, 2007.

Net Investment Income

Net investment income for the Partnership’s industrial property was nominal for the year ended December 31, 2007, reflecting a decrease of approximately $0.7 million from the prior year. The decrease was primarily due to the loss of rent and certain post closing adjustments at the property as a result of the sale on February 7, 2007.

Total Realized and Unrealized Gain/(Loss)

The industrial property owned by the Partnership recorded a realized gain of approximately $0.3 million for the year ended December 31, 2007, compared to an unrealized gain of approximately $2.1 million for the prior year. The realized gain for the year ended December 31, 2007 was primarily due to the February 7, 2007 sale at a price above the previously appraised value.

HOTEL PROPERTY

Net Investment

Unrealized

Income/(Loss)

Gain/(Loss)

Occupancy

Year Ended December 31,

2007

2006

2007

2006

2007

2006

Property

Lake Oswego, OR

1,343,200

1,288,716

2,409,924

3,782,829

Net Investment Income

Net investment income for the Partnership’s hotel property was approximately $1.3 million for the year ended December 31, 2007, relatively unchanged from the prior year.

Unrealized Gain/(Loss)

The hotel property owned by the Partnership recorded an unrealized gain of approximately $2.4 million for the year ended December 31, 2007, compared to an unrealized gain of approximately $3.8 million for the prior year. The unrealized gain for the year ended December 31, 2007 reflects continued improving property fundamentals as a result of improvements and renovations performed at the property.

Other

Other net investment income (loss) increased approximately $0.3 million during the year ended December 31, 2007 from the prior year. Other net investment income includes interest income from short-term investments and investment management fees, and portfolio level expenses.

c) Inflation

The Partnership’s leases with a majority of 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 audited Consolidated Financial Statements of the Account and the Partnership that are most dependent on the application of estimates and assumptions.

Valuation of Investments

Real Estate Investments— Real estate investments are shown at estimated market value in accordance with the terms of the Partnership’s contracts. 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. Market 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., or “PIM”, which is an indirectly owned subsidiary of Prudential Financial, Inc., is responsible for assuring that the valuation process provides independent and reasonable property market value estimates. An unaffiliated third party appraisal firm 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. Unless a property is currently held for sale, the market value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments.

Unconsolidated real estate partnerships are valued at the Partnership’s equity in net assets as reflected in the partnership’s 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 underlying entity.

The Partnership periodically enters into forward contracts to acquire, for a fixed price, real estate investments to be constructed in accordance with predetermined plans and specifications or that achieve a certain level of leasing. Where conditions precedent to funding have been met by its development partner, and the Partnership’s commitment to fund is firm, the amount of any unrealized gain or loss is recognized based upon the difference between the estimated investment’s market value as described above and the Partnership’s funding obligation. The funding obligation and related assets are recorded in the consolidated financial statements.

Land and development properties held for future development are carried at acquisition cost including soft costs incurred prior to development.

As described above, the estimated market value of real estate and real estate related assets is determined through an appraisal process. These estimated market values may vary significantly from the prices at which the real estate investments would sell, because market prices of real estate investments can only be determined by negotiation between a willing buyer and seller and could be material to the consolidated financial statements. Although the estimated market values represent subjective estimates, management believes that these estimated market values are reasonable approximations of market prices and that the aggregate estimated value of investments in real estate is fairly presented as of December 31, 2007 and 2006.

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 20.4% of its investment portfolio as of December 31, 2007, 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, 2007:

Estimated Market Value

Average

Maturity

(in $ millions)

Interest Rate

Cash and Cash equivalents

0-3 months

18.2

4.64

The table below discloses the Partnership’s debt as of December 31, 2007. 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.


Debt (in $ thousands),																						Estimated
including current portion	2008			2009			2010			2011			2012			Thereafter			Total			Fair Value
Weighted Average Fixed Interest Rate		5.35	%		5.74	%		6.75	%		6.75	%		6.75	%		6.75	%		6.14	%
Fixed Rate	$	16,090		$	9,277		$	565		$	604		$	646		$	4,940		$	32,122		$	32,262
Variable Rate		—			—			—			—			—			—			—			—

Total Mortgage Loans Payable	$	16,090		$	9,277		$	565		$	604		$	646		$	4,940		$	32,122		$	32,262

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 Securities and Exchange Commission, or “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, 2007. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2007, our disclosure controls and procedures were effective. There has been no change in our internal control over financial reporting, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), during the quarter ended December 31, 2007, 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 and Vice Chairman— President of Individual Life Insurance, Prudential since 1998. Age 56.

HELEN M. GALT,Director— Senior Vice President and Company Actuary, Prudential since 2005; prior to 2005: Company Actuary, Prudential. Age 61.

BERNARD J. JACOB,Director and Treasurer— Senior Vice President and Treasurer, Prudential. Age 52.

DAVID R. ODENATH, JR.,Director— President, Prudential Annuities since 2003; prior to 2003: President, Prudential Investments. Age 52.

SCOTT D. KAPLAN,Director, Chief Executive Officer and President— Vice President, Finance, Prudential since 2006. Age 43.

TUCKER I. MARR,Chief Financial Officer and Chief Accounting Officer —Vice President, Financial Reporting. Age 52.

THOMAS C. CASTANO,Chief Legal Officer and Secretary— Vice President and Corporate Counsel, Variable Products, Prudential Law Department. Age 60.

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

SCOTT G. SLEYSTER,Director— Senior Vice President Prudential since 1999. Age 48.

PHILLIP J. GRIGG,Senior Vice President and Chief Actuary— Vice President, Actuary, Prudential since 1987. Age 61.

KENT D. SLUYTER,Senior Vice President— Vice President and Chief Actuary of Individual Life Insurance, Prudential since 2002. Age 48

KENNETH S. SOLON,Senior Vice President— Vice President, Customer Service, Prudential since 1999. Age 47

The business address of all directors and officers of Pruco Life is 213 Washington Street, Newark, New Jersey 07102-2992. Pruco Life 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 Prudential Financial’s 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.

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 7 of Notes to Financial Statements of the Partnership on page F–22.

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 Accountant 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 the Independent Registered Public Accounting Firm” in the definitive proxy statement of Prudential Financial, Inc. for the Annual Meeting of Shareholders to be held on May 13, 2008, to be filed with the SEC pursuant to Regulation 14A within 120 days after the year ended December 31, 2007.

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 filed by Exhibit 1.A.(6)(a) in Form S-6, Registration No. 333-07451, filed July 2,1996, and incorporated herein by reference.

	3.2		Amended By-Laws of Pruco Life Insurance Company, filed by Exhibit to Form 10-Q, Registration No. 033-37587, filed August 15, 1997, and incorporated herein by reference.

	3.3		Resolution of the Board of Directors establishing the Pruco Life Variable Contract Real Property Account, filed as Exhibit (3C) in Post-Effective Amendment No. 3 to Form S-1, Registration Statement No. 33-86780, filed April 9, 1997, and incorporated herein by reference.

	4.1		Variable Life Insurance Contract, filed as Exhibit 1.A.(5)(a) to Post-Effective Amendment No. 24 to Form S-6, Registration Statement No. 2-80513, filed April 30, 1997, and incorporated herein by reference.

	4.2		Revised Variable Appreciable Life Insurance Contract with fixed death benefit, filed as Exhibit 1.A.(5)(f) in Post-Effective Amendment No. 26 to Form S-6, Registration Statement No. 2-89558, filed April 29, 1997, and incorporated herein by reference.

	4.3		Revised Variable Appreciable Life Insurance Contract with variable death benefit, filed as Exhibit 1.A.(5)(g) in Post-Effective Amendment No. 26 to Form S-6, Registration Statement No. 2-89558, filed April 29, 1997, and incorporated herein by reference.

	4.4		Single Premium Variable Annuity Contract, filed as Exhibit (4C) in Post-Effective Amendment No. 3 to Form S-1, Registration Statement No. 33-86780, filed April 9, 1997, and incorporated herein by reference.

	4.5		Flexible Premium Variable Life Insurance Contract, filed as Exhibit (D) in Post-Effective Amendment No. 3 to Form S-1, Registration Statement No. 33-86780, filed April 9, 1997, and incorporated herein by reference.

	9.		None.

	10.1		Investment Management Agreement between Prudential Investment Management, Inc. and The Prudential 10.2 Variable Contract Real Property Partnership, filed as Exhibit (10A) 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.

	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.

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
in respect of
Pruco Life Variable
Contract Real Property Account
(Registrant)


Date: March 21, 2008	By:	/s/ Scott D. Kaplan
		Scott D. Kaplan
		President and Director (Principal Executive Officer)


Date: March 21, 2008	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 21, 2008

* Bernard J. Jacob Bernard J. Jacob	Director	March 21, 2008

* Helen M. Galt Helen M. Galt	Director	March 21, 2008

* David R. Odenath, Jr. David R. Odenath, Jr.	Director	March 21, 2008

* Scott G. Sleyster Scott G. Sleyster	Director	March 21, 2008



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

PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
(Registrant)

INDEX


	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, 2007 and 2006		F-4
Statements of Operations – Years Ended December 31, 2007, 2006 and 2005		F-4
Statements of Changes in Net Assets – Years Ended December 31, 2007, 2006 and 2005		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-10
Report of Independent Registered Public Accounting Firm on Financial Statement Schedules		F-11
Consolidated Statements of Assets and Liabilities – December 31, 2007 and 2006		F-12
Consolidated Statements of Operations – Years Ended December 31, 2007, 2006 and 2005		F-13
Consolidated Statements of Changes in Net Assets – Years Ended December 31, 2007, 2006 and 2005		F-14
Consolidated Statements of Cash Flows – Years Ended December 31, 2007, 2006 and 2005		F-15
Consolidated Schedule of Investments – December 31, 2007 and 2006		F-16
Notes to Financial Statements		F-18
Financial Statement Schedules:
For the period ended December 31, 2007
Schedule III – Real Estate Owned: Properties		F-27
Schedule IV– Mortgage Loans on Real Estate		F-28

All other schedules are omitted because they are not applicable, or because the required information is included in the financial statements or notes thereto.

F-1

Management’s Annual Report on Internal Control Over Financial Reporting

Management of Pruco Life (together with its consolidated subsidiaries, the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Management conducted an assessment of the effectiveness, as of December 31, 2007, of the Company’s internal control over financial reporting, based on the framework established inInternal Control — Integrated FrameworkIssued 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, 2007.

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 21, 2008

F-2

Report of Independent Registered Public Accounting Firm

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

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 Variable Contract Real Property Account at December 31, 2007 and 2006, 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, 2007, 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. 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, which included confirmation of shares at December 31, 2007 with The Prudential Variable Contract Real Property Partnership, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
March 21, 2008

F-3

FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS
December 31, 2007 and 2006


	2007		2006
ASSETS
Investment in The Prudential Variable Contract Real Property Partnership	$	136,056,513	$	126,078,281

Net Assets	$	136,056,513	$	126,078,281

NET ASSETS, representing:
Equity of contract owners	$	93,366,283	$	90,093,068
Equity of Pruco Life Insurance Company		42,690,230		35,985,213

	$	136,056,513	$	126,078,281

Units outstanding		42,556,464		42,285,911

Portfolio shares held		3,722,570		3,722,570
Portfolio net asset value per share	$	36.55	$	33.87

STATEMENTS OF OPERATIONS
For the years ended December 31, 2007, 2006 and 2005


	2007		2006		2005
INVESTMENT INCOME
Net investment income from Partnership operations	$	6,974,604	$	6,150,138	$	5,082,863

EXPENSES
Charges to contract owners for assuming mortality risk and expense risk and for administration		562,528		520,933		476,464

NET INVESTMENT INCOME		6,412,076		5,629,205		4,606,399

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments in Partnership		2,634,904		10,075,522		5,096,823
Net realized gain (loss) on sale of investments allocated from the Partnership		368,724		37,341		3,428,662

NET GAIN (LOSS) ON INVESTMENTS		3,003,628		10,112,863		8,525,485

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	9,415,704	$	15,742,068	$	13,131,884

STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2007, 2006 and 2005


	2007			2006			2005
OPERATIONS
Net investment income	$	6,412,076		$	5,629,205		$	4,606,399
Net change in unrealized gain (loss) on investments in Partnership		2,634,904			10,075,522			5,096,823
Net realized gain (loss) on sale of investments allocated from the Partnership		368,724			37,341			3,428,662

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		9,415,704			15,742,068			13,131,884

CAPITAL TRANSACTIONS
Net contributions (withdrawals) by contract owners		(3,184,369	)		(2,886,469	)		(2,333,786	)
Net contributions (withdrawals) by Pruco Life Insurance Company		3,746,897			22,175			(548,374	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS		562,528			(2,864,294	)		(2,882,160	)

TOTAL INCREASE (DECREASE) IN NET ASSETS		9,978,232			12,877,774			10,249,724
NET ASSETS
Beginning of period		126,078,281			113,200,507			102,950,783

End of period	$	136,056,513		$	126,078,281		$	113,200,507

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

F-4

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007

Note 1: General

Pruco Life Variable Contract Real Property Account (the “Account”) was established on August 27, 1986 and commenced business September 5, 1986. Pursuant to Arizona law, the Account was established as a separate investment account of Pruco Life Insurance Company (“Pruco Life”), a wholly-owned subsidiary of The Prudential Insurance Company of America (“Prudential”), an indirect wholly-owned subsidiary of Prudential Financial, Inc. (“PFI”) and is registered under the Securities Act of 1933, as amended. The assets of the Account are segregated from Pruco Life’s other assets. The Account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by Pruco Life. 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 Prudential Variable Contract Real Property Account and the Pruco Life of New Jersey 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 staff of the U.S. Securities and Exchange Commission, or “SEC”, issued Staff Accounting Bulletin, or “SAB”, No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” The interpretations in this SAB express the staff’s views regarding the process of quantifying financial statement misstatements. Specifically, the SEC staff believes that registrants must quantify the impact on current period financial statements of correcting all misstatements, including both those occurring in the current period and the effect of reversing those that have accumulated from prior periods. This SAB must be applied beginning with the first fiscal year ending after November 15, 2006, with early adoption encouraged. Since the Account’s method for quantifying financial statement misstatements already considers those occurring in the current period and the effect of reversing those that have accumulated from prior periods, the adoption of SAB No. 108 should have no effect on the financial position and result of operations of the Account.

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 expects to adopt this guidance effective January 1, 2008. The Account’s adoption of this guidance is not expected to have a material effect on the Account’s financial position and results of operations.

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 expects to adopt this guidance effective January 1, 2008. The Account’s adoption of this guidance is not expected to have a material effect on the Account’s financial position and results of operations.

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, 2007 and 2006 the Account’s interest in the Partnership was 55.1% or 3,722,570 shares. Properties owned by the Partnership are illiquid and based on estimated fair value as discussed in the notes to the Partnership’s audited financial statements.

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.

F-5

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007

D. Equity of Pruco Life Insurance Company

Pruco Life maintains a position in the Account for property liquidity purposes, including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not have an effect on the contract owners’ accounts or the related unit values.

Note 3: Taxes

Pruco Life 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 Withdrawals by Contract Owners

Net contract owner withdrawals for the real estate investment option in Pruco Life’s variable insurance and variable annuity products for the years ended December 31, 2007, 2006 and 2005 were as follows:


2007:	VAL			VLI			SPVA			SPVL			TOTAL

Contract Owner Net Payments:	$	3,210,271		$	268,761		$	0		$	(1,657	)	$	3,477,375
Policy Loans:		(1,648,153	)		(88,326	)		0			(60,989	)		(1,797,468	)
Policy Loan Repayments and Interest:		1,803,872			64,388			0			139,306			2,007,566
Surrenders, Withdrawals, and Death Benefits:		(3,079,182	)		(184,388	)		(2,252	)		(222,916	)		(3,488,738	)
Net Transfers From/To Other Subaccounts or Fixed Rate Option:		(665,722	)		(37,227	)		0			(69,088	)		(772,037	)
Administrative and Other Charges:		(2,393,570	)		(193,051	)		0			(24,446	)		(2,611,067	)

Net Withdrawals by Contract Owners	$	(2,772,484	)	$	(169,843	)	$	(2,252	)	$	(239,790	)	$	(3,184,369	)


2006:	VAL			VLI			SPVA			SPVL			TOTAL

Contract Owner Net Payments:	$	3,284,594		$	283,122		$	(9	)	$	(5,308	)	$	3,562,399
Policy Loans:		(1,463,946	)		(84,509	)		0			(52,833	)		(1,601,288	)
Policy Loan Repayments and Interest:		1,545,182			127,997			0			149,233			1,822,412
Surrenders, Withdrawals, and Death Benefits:		(3,153,786	)		(303,089	)		(57,246	)		(403,139	)		(3,917,260	)
Net Transfers From/To Other Subaccounts or Fixed Rate Option:		(102,416	)		(37,252	)		(3,408	)		50,193			(92,883	)
Administrative and Other Charges:		(2,450,224	)		(185,612	)		0			(24,013	)		(2,659,849	)

Net Withdrawals by Contract Owners	$	(2,340,596	)	$	(199,343	)	$	(60,663	)	$	(285,867	)	$	(2,886,469	)


2005:	VAL			VLI			SPVA			SPVL			TOTAL

Contract Owner Net Payments:	$	3,479,291		$	280,783		$	(3	)	$	2,705		$	3,757,366
Policy Loans:		(1,420,648	)		(114,443	)		0			(51,315	)		(1,586,406	)
Policy Loan Repayments and Interest:		1,617,102			135,706			0			136,594			1,889,402
Surrenders, Withdrawals, and Death Benefits:		(2,962,740	)		(208,936	)		(119,238	)		(443,597	)		(3,734,511	)
Net Transfers From/To Other Subaccounts or Fixed Rate Option:		(7,738	)		(15,129	)		(4,039	)		16,985			(9,921	)
Administrative and Other Charges:		(2,450,927	)		(175,561	)		0			(23,228	)		(2,649,716	)

Net Withdrawals by Contract Owners	$	(1,745,660	)	$	(97,580	)	$	(123,280	)	$	(367,266	)	$	(2,333,786	)

F-6

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007

Note 5: Unit Activity

Transactions in units for the years ended December 31, 2007, 2006 and 2005 were as follows:


2007:			VAL	VLI	SPVA	SPVL

Company Contributions:	1,324,544	Contract Owner Contributions:	1,652,356	100,921	0	67,179
Company Redemptions:	(30,373)	Contract Owner Redemptions:	(2,535,482)	(152,306)	(816)	(155,468)

2006:			VAL	VLI	SPVA	SPVL

Company Contributions:	1,461,314	Contract Owner Contributions:	1,874,121	127,794	0	82,726
Company Redemptions:	(1,336,821)	Contract Owner Redemptions:	(2,700,887)	(194,930)	(25,052)	(198,202)

2005:			VAL	VLI	SPVA	SPVL

Company Contributions:	1,403,519	Contract Owner Contributions:	2,144,323	142,550	1,350	92,006
Company Redemptions:	(1,435,211)	Contract Owner Redemptions:	(2,841,794)	(178,595)	(56,870)	(260,949)

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, 2007, 2006 and 2005 were as follows:


	December 31,2007		December 31,2006			December 31,2005

Purchases:	$	0	$	0		$	0
Sales:	$	0	$	(3,385,228	)	$	(3,358,625	)

F-7

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007

Note 7: Financial Highlights

Pruco Life 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 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 ended

For the year ended

Units

Unit Value

Net Assets

Investment

Expense Ratio**

Total Return***

(000’s)

Lowest- Highest

(000’s)

Income Ratio*

Lowest-Highest

December 31, 2007

29,035*

$2.80966 to $3.39532

93,366

5.28

0.35% to 1.25%

6.58% to 7.54%

December 31, 2006

30,059*

$2.63621 to $3.15740

90,093

5.10

0.35% to 1.25%

13.05% to 14.06%

December 31, 2005

31,094*

$2.33181 to $2.76817

81,886

4.64

0.35% to 1.25%

11.76% to 12.76%

December 31, 2004

32,051*

$2.08645 to $2.45484

74,999

4.15

0.35% to 1.25%

4.74% to 5.68%

December 31, 2003

33,530*

$1.99197 to $2.32279

74,407

5.77

0.35% to 1.25%

0.98% to 1.89%

The table above reflects information for units held by contract owners. Pruco Life also maintains a position in the Real Property Account, to provide for property acquisitions and capital expenditure funding needs. Pruco Life held 13,521,139, 12,226,968, 12,102,475, 12,134,074 and 11,781,786 units representing $42,690,230, $35,985,213, $31,315,232, $27,951,903 and $25,741,655 of net assets as of December 31, 2007, 2006, 2005, 2004 and 2003, respectively. Charges for mortality risk, expense risk and administrative expenses are used by Pruco Life to purchase additional units in its account resulting in no impact to 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. 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 VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2007

C. Cost of Insurance and Other Related Charges

Contract owner contributions are subject to certain deductions prior to being invested in the Real Property 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 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 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 the surrender of certain variable life insurance contracts to compensate Pruco Life 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 contracts 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 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

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, 2007 and 2006, 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, 2007 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 22, 2008

F-10

Report of Independent Registered Public Accounting Firm on
Financial Statement Schedules

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

Our audits of the consolidated financial statements referred to in our report dated February 22, 2008 appearing in this Annual Report on Form 10-K also included an audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP
New York, New York
February 22, 2008

F-11

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


	December 31, 2007		December 31, 2006
ASSETS
REAL ESTATE INVESTMENTS – At estimated market value:
Real estate and improvements (cost: 12/31/2007 – $233,233,775; 12/31/2006 – $199,124,056)	$	251,161,712	$	214,444,568
Real estate partnerships and preferred equity investments (cost:
12/31/2007 – $14,523,934; 12/31/2006 – $22,334,823)		14,523,934		17,941,039
Other real estate investments (cost: 12/31/2007 – $3,232,341; 12/31/2006 – $2,857,851)		3,232,341		2,857,851

Total real estate investments	$	268,917,987	$	235,243,458
CASH AND CASH EQUIVALENTS		18,215,871		33,399,532
OTHER ASSETS, NET		3,033,040		3,493,829

Total assets	$	290,166,898	$	272,136,819


LIABILITIES & PARTNERS’ EQUITY
INVESTMENT LEVEL DEBT	$	32,121,712	$	32,710,488
ACCOUNTS PAYABLE AND ACCRUED EXPENSES		2,184,812		3,091,930
DUE TO AFFILIATES		901,371		789,889
OTHER LIABILITIES		920,454		876,487
MINORITY INTEREST		7,004,790		5,751,441

Total liabilities		43,133,139		43,220,235

COMMITMENTS AND CONTINGENCIES
PARTNERS’ EQUITY		247,033,759		228,916,584

Total liabilities and partners’ equity	$	290,166,898	$	272,136,819

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

SHARE VALUE AT END OF PERIOD	$	36.55	$	33.87

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

F-12

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended December 31,
	2007			2006		2005
INVESTMENT INCOME:
Revenue from real estate and improvements	$	28,720,477		$	25,460,860	$	27,087,813
Equity in income of real estate partnerships		1,136,936			962,208		252,618
Interest and equity income on mortgage and other loans receivable		—			125,510		281,134
Income from other real estate investments		374,491			219,564		—
Interest on short-term investments		1,468,159			1,855,345		1,022,706

Total investment income		31,700,063			28,623,487		28,644,271

INVESTMENT EXPENSES:
Operating		6,954,999			6,355,543		7,420,509
Investment management fee		3,380,090			3,075,176		2,845,519
Real estate taxes		2,466,704			2,069,169		2,382,626
Administrative		4,056,557			3,923,413		4,438,482
Interest expense		2,019,937			1,814,686		2,173,789
Minority interest		158,196			223,772		164,175

Total investment expenses		19,036,483			17,461,759		19,425,100

NET INVESTMENT INCOME		12,663,580			11,161,728		9,219,171

REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:
Net proceeds from real estate investments sold		18,353,122			67,770		55,054,217
Less: Cost of real estate investments sold		19,063,985			—		47,015,948
Realization of prior years’ unrealized gain (loss) on real estate investments sold		(1,380,344	)		—		(655,341	)
Minority interest in realized gain (loss) on real estate investments sold		—			—		2,474,788

NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD		669,481			67,770		6,218,822

Change in unrealized gain (loss) on real estate investments		5,620,864			20,294,808		10,475,654
Less: Minority interest in unrealized gain (loss) on real estate investments		836,750			2,010,573		1,233,857

Net unrealized gain (loss) on real estate investments		4,784,114			18,284,235		9,241,797

NET REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS		5,453,595			18,352,005		15,460,619

INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	18,117,175		$	29,513,733	$	24,679,790

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

F-13

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS


	Year Ended December 31,
	2007		2006			2005
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income	$	12,663,580	$	11,161,728		$	9,219,171
Net gain (loss) realized on real estate investments sold		669,481		67,770			6,218,822
Net unrealized gain (loss) from real estate investments		4,784,114		18,284,235			9,241,797

Increase (decrease) in net assets resulting from operations		18,117,175		29,513,733			24,679,790

INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS:
Withdrawals (2007-0; 2006-182,671; and 2005-198,677 shares, respectively)		—		(6,000,000	)		(6,000,000	)

Increase (decrease) in net assets resulting from capital transactions		—		(6,000,000	)		(6,000,000	)

INCREASE (DECREASE) IN NET ASSETS		18,117,175		23,513,733			18,679,790
NET ASSETS – Beginning of period		228,916,584		205,402,851			186,723,061

NET ASSETS – End of period	$	247,033,759	$	228,916,584		$	205,402,851

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

F-14

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2007			2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations	$	18,117,175		$	29,513,733		$	24,679,790
Adjustments to reconcile net increase in net assets to net cash from operating activities
Net realized and unrealized loss (gain)		(5,453,595	)		(18,352,005	)		(15,460,619	)
Amortization of deferred financing costs		193,594			—			(34,620	)
Distributions in excess of (less than) equity in income of real estate partnerships operations		35,287			(87,396	)		(148,668	)
Minority interest in consolidated partnerships		158,196			223,772			164,175
Bad debt expense		101,185			(239,380	)		240,176
(Increase) decrease in accrued interest included in other real estate investments		(374,491	)		(219,564	)		—
(Increase) decrease in:
Other assets		166,010			37,951			2,815,778
Increase (decrease) in:
Accounts payable and accrued expenses		(907,118	)		546,878			(550,954	)
Due to affiliates		111,482			28,963			39,507
Other liabilities		43,967			404,151			(150,564	)

Net cash flows from (used in) operating activities		12,191,692			11,857,103			11,594,001

CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from real estate investments sold		18,353,122			67,770			41,676,816
Acquisition of real estate and improvements		(42,218,143	)		(12,159,443	)		—
Additions to real estate and improvements		(3,179,960	)		(3,197,470	)		(6,198,211	)
Contributions to real estate partnerships		—			(7,289,487	)		(7,142,900	)
Return of investment in real estate partnerships		—			3,620,455			—
Origination of mortgage loan receivable		—			—			(2,945,709	)
Collection of mortgage loan receivable		—			4,277,769			—
Origination of other real estate investments		—			(2,638,287	)		—

Net cash flows from (used in) investing activities		(27,044,981	)		(17,318,693	)		25,389,996

CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		—			(6,000,000	)		(6,000,000	)
Principal payments on investment level debt		(588,776	)		(485,119	)		(853,525	)
Contributions to minority interest partners		294,143			—			—
Distributions to minority interest partners		(35,739	)		(121,244	)		(2,220,169	)

Net cash flows from (used in) financing activities		(330,372	)		(6,606,363	)		(9,073,694	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		(15,183,661	)		(12,067,953	)		27,910,303
CASH AND CASH EQUIVALENTS – Beginning of period		33,399,532			45,467,485			17,557,182

CASH AND CASH EQUIVALENTS – End of period	$	18,215,871		$	33,399,532		$	45,467,485

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

F-15

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED SCHEDULE OF INVESTMENTS


				2007 Total Rentable
				Square Feet			December 31,
				Unless Otherwise			2007				2006
	December 31, 2007			Indicated					Estimated				Estimated
Property Name	Ownership	City, State		(Unaudited)			Cost		Market Value		Cost		Market Value

OFFICES

750 Warrenville	WO	Lisle, IL			103,193		$	24,512,521	$	11,500,000	$	24,517,391	$	10,700,000

Summit @ Cornell Oaks	WO	Beaverton , OR			72,109			12,401,252		13,800,000		12,091,490		12,500,000

Westpark	WO	Nashville, TN			97,199			11,323,885		13,100,000		11,033,804		12,800,000

Financial Plaza	WO	Brentwood, TN			98,049			12,371,092		13,700,000		12,333,152		13,500,000



		Offices % as of 12/31/07			21	%		60,608,750		52,100,000		59,975,837		49,500,000


APARTMENTS

Brookwood Apartments	WO	Atlanta, GA		240 Units				19,548,293		20,200,000		18,918,016		20,100,000

Dunhill Trace Apartments	WO	Raleigh, NC		250 Units				16,375,037		19,800,000		16,287,767		20,400,000

Broadstone Crossing	WO	Austin, TX		225 Units				22,723,849		27,100,000		—		—

The Reserve At Waterford Lakes	WO	Charlotte, NC		140 Units				13,535,450		13,500,000		—		—



		Apartments % as of 12/31/07			33	%		72,182,629		80,600,000		35,205,783		40,500,000

RETAIL

King’s Market	WO	Rosewell, GA			314,358			37,883,222		24,700,000		37,775,326		28,400,000

Hampton Towne Center	WO	Hampton, VA			174,540			18,050,090		26,500,000		18,042,611		26,000,000

White Marlin Mall	CJV	Ocean City, MD			186,016			17,016,325		23,900,000		15,538,779		22,900,000

Westminster Crossing East, LLC	CJV	Westminster, MD			89,890			12,405,500		17,861,712		12,358,340		17,744,568

Kansas City Portfolio	EJV	Kansas City, KS;MO			487,660			140,911		140,911		7,816,531		3,422,747

CARS Preferred Equity	PE	Various			N/A			14,383,023		14,383,023		14,518,292		14,518,292

Harnett Crossing	CJV	Dunn, NC			193,235			5,958,844		7,200,000		—		—



		Retail % as of 12/31/07			47	%		105,837,915		114,685,646		106,049,879		112,985,607

INDUSTRIAL

Smith Road	WO	Aurora, CO			277,930			��		—		11,286,560		14,300,000



		Industrial % as of 12/31/07			0	%		—		—		11,286,560		14,300,000

HOTEL

Portland Crown Plaza	CJV	Portland, OR		161 Rooms				9,128,415		18,300,000		8,940,820		15,100,000



		Hotel % as of 12/31/07			7	%		9,128,415		18,300,000		8,940,820		15,100,000

OTHER REAL ESTATE INVESTMENTS

Westminster East	Eloan	Westminster, MD						3,232,341		3,232,341		2,857,851		2,857,851


		Other Real Estate
			Investments % as of 12/31/07		1	%		3,232,341		3,232,341		2,857,851		2,857,851

Total Real Estate Investments as a Percentage of Net Assets as of 12/31/07					109	%	$	250,990,050	$	268,917,987	$	224,316,730	$	235,243,458

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
Eloan – Mezzanine loan accounted for under the equity method

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

F-16

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
CONSOLIDATED SCHEDULE OF INVESTMENTS


			December 31, 2007					December 31, 2006
					Estimated					Estimated
	Face Amount		Cost		Market Value			Cost		Market Value

CASH AND CASH EQUIVALENTS – Percentage of Net Assets						7.4	%				14.6	%
Federal Home Loan Bank, 0 coupon bond, January, 2008	$	2,065,813	$	2,065,813	$	2,065,813		$	7,245,028	$	7,245,028
Federal Home Loan Bank, 0 coupon bond, January, 2008		4,998,313		4,998,313		4,998,313			24,914,167		24,914,167
Federal Home Loan Bank, 0 coupon bond, January, 2008		9,997,633		9,997,633		9,997,633			—		—

Total Cash Equivalents				17,061,759		17,061,759			32,159,195		32,159,195
Cash				1,154,112		1,154,112			1,240,337		1,240,337

Total Cash and Cash Equivalents			$	18,215,871	$	18,215,871		$	33,399,532	$	33,399,532

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

F-17

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005


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 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 estimated market 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 market 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 share value of the Partnership’s net assets. Share value is calculated by dividing the estimated market 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 9.


Note 2:	Summary of Significant Accounting Policies

A:		Basis of Presentation– The accompanying consolidated financial statements of the Partnership have been presented on the market 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-18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005


Note 2:	Summary of Significant Accounting Policies (continued)

Real Estate Investments– Real estate investments are shown at estimated market value in accordance with the terms of the Partnership’s contracts. 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. Market 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 is responsible to assure that the valuation process provides independent and reasonable property market value estimates. An unaffiliated third party appraisal firm 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. Unless a property is currently held for sale, the market value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments.

Unconsolidated real estate partnerships are 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 underlying entity.

Land and development properties held for future development is carried at acquisition cost including soft costs incurred prior to development.

The Partnership periodically enters into forward contracts to acquire, for a fixed price, real estate investments to be constructed in accordance with predetermined plans and specifications or those achieve a certain level of leasing. Where conditions precedent to funding have been met by its development partners, and the Partnership’s commitment to fund is firm, the amount of any unrealized gain or loss is recognized based upon the difference between the estimated investment’s market value as described above and the Partnership’s funding obligation. The funding obligation and related assets are recorded in the consolidated financial statements. As of December 31, 2007 and 2006, no such funding obligation existed.

As described above, the estimated market value of real estate and real estate related assets is determined through an appraisal process. These estimated market 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 consolidated financial statements. Although the estimated market values represent subjective estimates, management believes these estimated market values are reasonable approximations of market prices and the aggregate estimated value of investments in real estate is fairly presented as of December 31, 2007 and 2006.

D:		Other Real Estate Investments– Other real estate investments include short-term notes receivable, which are valued at the amount due and approximate market value.

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 market value.

F:		Other Assets –Restricted cash of $186,736 and $167,311 was maintained by the wholly owned and consolidated properties at December 31, 2007 and 2006, 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 $39,764 and $211,058 at December 31, 2007 and 2006, respectively.

F-19

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005


Note 2:	Summary of Significant Accounting Policies (continued)

G:		Investment Level Debt– Investment level debt is stated at the principal amount of the obligations outstanding. 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.

H:		Deferred Financing Costs– Included in Other Assets are deferred financing costs amounting to $36,072 and $309,894 which are net of accumulated amortization of $273,822 and $80,227 as of December 31, 2007 and 2006, respectively, and which are being amortized over the term of the related obligation.

I:		Revenue Recognition– Revenue from real estate is recognized when earned in accordance with the terms of the respective leases. 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 is stated at estimated market value, net income is not reduced by depreciation or amortization expense.

J:		Equity in Income of Real Estate Partnerships– Equity in income from real estate partnership operations 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 wholly owned real estate, partnership net income is 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.

K:		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.

L:		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 FIN46 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 the final determination from the FASB in order to evaluate the extent in which, if any, its equity investments may need to be consolidated as a result of this FIN 46-R.

In September 2006, the staff of the U.S. Securities and Exchange Commission, or “SEC”, issued Staff Accounting Bulletin, or “SAB”, No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” The interpretations in this SAB express the staff’s views regarding the process of quantifying financial statement misstatements. Specifically, the SEC staff believes that registrants must quantify the impact on current period financial statements of correcting all misstatements, including both those occurring in the current period and the effect of reversing those that have accumulated from prior periods. This SAB must be applied beginning with the first fiscal year ending after November 15, 2006, with early adoption encouraged. Since the Partnership’s method for quantifying financial statement misstatements already considers those occurring in the current period and the effect of reversing those that have accumulated from prior periods, the adoption of SAB No. 108 had no effect on the financial position and result of operations of the Partnership.

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.

F-20

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005


Note 2:	Summary of Significant Accounting Policies (continued)

New Accounting Pronouncements (continued)

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.

SFAS No. 157 and SFAS No. 159 are effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership plans to adopt this guidance effective January 1, 2008. The Partnership is currently assessing the impact of SFAS 157 and SFAS 159 on the Partnership’s consolidated financial position and results of operations.

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 AICPA Audit and Accounting Guide Investment Companies (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 final Staff Position indefinitely deferring the effective date and prohibiting early adoption of SOP 07-1 while addressing implementation issues.


Note 3:	Disclosure of Supplemental Cash Flow Information and Non-Cash Investing and Financing Activity

Cash paid for interest during the years ended December 31, 2007, 2006, and 2005, was $1,746,115, $1,806,320, and $2,324,397, respectively.

During the fourth quarter of 2005, a minority interest partner bought out the Account’s investment in a consolidated real estate partnership resulting in net proceeds of $15.9 million. This transaction resulted in the assumption of a mortgage loan by the partner of approximately $10.0 million and a reduction of the partner’s minority interest of $3.7 million.

F-21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005


Note 4:	Real Estate Partnerships and Preferred Equity Investments

Real estate partnerships and preferred equity investments are valued at the Partnership’s equity in net assets as reflected by the partnerships’ financial statements with properties valued as indicated in Note 2C above. The partnerships’ combined financial position and results of operations are summarized as follows (in 000’s):


	December 31,
	2007		2006
Partnership Assets and Liabilities
Real estate at estimated market value	$	14,383	$	22,018
Other assets		452		453

Total assets		14,835		22,471

Investment level debt		—		2,978
Other liabilities		242		253

Total liabilities		242		3,231

Net assets	$	14,593	$	19,240

Partnership’s share of net assets	$	14,524	$	17,941


	Year Ended December 31,
	2007		2006		2005
Partnership Operations
Rental revenue	$	1,598	$	3,364	$	4,115
Other revenue		—		—		—

Total revenue		1,598		3,364		4,115

Real estate expenses and taxes		235		1,017		2,326
Interest Expense		134		1,396		1,477

Total Expenses		369		2,413		3,803

Net Investment Income	$	1,229	$	951	$	312

Partnership’s equity in income of real estate partnerships	$	1,137	$	962	$	253

F-22

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005


Note 5:	Investment Level Debt

Debt includes mortgage loans payable as summarized below (in 000’s):


	As of 12/31/07				As of 12/31/06		As of 12/31/07
			(Unaudited)
			Partnership’s
	100% Principal		Share of		100% Principal
	Balance		Principal Balance		Balance		Interest			Maturity
	Outstanding		Outstanding(1)		Outstanding		Rate(2)			Date		Terms (3)
Mortgages of Wholly Owned Properties & Consolidated Partnerships
Hampton, VA	$	7,778	$	7,778	$	8,239		6.75	%		2018	PP, P&I
Ocean City, MD		6,847		4,991		6,973		7.24	%		2008	PP, P&I
Raleigh, NC		8,750		8,750		8,750		3.09	%		2008	PP, I
Atlanta, GA		8,747		8,747		8,748		4.90	%		2009	PP, P&I

Total	$	32,122	$	30,266	$	32,710

Mortgages on Equity Partnerships	��
Kansas City, MO — Cherokee Hill	$	—	$	—	$	2,978		—			—	PP, P&I

Total	$	—	$	—	$	2,978


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, 2007. It does not represent the Partnership’s legal obligation.

2.		The Partnership’s weighted average interest rate was 6.14% at December 31, 2007 and 2006, 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.		Loan Terms PP=Prepayment penalties applicable to loan, I=Interest only, P&I=Principal and Interest

For debt maturing in 2008, it is anticipated that repayment will be provided by operating cash flow, deposits from clients, real estate investment sales, or refinancing debt.

As of December 31, 2007 mortgage loans payable on wholly owned properties and consolidated partnerships are payable as follows:


Year Ending December 31,	(in 000’s)
2008	$	16,090
2009		9,277
2010		565
2011		604
2012		646
Thereafter		4,940

Total	$	32,122

The mortgage loans payable of wholly owned properties and consolidated partnerships are secured by real estate investments with an estimated market value of $90 million.

Based on borrowing rates available to the Partnership at December 31, 2007 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 $32 million, and a carrying value of $32 million. Different assumptions or changes in future market conditions could significantly affect estimated fair value.

F-23

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005

NOTE 6: Concentration of Risk on Real Estate Investments

At December 31, 2007, the Partnership had real estate investments located throughout the United States. The diversification of the Partnership’s holdings based on the estimated market values and established NCREIF regions is as follows:


	Estimated
	Market Value
Region	(in 000’s)		Region %
East North Central	$	13,871		5.16	%
Mideast		115,050		42.78	%
Mountain		1,719		0.64	%
Northeast		296		0.11	%
Pacific		33,290		12.38	%
Southeast		74,078		27.54	%
Southwest		30,434		11.32	%
West North Central		180		0.07	%

Total	$	268,918		100.00	%

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

Note 7: 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 2008 to 2025. At December 31, 2007, 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)
2008	$	13,825
2009		11,123
2010		9,831
2011		7,574
2012		5,309
Thereafter		21,082

Total	$	68,744

F-24

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005

Note 8: 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, 2007, 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 9: Other 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, 2007, 2006, and 2005 management fees incurred by the Partnership were $3.4 million, $3.1 million, and $2.8 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, 2007, 2006, and 2005 were $53,630, $146,930; and $123,630; respectively, and are classified as administrative expenses in the Consolidated Statements of Operations.

During the years ended December 31, 2007, 2006, and 2005, the Partnership made the following distributions to the Partners:


Year Ended December 31,		(000’s)
2007		$ —
2006		$6,000
2005		$6,000

F-25

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2007, 2006, and 2005

Note 10: Financial Highlights


	2007			2006			2005			2004			2003
Per Share(Unit) Operating Performance:
Net Asset Value, beginning of period	$	33.87		$	29.59		$	26.15		$	24.66		$	24.11
Income From Investment Operations:
Investment income, before management fee		2.37			2.07			1.67			1.44			1.71
Investment Management fee		(0.50	)		(0.45	)		(0.40	)		(0.36	)		(0.33	)
Net realized and unrealized gain (loss) on investments		0.81			2.66			2.17			0.41			(0.83	)

Net Increase in Net Assets Resulting from Operations		2.68			4.28			3.44			1.49			0.55

Net Asset Value, end of period	$	36.55		$	33.87		$	29.59		$	26.15		$	24.66

Total Return, before Management Fee (a):		9.44	%		16.03	%		14.76	%		7.61	%		3.63	%
Ratios/Supplemental Data:
Net Assets, end of period (in millions)	$	247		$	229		$	205		$	187		$	182
Ratios to average net assets for the year ended (b):
Total Portfolio Level Expenses		1.55	%		1.51	%		1.46	%		1.43	%		1.35	%
Investment Income before Management Fee		6.76	%		6.58	%		4.89	%		5.76	%		7.12	%


(a)		Total Return, before 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-26

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

SCHEDULE III — REAL ESTATE OWNED: PROPERTIES
DECEMBER 31, 2007



							Costs			Gross Amount at Which
			Initial Costs to the Partnership				Capitalized				Carried at Close of Year
	Encumbrances				Building &		Subsequent to					Building &		2007					Year of		Date
Description	at 12/31/07		Land		Improvements		Acquisition			Land		Improvements		Sales			Total		Construction		Acquired

Properties:
Office Building Lisle, IL		None		1,780,000		15,743,881		6,988,640			1,949,206		22,563,315					24,512,521		1985	Apr., 1988
Garden Apartments Atlanta, GA		8,747,000		3,631,212		11,168,904		4,748,177	(b)		4,937,369		14,610,924					19,548,293		1987	Apr., 1988
Retail Shopping Center Roswell, GA		None		9,454,622		21,513,677		6,914,923			11,135,593		26,747,629					37,883,222		1988	Jan., 1989
Garden Apartments Raleigh, NC		8,750,000		1,623,146		14,135,553		616,338			1,773,244		14,601,793					16,375,037		1995	Jun., 1995
Hotel Portland, OR		—		1,500,000		6,508,729		1,119,686			1,500,000		7,628,415					9,128,415		1989	Dec., 2003
Office Building Nashville, TN		None		1,797,000		6,588,451		2,938,434			1,855,339		9,468,546					11,323,885		1982	Oct., 1995
Office Building Beaverton, OR		None		816,415		9,897,307		1,687,530			845,887		11,555,365					12,401,252		1995	Dec., 1996
Industrial Building Aurora, CO		None		1,338,175		7,202,411		2,747,794			1,415,159		9,873,221		(11,288,380	)		—		1997	Sep., 1997
Office Complex Brentwood, TN		None		2,425,000		7,063,755		2,882,337			2,463,601		9,907,491					12,371,092		1987	Oct., 1997
Retail Shopping Center Hampton, VA		7,777,948		2,339,100		12,767,956		2,943,034			4,839,418		13,210,672					18,050,090		1998	May, 2001
Retail Shopping Center Westminster, MD		—		3,031,735		9,326,605		47,160			3,031,735		9,373,765					12,405,500		2005	June, 2006
Retail Shopping Center Ocean City, MD		6,846,764		1,517,099		8,495,039		7,004,187			1,517,099		15,499,226					17,016,325		1986	Nov., 2002
Garden Apartments Austin, TX		—		2,577,097		20,125,169		21,583			2,577,097		20,146,752					22,723,849		2007	May, 2007
Retail Shopping Center Dunn, NC		None		586,500		5,372,344		—			586,500		5,372,344					5,958,844		1984	Aug., 2007
Garden Apartments Charlotte, NC		—		1,350,000		12,184,750		700			1,350,000		12,185,450					13,535,450		1998	Sep., 2007

		32,121,712		35,767,101		168,094,531		40,660,523			41,777,247		202,744,908		(11,288,380	)		233,233,775


		2007			2006		2005
(a)	Balance at beginning of year		199,124,056			183,767,148		224,584,885
	Additions:
	Acquistions		42,195,860			12,358,340		—
	Improvements, etc.		3,202,239			2,998,568		6,187,973
	Conversions from JV to WO							—
	Deletions:
	Sale		(11,288,380	)		—		(47,005,710	)

	Balance at end of year		233,233,775			199,124,056		183,767,148

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

F-27

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE IV — MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2007

Principal amount

of Loans

Face

Subject to

Periodic

Amount

Carrying Amount

Delinquent

Interest

Final Maturity

payment

Prior

Principal or

Description

Rate

Date

Terms

Liens

Mortgages

Interest

Loans Receivables:

Westminster, MD

10.00

3/3/2006

I only

—


	2007		2006
Balance at beginning of year		—	4,277,769
Additions during the period:
New Mortgage loans
Other – drawdown on loan
Other – accrued interest
Deductions during the period:
Cost of real estate sold
Foreclosures
Cost of mortgages sold		—	(4,277,769	)
Amortization of premium
Other – accrued interest payment

Balance at end of year

* I is Interest only

F-28

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	7th grade Avg

Pruco Life Variable Contract Real Property Account 10-K2007 FY Annual report

Content analysis