Pruco Life Variable Contract Real Property Account 10-Q 2006 Q1 Quarterly report

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

FORM 10-Q

(Mark One)

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the quarterly period ended March 31, 2006

OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission file number 33-86780

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 incorporation or organization)	(IRS Employer Identification No.)
213 Washington Street, Newark, New Jersey 07102-2992
(Address of principal executive offices) (Zip Code)
(973) 802-6000
(Registrant's Telephone Number, including area code)

     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     NO

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

Large accelerated filer        Accelerated filer        Non-accelerated filer  

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

PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
(Registrant)

INDEX

			Page
Forward – Looking Statement Disclosure			3
Part I – Financial Information
Item 1.	Financial Statements (Unaudited)
A.	PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
		Statement of Net Assets – March 31, 2006 and December 31, 2005	4
		Statement of Operations – Three Months Ended March 31, 2006 and 2005	4
		Statement of Changes in Net Assets – Three Months Ended March 31, 2006 and 2005	4
		Notes to the Financial Statements of the Real Property Account	5
B.	THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
		Consolidated Statements of Assets and Liabilities – March 31, 2006 and December 31, 2005	8
		Consolidated Statements of Operations – Three Months Ended March 31, 2006 and 2005	9
		Consolidated Statements of Changes in Net Assets – Three Months Ended March 31, 2006 and 2005	10
		Consolidated Statements of Cash Flows – Three Months Ended March 31, 2006 and 2005	11
		Consolidated Schedules of Investments – March 31, 2006 and December 31, 2005	12
		Notes to the Financial Statements of the Partnership	14
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23
Item 4.	Controls and Procedures		25
Part II – Other Information
Item 1A.	Risk Factors		25
Item 4.	Submission of Matters to a Vote of Security Holders		25
Item 6.	Exhibits		25
Signatures			26

2

Forward-Looking Statement Disclosure

Certain of the statements included in this Quarterly Report on Form 10-Q, 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 The Prudential Insurance Company of America (“the Company”) or the Prudential Variable Contract Real Property Account (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 stock, 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 assumption we use in pricing our products, establishing liabilities and reserves or for other purposes or goodwill; (5) changes in our assumptions related to deferred policy acquisition costs and valuation of business acquired; (6) changes in our claims-paying or credit ratings; (7) investment losses and defaults; (8) competition in our product lines and for personnel; (9) changes in tax law; (10) economic, political, currency and other risks relating to our international operations; (11) fluctuations in foreign currency exchange rates and foreign securities markets; (12) regulatory or legislative changes; (13) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities, including in connection with our divestiture or winding down of businesses; (14) 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; (15) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; (16) effects of acquisitions, divestitures and restructurings, including possible difficulties in integrating and realizing the projected results of acquisitions; (17) changes in statutory or U.S. GAAP accounting principles, practices or policies; (18) changes in assumptions for retirement expense; (19) Prudential Financial, Inc.’s primary reliance, as a holding company, on dividends or distributions from its subsidiaries to meet debt payment obligations and continue share repurchase, and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends or distributions; and (20) risks due to the lack of legal separation between our Financial Services Businesses and our Closed Block Business. 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.

3

FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENT OF NET ASSETS
March 31, 2006 and December 31, 2005

	March 31, 2006 (unaudited)			December 31, 2005
ASSETS
Investment in The Prudential Variable Contract
Real Property Partnership	$	118,332,528		$	113,200,507
Net Assets	$	118,332,528		$	113,200,507
NET ASSETS, representing:
Equity of contract owners	$	84,907,761		$	81,885,275
Equity of Pruco Life Insurance Company		33,424,767			31,315,232
	$	118,332,528		$	113,200,507
Units outstanding		43,265,033			43,195,848
Portfolio shares held		3,825,616			3,825,616
Portfolio net asset value per share	$	30.93		$	29.59
STATEMENT OF OPERATIONS
For the three months ended March 31, 2006 and 2005
	1/1/2006-3/31/2006 (unaudited)			1/1/2005-3/31/2005 (unaudited)
INVESTMENT INCOME
Net investment income from Partnership operations	$	1,488,804		$	1,095,982
EXPENSES
Charges to contract owners for assuming mortality risk and
expense risk and for administration		125,253			113,448
NET INVESTMENT INCOME		1,363,551			982,534
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments from Partnership		3,644,825			1,510,205
Net realized gain (loss) on sale of investments from Partnership		(1,609	)		(109,300	)
NET GAIN (LOSS) ON INVESTMENTS		3,643,216			1,400,905
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS	$	5,006,767		$	2,383,439
STATEMENT OF CHANGES IN NET ASSETS
For the three months ended March 31, 2006 and 2005
	1/1/2006-3/31/2006 (unaudited)			1/1/2005-3/31/2005 (unaudited)
OPERATIONS
Net investment income	$	1,363,551		$	982,534
Net change in unrealized gain (loss) on investments in Partnership		3,644,825			1,510,205
Net realized gain (loss) on sale of investments in Partnership		(1,609	)		(109,300	)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS		5,006,767			2,383,439
CAPITAL TRANSACTIONS
Net withdrawals by contract owners		(546,439	)		(554,710	)
Net contributions (withdrawals) by Pruco Life Insurance Company		671,693			668,158
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS		125,254			113,448
TOTAL INCREASE (DECREASE) IN NET ASSETS		5,132,021			2,496,887
NET ASSETS
Beginning of period		113,200,507			102,950,783
End of period	$	118,332,528		$	105,447,670

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

4

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
March 31, 2006
(Unaudited)

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”), a wholly-owned subsidiary of Prudential Financial, Inc. (“PFI”) and is registered under the Securities Act of 1933. 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

A.      Basis of Accounting

The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.

The interim financial data as of March 31, 2006 and for the three months ended March 31, 2006 and 2005 is unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods.

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 March 31, 2006 and December 31, 2005 the Account’s interest in the Partnership was 55.1% or 3,825,616 shares.

C.      Income Recognition

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

D.      Equity of Pruco Life Insurance Company

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

Note 3: 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, SPVL, respectively. Mortality risk is that life insurance contract owners may not live as long as estimated or annuitants may live longer than estimated and expense risk is 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.

5

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.

C.      Cost of Insurance and Other Related Charges

Contract owner contributions are subject to certain deductions prior to being invested in the Account. The deductions for VAL and VLI are (1) state premium taxes; (2) sales charges, not to exceed 5% for VAL and 9% for VLI, which are deducted in order to compensate Pruco Life 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 also subject to monthly charges for the costs of administering the contract to compensate Pruco Life the guaranteed minimum death benefit risk. 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 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. A 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. A charge is assessed through the redemption of units.

Note 4: 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.

6

Note 5:  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 three months ended March 31, 2006 and 2005, were as follows:

	March 31,
		2006		2005
	(Unaudited)
VAL	$	423,698	$	352,062
VLI		40,620		6,413
SPVA		20,853		0
SPVL		61,268		196,235
TOTAL	$	546,439	$	554,710

Note 6:  Partnership Distributions

As of March 31, 2006, the Partnership had made no current year distributions. For the year ended December 31, 2005, the Partnership made distributions of $6 million. The Pruco Life Account’s share of these distributions was $3.4 million.

Note 7:  Unit Information

Outstanding units and unit values at March 31, 2006 and December 31, 2005 were as follows:

	March 31, 2006	December 31, 2005
	(Unaudited)
Units Outstanding:	43,265,033	43,195,848
Unit Value:	2.42996 to 2.89112	2.33181 to 2.76817

Note 8:  Financial Highlights

The range of total return for the three months ended March 31, 2006 and 2005 was as follows:

	Three months ended March 31,
		2006		2005
	(Unaudited)
Total Return	4.21% to 4.44%		2.11% to 2.34%

7

THEPRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

	March 31, 2006 (Unaudited)			December 31, 2005
ASSETS
REAL ESTATE INVESTMENTS - At estimated market value:
Real estate and improvements
(cost: 03/31/2006 - $183,929,849; 12/31/2005 - $183,767,148)	$	186,913,113		$	178,628,645
Real estate partnerships and preferred equity investments (cost:
03/31/2006 - $26,135,424; 12/31/2005 - $18,578,394)			21,850,185			14,348,816
Mortgage and other loans receivable (cost: 03/31/2006 - $0;
12/31/2005 - $4,277,769)			—			4,277,769
Total real estate investments		208,763,298			197,255,230
CASH AND CASH EQUIVALENTS			45,001,015			45,467,485
OTHER ASSETS, NET			2,851,582			3,292,400
Total assets	$	256,615,895		$	246,015,115
LIABILITIES & PARTNERS' EQUITY
INVESTMENT LEVEL DEBT	$		33,060,157	$		33,195,607
ACCOUNTS PAYABLE AND ACCRUED EXPENSES			2,384,991			2,545,052
DUE TO AFFILIATES			753,224			760,926
OTHER LIABILITIES			607,360			472,336
MINORITY INTEREST			5,095,238			3,638,343
Total liabilities			41,900,970			40,612,264
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY		214,714,925			205,402,851
Total liabilities and partners' equity	$	256,615,895		$	246,015,115
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD			6,941,631			6,941,631
SHARE VALUE AT END OF PERIOD	$		30.93	$		29.59

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

8

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months Ended March 31,
	2006			2005
INVESTMENT INCOME:
Revenue from real estate and improvements	$	5,858,589		$	6,739,666
Equity in income of real estate partnerships		391,255			122,750
Interest and equity income on mortgage
and other loans receivable		125,510			59,170
Interest on short-term investments		463,767			99,222
Total investment income		6,839,121			7,020,808
INVESTMENT EXPENSES:
Operating		1,485,963			1,941,949
Investment management fee		739,816			673,537
Real estate taxes		526,103			650,195
Administrative		932,771			1,177,736
Interest expense		448,686			586,024
Minority interest		4,340			3,573
Total investment expenses		4,137,679			5,033,014
NET INVESTMENT INCOME		2,701,442			1,987,794
REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
INVESTMENTS:
Net proceeds from real estate investments sold		(2,919	)		4,550,103
Less: Cost of real estate investments sold		—			4,101,778
Realization of prior years' unrealized
gain (loss) on real estate investments sold		—			646,563
NET GAIN (LOSS) REALIZED ON REAL ESTATE INVESTMENTS SOLD		(2,919	)		(198,238	)
Change in unrealized gain (loss) on real estate investments		8,066,106			3,100,426
Less: Minority interest in unrealized gain (loss) on real estate investments		1,452,555			361,348
Net unrealized gain (loss) on real estate investments		6,613,551			2,739,078
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON REAL ESTATE INVESTMENTS		6,610,632			2,540,840
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS	$	9,312,074		$	4,528,634

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

9

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)

	For the Three Months Ended March 31,
	2006				2005
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income	$		2,701,442		$		1,987,794
Net gain (loss) realized on real estate
investments sold			(2,919	)			(198,238	)
Net unrealized gain (loss) from real estate
investments			6,613,551				2,739,078
Increase (decrease) in net assets
resulting from operations			9,312,074				4,528,634
NET ASSETS - Beginning of period		205,402,851				186,723,061
NET ASSETS - End of period	$	214,714,925			$	191,251,695

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

10

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the Three Months Ended March 31,
	2006				2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations	$		9,312,074		$		4,528,634
Adjustments to reconcile net increase in net assets
to net cash from operating activities
Net realized and unrealized loss (gain)		(6,610,632		)		(2,540,840		)
Distributions in excess of (less than) equity in income
of real estate partnerships' operations			(267,543	)			(18,798	)
Minority interest in consolidated partnerships			4,340				3,573
Bad debt expense			52,358				30,775
(Increase) Decrease in accrued interest included in
mortgage and other loans receivable			—				(59,170	)
(Increase) decrease in:
Other assets			388,460				1,539,998
Increase (decrease) in:
Accounts payable and accrued expenses			(160,061	)			(3,293	)
Due to affiliates			(7,702	)			(34,475	)
Other liabilities			135,024				135,222
Net cash flows from (used in) operating activities			2,846,318				3,581,626
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from real estate investments sold			(2,919	)			4,550,103
Additions to real estate and improvements			(162,701	)			(979,382	)
Contributions to real estate partnerships		(7,289,487		)			—
Origination of mortgage loan receivable			—			(1,192,011		)
Collection of other real estate investments			4,277,769				—
Net cash flows from (used in) investing activities		(3,177,338		)			2,378,710
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on investment level debt			(135,450	)			(125,781	)
Contributions from minority interest partners			—				220,006
Distributions to minority interest partners			—			(1,974,692		)
Net cash flows from (used in) financing activities			(135,450	)		(1,880,467		)
NET CHANGE IN CASH AND CASH
EQUIVALENTS			(466,470	)			4,079,869
CASH AND CASH EQUIVALENTS - Beginning of period		45,467,485				17,557,182
CASH AND CASH EQUIVALENTS - End of period	$	45,001,015			$	21,637,051
DISCLOSURE OF SUPPLEMENTAL CASH FLOW
INFORMATION
Cash paid during the quarter for interest	$		438,372		$		650,306

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

11

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS

					March 31, 2006 (Unaudited)				December 31, 2005
Property Name	March 31, 2006 Ownership		City, State	March 31, 2006 Total Rentable Square Feet Unless Otherwise Indicated (Unaudited)	Cost		Estimated Market Value		Cost		Estimated Market Value
REAL ESTATE INVESTMENTS
OFFICES
750 Warrenville	WO		Lisle, IL	103,193	$	23,173,035	$	10,600,000	$	23,173,035	$	10,000,000
Summit @ Cornell Oaks	WO		Beaverton , OR	72,109		12,058,049		11,710,731		12,046,574		10,566,213
Westpark	WO		Nashville, TN	97,199		10,913,142		12,498,600		10,903,925		12,600,290
Financial Plaza	WO		Brentwood, TN	98,049		12,333,152		12,800,000		12,333,151		12,300,000
		Offices % as of 03/31/2006		22%		58,477,378		47,609,331		58,456,685		45,466,503
APARTMENTS
Brookwood Apartments	WO		Atlanta, GA	240 Units		18,499,722		17,103,782		18,481,376		17,155,625
Dunhill Trace Apartments	WO		Raleigh, NC	250 Units		16,170,782		19,200,000		16,170,782		19,202,057
		Apartments % as of 03/31/2006		17%		34,670,504		36,303,782		34,652,158		36,357,682
RETAIL
King's Market	WO		Rosewell, GA	314,358		37,672,353		27,900,000		37,646,731		27,199,960
Hampton Towne Center	WO		Hampton, VA	174,540		18,035,334		26,000,000		18,035,334		26,100,000
White Marlin Mall	CJV		Ocean City, MD	186,016		15,346,524		21,500,000		15,328,836		21,500,000
Kansas City Portfolio	EJV		Kansas City, KS;MO	487,660		11,617,132		7,331,893		11,413,171		7,183,593
CARS Preferred Equity	PE		Various	N/A		14,518,292		14,518,292		7,165,223		7,165,223
		Retail % as of 03/31/2006		45%		97,189,635		97,250,185		89,589,295		89,148,776
INDUSTRIAL
Smith Road	WO		Aurora, CO	277,930		10,875,286		12,500,000		10,823,619		11,704,500
		Industrial % as of 03/31/2006		6%		10,875,286		12,500,000		10,823,619		11,704,500
HOTEL
Portland Crown Plaza	CJV		Portland, OR	161 Rooms		8,852,470		15,100,000		8,823,785		10,300,000
		Hotel % as of 03/31/2006		7%		8,852,470		15,100,000		8,823,785		10,300,000
MORTGAGE AND OTHER LOANS RECEIVABLE
Westminster West	Eloan		Westminster, MD			—		—		4,277,769		4,277,769
			Mortgage and Other Loans Receivable % as of 03/31/2006	0%		—		—		4,277,769		4,277,769
Total Real Estate Investments as a Percentage of Net Assets as of 03/31/2006				97%	210,065,273		208,763,298		206,623,311		197,255,230

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.

12

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS

			March 31, 2006 (Unaudited)					December 31, 2005
	Face Amount		Cost		Estimated Market Value			Cost			Estimated Market Value
CASH AND CASH EQUIVALENTS - Percentage of Net Assets					21.0		%					22.1	%
Federal Home Loan Bank, 1.75%, January 3, 2006	$	488,000		—		—			$	487,908	$	487,908
Federal Home Loan Bank, 0 coupon bond, January 30, 2006	44,184,000			—		—			44,033,621			44,033,621
Federal Home Loan Bank, 0 coupon bond, April 28, 2006	40,000,000			39,859,900		39,859,900				—		—
Federal Home Loan Bank, 0 coupon bond, April 6, 2006	4,091,000			4,089,939		4,089,939				—		—
Total Cash Equivalents				43,949,839		43,949,839			44,521,529			44,521,529
Cash				1,051,176		1,051,176				945,956		945,956
Total Cash and Cash Equivalents			$	45,001,015	$	45,001,015		$	45,467,485		$	45,467,485

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
March 31, 2006
(Unaudited)

Note 1:   Summary Of Significant Accounting Policies

The accompanying unaudited financial statements included herein have been prepared in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States of America for interim financial information. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Operating results for the three months ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ended December 31, 2006. For further information, refer to the financial statements and notes thereto included in each partner’s Annual Report on Form 10-K for the Year Ended December 31, 2005.

Real estate investments are reported at their estimated fair market values.

FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), was issued in January 2003. In December 2003, FASB issued a revised interpretation of FIN 46 (“FIN 46-R”), that supersedes FIN 46. FIN 46-R defers the effective date for applying the provisions of FIN 46 for those companies currently accounting for their investments in accordance with the AICPA Audit and Accounting Guide, “Audits of Investment Companies” (the “Audit Guide”). The FASB is currently considering modifying FIN 46-R to provide an exception for companies that apply the Audit Guide. The Prudential Variable Contract Real Property Partnership (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.

Note 2:   Related Party Transactions

Pursuant to an investment management agreement, Prudential Investment Management (“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 three months ended March 31, 2006 and 2005 investment management fees incurred by the Partnership were $739,816 and $673,537, respectively.

The Partnership also reimburses PIM for certain administrative services rendered by PIM. The amounts incurred for the three months ended March 31, 2006 and 2005 were $36,732 and $53,907 respectively, and are classified as administrative expense in the Consolidated Statements of Operations.

Note 3:   Commitments and Contingencies

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 Prudential's management, the outcome of such matters will not have a material effect on the Partnership.

Purchase commitments include forward commitments without conditions waived, commitments to purchase real estate and/or fund additional expenditures on previously acquired properties and loan take out agreements. Certain purchases of real estate are contingent on a developer building the real estate according to plans and specifications outlined in the pre-sale agreement or the property achieving a certain level of leasing. It is anticipated that funding will be provided by operating cash flow, real estate investment sales and deposits from the Partnership.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
March 31, 2006
(Unaudited)

Note 3:   Commitments and Contingencies, (continued)

As of March 31, 2006, the Partnership had the following outstanding purchase commitments:

Property Type	Commitments (000's)
Retail	$	15,187
Other		20,805
Total	$	35,992

Note 4: Financial Highlights

	For The Three Months Ended March 31,
	2006			2005			2004			2003			2002
Per Share(Unit) Operating Performance:
Net Asset Value, beginning of period	$	29.59		$	26.15		$	24.66		$	24.11		$	23.82
Income From Investment Operations:
Investment income, before management fee		0.50			0.36			0.35			0.39			0.42
Management fee		(0.11	)		(0.09	)		(0.09	)		(0.08	)		(0.07	)
Net realized and unrealized gain (loss) on investments		0.95			0.36			(0.08	)		(0.49	)		(0.45	)
Net Increase in Net Assets Resulting from Operations		1.34			0.63			0.18			(0.18	)		(0.10	)
Net Asset Value, end of period	$	30.93		$	26.78		$	24.84		$	23.93		$	23.72
Total Return, before Management Fee (a):		4.89	%		2.79	%		1.10	%		(.45	%)		(.12	%)
Ratios/Supplemental Data:
Net Assets, end of period (in millions)	$	215		$	191		$	183		$	183		$	197
Ratios to average net assets (b):
Total Portfolio Level Expenses		0.36	%		0.36	%		0.35	%		0.31	%		0.31	%
Net Investment Income		1.68	%		1.43	%		1.41	%		1.60	%		1.80	%

(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 V alue + Time Weighted Contributions - Time Weighted Distributions
(b)	Average net assets are based on beginning of quarter net assets.

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

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

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

(a) Liquidity and Capital Resources

As of March 31, 2006, the Partnership’s liquid assets, consisting of cash and cash equivalents, were approximately $45.0 million, a decrease of approximately $0.5 million from $45.5 million at December 31, 2005. The decrease was primarily due to the funding of an additional $7.3 million of preferred equity, as discussed below. Partially offsetting the decrease were proceeds received in connection with a loan payoff, as described below, and the cash flows from the Account's operating activities. Sources of liquidity include net cash flow from property operations, sales, financings and interest from short-term investments. The Partnership uses cash for its real estate investment activities and for distribution to its partners. As of March 31, 2006, approximately 17.5% of the Partnership’s total assets consisted of cash and cash equivalents.

During the first three months of 2006, the Partnership completed the second funding of its preferred equity investment in the existing private REIT, Capital Automotive, or “CARS”, for $7.3 million. CARS owns approximately 364 properties, which are leased to sixty automobile dealership operators throughout the United States. This investment pays to investors an annual preferred return of 7.5% for years one through five, 8.75% during years six and seven, and 12% for all subsequent years.

The Partnership’s Leasehold Mortgage Loan that was originated in January 2004 for the borrower’s acquisition and redevelopment of a retail center in Westminster, Maryland was paid in full by the borrower in March 2006, resulting in proceeds of approximately $4.4 million.

During the first three months of 2006, the Partnership spent approximately $0.2 million on capital improvements to various existing properties.

(b) Results of Operations

The following is a comparison of the Partnership’s results of operations for the periods ended March 31, 2006 and 2005.

Net Investment Income Overview

The Partnership’s net investment income for the three months ended March 31, 2006 was approximately $2.7 million, an increase of $0.7 million from $2.0 million for the prior year period. The office, retail, industrial and hotel sector investments posted increases of approximately $0.1 million, $0.4 million, $0.1 million and $0.1 million, respectively, from the prior year period. Partially offsetting this increase for the three months ended March 31, 2006 was a decrease in net investment income in the apartment sector, which posted a decrease of $0.3 million from the prior year period. Other net investment income increased $0.4 million during the three months ended March 31, 2006 from the prior year period. Detail on the components of this net investment income are discussed below by property type sector.

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Valuation Overview

The Partnership recorded an aggregate net realized and unrealized gain of $6.6 million for the three months ended March 31, 2006, compared to an aggregate net realized and unrealized gain of $2.5 million for the prior year period.

The Partnership recorded a slight aggregate net realized loss for the three months ended March 31, 2006, compared to an aggregate net realized loss of $0.2 million for the prior year period. The realized loss for three months ended March 31, 2006 was recorded in the land sector.

The Partnership recorded an aggregate net unrealized gain of $6.6 million for the three months ended March 31, 2006, compared to an aggregate net unrealized gain of $2.7 million for the prior year period. The unrealized gain for the three months ended March 31, 2006 was attributable to valuation gains in the office, retail, industrial and hotel property sectors. Partially offsetting this gain was an unrealized loss of approximately $0.1 million recorded in the apartment sector. Details on the components of these valuation gains and/or losses are discussed below by property type sector.

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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 three months ended March 31, 2006 and 2005.

	Three Months Ended March 31,
	2006			2005
Net Investment Income:
Office properties	$	823,847		$	670,163
Apartment complexes		261,496			639,230
Retail properties		1,484,989			1,055,401
Industrial properties		195,933			119,965
Hotel property		278,301			169,536
Land		(43,508	)		—
Other (including interest income,
investment mgt fee, etc.)		(299,616	)		(666,501	)
Total Net Investment Income	$	2,701,442		$	1,987,794
Net Realized Gain (Loss) on Real Estate Investments:
Apartment Complex		—			(198,238	)
Office Building		—			—
Land		(2,919	)		—
Total Net Realized Gain (Loss) on Real Estate Investments		(2,919	)		(198,238	)
Net Unrealized Gain (Loss) on Real Estate Investments:
Office properties		2,122,136			(61,306	)
Apartment complexes		(72,246	)		163,700
Retail properties		18,996			1,191,835
Industrial properties		743,833			995,932
Hotel property		3,800,832			448,917
Total Net Unrealized Gain (Loss) on Real Estate Investments		6,613,551			2,739,078
Net Realized and Unrealized Gain (Loss) on Real Estate Investments	$	6,610,632		$	2,540,840

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OFFICE PORTFOLIO

Three Months Ended March 31,		Net Investment Income/(Loss) 2006		Net Investment Income/(Loss) 2005		Unrealized Gain/(Loss) 2006			Unrealized Gain/(Loss) 2005		Occupancy 2006		Occupancy 2005
Property
Lisle, IL	$	98,403	$	101,432	$	600,000		$	(398,854	)	38	%	43	%
Brentwood, TN		227,999		225,685		(110,907	)		148,673		93	%	97	%
Oakbrook Terrace, IL (1)		1,323		66,220		—			101,266		N/A		41	%
Beaverton, OR		229,068		218,008		1,133,043			(46,200	)	78	%	72	%
Brentwood, TN (2)		267,054		58,818		500,000			133,809		100	%	100	%
	$	823,847	$	670,163	$	2,122,136		$	(61,306	)

(1)	The Oakbrook Terrace, Illinois office property was sold on June 8, 2005 but certain post-closing adjustments were recognized in 2006.
(2)	Net Investment Income for the three months ended March 31, 2005 reflects partial period rental concessions.

Net Investment Income

Net investment income for the Partnership’s office properties was approximately $0.8 million for the three months ended March 31, 2006, an increase of approximately $0.1 million from the prior year period. The increase was primarily due to stabilized occupancy and increased market rents at the Partnership’s office asset in Brentwood, Tennessee. Partially offsetting this increase was the loss of rent at the Oakbrook Terrace, Illinois office property that was sold on June 8, 2005.

Unrealized Gain/(Loss)

The office properties owned by the Partnership recorded an aggregate net unrealized gain of approximately $2.1 million during the first three months of 2006, compared to an aggregate net unrealized loss of $0.1 million for the prior year period. The gain was primarily due to improved market fundamentals at the office properties located in Lisle, Illinois, Beaverton, Oregon and Brentwood, Tennessee. Partially offsetting this gain was a net unrealized loss of approximately $0.1 million recorded at the office property located in Brentwood, Tennessee.

APARTMENT COMPLEXES

Three Months Ended March 31,		Net Investment Income/(Loss) 2006		Net Investment Income/(Loss) 2005		Unrealized Gain/(Loss) 2006			Realized / Unrealized Gain/(Loss) 2005		Occupancy 2006		Occupancy 2005
Property
Atlanta, GA	$	114,338	$	71,206	$	(70,189	)	$	(205,698	)	91	%	92	%
Raleigh, NC		147,158		144,916		(2,057	)		(661	)	93	%	92	%
Jacksonville, FL (1)		—		218,880		—			316,991		N/A		92	%
Salem/Gresham, OR (1)		—		204,228		—			53,068		N/A		92	%
	$	261,496	$	639,230	$	(72,246	)	$	163,700

⁽¹⁾ The Salem, Oregon, Gresham, Oregon and Jacksonville, Florida apartment properties were sold on March 10, 2005, August 10, 2005 and November 30, 2005, respectively.

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Net Investment Income

Net investment income for the Partnership’s apartment properties was $0.3 million for the three months ended March 31, 2006, a decrease of $0.3 million from the prior year period. The decrease was primarily due to the loss of rent at the Salem, Oregon, Gresham, Oregon and Jacksonville, Florida apartment properties that were sold on March 10, 2005, August 10, 2005 and November 30, 2005, respectively.

Total Realized and Unrealized Gain/(Loss)

The Partnership recorded an aggregate net unrealized loss of $0.1 million for the three months ended March 31, 2006, compared to an aggregate net realized and unrealized gain of $0.2 million for the prior year period. The net unrealized loss for the three months ended March 31, 2006 resulted from a slight valuation change for the apartment property in Atlanta, Georgia.

RETAIL PROPERTIES

Three Months Ended March 31,		Net Investment Income/(Loss) 2006		Net Investment Income/(Loss) 2005		Unrealized Gain/(Loss) 2006			Unrealized Gain/(Loss) 2005		Occupancy 2006		Occupancy 2005
Property
Roswell, GA	$	531,549	$	448,122	$	674,414		$	(422,646	)	94	%	74	%
Kansas City, KS; Kansas City, MO		196,561		122,748		(55,660	)		86,677		81	%	82	%
Hampton, VA		318,723		307,708		(100,000	)		1,200,000		100	%	100	%
Ocean City, MD		126,501		117,981		(499,758	)		327,804		84	%	90	%
Westminster, MD (1)		124,362		58,842		—			—		N/A		N/A
CARS Preferred Equity (2)		187,293		—		—			—		N/A		N/A
	$	1,484,989	$	1,055,401	$	18,996		$	1,191,835

(1)	Leasehold Mortgage Loan Receivable (mortgage paid in full March 3, 2006).
(2)	Net investment income for the three months ended March 31, 2006 reflects partial period results for second funding, which occurred February 14, 2006.

Net Investment Income

Net investment income for the Partnership’s retail properties was $1.5 million for the three months ended March 31, 2006, an increase of $0.4 million from the prior year period. The increase in net investment income was primarily due to (a) increased rents and reduced expenses at the retail centers in Kansas City, Kansas and Kansas City, Missouri, (b) increased occupancy at the retail center in Roswell, Georgia and (c) income received from the preferred equity investments made by the Partnership on December 16, 2005 and February 14, 2006, respectively.

Unrealized Gain/(Loss)

The retail properties recorded a slight aggregate net unrealized gain for the three months ended March 31, 2006, compared to a net unrealized gain of $1.2 million for the prior year period. The unrealized gain of approximately $0.7 million recorded at the retail center in Roswell, Georgia during the first three months of 2006 was due to continued investor demand and improved property fundamentals. This gain was offset by unrealized losses of approximately (a) $0.1 million recorded at the retail centers in Kansas City, Kansas and Kansas City, Missouri, (b) $0.1 million recorded at the retail center in Hampton, Virginia, and (c) $0.5 million recorded at the retail center in Ocean City, Maryland.

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INDUSTRIAL PROPERTIES

Three Months Ended March 31,		Net Investment Income/(Loss) 2006		Net Investment Income/(Loss) 2005		Unrealized Gain/(Loss) 2006		Unrealized Gain/(Loss) 2005	Occupancy 2006		Occupancy 2005
Property
Aurora, CO	$	195,933	$	119,965	$	743,833	$	995,932	78	%	78	%

Net Investment Income

Net investment income for the Partnership’s industrial property was $0.2 million for the three months ended March 31, 2006, an increase of $0.1 million from the prior year period. The increase was primarily due to increased rents and reduced operating and administrative expenses at the Aurora, Colorado industrial property compared to the prior year period.

Unrealized Gain/(Loss)

The Aurora, Colorado industrial property owned by the Partnership recorded a net unrealized gain of approximately $0.7 million for the three months ended March 31, 2006, compared to a net unrealized gain of $1.0 million for the prior year period. The net unrealized gain for the three months ended March 31, 2006 was primarily due to improved market fundamentals and continuing investor demand for this product type.

HOTEL PROPERTY

Three Months Ended March 31,		Net Investment Income/(Loss) 2006		Net Investment Income/(Loss) 2005		Unrealized Gain/(Loss) 2006		Unrealized Gain/(Loss) 2005	Occupancy 2006		Occupancy 2005
Property
Lake Oswego, OR	$	278,301	$	169,536	$	3,800,832	$	448,917	72	%	62	%

Net Investment Income

Net investment income for the Partnership’s hotel property was $0.3 million for the three months ended March 31, 2006, an increase of $0.1 million from the prior year period. The increase was primarily due to increased occupancy and higher average daily rates generated at the property compared to the prior year period.

Unrealized Gain/(Loss)

The Lake Oswego, Oregon hotel property owned by the Partnership recorded a net unrealized gain of $3.8 million for the three months ended March 31, 2006. The net unrealized gain for the three months ended March 31, 2006 reflected both the strengthening of market fundamentals and the completion of a renovation program.

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Other

Other net investment income increased $0.4 million during the three months ended March 31, 2006 from the prior year period. Other net investment income includes interest income from short-term investments, 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 unaudited Consolidated Financial Statements of the Account and the Partnership may change significantly.

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

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, “PIM”, is responsible for assuring that the valuation process provides independent and reasonable property market value estimates. American Appraisal Associates, or the “Appraisal Management Firm”, an entity not affiliated with PIM, 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.

22

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.

Land and redevelopment properties held for future development via a forward contract are carried at cost plus cost incurred to hold the land and redevelopment properties as stated in the take out provisions of the contract.

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 March 31, 2006, and 2005.

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 unaudited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Item 3. 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 36.36% (as of March 31, 2006) of its investment portfolio, 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. By 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 March 31, 2006:

	Maturity		Estimated Market Value (in $ millions)	Average Interest Rate
Cash and Cash equivalents	0-3 months	$	45.0	3.49%

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The table below discloses the Partnership’s debt as of March 31, 2006. 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 (in thousands) 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), including current portion		2006			2007			2008			2009			2010			Thereafter			Total			Estimated Fair Value
Average Fixed Interest Rate		5.40	%		5.35	%		5.74	%		6.75	%		6.75	%		6.75	%		6.50	%
Fixed Rate	$	414		$	588		$	16,026		$	9,276		$	565		$	6,191		$	33,060		$	33,313
Variable Rate		—			—			—			—			—			—			—			—
Total Mortgage Loans Payable	$	414		$	588		$	16,026		$	9,276		$	565		$	6,191		$	33,060		$	33,313

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 would adversely affect its operating results and liquidity.

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Item 4. Controls and Procedures

In order to ensure that the information we must disclose in our filings with the Securities and Exchange Commission 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), as of March 31, 2006. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2006, our disclosure controls and procedures were effective in timely alerting them to material information relating to us required to be included in our periodic SEC filings. There has been no change in our internal control over financial reporting during the quarter ended March 31, 2006, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. Risk Factors

You should carefully consider the risks described under “–Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2005. 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 our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q

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.

Item 6. Exhibits

               Exhibits

               31.1     Section 302 Certification of the Chief Executive Officer.

               31.2     Section 302 Certification of the Chief Financial Officer.

               32.1     Section 906 Certification of the Chief Executive Officer.

               32.2     Section 906 Certification of the Chief Financial Officer

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRUCO LIFE INSURANCE COMPANY
in respect of
Pruco Life Variable
Contract Real Property Account
(Registrant)
____________________________________________________________

Date:	May 12, 2006	By:	/s/ /s/ Bernard J. Jacob
			Bernard J. Jacob
			Chief Executive Officer

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