UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)



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

For the fiscal year ended December 31, 2009

OR



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

Commission file Number 033-20018

PRUCO LIFE
INSURANCE COMPANY OF NEW JERSEY

in respect of

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

(Exact name of registrant as specified in its charter)



|                                |  |  |  |                                  
|------------------------------- |  |  |  | ---------------------------------
|New Jersey                      |  |  |  | 22-2426091                       
|(State or other jurisdiction of |  |  |  | (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  ̈ NO x

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  ̈ NO x

Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 75 days. YES x NO  ̈

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.  ̈

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 definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act (check one)

Large Accelerated filer     ̈        Accelerated filer     ̈        Non-accelerated filer    x    Smaller reporting
company      ̈

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

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 11, 2010, 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, 2009.



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PRUCO LIFE OF NEW JERSEY CONTRACT

REAL PROPERTY ACCOUNT

(Registrant)

INDEX



|         |  |                                                                                                              |  |        
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | -------
|Item No. |  |                                                                                                              |  | PageNo.
|         |  | Cover Page                                                                                                   |  |        
|         |  | Index                                                                                                        |  | 1      
|         |  | Forward-Looking Statement Disclosure                                                                         |  | 2      
|         |  |                                                                                                             
|PART I   |  |                                                                                                              |  |        
|         |  |                                                                                                             
|1.       |  | Business                                                                                                     |  | 3      
|1A.      |  | Risk Factors                                                                                                 |  | 5      
|1B.      |  | Unresolved Staff Comments                                                                                    |  | 9      
|2.       |  | Properties                                                                                                   |  | 9      
|3.       |  | Legal Proceedings                                                                                            |  | 9      
|         |  |                                                                                                             
|PART II  |  |                                                                                                              |  |        
|         |  |                                                                                                             
|5.       |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 10     
|6.       |  | Selected Financial Data                                                                                      |  | 10     
|7.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 11     
|7A.      |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 21     
|8.       |  | Financial Statements and Supplementary Data                                                                  |  | 22     
|9.       |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 22     
|9A.      |  | Controls and Procedures                                                                                      |  | 22     
|9B.      |  | Other Information                                                                                            |  | 22     
|         |  |                                                                                                             
|PART III |  |                                                                                                              |  |        
|         |  |                                                                                                             
|10.      |  | Directors, Executive Officers and Corporate Governance                                                       |  | 23     
|11.      |  | Executive Compensation                                                                                       |  | 24     
|12.      |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 24     
|13.      |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 24     
|14.      |  | Principal Accountant Fees and Services                                                                       |  | 24     
|         |  |                                                                                                             
|PART IV  |  |                                                                                                              |  |        
|         |  |                                                                                                             
|15.      |  | Exhibits and Financial Statement Schedules                                                                   |  | 25     
|         |  | Exhibit Index                                                                                                |  | 25     
|         |  | Signatures                                                                                                   |  | 27     



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Forward-Looking Statement Disclosure

Certain of the statements included in this Annual Report on Form 10-K, including but not limited to those in Managements Discussion
and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, believes,
anticipates, includes, plans, assumes, estimates, projects, intends, should, will, shall or variations of such words are
generally part of forward-looking statements. Forward-looking statements are made based on managements current expectations and beliefs concerning future developments and their potential effects upon Pruco Life Insurance Company of New Jersey,
or the Company, the Pruco Life of New Jersey Variable Contract Real Property Account, or the Real Property Account. There can be no assurance that future developments affecting the Company and the Real Property Account will
be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly
materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (1) general economic, market and political conditions, including the performance and fluctuations of fixed income, equity, real
estate and other financial markets, particularly in light of the severe economic conditions and the severe stress experienced by the financial markets that began the second half of 2007 and continued into 2009; (2) interest rate fluctuations;
(3) re-estimates of our reserves for future policy benefits and claims; (4) differences between actual experience regarding mortality, morbidity, persistency, surrender experience, interest rates, or market returns and the assumptions we
use in pricing our products, establishing liabilities and reserves or for other purposes; (5) changes in our assumptions related to deferred policy acquisition costs and valuation of business acquired; (6) changes in our claims-paying or
credit ratings; (7) investment losses and defaults; (8) competition in our product lines and for personnel; (9) changes in tax law; (10) regulatory or legislative changes, including government actions in response to the stress
experienced by the financial markets; (11) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities; (12) domestic or international military actions, natural or man-made disasters including
terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; (13) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; and (14) changes in statutory
or U.S. GAAP accounting principles, practices or policies. As noted above, the period from the second half of 2007 continuing into 2009 was characterized by extreme adverse market and economic conditions. The forgoing risks are even more
pronounced in these unprecedented market and economic conditions. The Company and the Real Property Account do not intend, and are under no obligation, to update any particular forward-looking statement included in this document. See Risk
Factors included in this Annual Report on Form 10-K for discussion of certain risks relating to the operation of the Partnership and investment in our securities.



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PART I

Item 1. Business

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

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

The Partnership has an investment policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. The largest portion of
these real estate investments are direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments, or industrial properties. Approximately 10% of the Partnerships assets are generally
held in cash or invested in liquid instruments and securities although the Partners reserve discretion to increase this amount to meet partnership liquidity requirements. The following is a summary of the Partnerships real estate investments
as of December 31, 2009:

Office Properties  The Partnership owns office properties in Lisle,
Illinois; Brentwood, Tennessee; and Beaverton, Oregon. Total square footage owned is approximately 372,007, of which 75%, or 279,838 square feet, is 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 95%, or 809 units, are leased. Leases range from month-to-month to sixteen months.

Retail Property  The Partnership owns retail properties in Ocean City, Maryland; Hampton, Virginia; Dunn, North
Carolina; and Westminster, Maryland. Total square footage owned is approximately 655,855 of which 78%, or 512,734 square feet, is 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 2009 averaged
61%.

Investment in Real Estate Trust  The Partnership liquidated its entire investment in shares
of a real estate investment trust, or REIT in December 2001. The Partnership does, however, maintain a preferred equity investment in a REIT (See Managements Discussion and Analysis of Financial Condition and Results of
Operations for more information).

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 its assets invested in any one investment, no more than 70% of its assets in any two investments, no more than 80% of its assets in any three investments, and no more
than 90% of its assets in any four investments. Also, to comply with regulatory requirements of the State of Arizona, the Partnership limits 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 more information regarding the Partnerships investments,
operations and other significant events, see Managements Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements and Supplementary Data.

The following is a description of general conditions in the U.S. real estate markets for 2009 to which the
Partnerships investments were subject. 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, required
investment rates and returns in this section are not necessarily relevant to the Partnerships portfolio. These historic trends are not indicative of future performance.



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Market Conditions

After approximately two years of economic decline, some positive signs for commercial real estate have recently appeared. Employment losses have slowed but continue to increase.
Unlike the early 1990s recession, when substantial amounts of capital were withdrawn from the commercial real estate asset class, some REITs and private funds have been able to raise capital for future opportunities. Meanwhile, real estate secured
debt is becoming more available: in the fourth quarter of 2009 the first non-agency commercial mortgage-backed securities (CMBS) were issued in more than a year, and some banks and life insurance companies have become more willing to lend. Despite
value stabilization, there are reasons to be cautious, as commercial real estate fundamentals remain weak. Vacancy rates in all major asset classes have been increasing for two years due to the combination of new supply and negative absorption,
causing property incomes to fall near-term. Investment rates, the returns to investment demanded by property buyers known as capitalization or cap rates, rose considerably during 2009, causing property values to decline.

Debt Markets

Except for multi-family properties, which are covered by Fannie Mae and Freddie Mac, the availability of mortgage financing is not strong. Some traditional commercial mortgage providers have returned to the market, and will lend against
high-quality assets. However, total origination volume remains relatively low because borrower demand is weak, and there are few debt providers willing to lend on properties that are in secondary locations or do not have a strong tenant base.
Insurers have few delinquent loans on their books. They are entering into low-leverage loans secured by high-quality properties at higher interest rate spreads than in past years when there was lower competition due to greater loan supply. In
particular, small- to medium-sized properties with stable cash flows and creditworthy sponsors are typically now able to find a life insurance company or bank willing to originate a mortgage.

On the property level, many maturing bank loans cannot be refinanced with the same level of proceeds. With property values
down significantly from the market peak, most maturing bank loans exceed the banks desired loan-to-value ratios. As a result, many maturing bank mortgages over the past year have been extended because borrowers are unable to provide additional
capital for overleveraged properties, and banks want to avoid foreclosing as long as the borrower is paying debt service. When banks agree to extend loans they often require a higher interest rate, partial principal repayment, increased
amortization, or some combination thereof.

REIT Market

The REIT market recovery occurred simultaneously with the rally in the global stock and bond markets that started in March 2009. The recovery was broad-based, both within the REIT
sector and across the broader public equities market. Further, REITs access to capital improved significantly in the third quarter due in part to the rally in the corporate bond market, which caused yield spreads to narrow sharply. Amid strong
demand from high yield investors, both institutional and retail, REITs turned to the unsecured bond market to raise capital. We believe most of the capital raised to date has been used to refinance maturing debt or to pay down credit lines.

Property Markets

The U.S. economy has exhibited severe levels of unemployment since December 2007 and January 2009, when the underemployed, which includes part-time workers in search of full-time jobs and those who have
given up searching, increased to 17.3%. Every sector in the commercial real estate market is approaching historic lows in terms of demand and income growth. The employment market outlook and reductions in consumer spending since 2007 could create
leasing risk for commercial properties, including office properties, shopping centers, industrial properties, hotels and apartments, which have historically exhibited positive correlation to job growth.

Hotels:A reduction in both business and leisure travel caused national hotel occupancy rates to drop in 2009. Revenue per
available room (RevPAR) fell in 2009, and borrower defaults on loans secured by hotels are rising.

Offices:The
real estate market has seen negative net absorption of office space over the past two years, which is expected to cause near-term vacancy rates to rise. Unlike some other sectors, office development has been fairly stagnant in recent years, thus
exerting a dampening effect on vacancy rates due to lower supply.

Retail:The significant decline in consumer
spending has had a large impact on the retail sector. Retail property values have fallen, and consumer spending remains below 2007 levels. Many retailers survived despite the severity of contraction in sales; however, other retailers have contracted
or gone out of business as a result of the weak economy.

Apartment: The apartment sector continues to exhibit
weak demand due to job losses and excess supply from the single-family and condominium markets. The national apartment vacancy ratereachedits highest level in 30 years during the fourth quarter
of



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2009. The presence of the government-backed agencies like Fannie Mae and Freddie Mac that provide multi-family financing has helped the sector avoid a larger decline in property values. However,
it is unclear how the sector will fare if Fannie Mae and Freddie Mac reduce their balance sheets as planned.

Industrial: Warehouse properties are sensitive to retail spending. Port activity fell sharply during the recession. Like other property types, no new supply is being produced.

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.

Our business and results of operations were materially adversely affected by the adverse conditions in the financial markets and adverse economic conditions generally that began in the second half of 2007 and continued into 2009. Our
business, results of operations and financial condition may be adversely affected, possibly materially, if these conditions recur or deteriorate.

Our results of operations were materially adversely affected by conditions in the global financial markets and the economy generally, that began in the second half of 2007 and continued into 2009.
Volatility and disruption in the global financial markets reached unprecedented levels for the Post World War II period. The availability and cost of credit were materially affected. These factors, combined with economic conditions in the U.S.,
including depressed home and commercial real estate prices and increasing foreclosures, falling equity market values, declining business and consumer confidence and rising unemployment, precipitated a severe economic recession and fears of even more
severe and prolonged adverse economic conditions.

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

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

Governmental actions in response to the recent financial crisis could subject us to substantial additional regulation.

The U.S. federal government has taken and is considering taking actions to address the recent financial crisis which are significant. We
cannot predict with any certainty whether these actions will be effective or the effect they may have on the financial markets or on our business, results of operations, cash flows and financial condition. Governmental actions in response to the
recent financial crisis could subject Prudential, its parent company and its affiliates to substantial additional regulation. For example, during 2009, the Obama Administration and Congress announced proposals to reform the national regulation of
financial services and financial institutions, including through the Wall Street Reform and Consumer Protection Act of 2009 which was approved by the House of Representatives in December 2009. Under this bill, Prudential, its parent
company and its affiliates could become subject to unspecified stricter standards, including stricter requirements and limitations relating to capital, leverage, liquidity, debt to income ratios, and counterparty exposure, as well as overall risk
management requirements and a requirement to maintain a plan for rapid and orderly dissolution in the event of severe financial distress. Also, if enacted, the bill would also establish a Federal Insurance Office within the Department of
the Treasury which, among other things, would be required to conduct a study on how to modernize and improve the system of insurance regulation in the United States, including by increased national uniformity through either a federal charter or
effective action by the states. We cannot predict whether Prudential, its parent company or its affiliates or any of their activities might be designated for stricter standards, if the bills provisions became law. Nor can we predict what
standards might be imposed, or what impact such standards would have on our business, financial condition or results of operations.



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Changes in U.S. federal income tax law could make some of our products less attractive to
consumers and increase our tax costs.

Current U.S. federal income tax laws generally permit certain holders to defer
taxation on the build-up of value of annuities and life insurance products until payments are actually made to the policyholder or other beneficiary and to exclude from taxation the death benefit paid under a life insurance contract. Congress from
time to time considers legislation that could make our products less attractive to consumers, including legislation that would reduce or eliminate the benefit of this deferral on some annuities and insurance products, as well as other types of
changes that could reduce or eliminate the attractiveness of annuities and life insurance products to consumers, such as repeal of the estate tax.

Under current law, the estate tax is completely eliminated for 2010. Thereafter, the tax is reinstated using the exclusion limit and rates in effect in 2001. It is unclear if Congress will keep current
law in place or take action to reinstate the estate tax, possibly retroactively to the beginning of 2010. This uncertainty makes estate planning difficult and may impact the sale or persistency of our products.

Congress, as well as state and local governments, also considers from time to time legislation that could increase the amount of taxes
payable.

On February 1, 2010 the Obama Administration released the General Explanations of the
Administrations Revenue Proposals or Revenue Proposals. Although the Administration has not released proposed statutory language, the Revenue Proposals includes proposals which if enacted, would affect the taxation of life insurance
companies and certain life insurance products.

The large federal deficit, as well as the budget constraints faced by many
states and localities, increases the likelihood that Congress and state and local governments will raise revenue by enacting legislation increasing the taxes paid by individuals and corporations. This can be accomplished either by raising rates or
otherwise changing the tax rules. While higher tax rates increase the benefits of tax deferral on the build up of value of annuities and life insurance, making our products more attractive to consumers, legislation that reduces or eliminates
deferral would have a potential negative effect on our products.

The products we sell have different tax characteristics, in
some cases generating tax deductions. The level of profitability of certain of our products are significantly dependent on these characteristics and our ability to continue to generate taxable income, which are taken into consideration when pricing
products and are a component of our capital management strategies. Accordingly, a change in tax law, our ability to generate taxable income, or other factors impacting the availability of the tax characteristics generated by our products, could
impact product pricing and returns or require us to reduce our sales of these products or implement other actions that could be disruptive to our business.

Our businesses are heavily regulated and changes in regulation may reduce our profitability.

Our business is subject to comprehensive regulation and supervision. The purpose of this regulation is primarily to protect our customers. Many of the laws and regulations to which we are subject, are
regularly re-examined, and existing or future laws and regulations may become more restrictive or otherwise adversely affect our operations. This is particularly the case under current market conditions. It appears likely that the continuing
financial markets dislocation will lead to extensive changes in existing laws and regulations, and regulatory frameworks, applicable to our business.

We are subject to the rules and regulations of the Securities and Exchange Commission (SEC) relating to public reporting and disclosure, accounting and financial reporting, and corporate
governance matters. The Sarbanes-Oxley Act of 2002 and rules and regulations adopted in furtherance of that Act have substantially increased our requirements in these and other areas. Changes in accounting requirements could have an impact on our
reported results of operations and our reported financial position.

Insurance regulators, as well as industry participants,
have begun to implement significant changes in the way in which statutory reserves and statutory capital are determined particularly for products with embedded options and guarantees, and are considering further potentially significant changes in
these requirements. Regulatory capital requirements based on scenario testing have already gone into effect for variable annuity products, and new reserving requirements for these products were implemented as of the end of 2009. The timing and
extent of further changes to the statutory reporting framework are uncertain.

Compliance with applicable laws and regulations
is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on our financial condition or
results of operations.



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

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

In the normal course of business, the Partnership enters into loan agreements with certain lenders to finance its real estate
investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the
Partnerships borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other
conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates. At December 31,
2009, the Partnership had no outstanding matured loans.

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

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

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

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



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



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

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



|¡ | The estimated fair value of real estate and real estate related assets is determined through an appraisal process. There continues to be significant
disruptions in the global capital, credit and real estate markets. These disruptions have led to, among other things, a significant decline in the volume of transaction activity, in the fair value of many real estate and real estate related
investments, and a significant contraction in short-term and long-term debt and equity funding sources. The decline in liquidity and prices of real estate and real estate related investments, as well as the availability of observable
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | transaction data and inputs, may have made it more difficult to determine the fair value of such investments. As a result, these estimated fair values may vary significantly from the prices at
which the real estate investments would sell, since market prices of real estate investments can only be determined by negotiation between a willing buyer and seller and could be material to the financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



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



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

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

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

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



| |  |  | Catastrophic loss of life due to natural or man-made disasters could cause us to pay benefits at higher levels and/or materially earlier than
anticipated and could lead to unexpected changes in persistency rates.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | A terrorist attack affecting financial institutions in the United States or elsewhere could negatively impact the financial services industry in
general and our business operations, investment portfolio and profitability in particular. As previously reported, in August 2004, the U.S. Department of Homeland Security identified our Newark, New Jersey facilities, along with those of several
other financial institutions in New York and Washington, D.C., as possible targets of a terrorist attack.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pandemic disease, caused by a virus such as H5N1, the avian flu virus, or H1N1, the swine flu virus, could have a severe
adverse effect on our business. The potential impact of such a pandemic on our results of operations and financial position is highly speculative, and would depend on numerous factors, including: in the case of the avian flu virus, the probability
of the virus mutating to a form that can be passed easily from human to human; the effectiveness of vaccines and the rate of contagion; the regions of the world most affected; the effectiveness of treatment for the infected population; the rates of
mortality and morbidity among various segments of the insured versus the uninsured population; the collectability of reinsurance; the possible macroeconomic effects of a pandemic on the Companys asset portfolio; the effect on lapses and
surrenders of existing policies, as well as sales of new policies; and many other variables.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8



---

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Not Applicable.

Item 3. Legal Proceedings

None.



9



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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 ofDecember 31, 2009, approximately2,091contract 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,
|                                                                   |  |                         |             |   |     
|                                                                   |  | 2009                    |             |   | 2008 |   |             | 2007                    |  | 2006 |             | 2005
|                                                                   |  |                         |             |   |     
|RESULTS OF OPERATIONS:                                             |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            
|                                                                   |  |                         |             |   |     
|Total Investment Income                                            |  | $                       | 26,678,405  |   |      | $ | 32,124,390  |                         |  | $    | 31,700,063  |      | $ | 28,623,487  |  | $ | 28,644,271 
|                                                                   |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            
|                                                                   |  |                         |             |   |     
|Net Investment Income                                              |  | $                       | 7,250,690   |   |      | $ | 11,138,184  |                         |  | $    | 12,663,580  |      | $ | 11,161,728  |  | $ | 9,219,171  
|                                                                   |  |                         |             |   |     
|Net Realized and Unrealized Gain (Loss) on Real Estate Investments |  |                         | (45,984,726 | ) |      |   | (44,233,635 | )                       |  |      | 5,453,595   |      |   | 18,352,005  |  |   | 15,460,619 
|                                                                   |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            
|                                                                   |  |                         |             |   |     
|Net Increase in Net Assets Resulting From Operations               |  | $                       | (38,734,036 | ) |      | $ | (33,095,451 | )                       |  | $    | 18,117,175  |      | $ | 29,513,733  |  | $ | 24,679,790 
|                                                                   |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            
|                                                                   |  |                         |             |   |     
|FINANCIAL POSITION:                                                |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            
|                                                                   |  |                         |            
|                                                                   |  |                         |             |   |      |   |             | Year Ended December 31,
|                                                                   |  |                         |             |   |     
|                                                                   |  | 2009                    |             |   | 2008 |   |             | 2007                    |  | 2006 |             | 2005
|                                                                   |  |                         |             |   |     
|Total Assets                                                       |  | $                       | 204,296,658 |   |      | $ | 263,665,273 |                         |  | $    | 290,166,898 |      | $ | 272,136,819 |  | $ | 246,015,115
|                                                                   |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            
|                                                                   |  |                         |             |   |     
|Long Term Lease Obligation                                         |  | $                       | -           |   |      | $ | -           |                         |  | $    | -           |      | $ | -           |  | $ | -          
|                                                                   |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            
|                                                                   |  |                         |             |   |     
|Investment Level Debt                                              |  | $                       | 30,824,899  |   |      | $ | 40,047,827  |                         |  | $    | 32,121,712  |      | $ | 32,710,488  |  | $ | 33,195,607 
|                                                                   |  |                         |             |   |      |   |             |                         |  |      |             |      |   |             |  |   |            



10



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

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

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

(a) Liquidity and Capital Resources

As of December 31, 2009, the Partnerships liquid assets, consisting of cash and cash equivalents, were
approximately $24.5 million, a decrease of approximately $3.2 million from $27.7 million at December 31, 2008. The decrease was primarily due to a distribution to the partners of $8.0 million, the repayment of a loan at the apartment investment
in Atlanta, Georgia, and capital expenditures on existing properties, as discussed below. Partially offsetting this decrease were cash flows received from the Partnerships operating activities, and proceeds from the sales of a retail
investment in Roswell, Georgia and an outparcel at the retail investment in Dunn, North Carolina, as detailed below. Sources of liquidity included net cash flow from property operations, financings, and interest from short-term investments. The
Partnership uses cash for its real estate investment activities and for its distributions to its partners. As of December 31, 2009, approximately 12.0% of the Partnerships total assets consisted of cash and cash equivalents.

The Partnership did not have any acquisitions for the year ended December 31, 2009. The Partnership paid off an $8.7 million loan at
the apartment property in Atlanta, Georgia on October 1, 2009.

Dispositions for the year ended December 31, 2009
included the sale of two assets. On May 1, 2009, the Partnership sold the retail property in Roswell, Georgia, resulting in net proceeds of $9.7 million to the Partnership. On November 10, 2009, the Partnership sold an outparcel at the
retail property in Dunn, North Carolina, resulting in net proceeds of $0.4 million to the Partnership.

During the year ended
December 31, 2009, the Partnership spent approximately $3.4 million on capital improvements to various existing properties. Approximately $1.0 million was associated with tenant improvements, leasing expenses, and interior upgrades at the
office property in Brentwood, Tennessee; approximately $1.0 million funded tenant improvements, leasing expenses, and interior upgrades at the office property in Lisle, Illinois; approximately $0.4 million contributed to the renovation of the hotel
property in Lake Oswego, Oregon; and approximately $0.4 million financed exterior repair and interior renovation at the apartment property in Atlanta, Georgia. The remaining $0.6 million was associated with minor capital improvements and transaction
costs associated with leasing expenses related to other properties in the Partnership.



11



---

(b) Results of Operations

The following is a comparison of the Partnerships results of operations for the years ended December 31, 2009, and 2008.

Net investment income overview

The Partnerships net investment income attributable to the general partners controlling interest for the year ended December 31, 2009 was approximately $7.3 million, a decrease of
approximately $3.9 million from the prior year. The decrease in net investment income attributable to the general partners controlling interest was attributable to declines in every sectors net investment income attributable to the
general partners controlling interest ranging from approximately $1.6 million to $0.5 million during the year ended December 31, 2009 from the prior year, as depicted in the table on the following page. Partially offsetting these
decreases was a decrease in other income losses of approximately $0.2 million from the prior year. The components of this net investment income attributable to the general partners controlling interest are discussed below by investment type.

Valuation overview

The Partnership recognized a loss on real estate investments sold attributable to the general partners controlling interests of approximately $4.3 million for the year ended December 31, 2009,
compared with no gain/(loss) on real estate investments sold attributable to the general partners controlling interest for the prior year. The Partnership recorded a net unrealized loss attributable to the general partners controlling
interest of approximately $41.7 million for the year ended December 31, 2009, compared with a net unrealized loss attributable to the general partners controlling interest of approximately $44.2 million for the prior year. The net
unrealized loss attributable to the general partners controlling interest of approximately $41.7 million for the year ended December 31, 2009 was primarily attributable to valuation declines in every sector primarily due to increased
investment rates suggesting an industry-wide repricing. Investment rates include direct and terminal capitalization rates, and discount rates, which reflect investors yield requirements on investments. The increase in investment rates was
caused by the national economic downturn, frozen credit markets, weakening market fundamentals, and deteriorated demand for commercial real estate. The components of these valuation losses are discussed below by investment type.



12



---

The following table presents a comparison of the Partnerships sources of net investment income
attributable to the general partners controlling interest, and recognized and unrealized gain or (loss) attributable to the general partners controlling interests or losses attributable to the general partners controlling interests
by investment type for the years ended December 31, 2009 and 2008.



|                                                                    |  |                                  |               |      |   |              
|------------------------------------------------------------------- |  | -------------------------------- | ------------- | ---- | - | -------------
|                                                                    |  | Twelve Months Ended December 31,
|                                                                    |  | 2009                             |               | 2008
|Net Investment Income:                                              |  |                                  |               |      |   |              
|                                                                    |  |                                 
|Office properties                                                   |  | $                                | 2,463,010     |      | $ | 3,893,422    
|Apartment properties                                                |  |                                  | 2,674,979     |      |   | 3,129,457    
|Retail properties                                                   |  |                                  | 4,425,357     |      |   | 6,062,399    
|Hotel property                                                      |  |                                  | 620,724       |      |   | 1,213,328    
|Other (including interest income, investment mgt fee, etc.)         |  |                                  | (2,933,380)   |      |   | (3,160,422)  
|                                                                    |  |                                  |               |      |   |              
|Total Net Investment Income                                         |  | $                                | 7,250,690     |      | $ | 11,138,184   
|                                                                    |  |                                  |               |      |   |              
|                                                                    |  |                                 
|Net Recognized Gain (Loss) on Real Estate Investments:              |  |                                  |               |      |   |              
|                                                                    |  |                                 
|Retail properties                                                   |  |                                  | (4,254,196)   |      |   | -            
|                                                                    |  |                                  |               |      |   |              
|Net Recognized Gain (Loss) on Real Estate Investments               |  |                                  | (4,254,196)   |      |   | -            
|                                                                    |  |                                  |               |      |   |              
|                                                                    |  |                                 
|Net Unrealized Gain (Loss) on Real Estate Investments:              |  |                                  |               |      |   |              
|                                                                    |  |                                 
|Office properties                                                   |  |                                  | (15,609,886)  |      |   | (6,677,199)  
|Apartment properties                                                |  |                                  | (9,659,969)   |      |   | (12,344,133) 
|Retail properties                                                   |  |                                  | (12,728,430)  |      |   | (23,864,965) 
|Hotel property                                                      |  |                                  | (3,732,245)   |      |   | (1,347,338)  
|                                                                    |  |                                 
|                                                                    |  |                                  |               |      |   |              
|                                                                    |  |                                 
|Net Unrealized Gain (Loss) on Real Estate Investments               |  |                                  | (41,730,530)  |      |   | (44,233,635) 
|                                                                    |  |                                  |               |      |   |              
|                                                                    |  |                                 
|Net Recognized and Unrealized Gain (Loss)on Real Estate Investments |  |                                  | ($45,984,726) |      |   | ($44,233,635)
|                                                                    |  |                                  |               |      |   |              



13



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OFFICE PROPERTIES



|                        |  |                                 |           |                                 |   |                             |  |                             |              |               |   |             |               |     |   |  |     |  
|----------------------- |  | ------------------------------- | --------- | ------------------------------- | - | --------------------------- |  | --------------------------- | ------------ | ------------- | - | ----------- | ------------- | --- | - |  | --- | -
|Year Ended December 31, |  | Net InvestmentIncome/(Loss)2009 |           | Net InvestmentIncome/(Loss)2008 |   | Unrealized Gain/(Loss) 2009 |  | Unrealized Gain/(Loss) 2008 |              | Occupancy2009 |   |             | Occupancy2008 |    
|Property                |  |                                 |           |                                 |   |                             |  |                             |              |               |   |             |               |     |   |  |     |  
|Lisle, IL               |  | $                               | 44,274    |                                 | $ | 767,766                     |  | $                           | (3,809,684)  |               | $ | (2,664,209) |               | 48  | % |  | 70  | %
|Brentwood, TN           |  |                                 | 149,890   |                                 |   | 972,063                     |  |                             | (6,012,154)  |               |   | (83,142)    |               | 70  | % |  | 83  | %
|Beaverton, OR           |  |                                 | 1,178,698 |                                 |   | 1,090,039                   |  |                             | (2,612,641)  |               |   | (2,911,733) |               | 88  | % |  | 88  | %
|Brentwood, TN           |  |                                 | 1,090,148 |                                 |   | 1,063,554                   |  |                             | (3,175,407)  |               |   | (1,018,115) |               | 100 | % |  | 100 | %
|                        |  | $                               | 2,463,010 |                                 | $ | 3,893,422                   |  | $                           | (15,609,886) |               | $ | (6,677,199) |               |     |   |  |     |  

Net investment income

Net investment income attributable to the general partners controlling interest for the Partnerships office properties was approximately $2.5 million for the year ended
December 31, 2009, a decrease of approximately $1.4 million from the prior year. The decrease in net investment income attributable to the general partners controlling interest for the year ended December 31, 2009 was primarily the
result of (a) a $0.8 million decrease at the property in Brentwood, Tennessee due to a decrease in occupancy and free rent given to the largest existing tenant; and (b) a $0.7 million decrease at the property in Lisle, Illinois due to a
decrease in occupancy. These decrease were partially offset by an increase in net investment income attributable to the general partners controlling interest at the property in Beaverton, Oregon due to increased contract rents.

Unrealized gain /(loss)

The office properties owned by the Partnership recorded a net unrealized loss attributable to the general partners controlling interest of approximately $15.6 million during the year ended
December 31, 2009, compared with a net unrealized loss attributable to the general partners controlling interest of approximately $6.7 million for the prior year. The net unrealized loss attributable to the general partners
controlling interest of approximately $15.6 million for the year ended December 31, 2009 was primarily due to increased investment rates and more conservative market leasing assumptions across the office sector that caused each property to
decline in value. Specifically, this contributed to the net unrealized losses attributable to the general partners controlling interest of approximately $2.6 million and $3.2 million at the properties in Beaverton, Oregon and Brentwood,
Tennessee, respectively. In addition, prolonged free rent and significant leasing costs associated with the renewal of the propertys largest tenant at the property in Brentwood, Tennessee resulted in decreased cash flows, which contributed to
its net unrealized loss attributable to the general partners controlling interest of approximately $6.0 million. Finally, at the office property in Lisle, Illinois, notification from the propertys largest tenant of its intent to vacate
upon lease expiration in January 2009 resulted in decreased projected cash flows, which contributed to its net unrealized loss attributable to the general partners controlling interest of approximately $3.8 million.



14



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APARTMENT PROPERTIES



|                        |  |                                 |           |                                 |   |                             |  |                             |             |               |   |              |               |    |   |  |    |  
|----------------------- |  | ------------------------------- | --------- | ------------------------------- | - | --------------------------- |  | --------------------------- | ----------- | ------------- | - | ------------ | ------------- | -- | - |  | -- | -
|Year Ended December 31, |  | Net InvestmentIncome/(Loss)2009 |           | Net InvestmentIncome/(Loss)2008 |   | Unrealized Gain/(Loss) 2009 |  | Unrealized Gain/(Loss) 2008 |             | Occupancy2009 |   |              | Occupancy2008 |   
|Property                |  |                                 |           |                                 |   |                             |  |                             |             |               |   |              |               |    |   |  |    |  
|Atlanta, GA             |  | $                               | 512,311   |                                 | $ | 480,064                     |  | $                           | (1,999,912) |               | $ | (4,362,625)  |               | 92 | % |  | 91 | %
|Raleigh, NC             |  |                                 | 332,684   |                                 |   | 608,481                     |  |                             | (1,679,426) |               |   | (3,258,506)  |               | 93 | % |  | 87 | %
|Austin, TX              |  |                                 | 1,260,713 |                                 |   | 1,440,973                   |  |                             | (4,083,628) |               |   | (2,108,514)  |               | 95 | % |  | 92 | %
|Charlotte, NC           |  |                                 | 569,271   |                                 |   | 599,939                     |  |                             | (1,897,003) |               |   | (2,614,488)  |               | 91 | % |  | 90 | %
|                        |  | $                               | 2,674,979 |                                 | $ | 3,129,457                   |  | $                           | (9,659,969) |               | $ | (12,344,133) |               |    |   |  |    |  

Net investment income

Net investment income attributable to the general partners controlling interest for the Partnerships apartment properties was approximately $2.7 million for the year
ended December 31, 2009, a decrease of approximately $0.5 million from the prior year. The decrease in net investment income attributable to the general partners controlling interest for the year ended December 31, 2009 was primarily
due to decreased contract rents and increased concessions at the apartment properties in Raleigh, North Carolina; Austin, Texas; and Charlotte, North Carolina.

Unrealized gain/(loss)

The apartment properties owned by the Partnership
recorded a net unrealized loss attributable to the general partners controlling interest of approximately $9.7 million for the year ended December 31, 2009, compared with a net unrealized loss attributable to the general partners
controlling interest of approximately $12.3 million for the prior year. The net unrealized loss attributable to the general partners controlling interest for the year ended December 31, 2009 was primarily due to increased investment rates
and more conservative market leasing assumptions across the apartment sector that caused each property to decline in value.



15



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RETAIL PROPERTIES



|                        |  |                                 |           |   |                                 |   |           |                                         |  |                             |              |               |   |               |  |      |  |     
|----------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | --------- | --------------------------------------- |  | --------------------------- | ------------ | ------------- | - | ------------- |  | ---- |  | ----
|Year Ended December 31, |  | Net InvestmentIncome/(Loss)2009 |           |   | Net InvestmentIncome/(Loss)2008 |   |           | Recognized &Unrealized Gain/(Loss) 2009 |  | Unrealized Gain/(Loss) 2008 |              | Occupancy2009 |   | Occupancy2008
|Property                |  |                                 |           |   |                                 |   |           |                                         |  |                             |              |               |   |               |  |      |  |     
|Roswell, GA(1)          |  | $                               | 136,726   |   |                                 | $ | 1,674,996 |                                         |  | $                           | (4,452,106)  |               | $ | (10,610,373)  |  | N/A  |  | 38% 
|Kansas City, KS(2)      |  |                                 | 21,094    |   |                                 |   | (15,941   | )                                       |  |                             | -            |               |   | -             |  | N/A  |  | N/A 
|Hampton, VA             |  |                                 | 967,392   |   |                                 |   | 1,318,984 |                                         |  |                             | (4,825,583)  |               |   | (3,160,726)   |  | 89%  |  | 98% 
|Ocean City, MD          |  |                                 | 1,113,478 |   |                                 |   | 820,593   |                                         |  |                             | (2,121,292)  |               |   | (686,899)     |  | 96%  |  | 95% 
|Westminster, MD         |  |                                 | 1,214,240 |   |                                 |   | 1,181,465 |                                         |  |                             | (3,800,156)  |               |   | (3,394,988)   |  | 100% |  | 100%
|Dunn, NC(3)             |  |                                 | (101,433  | ) |                                 |   | 81,363    |                                         |  |                             | (116,789)    |               |   | (3,484,491)   |  | 36%  |  | 34% 
|CARS Preferred Equity   |  |                                 | 1,073,860 |   |                                 |   | 1,000,939 |                                         |  |                             | (1,666,700)  |               |   | (2,527,488)   |  | N/A  |  | N/A 
|                        |  | $                               | 4,425,357 |   |                                 | $ | 6,062,399 |                                         |  | $                           | (16,982,626) |               | $ | (23,864,965)  |  |      |  |     



|(1) | The Roswell, Georgia retail property was sold on May 1, 2009, which is
reflected as a realized gain/(loss).
|--- | -----------------------------------------------------------------------------------------------------------



|(2) | The Kansas City, Kansas retail property was sold on June 29, 2007 but
certain post-closing adjustments were recognized during the six months ended June 30, 2009.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | A portion of the Dunn, North Carolina retail property was sold on
November 12, 2009, which is reflected as a realized gain/(loss).
|--- | ----------------------------------------------------------------------------------------------------------------------------------

Net investment income

Net investment income attributable to the general partners controlling interest for the Partnerships retail properties was
approximately $4.4 million for the year ended December 31, 2009, a decrease of approximately $1.6 million from the prior year. The decrease was primarily due to (a) loss of operating income from the Roswell, Georgia retail property sold on
May 1, 2009; (b) increased vacancy and reduced rents at the Hampton, Virginia retail property; and (d) a one-time occurrence related to bad debt expense at the retail property in Dunn, North Carolina. Partially offsetting these losses
was an increase in net investment income attributable to the general partners controlling interest at the property in Ocean City, Maryland due to completion of renovation and increased occupancy over the course of the year.

Recognized and Unrealized gain /(loss)

The retail properties owned by the Partnership recorded a net recognized and unrealized loss attributable to the general partners controlling interest of approximately $17.0 million for the year
ended December 31, 2009, compared with a net unrealized loss attributable to the general partners controlling interest of approximately $23.9 million for the prior year. The net unrealized loss attributable to the general partners
controlling interest for the year ended December 31, 2009 was primarily due to increased investment rates and more conservative market leasing assumptions across the retail sector based on declining retail property fundamentals and decreased
national consumption, which caused each property to decline in value. The net recognized and unrealized loss attributable to the general partners controlling interest was also partially attributable to the $4.5 million loss recorded at the
retail property in Roswell, Georgia upon sale on May 1, 2009.



16



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HOTEL PROPERTY



|                        |  |                                 |         |                                 |   |                           |  |                           |             |               |   |               |  |     |  |    
|----------------------- |  | ------------------------------- | ------- | ------------------------------- | - | ------------------------- |  | ------------------------- | ----------- | ------------- | - | ------------- |  | --- |  | ---
|Year Ended December 31, |  | Net InvestmentIncome/(Loss)2009 |         | Net InvestmentIncome/(Loss)2008 |   | UnrealizedGain/(Loss)2009 |  | UnrealizedGain/(Loss)2008 |             | Occupancy2009 |   | Occupancy2008
|Property                |  |                                 |         |                                 |   |                           |  |                           |             |               |   |               |  |     |  |    
|Lake Oswego, OR         |  | $                               | 620,724 |                                 | $ | 1,213,328                 |  | $                         | (3,732,245) |               | $ | (1,347,338)   |  | 61% |  | 71%

Net investment income

Net investment income attributable to the general partners controlling interest for the Partnerships hotel property was
approximately $0.6 million for the year ended December 31, 2009, reflecting a decrease of approximately $0.6 million from the prior year due to lost occupancy and decreased revenue per available room.

Unrealized gain /(loss)

The hotel property owned by the Partnership recorded an unrealized loss attributable to the general partners controlling interest of approximately $3.7 million for the year ended December 31,
2009, compared with an unrealized loss attributable to the general partners controlling interest of approximately $1.3 million for the prior year. The unrealized loss attributable to the general partners controlling interest for the year
ended December 31, 2009 reflects increased investment rates and decreased average daily rate growth projections.



17



---

Other

Other net investment loss decreased approximately $0.2 million during the year ended December 31, 2009 from the prior year. Other net investment loss includes interest income from short-term
investments, investment management fees, and portfolio level expenses.

(c) Inflation

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

Critical Accounting Policies

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

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

Accounting Pronouncements Adopted

The Partnership adopted the FASB interpretation guidance on accounting for uncertainty in income taxes 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 a partnership has taken or expects to take on a tax return. The adoption of this guidance had no effect on the
financial position and result of operations of the Partnership.

In September 2006, the FASB issued authoritative guidance for
fair value measurements. This guidance defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and requires additional disclosures related to fair value measurements. This guidance does
not require any new fair value measurements, but the application of this guidance could change current practices in determining fair value. This guidance is effective for fiscal years beginning after November 15, 2007 with early adoption
permitted. The Partnerships adoption effective January 1, 2008 did not have any material effect on the Partnerships financial position and result of operations. Please refer to Notes 2D and 5 for details.

In February 2007, the FASB issued authoritative guidance on the fair value option for financial assets and financial liabilities, which
provides entities with an option to report selected financial assets and liabilities at fair value. This guidance also amended certain provisions in the existing guidance for investments in debt and equity securities. This guidance is effective for
fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership adopted this guidance effective January 1, 2008, however, the Partnership did not make a fair value option election for its existing debt. The
Partnerships adoption did not have any effect on the Partnerships consolidated financial position and results of operations. Please refer to Note 5 of the related Notes in this filing for details.

In December 2007, FASB revised authoritative guidance for business combinations, which expands the definition of a business and redefines the
acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes to acquisition related contingent consideration, preacquisition contingencies, noncontrolling
interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first annual reporting period beginning after December 15, 2008. The Partnerships adoption
of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations, but may have an effect on the accounting for future business combinations.

In December 2007, FASB revised the accounting, presentation and disclosure for noncontrolling interests in consolidated financial
statements. This revised guidance requires noncontrolling interests to be reported as a separate component of equity. It also changes the allocation of losses and accounting in step acquisitions. The provisions in this revision should be applied
prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. After the initial adoption, any retained noncontrolling equity investment as a result of a deconsolidation must be
measured at fair value at the date of the deconsolidation. This guidance is effective for the annual periods beginning after December 15, 2008. Pursuant to the Partnerships adoption on January 1, 2009 of the revised guidance, the
Partnership is presenting its noncontrolling interests as equity for all periods presented in the financial statements. Noncontrolling interests, previously reported as a liability, are now required to be reported as a separate component of equity
on the balance sheet, and totaled $4.9 million December 31, 2008. In addition, net income (loss) attributable to the noncontrolling interest, which was previously reported as an expense and reflected within Net Investment Income is now reported
as a separate amount below Increase (decrease) in Net Assets Resulting from Operations, and totaled ($0.5) million and $0.2 million for the years ended December 31, 2008 and 2007, respectively.



18



---

In April 2009, the FASB revised authoritative guidance for the recognition and presentation
of other-than-temporary impairments. This revision amends the other-than-temporary impairment guidance for debt securities and expands the presentation and disclosure requirements of other-than-temporary impairments on debt and equity securities in
the financial statements. This revision also requires that the required annual disclosures for debt and equity securities be made for interim reporting periods. This revision does not amend existing recognition and measurement guidance related to
other-than-temporary impairments of equity securities. This revision is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The
Partnerships early adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued authoritative guidance on determining fair value when the volume and level of activity for the asset or
liability have significantly decreased and identifying transactions that are not orderly. This guidance also amends the disclosure requirements in interim and annual periods. This guidance is effective for interim and annual reporting periods ending
after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. The Partnerships early adoption of this guidance effective January 1, 2009 did not have a material
effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued
additional guidance for accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies. This guidance requires an asset acquired or liability assumed in a business combination that arises from a
contingency to be recognized at fair value at the acquisition date, if the acquisition date fair value of that asset or liability can be determined during the measurement period. If the acquisition date fair value of an asset acquired or liability
assumed in a business combination that arises from a contingency cannot be determined during the measurement period, the asset or liability shall be recognized at the acquisition date using the guidance in accounting for contingencies. This guidance
also amends disclosure requirements. This guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after January 1, 2009. The Partnerships adoption of this
guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued additional guidance for interim disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual
financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted. The Partnership adopted this guidance within the interim period ending June 30, 2009. The
Partnerships adoption of this guidance did not have a material effect on the Partnerships consolidated financial position or results of operations.

In May 2009, the FASB issued authoritative guidance for subsequent events. Subsequent events are events that occur after balance sheet date but before financial statements are issued or are available to
be issued. This guidance addresses the accounting for and disclosure of subsequent events not addressed in other applicable Generally Accepted Accounting Principles (U.S. GAAP), including disclosure of the date through which subsequent
events have been evaluated. This guidance is effective for interim or annual periods ending after June 15, 2009. The Partnerships adoption of this guidance effective with the interim period ending June 30, 2009 did not have a
material effect on the Partnerships consolidated financial position or results of operations. The required disclosure of the date through which subsequent events have been evaluated is provided in Note 2A of the related Notes in this filing.

In July 2009, the FASB launched its Accounting Standards Codification (the Codification), as the sole source of
authoritative U.S. GAAP to be applied by nongovernmental entities. The Codification generally does not change the existing rules of U.S. GAAP but rather makes it easier to find and research U.S. GAAP applicable to a particular transaction or
specific accounting issue. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics and aggregates them in four common accounting areas. Topics within each category are
further broken down into subtopics, sections and paragraphs. Accounting standards that are included in the Codification will be considered authoritative whereas those that are not included will be deemed non-authoritative. As a result, there are two
levels of U.S. GAAP, authoritative and non-authoritative. The Codification is effective for financial statements that cover the interim and annual periods ending after September 15, 2009 and impacts the way the Partnership references U.S. GAAP
accounting standards in the financial statements.

In September 2009, the FASB issued updated guidance for the fair value
measurement of investments in certain entities that calculate net asset value per share including certain alternative investments such as hedge funds, private equity funds, and venture capital funds. This guidance allows companies to determine the
fair value of such investments using net asset value (NAV) as a practical expedient if the fair value of the investment is not readily determinable and the investee entity issues financial statements in accordance with measurement
principles for investment companies. Use of this practical expedient is prohibited if it is probable the investment will be sold at something other than NAV. This guidance also requires new disclosures for each major category of alternative
investments. It is effective for the first annual or interim reporting period ending after December 15, 2009, with early application permitted. The Partnerships adoption of this guidance effective December 31, 2009 did not have a
material effect on the Partnerships consolidated financial position or results of operations.



19



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In January 2010, the FASB issued updated guidance that clarifies existing guidance on
accounting and reporting by an entity that experiences a decrease in ownership of a subsidiary that is a business. The updated guidance states that a decrease in ownership applies to a subsidiary or group of assets that is a business, but does not
apply to a sale of in-substance real estate even if it involves a business, such as an ownership interest in a partnership whose only asset is operating real estate. This guidance also affects accounting and reporting by an entity that exchanges a
group of assets that constitutes a business for an equity interest in another entity. The updated guidance also expands disclosures about fair value measurements relating to retained investments in a deconsolidated subsidiary or a preexisting
interest held by an acquirer in a business combination. The updated guidance is effective in the first interim or annual reporting period ending on or after December 15, 2009, and is applied on a retrospective basis to the first period that the
Partnership adopted the existing guidance, which was as of January 1, 2009. The Partnerships adoption of this updated guidance effective December 31, 2009 did not have a material effect on the Partnerships consolidated
financial position, results of operations, or financial statement disclosures.

Valuation of Investments

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

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

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

In general, the input
values used in the appraisal process are unobservable, therefore unless indicated otherwise; real estate investments are classified as Level 3 (see Note 5 of the related Notes in this filing for detail) under the FASB authoritative guidance for fair
value measurements.

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

As described above, the estimated fair value of real estate and real estate related assets is generally determined through an
appraisal process. Recent disruptions in the global capital, credit and real estate markets have led to, among other things a decline in the volume of transaction activity, in the fair value of many real estate and real estate related investments,
and a contraction in short-term and long-term debt and equity funding sources. The decline in liquidity and prices of real estate and real estate related investments, as well as the availability of observable transaction data and inputs, may have
made it more difficult to determine the fair value of such investments. As a result, these estimated fair values may vary significantly from the prices at which the real estate investments would sell, since market prices of real estate investments
can only be determined by negotiation between a willing buyer and seller. These differences could be material to the financial statements. Although the estimated fair values represent subjective estimates, management believes these estimated fair
values are reasonable approximations of market prices and the aggregate estimated value of investments in real estate is fairly presented as of December 31, 2009 and December 31, 2008.



20



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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 33.10% of its investment portfolio as of December 31, 2009,
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, 2009:



|                          |  |            |  |                                               |  |                     
|------------------------- |  | ---------- |  | --------------------------------------------- |  | --------------------
|                          |  | Maturity   |  | Estimated Market Value        (in $ millions) |  | AverageInterest Rate
|Cash and Cash equivalents |  | 0-3 months |  | $    24.5                                     |  | 1.10%               

The table below
discloses the Partnerships debt as of December 31, 2009. All of the Partnerships long-term debt bears interest at fixed rates and therefore the fair value of these instruments is affected by changes in market interest rates. The
following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt.



|                                            |  |       |   |  |         |  |       |  |        |  |       |  |            |  |         |   |  |           
|------------------------------------------- |  | ----- | - |  | ------- |  | ----- |  | ------ |  | ----- |  | ---------- |  | ------- | - |  | ----------
|Investment level debt (in $ thousands)      |  |       |   |  |         |  |       |  |        |  |       |  |            |  |         |   |  | Estimated 
|including current portion                   |  | 2010  |   |  | 2011    |  | 2012  |  | 2013   |  | 2014  |  | Thereafter |  | Total   |   |  | Fair Value
|                                            |  |       |   |  |         |  |       | 
|Weighted Average Fixed Interest Rate        |  | 6.75% |   |  | 6.75%   |  | 6.75% |  | 6.75%  |  | 6.75% |  | 6.75%      |  | 6.75%   |   |  |           
|Fixed Rate                                  |  | $565  |   |  | $604    |  | $646  |  | $692   |  | $676  |  | $3,573     |  | $6,756  |   |  | $6,658    
|Variable Rate                               |  | -     |   |  | 15,071  |  | -     |  | 9,000  |  | -     |  | -          |  | 24,071  |   |  | 24,008    
|Premium/(Discount) on Investment Level Debt |  | (2    | ) |  | -       |  | -     |  |        |  |       |  | -          |  | (2      | ) |  | -         
|                                            |  |      
|Total Investment Level Debt                 |  | $563  |   |  | $15,675 |  | $646  |  | $9,692 |  | $676  |  | $3,573     |  | $30,825 |   |  | $30,666   
|                                            |  |      

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.



21



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Item 8. Financial Statements and Supplementary Data

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

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

None.

Item 9A. Controls and Procedures

In order to ensure that the information we must disclose in our filings with the
SEC is recorded, processed, summarized, and reported on a timely basis, the Companys management, including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and
procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), under the Securities Exchange Act of 1934, as amended as ofDecember 31, 2009. Based on such evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that, as ofDecember 31, 2009, 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 year endedDecember 31, 2009, that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other
Information

None.



22



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PART III

Item 10. Directors, Executive Officers and Corporate Governance

JAMES J. AVERY, JR.,Director President, Individual Life Insurance, Prudential since 1998. Age 58.

HELEN M. GALT,Director Senior Vice President, Company Actuary and Chief Risk Officer, Prudential since 2007; prior to 2007, Senior Vice President and Company Actuary,
Prudential. Age 63.

BERNARD J. JACOB,Director Senior Vice President, Prudential since 2006. Age
54.

SCOTT D. KAPLAN, Director, Chief Executive Officer and President Vice President, Finance, Prudential
since 2006. Age 45.

SCOTT G. SLEYSTER,Director  Senior Vice President, Prudential since 1999. Age 50.

STEPHEN PELLETIER,Director, - President, Prudential Annuities since 2008, prior to 2008, Chairman and Chief Executive
Officer , Prudential International Investments. Age 56.

TUCKER I. MARR,Vice President, Chief Financial Officer and
Chief Accounting Officer - Vice President, Financial Reporting. Age 54.

THOMAS C. CASTANO,Vice President,
Corporate Counsel, Chief Legal Officer and Secretary Vice President and Corporate Counsel, Insurance Law , Prudential. Age 62.

JAMES M. OCONNOR,Senior Vice President and Actuary Vice President, Guaranteed Products since 2001. Age 53.

PHILLIP J. GRIGG,Senior Vice President and Chief Actuary  Vice President, Actuary, Prudential since 1987. Age 54.

KENT D. SLUYTER,Senior Vice President Vice President and Chief Actuary, Individual Life Insurance, Prudential since
2002. Age 50.

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



23



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Code of Ethics

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

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

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

Item 11. Executive Compensation

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

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

Not applicable.

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

See Related Transactions in Note 11 of Notes to Financial Statements of the Partnership.

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

Item 14. Principal Accounting Fees and Services

The Audit Committee of the Board of Directors of Prudential Financial, Inc. has appointed PricewaterhouseCoopers LLP as the independent registered public accounting firm of
Prudential Financial, Inc. and certain of its domestic and international subsidiaries, including the Registrant. The Audit Committee has established a policy requiring its pre-approval of all audit and permissible non-audit services provided by the
independent auditor. The specific information called for by this item is hereby incorporated by reference to the section entitled Item 2  Ratification of the Appointment of Independent Auditors in the definitive proxy statement of
Prudential Financial, Inc. for the Annual Meeting of Shareholders to be held on May 11, 2010, to be filed with the SEC pursuant to Regulation 14A within 120 days after the year endedDecember 31, 2009.



24



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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

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



| | 3. | Documents Incorporated by Reference
| | -- | -----------------------------------

See the following list of exhibits.



| | 4. | Exhibits
| | -- | --------

See the following list of exhibits.



|(b) | None.
|--- | -----



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



|     |  |                                                                                                                                                                                                                                                                                                              
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended Articles of Incorporation of Pruco Life Insurance Company of New Jersey filed as Exhibit 1.A.(6)(a) in Post Effective Amendment No. 26 to Form S-6, Registration Statement
No. 2-89780, filed April 28, 1997, and incorporated herein by reference.                                                  
|     | 
|3.2  |  | Certificate of Amendment of the Articles of Incorporation of Pruco Life Insurance Company of New Jersey, filed as Exhibit (3B) in Post-Effective Amendment No. to Form S-6,
Registration Statement No.12 to Form S-1, Registration No. 33-20018, filed April 16, 1999,, and incorporated herein by reference.
|     | 
|3.3  |  | Amended By-Laws of Pruco Life Insurance Company of New Jersey, filed as Exhibit 1.A.(6)(c) to Form S-6, Registration Statement No. 333-85117, filed August 13, 1999, and incorporated
herein by reference.                                                                                                   
|     | 
|3.4  |  | Resolution of the Board of Directors establishing the Pruco Life of New Jersey Variable Contract Real Property Account, filed as Exhibit (3C) in Post-Effective Amendment No. 9 to
Form S-1, Registration Statement No. 33-20018, filed April 9, 1997, and incorporated herein by reference.                 
|     | 
|4.1  |  | Variable Life Insurance Contract filed as Exhibit 1.A.(5) in Post-Effective Amendment No. 24 to Form s-6, Registration Statement No. 2-81243, filed April 29, 1997, and incorporated
herein by reference.                                                                                                    
|     | 
|4.2  |  | Revised Variable Appreciable Life Insurance Contract with fixed death benefit, filed as Exhibit 1.A.(5)(c) in Post-Effective Amendment No. 26 to Form S-6, Registration Statement No.
2-89780, filed April 28,1997, and incorporated herein by reference.                                                    
|     | 
|4.3  |  | Revised Variable Appreciable Life Insurance Contract with variable death benefit, filed as Exhibit 1.A.(5)(d) in Post-Effective Amendment No. 26 to Form S-6, Registration Statement
No. 2-89780, filed April 28, 1997, and incorporated herein by reference.                                                
|     | 
|4.4  |  | Single Premium Variable Annuity Contract, filed as Exhibit (4C) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20018, filed April 9, 1997, and
incorporated herein by reference.                                                                                               
|     | 
|4.5  |  | Flexible Premium Variable Life Insurance Contract, filed as Exhibit (4D) in Post-Effective Amendment No. 9 to Form S-1, Registration Statement No. 33-20018, filed April 9, 1997, and
incorporated herein by reference.                                                                                      
|     | 
|9.   |  | None.                                                                                                                                                                                                                                                                                                        
|     | 
|10.1 |  | Investment Management Agreement between Prudential Investment Management, Inc. and The Prudential Variable Contract Real Property Partnership, filed in Post-Effective Amendment No.
16 to Form S-1, Registration Statement No. 33-20083-01, filed April 10, 2003, and incorporated herein by reference.     



25



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|     |  |                                                                                                                                                                                                                                                                                                                                              
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.                                                                                                                                                                                                                                                                                       



26



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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 OF NEW JERSEY INSURANCE COMPANY

in respect of

Pruco Life Variable Contract Real Property Account

(Registrant)



|                     |  |  |  |     |  |                                                                                     
|-------------------- |  |  |  | --- |  | ------------------------------------------------------------------------------------
|Date: March 23, 2010 |  |  |  | By: |  | /s/ Scott D. Kaplan                                                                 
|                     |  |  |  |     |  | Scott D. Kaplan President and Director (Principal Executive Officer)                
|                     |  |  | 
|Date: March 23, 2010 |  |  |  | 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. |  | Director |  | March 23, 2010
|James J. Avery, Jr.   |  |          |  |               
|                      |  |         
|* Bernard J. Jacob    |  | Director |  | March 23, 2010
|Bernard J. Jacob      |  |          |  |               
|                      |  |         
|* Helen M. Galt       |  | Director |  | March 23, 2010
|Helen M. Galt         |  |          |  |               
|                      |  |         
|* Stephen Pelletier   |  | Director |  | March 23, 2010
|Stephen Pelletier     |  |          |  |               
|                      |  |         
|* Scott G. Sleyster   |  | Director |  | March 23, 2010
|Scott G. Sleyster     |  |          |  |               



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



27



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PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

(Registrant)

INDEX



|                                                                                                |  |     
|----------------------------------------------------------------------------------------------- |  | ----
|                                                                                                |  | Page
|A.     PRUCO LIFE OF NEW JERSEY 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, 2009 and 2008                                           |  | F-4 
|                                                                                                | 
|Statements of Operations  Years Ended December 31, 2009, 2008 and 2007                         |  | F-4 
|                                                                                                | 
|Statements of Changes in Net Assets  Years Ended December 31, 2009, 2008 and 2007              |  | 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-15
|                                                                                                | 
|Report of Independent Registered Public Accounting Firm on Financial Statement Schedules        |  | F-16
|                                                                                                | 
|Consolidated Statements of Assets and Liabilities  December 31, 2009 and 2008                  |  | F-17
|                                                                                                | 
|Consolidated Statements of Operations  Years Ended December 31, 2009, 2008 and
2007            |  | F-18
|                                                                                                | 
|Consolidated Statements of Changes in Net Assets  Years Ended December 31, 2009, 2008 and 2007 |  | F-19
|                                                                                                | 
|Consolidated Statements of Cash Flows  Years Ended December 31, 2009, 2008 and
2007            |  | F-20
|                                                                                                | 
|Consolidated Schedule of Investments  December 31, 2009 and 2008                               |  | F-21
|                                                                                                | 
|Notes to Financial Statements                                                                   |  | F-23
|                                                                                                | 
|Financial Statement Schedules:                                                                  |  |     
|                                                                                                | 
|For the period ended December 31, 2009                                                          |  |     
|                                                                                                | 
|Schedule III  Real Estate Owned: Properties                                                    |  | F-37

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 of New Jersey is responsible for establishing and maintaining adequate
internal control over financial reporting. Management conducted an assessment of the effectiveness, as of December 31, 2009, of the Companys internal control over financial reporting, based on the framework established inInternal
Control  Integrated Framework Issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment under that framework, management concluded that the Companys internal control over financial
reporting was effective as of December 31, 2009.

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. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

This annual report does not include an
attestation report of the Companys registered public accounting firm, PricewaterhouseCoopers LLP, 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 23, 2010



F-2



---

Report of Independent Registered Public Accounting Firm

To the Contract Owners of the

Pruco Life of New Jersey Variable Contract Real Property Account

and the Board of
Directors of

Pruco Life Insurance Company of New Jersey

In our opinion, the accompanying statements of net assets and the related statements of operations and of changes in net assets present fairly, in all material respects, the
financial position of Pruco Life of New Jersey Variable Contract Real Property Account at December 31, 2009 and 2008, 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, 2009, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of Pruco Life Insurance Company of New Jersey. Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 23, 2010



F-3



---

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

STATEMENTS OF NET ASSETS

December 31, 2009 and 2008



|                                                                                               |  |      |             |      |   |             |  |   |           
|---------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ----------- |  | - | ----------
|                                                                                               |  | 2009 |             | 2008 |   |            
|ASSETS                                                                                         |  |      |             |      |   |             | 
|Investment in The Prudential Variable Contract Real Property Partnership                       |  | $    | 7,317,018   |      | $ | 9,322,498   | 
|                                                                                               |  |      |             |      |   |             | 
|Net Assets                                                                                     |  | $    | 7,317,018   |      | $ | 9,322,498   | 
|                                                                                               |  |      |             |      |   |             | 
|NET ASSETS,representing:                                                                       |  |      |             |      |   |             | 
|Equity of contract owners                                                                      |  | $    | 5,103,774   |      | $ | 6,493,703   | 
|Equity of Pruco Life Insurance Company of New Jersey                                           |  |      | 2,213,244   |      |   | 2,828,795   | 
|                                                                                               |  |      |             |      |   |             | 
|                                                                                               |  | $    | 7,317,018   |      | $ | 9,322,498   | 
|                                                                                               |  |      |             |      |   |             | 
|Units outstanding                                                                              |  |      | 3,237,668   |      |   | 3,353,044   | 
|                                                                                               |  |      |             |      |   |             | 
|Portfolio shares held                                                                          |  |      | 282,778     |      |   | 294,526     | 
|Portfolio net asset value per share                                                            |  | $    | 25.88       |      | $ | 31.65       | 
|STATEMENTS OF OPERATIONS                                                                       |  |      |             |      |   |             | 
|For the years ended December 31, 2009, 2008 and 2007                                           |  |      |             |      |   |             | 
|                                                                                               |  |      |            
|                                                                                               |  | 2009 |             | 2008 |   | 2007       
|INVESTMENT INCOME                                                                              |  |      |             |      |   |             |  |   |           
|Net investment income from Partnership operations                                              |  | $    | 316,622     |      | $ | 485,353     |  | $ | 551,823   
|                                                                                               |  |      |             |      |   |             |  |   |           
|                                                                                               |  |      |            
|EXPENSES                                                                                       |  |      |             |      |   |             |  |   |           
|Charges to contract owners for assuming mortality risk and expense risk and for administration |  |      | 31,930      |      |   | 43,595      |  |   | 44,386    
|                                                                                               |  |      |             |      |   |             |  |   |           
|NET INVESTMENT INCOME                                                                          |  |      | 284,692     |      |   | 441,758     |  |   | 507,437   
|                                                                                               |  |      |             |      |   |             |  |   |           
|                                                                                               |  |      |            
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS                                         |  |      |             |      |   |             |  |   |           
|Net change in unrealized gain (loss) on investments in Partnership                             |  |      | (1,819,953) |      |   | (1,927,508) |  |   | 208,471   
|Net realized gain (loss) on sale of investments allocated from the Partnership                 |  |      | (185,772)   |      |   | 0           |  |   | 29,173    
|                                                                                               |  |      |             |      |   |             |  |   |           
|NET GAIN (LOSS) ON INVESTMENTS                                                                 |  |      | (2,005,725) |      |   | (1,927,508) |  |   | 237,644   
|                                                                                               |  |      |             |      |   |             |  |   |           
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS                                |  | $    | (1,721,033) |      | $ | (1,485,750) |  | $ | 745,081   
|                                                                                               |  |      |             |      |   |             |  |   |           
|                                                                                               |  |      |            
|STATEMENTS OF CHANGES IN NET ASSETS                                                            |  |      |             |      |   |             |  |   |           
|For the years ended December 31, 2009, 2008 and 2007                                           |  |      |             |      |   |             |  |   |           
|                                                                                               |  |      |            
|                                                                                               |  | 2009 |             | 2008 |   | 2007       
|OPERATIONS                                                                                     |  |      |             |      |   |             |  |   |           
|Net investment income                                                                          |  | $    | 284,692     |      | $ | 441,758     |  | $ | 507,437   
|Net change in unrealized gain (loss) on investments in Partnership                             |  |      | (1,819,953) |      |   | (1,927,508) |  |   | 208,471   
|Net realized gain (loss) on sale of investments allocated from the Partnership                 |  |      | (185,772)   |      |   | 0           |  |   | 29,173    
|                                                                                               |  |      |             |      |   |             |  |   |           
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS                                |  |      | (1,721,033) |      |   | (1,485,750) |  |   | 745,081   
|                                                                                               |  |      |             |      |   |             |  |   |           
|CAPITAL TRANSACTIONS                                                                           |  |      |             |      |   |             |  |   |           
|Net withdrawals by contract owners                                                             |  |      | (184,267)   |      |   | (170,768)   |  |   | (339,677) 
|Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey                  |  |      | (100,180)   |      |   | 214,363     |  |   | 384,063   
|                                                                                               |  |      |             |      |   |             |  |   |           
|NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS                      |  |      | (284,447)   |      |   | 43,595      |  |   | 44,386    
|                                                                                               |  |      |             |      |   |             |  |   |           
|TOTAL INCREASE (DECREASE) IN NET ASSETS                                                        |  |      | (2,005,480) |      |   | (1,442,155) |  |   | 789,467   
|                                                                                               |  |      |            
|NET ASSETS                                                                                     |  |      |             |      |   |             |  |   |           
|Beginning of period                                                                            |  |      | 9,322,498   |      |   | 10,764,653  |  |   | 9,975,186 
|                                                                                               |  |      |             |      |   |             |  |   |           
|End of period                                                                                  |  | $    | 7,317,018   |      | $ | 9,322,498   |  | $ | 10,764,653
|                                                                                               |  |      |             |      |   |             |  |   |           

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



F-4



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009

Note 1: General

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

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

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

Note 2: Summary of Significant Accounting Policies and Pronouncements

A. Basis of Accounting

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

In September 2006, the FASB
issued authoritative guidance for fair value measurements. This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value
measurements. This guidance does not require any new fair value measurements, but the application of this guidance could change current practices in determining fair value. This guidance is effective for fiscal years beginning after
November 15, 2007 with early adoption permitted. The Accounts adoption effective January 1, 2008 did not have any material effect on the Accounts financial position and result of operations. See Note 9 for more information on
Fair Value Measurements.

In February 2007, the FASB issued authoritative guidance on fair value option for
financial assets and financial liabilities, which provides entities with an option to report selected financial assets and liabilities at fair value. This guidance also amended certain provisions in the existing guidance for investments in debt and
equity securities. This guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Account adopted this guidance effective January 1, 2008. The Accounts adoption has no effect on the
Accounts financial position and results of operations.

In December 2007, FASB revised authoritative guidance for
business combinations, which expands the definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes to acquisition
related contingent consideration, preacquisition contingencies, non controlling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first annual reporting
period beginning after December 15, 2008. The Account adopted this guidance effective January 1, 2009. The Accounts adoption has no effect on the Accounts financial position and results of operations, but may have an effect on
the accounting for future business combinations.



F-5



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



In December 2007, FASB revised the accounting, presentation and disclosure for
noncontrolling interests in consolidated financial statements. This revised guidance will change the accounting for minority interests, which will be recharacterized as noncontrolling interests and classified by the parent company as a component of
equity. This guidance is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. Upon adoption, the guidance requires retroactive adoption of the presentation and disclosure requirements for existing
minority interests and prospective adoption for all other requirements. The adoption of this guidance has no effect on the Accounts financial position and results of operations.

In April 2009, the FASB revised authoritative guidance on issued recognition and presentation of other-than-temporary impairments. This revision amends the other-than-temporary
impairment guidance for debt securities and expands the presentation and disclosure requirements of other-than-temporary impairments on debt and equity securities in the financial statements. This revision also requires that the required annual
disclosures for debt and equity securities be made for interim reporting periods. This revision does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This revision is effective
for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. The Accounts early adoption of this guidance effective
January 1, 2009 did not have a material effect on the Accounts financial position or results of operations.

In
April 2009, the FASB issued authoritative guidance on determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. This guidance also amends
the disclosure requirements in interim and annual periods. This guidance is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after
March 15, 2009. The Accounts early adoption of this guidance effective January 1, 2009 did not have a material effect on the Accounts financial position or results of operations.

In April 2009, the FASB issued additional guidance for accounting for assets acquired and liabilities assumed in a business combination that
arise from contingencies. This guidance requires an asset acquired or liability assumed in a business combination that arises from a contingency to be recognized at fair value at the acquisition date, if the acquisition date fair value of that asset
or liability can be determined during the measurement period. If the acquisition date fair value of an asset acquired or liability assumed in a business combination that arises from a contingency cannot be determined during the measurement period,
the asset or liability shall be recognized at the acquisition date using the guidance in accounting for contingencies. This guidance also amends disclosure requirements. This guidance is effective for assets or liabilities arising from contingencies
in business combinations for which the acquisition date is on or after January 1, 2009. The Accounts adoption of this guidance effective January 1, 2009 did not have a material effect on the Accounts financial position or
results of operations.

In April 2009, the FASB issued additional guidance for interim disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted. The
Account adopted this guidance within the interim period ending June 30, 2009. The Accounts adoption of this guidance did not have a material effect on the Accounts financial position or results of operations.

In July 2009, the FASB launched its Accounting Standards Codification (the Codification), as the sole source of authoritative U.S.
GAAP to be applied by nongovernmental entities. The Codification generally does not change the existing rules of U.S. GAAP but rather makes it easier to find and research U.S. GAAP applicable to a particular transaction or specific accounting issue.
The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics and aggregates them in four common accounting areas. Topics within each category are further broken down into
subtopics, sections and paragraphs. Accounting standards that are included in the Codification will be considered authoritative whereas those that are not included will be deemed non-authoritative. As a result, there are two levels of U.S. GAAP,
authoritative and non-authoritative. The Codification is effective for financial statements that cover the interim and annual periods ending after September 15, 2009 and impacts the way the Account references U.S. GAAP accounting standards in
the financial statements.

In August 2009, the FASB issued updated guidance for the fair value measurement of liabilities.
This guidance includes techniques for measuring fair value when a quoted price in an active market for the identical liability is not available and clarifies that restrictions preventing the transfer of a liability should not be considered as a
separate input or adjustment in the measurement of its fair value. This guidance is effective for the first reporting period (including interim periods) beginning after issuance. The Accounts adoption of this guidance effective
December 31, 2009 did not have a material effect on the Accounts consolidated financial position, results of operations or financial statement disclosures.



F-6



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



In September 2009, the FASB issued updated guidance for the fair value measurement of
investments in certain entities that calculate net asset value per share including certain alternative investments such as hedge funds, private equity funds, and venture capital funds. This guidance allows companies to determine the fair value of
such investments using net asset value (NAV) as a practical expedient if the fair value of the investment is not readily determinable and the investee entity issues financial statements in accordance with measurement principles for
investment companies. Use of this practical expedient is prohibited if it is probable the investment will be sold at something other than NAV. This guidance also requires new disclosures for each major category of alternative investments. It is
effective for the first annual or interim reporting period ending after December 15, 2009, with early application permitted. The Accounts adoption of this guidance effective December 31, 2009 did not have a material effect on the
Accounts consolidated financial position, results of operations or financial statement disclosures.

In January 2010,
the FASB issued updated guidance that clarifies existing guidance on accounting and reporting by an entity that experiences a decrease in ownership of a subsidiary that is a business. The updated guidance states that a decrease in ownership applies
to a subsidiary or group of assets that is a business, but does not apply to a sale of in-substance real estate even if it involves a business, such as an ownership interest in a partnership whose only asset is operating real estate. This guidance
also affects accounting and reporting by an entity that exchanges a group of assets that constitutes a business for an equity interest in another entity. The updated guidance also expands disclosures about fair value measurements relating to
retained investments in a deconsolidated subsidiary or a preexisting interest held by an acquirer in a business combination. The updated guidance is effective in the first interim or annual reporting period ending on or after December 15, 2009,
and is applied on a retrospective basis to the first period that the Account adopted the existing guidance, which was as of January 1, 2009. The Accounts adoption of this updated guidance effective December 31, 2009 did not have a
material effect on the Accounts financial position, results of operations, or financial statement disclosures.



F-7



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



B. Investment in Partnership Interest

The investment in the Partnership is based on the Accounts proportionate interest of the Partnerships fair value. AtDecember 31, 2009 and December 31, 2008the Accounts interest in the Partnership was4.4% or 282,778shares and4.3% or 294,526shares, respectively. 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 for the Partnership. Amounts are based upon the Accounts proportionate interest in the Partnership.

D. Equity of Pruco Life Insurance Company of New Jersey

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

Note 3: Taxes

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

Note 4: Net
Contributions (Withdrawals) by Contract Owners

Net contract owner contributions (withdrawals) for the real estate
investment option in Pruco Life of New Jerseys variable insurance and variable annuity products for the years endedDecember 31, 2009, 2008 and 2007were as follows:



|                                                              |  |     |          |   |     |   |         |      |  |   |         |   |  |       |         |   |  |   |          |  
|------------------------------------------------------------- |  | --- | -------- | - | --- | - | ------- | ---- |  | - | ------- | - |  | ----- | ------- | - |  | - | -------- | -
|2009:                                                         |  | VAL |          |   | VLI |   |         | SPVA |  |   | SPVL    |   |  | TOTAL |        
|Contract Owner Net Payments:                                  |  | $   | 335,531  |   |     | $ | 50,568  |      |  | $ | 0       |   |  | $     | (12     | ) |  | $ | 386,087  |  
|Policy Loans:                                                 |  |     | (111,251 | ) |     |   | (10,425 | )    |  |   | 0       |   |  |       | (256    | ) |  |   | (121,932 | )
|Policy Loan Repayments and Interest:                          |  |     | 248,454  |   |     |   | 10,739  |      |  |   | 0       |   |  |       | 8,870   |   |  |   | 268,063  |  
|Surrenders, Withdrawals, and Death Benefits:                  |  |     | (346,035 | ) |     |   | (49,308 | )    |  |   | (8,456  | ) |  |       | (15,055 | ) |  |   | (418,854 | )
|Net Transfers From/To Other Subaccounts or Fixed Rate Option: |  |     | (44,229  | ) |     |   | (32,000 | )    |  |   | (10,000 | ) |  |       | 0       |   |  |   | (86,229  | )
|Administrative and Other Charges:                             |  |     | (178,910 | ) |     |   | (31,919 | )    |  |   | 0       |   |  |       | (573    | ) |  |   | (211,402 | )
|                                                              |  |     |          |   |     |   |         |      |  |   |         |   |  |       |         |   |  |   |          |  
|Net Contributions (Withdrawals) by Contract Owners            |  | $   | (96,440  | ) |     | $ | (62,345 | )    |  | $ | (18,456 | ) |  | $     | (7,026  | ) |  | $ | (184,267 | )
|                                                              |  |     |          |   |     |   |         |      |  |   |         |   |  |       |         |   |  |   |          |  
|                                                              |  |     |          |   |    
|2008:                                                         |  | VAL |          |   | VLI |   |         | SPVA |  |   | SPVL    |   |  | TOTAL |        
|Contract Owner Net Payments:                                  |  | $   | 333,669  |   |     | $ | 49,893  |      |  | $ | 0       |   |  | $     | 0       |   |  | $ | 383,562  |  
|Policy Loans:                                                 |  |     | (152,837 | ) |     |   | (14,315 | )    |  |   | 0       |   |  |       | (608    | ) |  |   | (167,760 | )
|Policy Loan Repayments and Interest:                          |  |     | 160,137  |   |     |   | 22,545  |      |  |   | 0       |   |  |       | 3,590   |   |  |   | 186,272  |  
|Surrenders, Withdrawals, and Death Benefits:                  |  |     | (304,860 | ) |     |   | (57,980 | )    |  |   | 0       |   |  |       | (7,581  | ) |  |   | (370,421 | )
|Net Transfers From/To Other Subaccounts or Fixed Rate Option: |  |     | (1,169   | ) |     |   | 7,657   |      |  |   | 32,000  |   |  |       | 0       |   |  |   | 38,488   |  
|Administrative and Other Charges:                             |  |     | (200,188 | ) |     |   | (39,870 | )    |  |   | 0       |   |  |       | (849    | ) |  |   | (240,907 | )
|                                                              |  |     |          |   |     |   |         |      |  |   |         |   |  |       |         |   |  |   |          |  
|Net Contributions (Withdrawals) by Contract Owners            |  | $   | (165,248 | ) |     | $ | (32,070 | )    |  | $ | 32,000  |   |  | $     | (5,448  | ) |  | $ | (170,766 | )
|                                                              |  |     |          |   |     |   |         |      |  |   |         |   |  |       |         |   |  |   |          |  
|                                                              |  |     |          |   |    
|2007:                                                         |  | VAL |          |   | VLI |   |         | SPVA |  |   | SPVL    |   |  | TOTAL |        
|Contract Owner Net Payments:                                  |  | $   | 262,694  |   |     | $ | 52,362  |      |  | $ | 0       |   |  | $     | 3       |   |  | $ | 315,059  |  
|Policy Loans:                                                 |  |     | (148,314 | ) |     |   | (21,253 | )    |  |   | 0       |   |  |       | (872    | ) |  |   | (170,439 | )
|Policy Loan Repayments and Interest:                          |  |     | 140,844  |   |     |   | 14,441  |      |  |   | 0       |   |  |       | 5,383   |   |  |   | 160,668  |  
|Surrenders, Withdrawals, and Death Benefits:                  |  |     | (371,717 | ) |     |   | (65,896 | )    |  |   | 0       |   |  |       | 0       |   |  |   | (437,613 | )
|Net Transfers From/To Other Subaccounts or Fixed Rate Option: |  |     | 27,721   |   |     |   | 3,778   |      |  |   | 0       |   |  |       | (6,855  | ) |  |   | 24,644   |  
|Administrative and Other Charges:                             |  |     | (193,372 | ) |     |   | (37,783 | )    |  |   | 0       |   |  |       | (841    | ) |  |   | (231,996 | )
|                                                              |  |     |          |   |     |   |         |      |  |   |         |   |  |       |         |   |  |   |          |  
|Net Contributions (Withdrawals) by Contract Owners            |  | $   | (282,144 | ) |     | $ | (54,351 | )    |  | $ | 0       |   |  | $     | (3,182  | ) |  | $ | (339,677 | )
|                                                              |  |     |          |   |     |   |         |      |  |   |         |   |  |       |         |   |  |   |          |  



F-8



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



Note 5: Partnership Distributions

As of December 31, 2009, the Partnership made a distribution of $8 million. The Pruco Life of New Jersey Accounts share of this distribution was $0.3 million. For the year
ended December 31, 2008, the Partnership made no distributions.

Note 6: Unit Activity

Transactions in units for the years ended December 31, 2009, 2008 and 2007 were as follows:

2009:



|                       |  |          |   |  |                               |  |          |   |  |         |   |  |        |   |  |        |  
|---------------------- |  | -------- | - |  | ----------------------------- |  | -------- | - |  | ------- | - |  | ------ | - |  | ------ | -
|                       |  |          |   |  |                               |  | VAL      |   |  | VLI     |   |  | SPVA   |   |  | SPVL   |  
|Company Contributions: |  | 178,349  |   |  | Contract Owner Contributions: |  | 219,159  |   |  | 24,075  |   |  | 0      |   |  | 4,420  |  
|Company Redemptions:   |  | (216,074 | ) |  | Contract Owner Redemptions:   |  | (260,440 | ) |  | (48,026 | ) |  | (9,051 | ) |  | (7,788 | )
|                       |  |          |   |  |                               | 
|2008:                  |  |          |   |  |                               |  |          |   |  |         |   |  |        |   |  |        |  
|                       |  |          |   |  |                               |  | VAL      |   |  | VLI     |   |  | SPVA   |   |  | SPVL   |  
|Company Contributions: |  | 131,790  |   |  | Contract Owner Contributions: |  | 148,198  |   |  | 26,598  |   |  | 11,244 |   |  | 1,293  |  
|Company Redemptions:   |  | (59,871  | ) |  | Contract Owner Redemptions:   |  | (200,157 | ) |  | (36,205 | ) |  | 0      |   |  | (3,252 | )
|                       |  |          |   |  |                               | 
|2007:                  |  |          |   |  |                               |  |          |   |  |         |   |  |        |   |  |        |  
|                       |  |          |   |  |                               |  | VAL      |   |  | VLI     |   |  | SPVA   |   |  | SPVL   |  
|Company Contributions: |  | 164,691  |   |  | Contract Owner Contributions: |  | 143,947  |   |  | 21,788  |   |  | 0      |   |  | 1,941  |  
|Company Redemptions:   |  | (39,046  | ) |  | Contract Owner Redemptions:   |  | (232,502 | ) |  | (38,018 | ) |  | 0      |   |  | (3,220 | )

Note 7: Purchases and Sales
of Investments

The aggregate costs of purchases and proceeds from sales of investments in the Partnership for the yearsended December 31, 2009, 2008 and 2007were as follows:



|           |  |                  |         |                  |   |                  |  |   |  
|---------- |  | ---------------- | ------- | ---------------- | - | ---------------- |  | - | -
|           |  | December 31,2009 |         | December 31,2008 |   | December 31,2007
|Purchases: |  | $                | 0       |                  | $ | 0                |  | $ | 0
|Sales:     |  | $                | 316,377 |                  | $ | 0                |  | $ | 0



F-9



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



Note 8: Financial Highlights

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

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



|                  |  |               |  |                    |                     |            |   |              |  |      |                 |  |               |                 |  |                   |  
|----------------- |  | ------------- |  | ------------------ | ------------------- | ---------- | - | ------------ |  | ---- | --------------- |  | ------------- | --------------- |  | ----------------- | -
|                  |  | At year ended |  | For the year ended |                    
|                  |  |               |  |                    |                     |           
|                  |  | Units         |  | Unit Value         |                     | Net Assets |   | Investment   |  |      | Expense Ratio** |  |               | Total Return*** | 
|                  |  | (000s)       |  | Lowest-Highest     |                     | (000s)    |   | IncomeRatio* |  |      | Lowest-Highest  |  |               | Lowest-Highest  | 
|December 31, 2009 |  | 2,253         |  | $                  | 1.94013 to $2.38693 |            | $ | 5,104        |  | 3.98 | %               |  | 0.35% to 1.25 | %               |  | -19.26% to -18.54 | %
|December 31, 2008 |  | 2,330         |  | $                  | 2.40304 to $2.93018 |            | $ | 6,494        |  | 4.55 | %               |  | 0.35% to 1.25 | %               |  | -14.47% to -13.70 | %
|December 31, 2007 |  | 2,382         |  | $                  | 2.80966 to $3.39532 |            | $ | 7,715        |  | 5.28 | %               |  | 0.35% to 1.25 | %               |  | 6.58% to 7.54     | %
|December 31, 2006 |  | 2,489         |  | $                  | 2.63621 to $3.15740 |            | $ | 7,511        |  | 5.1  | %               |  | 0.35% to 1.25 | %               |  | 13.05% to 14.06   | %
|December 31, 2005 |  | 2,570         |  | $                  | 2.33181 to $2.76817 |            | $ | 6,812        |  | 4.64 | %               |  | 0.35% to 1.25 | %               |  | 11.76% to 12.76   | %

The table
above reflects information for units held by contract owners. Pruco Life of New Jersey also maintains a position in the Real Property Account, to provide for property acquisitions and capital expenditure funding needs. Pruco Life of New Jersey held984,898, 1,022,622, 950,695, 825,050 and 804,224units representing$2,213,244, $2,828,795, $3,049,391, $2,464,171 and $2,112,648 of net assets as ofDecember 31, 2009, 2008, 2007, 2006 and 2005, respectively. Charges for mortality risk, expense risk and administrative expenses are used by Pruco Life of New Jersey to
purchase additional units in its account resulting in no impact of its net assets.





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

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

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

Charges and Expenses

A. Mortality Risk and Expense Risk Charges

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

B. Administrative Charges

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



F-10



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



C. Cost of Insurance and Other Related Charges

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

D. Deferred Sales Charge

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

E. Partial Withdrawal Charge

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

Note 9:    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-11



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



Note 10: Fair Value Disclosure

FASB guidance on fair value measurements and disclosures establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in fair value.
The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is
significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

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

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

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

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

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

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



F-12



---

NOTES TO THE FINANCIAL STATEMENTS OF

PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

December 31, 2009



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

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

Table 1:



|                                                                         |  |                                                                  |       |                                                             |   |                                             |  |                                         |   |  |   |      
|------------------------------------------------------------------------ |  | ---------------------------------------------------------------- | ----- | ----------------------------------------------------------- | - | ------------------------------------------- |  | --------------------------------------- | - |  | - | -----
|                                                                         |  | ($ in 000s) Fair Value Measurements at December 31, 2009 using 
|Assets:                                                                  |  | Amounts  Measured at Fair  Value 12/31/2009                      |       | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservableInputs (Level 2) |  | SignificantUnobservable Inputs(Level 3)
|                                                                         |  |                                                                  |      
|                                                                         |  |                                                                  |       |                                                            
|Investment in The Prudential Variable Contract Real Property Partnership |  | $                                                                | 7,317 |                                                             | $ | -                                           |  | $                                       | - |  | $ | 7,317
|                                                                         |  |                                                                  |      
|Total Assets                                                             |  | $                                                                | 7,317 |                                                             | $ | -                                           |  | $                                       | - |  | $ | 7,317
|                                                                         |  |                                                                  |      
|                                                                         | 
|                                                                         |  | ($ in 000s)  Fair Value Measurements at December 31, 2008 using
|Assets:                                                                  |  | Amounts Measured at FairValue 12/31/2008                         |       | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservableInputs (Level 2) |  | SignificantUnobservable Inputs(Level 3)
|                                                                         |  |                                                                  |      
|                                                                         |  |                                                                  |       |                                                            
|Investment in The Prudential Variable Contract Real Property Partnership |  | $                                                                | 9,322 |                                                             | $ | -                                           |  | $                                       | - |  | $ | 9,322
|                                                                         |  |                                                                  |      
|Total Assets                                                             |  | $                                                                | 9,322 |                                                             | $ | -                                           |  | $                                       | - |  | $ | 9,322
|                                                                         |  |                                                                  |      



F-13



---

Table 2 below provides a reconciliation of the beginning and ending balances for all assets
measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period endedDecember 31, 2009 and December 31, 2008.

Table 2:



|                                                                                                                                                             |  |                                                                                                    |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------- | -------
|                                                                                                                                                             |  | ($ in 000s)                                                                                      
|                                                                                                                                                             |  | Fair Value Measurements Using SignificantUnobservable Inputs for the year endedDecember 31, 2009  
|                                                                                                                                                             |  | (Level 3)                                                                                         
|                                                                                                                                                             |  |                                                                                                   
|                                                                                                                                                             |  |                                                                                                    |        
|                                                                                                                                                             | 
|Beginning balance @01/01/09                                                                                                                                  |  | $                                                                                                  | 9,322  
|                                                                                                                                                             | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership
operations                                      |  | $                                                                                                  | (2,006)
|Net Investment Income from Partnership operations                                                                                                            |  | $                                                                                                  | 317    
|Acquisition/Additions                                                                                                                                        |  |                                                                                                    | -      
|Equity Income                                                                                                                                                |  |                                                                                                    | -      
|Contributions                                                                                                                                                |  |                                                                                                    | -      
|Disposition/Settlements                                                                                                                                      |  | $                                                                                                  | (316)  
|Equity losses                                                                                                                                                |  |                                                                                                    | -      
|Distributions                                                                                                                                                |  |                                                                                                    | -      
|                                                                                                                                                             |  |                                                                                                    |        
|Ending balance @12/31/09                                                                                                                                     |  | $                                                                                                  | 7,317  
|                                                                                                                                                             |  |                                                                                                    |        
|                                                                                                                                                             | 
|The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in (realized\unrealized) gains |  |                                                                                                    |        
|                                                                                                                                                             |  |                                                                                                   
|or losses relating to assets still held at the reporting date                                                                                                |  | $                                                                                                  | (2,006)
|                                                                                                                                                             |  |                                                                                                    |        
|                                                                                                                                                             | 
|Table 2:                                                                                                                                                     |  |                                                                                                    |        
|                                                                                                                                                             | 
|                                                                                                                                                             |  | ($ in 000s)                                                                                      
|                                                                                                                                                             |  | Fair Value Measurements Using Significant Unobservable Inputs for the year ended December 31, 2008
|                                                                                                                                                             |  | (Level 3)                                                                                         
|                                                                                                                                                             |  |                                                                                                   
|                                                                                                                                                             |  |                                                                                                    |        
|                                                                                                                                                             | 
|Beginning balance @ 01/01/08                                                                                                                                 |  | $                                                                                                  | 10,765 
|                                                                                                                                                             | 
|Total gains or losses (realized/unrealized) included in earnings (or changes in net assets) from Partnership
operations                                      |  | $                                                                                                  | (1,928)
|Net Investment Income from Partnership operations                                                                                                            |  | $                                                                                                  | 485    
|Acquisition/Additions                                                                                                                                        |  |                                                                                                    | -      
|Equity Income                                                                                                                                                |  |                                                                                                    | -      
|Contributions                                                                                                                                                |  |                                                                                                    | -      
|Disposition/Settlements                                                                                                                                      |  |                                                                                                    | -      
|Equity losses                                                                                                                                                |  |                                                                                                    | -      
|Distributions                                                                                                                                                |  |                                                                                                    | -      
|                                                                                                                                                             |  |                                                                                                    |        
|Ending balance @ 12/31/08                                                                                                                                    |  | $                                                                                                  | 9,322  
|                                                                                                                                                             |  |                                                                                                    |        
|                                                                                                                                                             | 
|The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains            |  |                                                                                                    |        
|                                                                                                                                                             |  |                                                                                                   
|or losses relating to assets still held at the reporting date.                                                                                               |  | $                                                                                                  | (1,928)
|                                                                                                                                                             |  |                                                                                                    |        



F-14



---

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 consolidated schedules 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, 2009 and 2008, 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, 2009 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2C to the consolidated financial statements, the Partnership changed its accounting, presentation and
disclosure for non-controlling interests in consolidated subsidiaries in 2009.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 19, 2010



F-15



---

Report of Independent Registered Public Accounting Firm on

Financial Statement Schedule

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 19, 2010 appearing in this Annual Report on
Form 10-K also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 19, 2010



F-16



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES



|                                                                                                                     |  |                   |             |                   |   |            
|-------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | ----------------- | - | -----------
|                                                                                                                     |  | December 31, 2009 |             | December 31, 2008
|ASSETS                                                                                                               |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|REAL ESTATE INVESTMENTS - At estimated fair value:                                                                   |  |                   |             |                   |   |            
|Real estate and improvements(cost: 12/31/2009 - $211,091,543; 12/31/2008 - $245,808,214)                             |  | $                 | 167,100,000 |                   | $ | 221,196,000
|Real estate partnerships and preferred equity investments (cost: 12/31/2009 - $14,238,698; 12/31/2008 - $14,324,204) |  |                   | 10,044,510  |                   |   | 11,796,716 
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|Total real estate investments                                                                                        |  |                   | 177,144,510 |                   |   | 232,992,716
|                                                                                                                     |  |                  
|CASH AND CASH EQUIVALENTS                                                                                            |  |                   | 24,522,159  |                   |   | 27,736,520 
|                                                                                                                     |  |                  
|OTHER ASSETS, NET                                                                                                    |  |                   | 2,629,989   |                   |   | 2,936,037  
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|Total assets                                                                                                         |  | $                 | 204,296,658 |                   | $ | 263,665,273
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|LIABILITIES & PARTNERS EQUITY                                                                                       |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|INVESTMENT LEVEL DEBT (net of unamortized discount: 12/31/09 $1,830; 12/31/08 $26,480)                               |  | $                 | 30,824,899  |                   | $ | 40,047,827 
|                                                                                                                     |  |                  
|ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                                                |  |                   | 2,541,198   |                   |   | 2,924,938  
|                                                                                                                     |  |                  
|DUE TO AFFILIATES                                                                                                    |  |                   | 603,101     |                   |   | 851,595    
|                                                                                                                     |  |                  
|OTHER LIABILITIES                                                                                                    |  |                   | 1,025,279   |                   |   | 978,342    
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|Total liabilities                                                                                                    |  |                   | 34,994,477  |                   |   | 44,802,702 
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|COMMITMENTS AND CONTINGENCIES                                                                                        |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|NET ASSETS, REPRESENTING PARTNERS EQUITY:                                                                           |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|GENERAL PARTNERS CONTROLLING INTEREST                                                                               |  |                   | 167,204,272 |                   |   | 213,938,308
|                                                                                                                     |  |                  
|NONCONTROLLING INTEREST                                                                                              |  |                   | 2,097,909   |                   |   | 4,924,263  
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|                                                                                                                     |  |                   | 169,302,181 |                   |   | 218,862,571
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|Total liabilities and partners equity                                                                               |  | $                 | 204,296,658 |                   | $ | 263,665,273
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|NUMBER OF SHARES OUTSTANDING AT END OF PERIOD                                                                        |  |                   | 6,461,874   |                   |   | 6,758,960  
|                                                                                                                     |  |                   |             |                   |   |            
|                                                                                                                     |  |                  
|SHARE VALUE AT END OF PERIOD                                                                                         |  | $                 | 25.88       |                   | $ | 31.65      
|                                                                                                                     |  |                   |             |                   |   |            

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



F-17



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------------ | ---- | - | ------------ |  | - | -----------
|                                                                                                                       |  | Year Ended December 31,
|                                                                                                                       |  | 2009                    |              | 2008 |   | 2007        
|INVESTMENT INCOME:                                                                                                     |  |                         |              |      |   |              |  |   |            
|Revenue from real estate and improvements                                                                              |  | $                       | 25,607,535   |      | $ | 30,723,626   |  | $ | 29,094,968 
|Equity in income of real estate partnerships                                                                           |  |                         | 1,031,368    |      |   | 994,333      |  |   | 1,136,936  
|Interest on short-term investments                                                                                     |  |                         | 39,502       |      |   | 406,431      |  |   | 1,468,159  
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Total investment income                                                                                                |  |                         | 26,678,405   |      |   | 32,124,390   |  |   | 31,700,063 
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|INVESTMENT EXPENSES:                                                                                                   |  |                         |              |      |   |              |  |   |            
|Operating                                                                                                              |  |                         | 6,791,045    |      |   | 7,193,577    |  |   | 6,954,999  
|Investment management fee                                                                                              |  |                         | 2,607,256    |      |   | 3,447,030    |  |   | 3,380,090  
|Real estate taxes                                                                                                      |  |                         | 2,747,956    |      |   | 2,957,947    |  |   | 2,466,704  
|Administrative                                                                                                         |  |                         | 4,882,308    |      |   | 5,927,773    |  |   | 4,056,557  
|Interest expense                                                                                                       |  |                         | 1,682,562    |      |   | 1,970,462    |  |   | 2,019,937  
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Total investment expenses                                                                                              |  |                         | 18,711,127   |      |   | 21,496,789   |  |   | 18,878,287 
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|NET INVESTMENT INCOME                                                                                                  |  |                         | 7,967,278    |      |   | 10,627,601   |  |   | 12,821,776 
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:                                                                    |  |                         |              |      |   |              |  |   |            
|Net proceeds from real estate investments sold                                                                         |  |                         | 10,008,560   |      |   | -            |  |   | 18,353,122 
|Less:  Cost of real estate investments sold                                                                            |  |                         | 38,102,511   |      |   | -            |  |   | 19,063,985 
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|Gain (loss) realized from real estate investments sold                                                                 |  |                         | (28,093,951) |      |   | -            |  |   | (710,863)  
|                                                                                                                       |  |                         |             
|Less:  Reversal of prior periods unrealized gain (loss) on real estate investments sold                               |  |                         | (23,870,681) |      |   | -            |  |   | (1,380,344)
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Net gain (loss) recognized on real estate investments sold                                                             |  |                         | (4,223,270)  |      |   | -            |  |   | 669,481    
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Unrealized gain (loss) on investments held:                                                                            |  |                         |              |      |   |              |  |   |            
|Change in unrealized gain (loss) on real estate investments held                                                       |  |                         | (44,916,708) |      |   | (45,661,694) |  |   | 5,620,864  
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Net unrealized gain (loss) on real estate investments held                                                             |  |                         | (44,916,708) |      |   | (45,661,694) |  |   | 5,620,864  
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|NET REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS                                                     |  |                         | (49,139,978) |      |   | (45,661,694) |  |   | 6,290,345  
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Increase (decrease) in net assets resulting from operations                                                            |  | $                       | (41,172,700) |      | $ | (35,034,093) |  | $ | 19,112,121 
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Amounts attributable to noncontrolling interest:                                                                       |  |                         |              |      |   |              |  |   |            
|Net investment income (loss) attributable to noncontrolling interest                                                   |  |                         | 716,588      |      |   | (510,583)    |  |   | 158,196    
|Net gain (loss) recognized on real estate investments sold attributable to noncontrolling interest                     |  |                         | 30,926       |      |   | -            |  |   | -          
|Net unrealized gain (loss) on investments held attributable to noncontrolling interest                                 |  |                         | (3,186,178)  |      |   | (1,428,059)  |  |   | 836,750    
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|Net increase (decrease) in net assets resulting from operations attributable to the noncontrolling interest            |  | $                       | (2,438,664)  |      | $ | (1,938,642)  |  | $ | 994,946    
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|                                                                                                                       |  |                         |             
|Amounts attributable to general partners controlling interest:                                                        |  |                         |              |      |   |              |  |   |            
|Net investment income attributable to general partners controlling interest                                           |  |                         | 7,250,690    |      |   | 11,138,184   |  |   | 12,663,580 
|Net gain (loss) recognized on real estate investments sold attributable to general partners controlling interest      |  |                         | (4,254,196)  |      |   | -            |  |   | 669,481    
|Net unrealized gain (loss) on investments held attributable to general partners controlling interest                  |  |                         | (41,730,530) |      |   | (44,233,635) |  |   | 4,784,114  
|                                                                                                                       |  |                         |              |      |   |              |  |   |            
|Net increase (decrease) in net assets resulting from operations attributable to general partners controlling interest |  | $                       | (38,734,036) |      | $ | (33,095,451) |  | $ | 18,117,175 
|                                                                                                                       |  |                         |              |      |   |              |  |   |            

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



F-18



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS



|                                                                       |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |           |  |   |            
|---------------------------------------------------------------------- |  | -------------------------------------- | ------------ | ----------------------- | - | ----------- |  | -------------------------------------- | ------------ | ----------------------- | - | ------------ |  | -------------------------------------- | ----------- | ----------------------- | - | ------------ |  | - | ----------- |  | - | --------- |  | - | -----------
|                                                                       |  | Year Ended December 31,               
|                                                                       |  |                                        |             
|                                                                       |  | 2009                                   |              | 2008                    |   | 2007       
|                                                                       |  |                                        |             
|                                                                       |  | General Partners Controlling Interest |              | Noncontrolling Interest |   | Total       |  | General Partners Controlling Interest |              | Noncontrolling Interest |   | Total        |  | General Partners Controlling Interest |             | Noncontrolling Interest |   | Total       
|INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:           |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |           |  |   |            
|Net investment income                                                  |  | $                                      | 7,250,690    |                         | $ | 716,588     |  | $                                      | 7,967,278    |                         | $ | 11,138,184   |  | $                                      | (510,583)   |                         | $ | 10,627,601   |  | $ | 12,663,580  |  | $ | 158,196   |  | $ | 12,821,776 
|Net realized and unrealized gain (loss) from real estate investments   |  |                                        | (45,984,726) |                         |   | (3,155,252) |  |                                        | (49,139,978) |                         |   | (44,233,635) |  |                                        | (1,428,059) |                         |   | (45,661,694) |  |   | 5,453,595   |  |   | 836,750   |  |   | 6,290,345  
|                                                                       |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |          
|Increase (decrease) in net assets resulting from operations            |  |                                        | (38,734,036) |                         |   | (2,438,664) |  |                                        | (41,172,700) |                         |   | (33,095,451) |  |                                        | (1,938,642) |                         |   | (35,034,093) |  |   | 18,117,175  |  |   | 994,946   |  |   | 19,112,121 
|                                                                       |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |          
|INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS: |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |           |  |   |            
|Withdrawals                                                            |  |                                        | (8,000,000)  |                         |   | -           |  |                                        | (8,000,000)  |                         |   | -            |  |                                        | -           |                         |   | -            |  |   | -           |  |   | -         |  |   | -          
|Contributions from noncontrolling interest                             |  |                                        | -            |                         |   | 15,000      |  |                                        | 15,000       |                         |   | -            |  |                                        | 80,000      |                         |   | 80,000       |  |   | -           |  |   | 294,141   |  |   | 294,141    
|Distributions to noncontrolling interest                               |  |                                        | -            |                         |   | (402,690)   |  |                                        | (402,690)    |                         |   | -            |  |                                        | (221,885)   |                         |   | (221,885)    |  |   | -           |  |   | (35,739)  |  |   | (35,739)   
|                                                                       |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |          
|Increase (decrease) in net assets resulting from capital transactions  |  |                                        | (8,000,000)  |                         |   | (387,690)   |  |                                        | (8,387,690)  |                         |   | -            |  |                                        | (141,885)   |                         |   | (141,885)    |  |   | -           |  |   | 258,402   |  |   | 258,402    
|                                                                       |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |          
|INCREASE (DECREASE) IN NET ASSETS                                      |  |                                        | (46,734,036) |                         |   | (2,826,354) |  |                                        | (49,560,390) |                         |   | (33,095,451) |  |                                        | (2,080,527) |                         |   | (35,175,978) |  |   | 18,117,175  |  |   | 1,253,348 |  |   | 19,370,523 
|NET ASSETS -Beginning of period                                        |  |                                        | 213,938,308  |                         |   | 4,924,263   |  |                                        | 218,862,571  |                         |   | 247,033,759  |  |                                        | 7,004,790   |                         |   | 254,038,549  |  |   | 228,916,584 |  |   | 5,751,442 |  |   | 234,668,026
|                                                                       |  |                                        |              |                         |   |             |  |                                        |              |                         |   |              |  |                                        |             |                         |   |              |  |   |             |  |   |          
|NET ASSETS - End of period                                             |  | $                                      | 167,204,272  |                         | $ | 2,097,909   |  | $                                      | 169,302,181  |                         | $ | 213,938,308  |  | $                                      | 4,924,263   |                         | $ | 218,862,571  |  | $ | 247,033,759 |  | $ | 7,004,790 |  | $ | 254,038,549
|                                                                       |  |                                        |              |                         |   |            

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



F-19



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------------ | ---- | - | ------------ |  | - | ------------
|                                                                                                                      |  | Year Ended December 31,
|                                                                                                                      |  | 2009                    |              | 2008 |   | 2007        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                 |  |                         |              |      |   |              |  |   |             
|Net increase (decrease) in net assets from operations                                                                 |  | $                       | (41,172,700) |      | $ | (35,034,093) |  | $ | 19,112,121  
|Adjustments to reconcile net increase (decrease) in net assets to net cash provided by (used in) operating activities |  |                         |              |      |   |              |  |   |             
|Net realized and unrealized loss (gain)                                                                               |  |                         | 49,139,978   |      |   | 45,661,694   |  |   | (6,290,345) 
|Amortization of discount on investment level debt                                                                     |  |                         | 24,650       |      |   | -            |  |   | -           
|Amortization of deferred financing costs                                                                              |  |                         | 63,888       |      |   | 94,554       |  |   | 193,594     
|Distributions in excess of (less than) equity in income of real estate partnerships operations                       |  |                         | 85,506       |      |   | 199,730      |  |   | 35,287      
|Bad debt expense                                                                                                      |  |                         | 94,787       |      |   | 1,139,238    |  |   | 101,185     
|(Increase) decrease in:                                                                                               |  |                         |              |      |   |              |  |   |             
|Other assets                                                                                                          |  |                         | 147,375      |      |   | (1,136,791)  |  |   | 166,010     
|Increase (decrease) in:                                                                                               |  |                         |              |      |   |              |  |   |             
|Accounts payable and accrued expenses                                                                                 |  |                         | (383,740)    |      |   | 740,126      |  |   | (907,118)   
|Due to affiliates                                                                                                     |  |                         | (248,494)    |      |   | (49,776)     |  |   | 111,482     
|Other liabilities                                                                                                     |  |                         | 46,937       |      |   | 57,888       |  |   | 43,967      
|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|                                                                                                                      |  |                         |             
|Net cash flows provided by (used in) operating activities                                                             |  |                         | 7,798,187    |      |   | 11,672,570   |  |   | 12,566,183  
|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|                                                                                                                      |  |                         |             
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                 |  |                         |              |      |   |              |  |   |             
|Net proceeds from real estate investments sold                                                                        |  |                         | 10,008,560   |      |   | -            |  |   | 18,353,122  
|Acquisition of real estate and improvements                                                                           |  |                         | -            |      |   | -            |  |   | (42,218,143)
|Additions to real estate and improvements                                                                             |  |                         | (3,385,840)  |      |   | (9,936,151)  |  |   | (3,554,451) 
|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|                                                                                                                      |  |                         |             
|Net cash flows provided by (used in) investing activities                                                             |  |                         | 6,622,720    |      |   | (9,936,151)  |  |   | (27,419,472)
|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|                                                                                                                      |  |                         |             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                 |  |                         |              |      |   |              |  |   |             
|Withdrawals                                                                                                           |  |                         | (8,000,000)  |      |   | -            |  |   | -           
|Proceeds from investment level debt                                                                                   |  |                         | -            |      |   | 24,016,161   |  |   | -           
|Principal payments on investment level debt                                                                           |  |                         | (9,247,578)  |      |   | (16,090,046) |  |   | (588,776)   
|Contributions from noncontrolling interest                                                                            |  |                         | 15,000       |      |   | 80,000       |  |   | 294,143     
|Distributions to noncontrolling interest                                                                              |  |                         | (402,690)    |      |   | (221,885)    |  |   | (35,739)    
|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|                                                                                                                      |  |                         |             
|Net cash flows provided by (used in) financing activities                                                             |  |                         | (17,635,268) |      |   | 7,784,230    |  |   | (330,372)   
|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|                                                                                                                      |  |                         |             
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                               |  |                         | (3,214,361)  |      |   | 9,520,649    |  |   | (15,183,661)
|                                                                                                                      |  |                         |             
|CASH AND CASH EQUIVALENTS - Beginning of period                                                                       |  |                         | 27,736,520   |      |   | 18,215,871   |  |   | 33,399,532  
|                                                                                                                      |  |                         |              |      |   |              |  |   |             
|                                                                                                                      |  |                         |             
|CASH AND CASH EQUIVALENTS - End of period                                                                             |  | $                       | 24,522,159   |      | $ | 27,736,520   |  | $ | 18,215,871  
|                                                                                                                      |  |                         |              |      |   |              |  |   |             

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



F-20



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS



|                                                                                                       |  |                            |  |                             |             |                                |   |                  |            |                     |             |            |   |                     |             |  |   |           
|------------------------------------------------------------------------------------------------------ |  | -------------------------- |  | --------------------------- | ----------- | ------------------------------ | - | ---------------- | ---------- | ------------------- | ----------- | ---------- | - | ------------------- | ----------- |  | - | ----------
|                                                                                                       |  |                            |  |                             |             | 2009 Total RentableSquare Feet |   |                  |            |                     |             |            |   |                    
|                                                                                                       |  |                            |  |                             |             | Unless Otherwise               |   | December 31,2009 |            | December 31, 2008  
|Property Name                                                                                          |  | December 31, 2009Ownership |  | City, State                 |             | Indicated(Unaudited)           |   | Cost             |            | Estimated FairValue |             | Cost       |   | Estimated FairValue
|                                                                                                       |  |                            |  |                             |             |                                |  
|OFFICES                                                                                                |  |                            |  |                             |             |                                |   |                  |            |                     |             |            |   |                     |             |  |   |           
|750 Warrenville                                                                                        |  | WO                         |  | Lisle, IL                   |             | 103,193                        |   | $                | 26,186,415 |                     | $           | 6,700,000  |   | $                   | 25,218,777  |  | $ | 9,542,046 
|Summit @ Cornell Oaks                                                                                  |  | WO                         |  | Beaverton , OR              |             | 72,109                         |   |                  | 12,625,626 |                     |             | 8,500,000  |   |                     | 12,512,985  |  |   | 11,000,000
|Westpark                                                                                               |  | WO                         |  | Nashville, TN               |             | 97,199                         |   |                  | 13,019,181 |                     |             | 8,700,000  |   |                     | 12,060,981  |  |   | 13,753,954
|Financial Plaza                                                                                        |  | WO                         |  | Brentwood, TN               |             | 98,049                         |   |                  | 12,564,614 |                     |             | 9,700,000  |   |                     | 12,389,207  |  |   | 12,700,000
|                                                                                                       |  |                            |  | Offices % as of 12/31/09    |             | 20%                            |   |                  | 64,395,836 |                     |             | 33,600,000 |   |                     | 62,181,950  |  |   | 46,996,000
|                                                                                                       |  |                            |  |                             |             |                                |  
|APARTMENTS                                                                                             |  |                            |  |                             |             |                                |   |                  |            |                     |             |            |   |                     |             |  |   |           
|                                                                                                       |  |                            |  |                             |             |                                |  
|Brookwood Apartments                                                                                   |  | WO                         |  | Atlanta, GA                 |             | 240 Units                      |   |                  | 20,210,830 |                     |             | 14,500,000 |   |                     | 19,810,918  |  |   | 16,100,000
|Dunhill Trace Apartments                                                                               |  | WO                         |  | Raleigh, NC                 |             | 250 Units                      |   |                  | 16,512,970 |                     |             | 15,000,000 |   |                     | 16,433,544  |  |   | 16,600,000
|Broadstone Crossing                                                                                    |  | WO                         |  | Austin, TX                  |             | 225 Units                      |   |                  | 22,815,992 |                     |             | 21,000,000 |   |                     | 22,732,363  |  |   | 25,000,000
|The Reserve At Waterford Lakes                                                                         |  | WO                         |  | Charlotte, NC               |             | 140 Units                      |   |                  | 13,746,940 |                     |             | 9,200,000  |   |                     | 13,649,938  |  |   | 11,000,000
|                                                                                                       |  |                            |  | Apartments % as of 12/31/09 |             | 36%                            |   |                  | 73,286,732 |                     |             | 59,700,000 |   |                     | 72,626,763  |  |   | 68,700,000
|                                                                                                       |  |                            |  |                             |             |                                |  
|RETAIL                                                                                                 |  |                            |  |                             |             |                                |   |                  |            |                     |             |            |   |                     |             |  |   |           
|Kings Market                                                                                          |  | WO                         |  | Rosewell, GA                |             | Sold                           |   |                  | -          |                     |             | -          |   |                     | 37,893,595  |  |   | 14,100,000
|Hampton Towne Center                                                                                   |  | WO                         |  | Hampton, VA                 |             | 174,540                        |   |                  | 18,136,399 |                     |             | 18,600,000 |   |                     | 18,110,816  |  |   | 23,400,000
|White Marlin Mall                                                                                      |  | CJV                        |  | Ocean City, MD              |             | 197,098                        |   |                  | 23,311,878 |                     |             | 24,600,000 |   |                     | 23,271,014  |  |   | 28,600,000
|Westminster Crossing East, LLC                                                                         |  | CJV                        |  | Westminster, MD             |             | 89,890                         |   |                  | 15,044,877 |                     |             | 13,900,000 |   |                     | 15,044,721  |  |   | 17,700,000
|Kansas City Portfolio                                                                                  |  | EJV                        |  | Kansas City, KS;MO          |             | Sold                           |   |                  | -          |                     |             | -          |   |                     | 13,595      |  |   | 13,595    
|CARS Preferred Equity                                                                                  |  | PE                         |  | Various                     |             | N/A                            |   |                  | 14,238,698 |                     |             | 10,044,510 |   |                     | 14,310,609  |  |   | 11,783,121
|Harnett Crossing                                                                                       |  | CJV                        |  | Dunn, NC                    |             | 194,327                        |   |                  | 6,237,926  |                     |             | 3,200,000  |   |                     | 6,366,767   |  |   | 3,900,000 
|                                                                                                       |  |                            |  | Retail % as of 12/31/09     |             | 42%                            |   |                  | 76,969,778 |                     |             | 70,344,510 |   |                     | 115,011,117 |  |   | 99,496,716
|                                                                                                       |  |                            |  |                             |             |                                |  
|HOTEL                                                                                                  |  |                            |  |                             |             |                                |   |                  |            |                     |             |            |   |                     |             |  |   |           
|Portland Crown Plaza                                                                                   |  | CJV                        |  | Portland, OR                |             | 161 Rooms                      |   |                  | 10,677,895 |                     |             | 13,500,000 |   |                     | 10,312,588  |  |   | 17,800,000
|                                                                                                       |  |                            |  | Hotel % as of 12/31/09      |             | 8%                             |   |                  | 10,677,895 |                     |             | 13,500,000 |   |                     | 10,312,588  |  |   | 17,800,000
|                                                                                                       |  |                            |  |                             |            
|Total Real Estate Investments as a Percentage of General Partners Controlling Interest as of
12/31/09 |  | 106%                       |  | $                           | 225,330,241 |                                | $ | 177,144,510      |            | $                   | 260,132,418 |            | $ | 232,992,716        
|                                                                                                       |  |                            |  |                             |             |                                |   |                  |            |                     |             |            |   |                     |             |  |   |           

WO - Wholly Owned Investment

CJV - Consolidated Joint Venture

EJV - Joint Venture Investment
accounted for under the equity method

PE - Preferred equity investments accounted for under the equity method

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



F-21



---

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED SCHEDULE OF INVESTMENTS



|                                                                                 |  |             |           |                   |   |                     |  |      |            |                     |   |            |  |   |           
|-------------------------------------------------------------------------------- |  | ----------- | --------- | ----------------- | - | ------------------- |  | ---- | ---------- | ------------------- | - | ---------- |  | - | ----------
|                                                                                 |  |             |           | December 31, 2009 |   | December 31, 2008  
|                                                                                 |  | Face Amount |           | Cost              |   | EstimatedFair Value |  | Cost |            | EstimatedFair Value
|CASH AND CASH EQUIVALENTS - Percentage of General Partners Controlling Interest |  |             |           |                   |   | 14.7%               |  |      |            |                     |   | 13.0%     
|                                                                                 |  |             |           |                   |  
|Federal Home Loan Bank, 0 coupon bond, March, 2010                               |  | $           | 2,999,184 |                   | $ | 2,999,184           |  | $    | 2,999,184  |                     | $ | 1,000,000  |  | $ | 1,000,000 
|Federal Home Loan Bank, 0 coupon bond, March, 2010                               |  |             | 9,997,769 |                   |   | 9,997,769           |  |      | 9,997,769  |                     |   | 4,446,932  |  |   | 4,446,932 
|Federal Home Loan Bank, 0 coupon bond, March, 2010                               |  |             | 2,999,267 |                   |   | 2,999,267           |  |      | 2,999,267  |                     |   | 1,999,985  |  |   | 1,999,985 
|Federal Home Loan Bank, 0 coupon bond, March, 2010                               |  |             | 1,999,660 |                   |   | 1,999,660           |  |      | 1,999,660  |                     |   | 18,831,977 |  |   | 18,831,977
|                                                                                 |  |             |           |                   |  
|                                                                                 |  |             |           |                   |   |                     |  |      |            |                     |   |            |  |   |           
|                                                                                 |  |             |           |                   |  
|Total Cash Equivalents                                                           |  |             |           |                   |   | 17,995,880          |  |      | 17,995,880 |                     |   | 26,278,894 |  |   | 26,278,894
|                                                                                 |  |             |           |                   |  
|Cash                                                                             |  |             |           |                   |   | 6,526,279           |  |      | 6,526,279  |                     |   | 1,457,626  |  |   | 1,457,626 
|                                                                                 |  |             |           |                   |   |                     |  |      |            |                     |   |            |  |   |           
|                                                                                 |  |             |           |                   |  
|Total Cash and Cash Equivalents                                                  |  |             |           |                   | $ | 24,522,159          |  | $    | 24,522,159 |                     | $ | 27,736,520 |  | $ | 27,736,520
|                                                                                 |  |             |           |                   |   |                     |  |      |            |                     |   |            |  |   |           

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



F-22



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007

Note 1:
Organization

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

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

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

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

PREI ® is the real estate advisory unit of Prudential Investment Management, Inc. (PIM), which is an indirectly owned subsidiary of Prudential Financial Inc.
(PFI). PREI provides investment advisory services to the Partnerships partners pursuant to the terms of the Advisory Agreement as described in Note 11.

Note 2:    Summary of Significant Accounting Policies



| | A. | Basis of Presentation -The accompanying consolidated financial statements of The Partnership included herein have been prepared in
accordance with the requirements of Form 10-K and accounting principles generally accepted in the United States of America that are applicable to real estate investment companies. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair statement have been included. The Partnership has evaluated subsequent events through February19, 2010, the date these financial statements were available to be issued.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 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-23



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 2:          Summary of Significant
Accounting Policies (continued)





| | C. | Accounting Pronouncements Adopted-The Partnership adopted the FASB interpretation guidance on accounting for uncertainty in income taxes 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 a partnership has taken or expects to take
on a tax return. The adoption of this guidance had no effect on the financial position and result of operations of the Partnership.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In September 2006, the FASB issued authoritative guidance for fair value measurements. This guidance defines fair value, establishes a framework for measuring fair value under generally accepted
accounting principles, and requires additional disclosures related to fair value measurements. This guidance does not require any new fair value measurements, but the application of this guidance could change current practices in determining fair
value. This guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnerships adoption effective January 1, 2008 did not have any material effect on the Partnerships
financial position and result of operations. Please refer to Notes 2D and 5 for details.

In February 2007,
the FASB issued authoritative guidance on the fair value option for financial assets and financial liabilities, which provides entities with an option to report selected financial assets and liabilities at fair value. This guidance also amended
certain provisions in the existing guidance for investments in debt and equity securities. This guidance is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership adopted this guidance
effective January 1, 2008, however, the Partnership did not make a fair value option election for its existing debt. The Partnerships adoption did not have any effect on the Partnerships consolidated financial position and results
of operations. Please refer to Note 5 for details.

In December 2007, FASB revised authoritative guidance for
business combinations, which expands the definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing guidance for business combinations, including changes to acquisition
related contingent consideration, preacquisition contingencies, noncontrolling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. This guidance is effective for acquisitions closing after the first annual reporting
period beginning after December 15, 2008. The Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations, but may
have an effect on the accounting for future business combinations.

In December 2007, FASB revised the
accounting, presentation and disclosure for noncontrolling interests in consolidated financial statements. This revised guidance requires noncontrolling interests to be reported as a separate component of equity. It also changes the allocation of
losses and accounting in step acquisitions. The provisions in this revision should be applied prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. After the initial
adoption, any retained noncontrolling equity investment as a result of a deconsolidation must be measured at fair value at the date of the deconsolidation. This guidance is effective for the annual periods beginning after December 15, 2008.
Pursuant to the Partnerships adoption on January 1, 2009 of the revised guidance, the Partnership is presenting its noncontrolling interests as equity for all periods presented in the financial statements. Noncontrolling interests,
previously reported as a liability, are now required to be reported as a separate component of equity on the balance sheet, and totaled $4.9 million December 31, 2008. In addition, net income (loss) attributable to the noncontrolling interest,
which was previously reported as an expense and reflected within Net Investment Income is now reported as a separate amount below Increase (decrease) in Net Assets Resulting from Operations, and totaled ($0.5) million and $0.2 million
for the years ended December 31, 2008 and 2007, respectively.



F-24



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 2:    Summary of Significant Accounting Policies (continued)



C.   Accounting Pronouncements Adopted
(continued)



In April 2009, the FASB revised authoritative guidance on issued
recognition and presentation of other-than-temporary impairments. This revision amends the other-than-temporary impairment guidance for debt securities and expands the presentation and disclosure requirements of other-than-temporary impairments on
debt and equity securities in the financial statements. This revision also requires that the required annual disclosures for debt and equity securities be made for interim reporting periods. This revision does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity securities. This revision is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. The Partnerships early adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued authoritative guidance on determining fair value when the volume and level of activity for
the asset or liability have significantly decreased and identifying transactions that are not orderly. This guidance also amends the disclosure requirements in interim and annual periods. This guidance is effective for interim and annual reporting
periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. The Partnerships early adoption of this guidance effective January 1, 2009 did not have
a material effect on the Partnerships consolidated financial position or results of operations.

In
April 2009, the FASB issued additional guidance for accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies. This guidance requires an asset acquired or liability assumed in a business
combination that arises from a contingency to be recognized at fair value at the acquisition date, if the acquisition date fair value of that asset or liability can be determined during the measurement period. If the acquisition date fair value of
an asset acquired or liability assumed in a business combination that arises from a contingency cannot be determined during the measurement period, the asset or liability shall be recognized at the acquisition date using the guidance in accounting
for contingencies. This guidance also amends disclosure requirements. This guidance is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after January 1, 2009. The
Partnerships adoption of this guidance effective January 1, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In April 2009, the FASB issued additional guidance for interim disclosures about fair value of financial instruments for
interim reporting periods of publicly traded companies as well as in annual financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted. The Partnership adopted this
guidance within the interim period ending June 30, 2009. The Partnerships adoption of this guidance did not have a material effect on the Partnerships consolidated financial position or results of operations.

In May 2009, the FASB issued authoritative guidance for subsequent events. Subsequent events are events that occur after
balance sheet date but before financial statements are issued or are available to be issued. This guidance addresses the accounting for and disclosure of subsequent events not addressed in other applicable Generally Accepted Accounting Principles
(U.S. GAAP), including disclosure of the date through which subsequent events have been evaluated. This guidance is effective for interim or annual periods ending after June 15, 2009. The Partnerships adoption of this guidance
effective with the interim period ending June 30, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations. The required disclosure of the date through which subsequent events have
been evaluated is provided in Note 2A.



F-25



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 2:          Summary of Significant
Accounting Policies (continued)



C.   Accounting Pronouncements Adopted
(continued)



In July 2009, the FASB launched its Accounting Standards Codification
(the Codification), as the sole source of authoritative U.S. GAAP to be applied by nongovernmental entities. The Codification generally does not change the existing rules of U.S. GAAP but rather makes it easier to find and research U.S.
GAAP applicable to a particular transaction or specific accounting issue. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics and aggregates them in four common
accounting areas. Topics within each category are further broken down into subtopics, sections and paragraphs. Accounting standards that are included in the Codification will be considered authoritative whereas those that are not included will be
deemed non-authoritative. As a result, there are two levels of U.S. GAAP, authoritative and non-authoritative. The Codification is effective for financial statements that cover the interim and annual periods ending after September 15, 2009 and
will impact the way the Partnership references U.S. GAAP accounting standards in the financial statements.

In
September 2009, the FASB issued updated guidance for the fair value measurement of investments in certain entities that calculate net asset value per share including certain alternative investments such as hedge funds, private equity funds, and
venture capital funds. This guidance allows companies to determine the fair value of such investments using net asset value (NAV) as a practical expedient if the fair value of the investment is not readily determinable and the investee
entity issues financial statements in accordance with measurement principles for investment companies. Use of this practical expedient is prohibited if it is probable the investment will be sold at something other than NAV. This guidance also
requires new disclosures for each major category of alternative investments. It is effective for the first annual or interim reporting period ending after December 15, 2009, with early application permitted. The Partnerships adoption of
this guidance effective December 31, 2009 did not have a material effect on the Partnerships consolidated financial position or results of operations.

In January 2010, the FASB issued updated guidance that clarifies existing guidance on accounting and reporting by an entity that experiences a decrease in ownership of a subsidiary
that is a business. The updated guidance states that a decrease in ownership applies to a subsidiary or group of assets that is a business, but does not apply to a sale of in-substance real estate even if it involves a business, such as an ownership
interest in a partnership whose only asset is operating real estate. This guidance also affects accounting and reporting by an entity that exchanges a group of assets that constitutes a business for an equity interest in another entity. The updated
guidance also expands disclosures about fair value measurements relating to retained investments in a deconsolidated subsidiary or a preexisting interest held by an acquirer in a business combination. The updated guidance is effective in the first
interim or annual reporting period ending on or after December 15, 2009, and is applied on a retrospective basis to the first period that the Partnership adopted the existing guidance, which was as of January 1, 2009. The
Partnerships adoption of this updated guidance effective December 31, 2009 did not have a material effect on the Partnerships consolidated financial position, results of operations, or financial statement disclosures.



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



F-26



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 2:          Summary of Significant
Accounting Policies (continued)



D.Real Estate Investments (continued)



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

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

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

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

As described above, the estimated fair value of real estate and real estate related assets is generally determined through
an appraisal process. Recent disruptions in global capital, credit and real estate markets have led to, among other things, a decline in the volume of transaction activity, in the fair value of many real estate and real estate related investments,
and a contraction in short-term and long-term debt and equity funding sources. The decline in liquidity and prices of real estate and real estate related investments, as well as the availability of observable transaction data and inputs, may have
made it more difficult to determine the fair value of such investments. As a result, these estimated fair values may vary significantly from the prices at which the real estate investments would sell, since market prices of real estate investments
can only be determined by negotiation between a willing buyer and seller. These differences could be material to the financial statements. Although the estimated fair values represent subjective estimates, management believes these estimated fair
values are reasonable approximations of market prices and the aggregate estimated value of investments in real estate is fairly presented as of December 31, 2009 and December 31, 2008.



F-27



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 2:          Summary of Significant
Accounting Policies (continued)



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



| | F. | Other Assets Restricted cash of $115,711 and $207,343 was maintained by the wholly owned and consolidated properties at
December 31, 2009 and 2008, respectively, for tenant security deposits and is included in Other Assets on the Consolidated Statements of Assets and Liabilities. Other assets also include tenant receivables and are net of allowance for
uncollectible accounts of $1,083,235 and $1,028,539 at December 31, 2009 and 2008, respectively.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | G. | Investment Level Debt Investment level includes mortgage loan payable on wholly owned properties and consolidated partnerships and 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. Deferred financing costs related to debt were capitalized and amortized over the terms of the related obligations.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



F-28



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 3:  Reclassification

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

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

Cash paid for interest during the years ended December 31, 2009, 2008, and 2007, was $1,618,673, $1,878,870, and $1,746,115,
respectively.

Note 5:  Fair Value Measurements

Fair Value Measurements:

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

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

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

Level 3  Fair value is based on significant unobservable
inputs for the asset or liability. These inputs reflect the entitys own assumptions about how market participants would price the asset or liability.

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

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



F-29



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 5:  Fair Value Measurements (continued)



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

Table 1



|                                                          |  |                  |         |                                                    |   |                                                             |  |                                            |   |                                          |   |   |  |   |        
|--------------------------------------------------------- |  | ---------------- | ------- | -------------------------------------------------- | - | ----------------------------------------------------------- |  | ------------------------------------------ | - | ---------------------------------------- | - | - |  | - | -------
|                                                          |  |                  |         | (in 000s)                                        
|                                                          |  |                  |         | Fair value measurements at December 31, 2009 using
|Assets:                                                   |  | Cost at 12/31/09 |         | Amountsmeasured atfair value12/31/2009             |   | Quoted pricesin
activemarkets foridentical assets (level 1) |  | Significantotherobservableinputs (level 2) |   | Significantunobservableinputs (level 3) 
|                                                          |  |                  |        
|                                                          |  |                  |         |                                                    |  
|Real estate and improvements                              |  | $                | 211,092 |                                                    | $ | 167,100                                                     |  | $                                          | - |                                          | $ | - |  | $ | 167,100
|Real estate partnerships and preferred equity investments |  |                  | 14,239  |                                                    |   | 10,045                                                      |  |                                            | - |                                          |   | - |  |   | 10,045 
|                                                          | 
|                                                          |  |                  |        
|Total                                                     |  | $                | 225,331 |                                                    | $ | 177,145                                                     |  | $                                          | - |                                          | $ | - |  | $ | 177,145
|                                                          |  |                  |        
|                                                          |  |                 
|                                                          |  |                  |         | (in 000s)                                        
|                                                          |  |                  |         | Fair value measurements at December 31, 2008 using
|Assets:                                                   |  | Cost at12/31/08  |         | Amountsmeasured atfair value12/31/2008             |   | Quoted pricesin activemarkets foridentical assets(level 1)  |  | Significantotherobservableinputs (level 2) |   | Significantunobservable inputs (level 3)
|                                                          |  |                  |        
|                                                          |  |                  |         |                                                    |  
|Real estate and improvements                              |  | $                | 245,808 |                                                    | $ | 221,196                                                     |  | $                                          | - |                                          | $ | - |  | $ | 221,196
|Real estate partnerships and preferred equity investments |  |                  | 14,324  |                                                    |   | 11,797                                                      |  |                                            | - |                                          |   | - |  |   | 11,797 
|                                                          | 
|                                                          |  |                  |        
|                                                          |  |                  |         |                                                    |  
|Total                                                     |  | $                | 260,132 |                                                    | $ | 232,993                                                     |  | $                                          | - |                                          | $ | - |  | $ | 232,993
|                                                          |  |                  |        



F-30



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 5:  Fair Value Measurements (continued)



Table 2 below provides a reconciliation of the beginning and ending balances for all
assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period ended December 31, 2009 and December 31, 2008.

Table 2



|                                                                                                     |  |                             |          |                                                            |   |         |  |   |         
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | -------- | ---------------------------------------------------------- | - | ------- |  | - | --------
|(in 000s) Fair value measurements using significant unobservable inputs Level 3                    
|                                                                                                     |  |                             |         
|                                                                                                     |  | Real estate andimprovements |          | Real estate andpartnerships andpreferred equityinvestments |   | Total  
|                                                                                                     |  |                             |         
|                                                                                                     |  |                             |         
|Beginning balance @ 1/1/09                                                                           |  | $                           | 221,196  |                                                            | $ | 11,797  |  | $ | 232,993 
|                                                                                                     |  |                             |         
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | (47,473) |                                                            |   | (1,667) |  |   | (49,140)
|Equity income (losses)/interest income                                                               |  |                             | -        |                                                            |   | 1,031   |  |   | 1,031   
|Purchases, issuances and settlements                                                                 |  |                             | (6,623)  |                                                            |   | (1,116) |  |   | (7,739) 
|                                                                                                     |  |                             |         
|Ending balance @ 12/31/09                                                                            |  | $                           | 167,100  |                                                            | $ | 10,045  |  | $ | 177,145 
|                                                                                                     |  |                             |         
|                                                                                                     |  |                             |         
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | (43,250) |                                                            | $ | (1,667) |  | $ | (44,917)
|                                                                                                     |  |                             |         
|                                                                                                    
|(in 000s)                                                                                          
|Fair value measurements using significant unobservable inputs                                       
|(Level 3)                                                                                           
|                                                                                                     |  |                             |         
|                                                                                                     |  | Real estate andimprovements |          | Real estate andpartnerships andpreferred equityinvestments |   | Total  
|                                                                                                     |  |                             |         
|Beginning balance @ 1/1/08                                                                           |  | $                           | 254,394  |                                                            | $ | 14,524  |  | $ | 268,918 
|                                                                                                     |  |                             |         
|Net gains (losses) realized/unrealized included in earnings (or changes in net assets)               |  |                             | (43,134) |                                                            |   | (2,527) |  |   | (45,661)
|Equity income (losses)/interest income                                                               |  |                             | -        |                                                            |   | 994     |  |   | 994     
|Purchases, issuances and settlements                                                                 |  |                             | 9,936    |                                                            |   | (1,194) |  |   | 8,742   
|                                                                                                     |  |                             |         
|Ending balance @ 12/31/08                                                                            |  | $                           | 221,196  |                                                            | $ | 11,797  |  | $ | 232,993 
|                                                                                                     |  |                             |         
|                                                                                                     |  |                             |         
|Unrealized gains (losses) for the period relating to level 3 assets still held at the reporting date |  | $                           | (43,134) |                                                            | $ | (2,527) |  | $ | (45,661)
|                                                                                                     |  |                             |         



F-31



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 6:  Investment Level Debt

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



|                                                                 |  |                                   |        |   |                                                                  |   |        |                                    |  |   |                   |   |               |            |         |      |  |        
|---------------------------------------------------------------- |  | --------------------------------- | ------ | - | ---------------------------------------------------------------- | - | ------ | ---------------------------------- |  | - | ----------------- | - | ------------- | ---------- | ------- | ---- |  | -------
|                                                                 |  | As of 12/31/09                    |        |   | As of 12/31/08                                                   |   |        | As of 12/31/09                    
|                                                                 |  | 100% PrincipalBalance Outstanding |        |   | (Unaudited)PartnershipsShare of Principal Balance Outstanding 1 |   |        | 100% Principal Balance Outstanding |  |   | Interest Rate 2,3 |   | Maturity Date |            | Terms 4
|                                                                 |  |                                   |        |  
|Mortgages of Wholly Owned Properties & Consolidated Partnerships |  |                                   |        |   |                                                                  |   |        |                                    |  |   |                  
|Hampton, VA                                                      |  | $                                 | 6,756  |   |                                                                  | $ | 6,756  |                                    |  | $ | 7,284             |   |               | 6.75%      |         | 2018 |  | PP, P&I
|Ocean City, MD                                                   |  |                                   | 15,071 |   |                                                                  |   | 13,006 |                                    |  |   | 15,044            |   |               | Libor +225 |         | 2011 |  | I      
|Raleigh, NC                                                      |  |                                   | 9,000  |   |                                                                  |   | 9,000  |                                    |  |   | 9,000             |   |               | DMBS +142  |         | 2013 |  | I      
|Atlanta, GA                                                      |  |                                   | -      |   |                                                                  |   | -      |                                    |  |   | 8,746             |   |               | -          |         | -    |  | -      
|Unamortized Premium (Discount)                                   |  |                                   | (2     | ) |                                                                  |   | (2     | )                                  |  |   | (26               | ) |               |            |         |      |  |        
|                                                                 |  |                                   |        |   |                                                                  |   |        |                                    |  |   |                   |   |               |           
|Total                                                            |  | $                                 | 30,825 |   |                                                                  | $ | 28,760 |                                    |  | $ | 40,048            |   |               |            |         |      |  |        
|                                                                 |  |                                   |        |   |                                                                  |   |        |                                    |  |   |                   |   |               |           



|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, 2009. It does not represent the Partnerships legal obligation.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | The Partnerships weighted average interest rate was 3.63% and 5.78% at December 31, 2009 and 2008, respectively.
|-- | -----------------------------------------------------------------------------------------------------------------

The weighted average interest rates were calculated using the Partnerships annualized interest expense for each loan (derived
using the same percentage as that in (1) above) divided by the Partnerships share of total debt.

|3. | At December 31, 2009, the 30 day LIBOR is .23094% and the DMBS is 1.542%.
|-- | -------------------------------------------------------------------------

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

As of December 31, 2009 principal amounts of mortgage loans payable on wholly owned properties and consolidated partnerships are
payable as follows:



| |                                                          |                          |   |            | 
| | -------------------------------------------------------- | ------------------------ | - | ---------- | 
| |                                                          | Year Ending
December 31, |   | (in 000s)
| | 2010                                                     |                          |   | 565       
| | 2011                                                     |                          |   | 15,675    
| | 2012                                                     |                          |   | 646       
| | 2013                                                     |                          |   | 9,692     
| | 2014                                                     |                          |   | 676       
| | Thereafter                                               |                          |   | 3,573     
| |                                                          |                          |   |           
| | Total Principal Balance Outstanding                      |                          | $ | 30,827    
| | Premium (Discount)                                       |                          |   | (2)       
| |                                                          |                          |   |           
| | Principal Balance Outstanding, net of premium (discount) |                          | $ | 30,825    
| |                                                          |                          |   |           



F-32



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 6:  Investment Level Debt (continued)

The mortgage loans payable of wholly owned properties and consolidated partnerships are secured by real estate investments with an estimated
fair value of $58.2 million.

Based on borrowing rates available to the Partnership at December 31, 2009 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 $31 million, and a carrying value of $31 million. Different assumptions or
changes in future market conditions could significantly affect estimated fair value.

Note 7:  Financing, Covenant, and Repayment
Risks

In the normal course of business, the Partnership enters into loan agreements with certain lenders to finance its
real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that
the Partnerships borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other
conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates. At December 31,
2009 the Partnership had no outstanding matured loans.

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

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

Note 8:  Concentration of Risk on Real Estate Investments

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



F-33



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 8:  Concentration of Risk on Real Estate Investments (continued)

At December 31, 2009, the Partnership had real estate investments located throughout the United States. The diversification of the
Partnerships holdings based on the estimated fair values and established NCREIF regions is as follows:



|                   |  |                               |         |          |        
|------------------ |  | ----------------------------- | ------- | -------- | -------
|Region             |  | EstimatedFair Value(in 000s) |         | Region %
|East North Central |  | $                             | 8,356   |          | 4.72%  
|Mideast            |  |                               | 86,634  |          | 48.90% 
|Mountain           |  |                               | 1,201   |          | 0.68%  
|Northeast          |  |                               | 207     |          | 0.12%  
|Pacific            |  |                               | 22,831  |          | 12.89% 
|Southeast          |  |                               | 34,561  |          | 19.51% 
|Southwest          |  |                               | 23,328  |          | 13.16% 
|West North Central |  |                               | 27      |          | 0.02%  
|                   |  |                               |         |          |        
|                   |  |                              
|Total              |  | $                             | 177,145 |          | 100.00%
|                   |  |                               |         |          |        

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

Note 9:  Leasing Activity

The Partnership leases space to tenants under various operating lease agreements. These agreements, without giving effect to renewal options, have expiration dates ranging from January 1, 2010 to December 31, 2025. At
December 31, 2009, 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) |        | 
|2010                     |  |  |  | $          | 10,916 | 
|2011                     |  |  |  |            | 9,668  | 
|2012                     |  |  |  |            | 7,552  | 
|2013                     |  |  |  |            | 6,089  | 
|2014                     |  |  |  |            | 5,566  | 
|Thereafter               |  |  |  |            | 18,241 | 
|                         |  |  |  |            |        | 
|Total                    |  |  |  | $          | 58,032 | 
|                         |  |  |  |            |        | 



F-34



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 10:  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, 2009, the cost basis of Prudentials equity 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 11:  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, 2009, 2008, and 2007 management fees incurred by the Partnership were $2.6 million, $3.4 million, and $3.4 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, 2009, 2008, and 2007 were $53,630, $53,630, and $53,630; respectively, and are classified as administrative expenses in the Consolidated Statements of Operations.

During the years ended December 31, 2009, 2008, and 2007, the Partnership made the following distributions to the
Partners:



|                        |  |            
|----------------------- |  | -----------
|Year Ended December 31, |  | (000s)    
|2009                    |  | $ 8,000    
|2008                    |  | $         -
|2007                    |  | $         -



F-35



---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

For Years Ended December 31, 2009, 2008, and 2007



Note 12:  Financial Highlights



|                                                                                                              |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------- | ---- | - | ------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                                                                                              |  | For The Twelve Months Ended December 31,
|                                                                                                              |  | 2009                                     |         | 2008 |   | 2007    |  | 2006 |        | 2005
|Per Share(Unit) Operating Performance:                                                                        |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|Net Asset Value attributable to general partners controlling interest, beginning of period                   |  | $                                        | 31.65   |      | $ | 36.55   |  | $    | 33.87  |      | $ | 29.59  |  | $ | 26.15 
|Income From Investment Operations:                                                                            |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|Net investment income attributable to general partners controlling interest, before management fee           |  |                                          | 1.49    |      |   | 2.15    |  |      | 2.37   |      |   | 2.07   |  |   | 1.67  
|Investment Management fee attributable to general partners controlling interest                              |  |                                          | (0.39)  |      |   | (0.51)  |  |      | (0.50) |      |   | (0.45) |  |   | (0.40)
|Net realized and unrealized gain (loss) on investments attributable to general partners controlling interest |  |                                          | (6.87)  |      |   | (6.54)  |  |      | 0.81   |      |   | 2.66   |  |   | 2.17  
|                                                                                                              |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|Net Increase in Net Assets Resulting from Operations attributable to general partners controlling interest   |  |                                          | (5.77)  |      |   | (4.90)  |  |      | 2.68   |      |   | 4.28   |  |   | 3.44  
|                                                                                                              |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|Net Asset Value attributable to general partners controlling interest, end of period                         |  | $                                        | 25.88   |      | $ | 31.65   |  | $    | 36.55  |      | $ | 33.87  |  | $ | 29.59 
|                                                                                                              |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|Total Return attributable to general partners controlling interest, before Management Fee:                   |  |                                          | -17.04% |      |   | -12.14% |  |      | 9.44%  |      |   | 16.03% |  |   | 14.76%
|Total Return attributable to general partners controlling interest, after Management Fee (a):                |  |                                          | -18.24% |      |   | -13.40% |  |      | 7.91%  |      |   | 14.46% |  |   | 13.15%
|Ratios/Supplemental Data:                                                                                     |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|Net Assets attributable to general partners controlling interest, end of period (in millions)                |  | $                                        | 167     |      | $ | 214     |  | $    | 247    |      | $ | 229    |  | $ | 205   
|Ratios to average net assets for the period ended (b):                                                        |  |                                          |         |      |   |         |  |      |        |      |   |        |  |   |       
|Total Portfolio Level Expenses                                                                                |  |                                          | 1.60%   |      |   | 1.44%   |  |      | 1.55%  |      |   | 1.51%  |  |   | 1.46% 
|Net Investment Income, before Management Fee                                                                  |  |                                          | 5.29%   |      |   | 5.87%   |  |      | 6.76%  |      |   | 6.58%  |  |   | 4.89% 



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



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



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



F-36



---

|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |             |                     |      |              |           
|-------------------------------------- |  | --- |  | ----------------------------------------------------------- |  | ------------ |  | ---------------------------------------------------------- |  | ---------------------------------------- |  | ------------ |  | --------------------------------------------- | ---- | ---------- | ---------------------- | ----------- | --------- | ------------ | ----- | ----------- | ------------------- | ---- | ------------ | ----------
|                                       |  |     |  |                                                             |  |              |  | THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP |  |                                          |  |             
|                                       |  |     |  |                                                             |  |              |  | SCHEDULE III - REAL ESTATE OWNED: PROPERTIES               |  |                                          |  |             
|                                       |  |     |  |                                                             |  |              |  | DECEMBER 31, 2009                                          |  |                                          |  |             
|                                       |  |     |  |                                                             |  |              | 
|                                       |  |     |  |                                                             |  |              |  | Initial Costs to the Partnership                           |  | CostsCapitalizedSubsequent toAcquisition |  |              |  | Gross Amount at WhichCarried at Close of
Year
|Description                            |  |     |  | Encumbrancesat 12/31/09                                     |  |              |  | Land                                                       |  | Building
&Improvements                   |  |              |  |                                               | Land |            | Building &Improvements |             | 2009Sales |              | Total |             | Year ofConstruction |      | DateAcquired
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Properties:                            |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |             |                     |      |              |           
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Office Building Lisle, IL              |  |     |  | None                                                        |  |              |  | 1,780,000                                                  |  | 15,743,881                               |  | 8,662,534    |  |                                               |      | 1,949,206  |                        | 24,237,209  |           |              |       | 26,186,415  |                     | 1985 |              | Apr., 1988
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Garden Apartments Atlanta, GA          |  |     |  | -                                                           |  |              |  | 3,631,212                                                  |  | 11,168,904                               |  | 5,410,714    |  | (b)                                           |      | 4,937,369  |                        | 15,273,461  |           |              |       | 20,210,830  |                     | 1987 |              | Apr., 1988
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Retail Shopping Center Roswell, GA     |  |     |  | None                                                        |  |              |  | 9,454,622                                                  |  | 21,513,677                               |  | 6,933,027    |  |                                               |      | 11,135,593 |                        | 26,765,733  |           | (37,901,326) |       | -           |                     | 1988 |              | Jan., 1989
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Garden Apartments Raleigh, NC          |  |     |  | 8,998,170                                                   |  | (c)          |  | 1,623,146                                                  |  | 14,135,553                               |  | 754,271      |  |                                               |      | 1,785,544  |                        | 14,727,426  |           |              |       | 16,512,970  |                     | 1995 |              | Jun., 1995
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Hotel Portland, OR                     |  |     |  | -                                                           |  |              |  | 1,500,000                                                  |  | 6,508,729                                |  | 2,669,166    |  |                                               |      | 1,500,000  |                        | 9,177,895   |           |              |       | 10,677,895  |                     | 1989 |              | Dec., 2003
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Office Building Nashville, TN          |  |     |  | None                                                        |  |              |  | 1,797,000                                                  |  | 6,588,451                                |  | 4,633,730    |  |                                               |      | 1,855,339  |                        | 11,163,842  |           |              |       | 13,019,181  |                     | 1982 |              | Oct., 1995
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Office Building Beaverton, OR          |  |     |  | None                                                        |  |              |  | 816,415                                                    |  | 9,897,307                                |  | 1,911,904    |  |                                               |      | 845,887    |                        | 11,779,739  |           |              |       | 12,625,626  |                     | 1995 |              | Dec., 1996
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Office Complex Brentwood, TN           |  |     |  | None                                                        |  |              |  | 2,425,000                                                  |  | 7,063,755                                |  | 3,075,859    |  |                                               |      | 2,463,601  |                        | 10,101,013  |           |              |       | 12,564,614  |                     | 1987 |              | Oct., 1997
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Retail Shopping Center Hampton, VA     |  |     |  | 6,756,057                                                   |  |              |  | 2,339,100                                                  |  | 12,767,956                               |  | 3,029,343    |  |                                               |      | 4,839,418  |                        | 13,296,981  |           |              |       | 18,136,399  |                     | 1998 |              | May, 2001 
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Retail Shopping Center Westminster, MD |  |     |  | -                                                           |  |              |  | 3,031,735                                                  |  | 9,326,605                                |  | 2,686,537    |  |                                               |      | 3,031,735  |                        | 12,013,142  |           |              |       | 15,044,877  |                     | 2005 |              | June, 2006
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Retail Shopping Center Ocean City, MD  |  |     |  | 15,070,672                                                  |  |              |  | 1,517,099                                                  |  | 8,495,039                                |  | 13,299,740   |  |                                               |      | 1,517,099  |                        | 21,794,779  |           |              |       | 23,311,878  |                     | 1986 |              | Nov., 2002
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Garden Apartments Austin, TX           |  |     |  | -                                                           |  |              |  | 2,577,097                                                  |  | 20,125,169                               |  | 113,726      |  |                                               |      | 2,577,097  |                        | 20,238,895  |           |              |       | 22,815,992  |                     | 2007 |              | May, 2007 
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Retail Shopping Center Dunn, NC        |  |     |  | None                                                        |  |              |  | 586,500                                                    |  | 5,372,344                                |  | 480,267      |  |                                               |      | 586,500    |                        | 5,852,611   |           | (201,185)    |       | 6,237,926   |                     | 1984 |              | Aug., 2007
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              | 
|Garden Apartments Charlotte, NC        |  |     |  | -                                                           |  |              |  | 1,350,000                                                  |  | 12,184,750                               |  | 212,190      |  |                                               |      | 1,350,000  |                        | 12,396,940  |           |              |       | 13,746,940  |                     | 1998 |              | Sep., 2007
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |             |                     |      |              |           
|                                       |  |     |  | 30,824,899                                                  |  |              |  | 34,428,926                                                 |  | 160,892,120                              |  | 53,873,008   |  |                                               |      | 40,374,388 |                        | 208,819,666 |           | (38,102,511) |       | 211,091,543 |                     |      |              |           
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |             |                     |      |              |           
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          | 
|                                       |  |     |  |                                                             |  | 2009         |  | 2008                                                       |  |                                          |  | 2007         |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          | 
|                                       |  | (a) |  | Balance at beginning of year                                |  | 245,808,214  |  | 236,466,116                                                |  |                                          |  | 199,124,056  |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  | Additions:                                                  |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  | Acquisitions                                                |  | -            |  | -                                                          |  |                                          |  | 42,218,143   |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  | Improvements, etc.                                          |  | 3,385,840    |  | 9,936,151                                                  |  |                                          |  | 3,179,960    |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  | Deletions:                                                  |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  | Sale                                                        |  | (38,102,511) |  | -                                                          |  |                                          |  | (11,288,380) |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          | 
|                                       |  |     |  | Reclass of other receivable to Real Estate and Improvements |  | -            |  | -                                                          |  |                                          |  | 3,232,337    |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          | 
|                                       |  |     |  | Write off of uncollectible interest receivable              |  | -            |  | (594,053)                                                  |  |                                          |  | -            |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |             |                     |      |              |           
|                                       |  |     |  | Balance at end of year                                      |  | 211,091,543  |  | 245,808,214                                                |  |                                          |  | 236,466,116  |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |             |                     |      |              |           
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          | 
|                                       |  | (b) |  | Net of $1,000,000 settlement received from lawsuit.         |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |            
|                                       |  |     |  |                                                             |  |              |  |                                                            |  |                                          | 
|                                       |  | (c) |  | Net of an unamortized discount of $1,830                    |  |              |  |                                                            |  |                                          |  |              |  |                                               |      |            |                        |             |           |              |       |            



F-37