<Page>

                                  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 [FEE REQUIRED]

FOR  THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

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

COMMISSION FILE NUMBER 33-20018

                   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)

                                 (800) 778-2255
              ----------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.                     YES X      NO
                                                                 ---       ---


<Page>

                   PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

                                      INDEX
                                      -----
<Table>
ITEM                                                                          PAGE
 NO.                                                                           NO.
 ---                                                                           ---
<S>     <C>                                                                   <C>

        COVER PAGE

        INDEX                                                                  2

PART I

  1.    BUSINESS                                                               3

  2.    PROPERTIES                                                             5

  3.    LEGAL PROCEEDINGS                                                      5

  4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    5

PART II

  5.    MARKET FOR THE REGISTRANT'S INTERESTS AND RELATED SECURITY
          HOLDER MATTERS                                                       6

  6.    SELECTED FINANCIAL DATA                                                6

  7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS                                            7

  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

PART III

  10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    23

  11.   EXECUTIVE COMPENSATION                                                24

  12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        24

  13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        24

PART IV

  14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K      25

        EXHIBIT INDEX                                                         25

        SIGNATURES                                                            27
</Table>

                                       2
<Page>

                                            PART I

ITEM 1. BUSINESS

Pruco Life of New Jersey Variable Contract Real Property Account (the "Real
Property Account"), the Registrant, was established on October 30, 1987 by Pruco
Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), as a separate
investment account, pursuant to New Jersey law. 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 The Prudential Insurance Company of America, 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 remainder of the
Partnership's assets are invested in other types of real estate-related
investments, including real estate investment trusts.

     Office Properties - The Partnership owns office properties in Lisle and
     Oakbrook Terrace, Illinois; Brentwood, Tennessee and Beaverton, Oregon.
     Total square footage owned is approximately 482,000 of which 89% or 431,000
     square feet are leased between 1 and 10 years. The Partnership's
     Morristown, New Jersey property, which had approximately 85,000 square
     feet, was sold on October 26, 2000.

     Apartment Complexes - The Partnership owns apartment complexes in Atlanta,
     Georgia and Raleigh, North Carolina. There are a total of 490 apartment
     units available of which 82% or 403 units are leased. Leases range from
     month to month to one year. In addition, on September 17, 1999, the
     Partnership invested in an apartment complex located in Jacksonville, FL.
     This joint venture investment has a total of 458 units available of which
     402 units or 88% are occupied. Leases range from month-to-month to one
     year. Also, on February 15, 2001, the Partnership invested in four
     apartment complexes located in Gresham/Salem, OR. This joint venture
     investment has a total of 492 units available of which 458 units or 93% are
     occupied. Leases range from month-to-month to one year.

     Retail Property - The Partnership owns a shopping center in Roswell,
     Georgia. The property is located approximately 22 miles north of downtown
     Atlanta on a 30 acre site. The square footage is approximately 316,000 of
     which 92% or 293,000 square feet is leased between 1 and 10 years. On
     September 30, 1999 the Partnership invested in a retail portfolio located
     in the Kansas City, MO and KS areas. This joint venture investment has
     approximately 488,000 of net rentable square feet of which 90% or 440,000
     square feet is leased between 1 and 20 years. In addition, on May 17, 2001,
     the Partnership invested in a retail center located in the Hampton, VA.
     This joint venture investment has approximately 155,000 of net rentable
     square feet of which 100% or 155,000 square feet is leased between 1 and 20
     years.


                                       3
<Page>

     Industrial Properties - The Partnership owns warehouses and distribution
     centers in Bolingbrook, Illinois; Aurora, Colorado; and Salt Lake City,
     Utah. Total square footage owned is approximately 685,000 of which 83% or
     569,000 square feet are leased between 1 and 10 years.

     Investment in Real Estate Trust - The Partnership liquidated its entire
     investment in REIT shares during December 2001.

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

For information regarding the Partnership's investments, operations, and other
significant events, see Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Item 8, Financial Statements
and Supplementary Data.

REAL ESTATE MARKET
The real estate sector certainly felt the effects of the slowing US economy
during the fourth quarter. The decline in demand for space pushed vacancy rates
up and adversely affected both rents and prices. The hotel sector was hit
hardest and continues to suffer due to demand uncertainty, while the office and
industrial sectors weakened as vacancy rates rose, sharply in some markets where
technology had been a main driver of growth. Unlike the market downturn a decade
ago, however, a large portion of the vacant office space is sublease space which
continues to pay rent and should be absorbed relatively quickly once the economy
begins to recover. Investors continued their interest in apartments to take
advantage of their stabilizing attributes. Overall, private institutional real
estate investment, as measured by the NCREIF Index, produced total returns of
around 7.41% for the year with a total return of 0.74% in the fourth quarter.
The REIT market, as measured by the Morgan Stanley REIT Index (RMS), finished
the year strong registering a total return of 12.8%. In all, both private and
public equity real estate performed much better than most other investment
sectors, helping to fulfill their role as a hedge against market uncertainty.

OFFICE MARKET

Deterioration in office market conditions continued in the fourth quarter of
2001. According to Torto Wheaton research (TWR), the average vacancy rate rose
to 13.60% in the fourth quarter, up from 12.50% in the third quarter. The
average vacancy rate in downtown areas rose to 10.4%, up from 9.8% as of third
quarter. the suburban markets were hit even harder, with the average vacancy
rate rising to 15.3% in the fourth quarter, up 1.5% from the third quarter.

Based on data from the NCREIF office index, private investment in US office real
estate returned 0.04% during the fourth quarter of 2001, down from 1.49% in the
third quarter. The current quarter's return was composed of 2.11% income and
-2.06% value loss. The one-year total return for the sector was 6.36%. The total
returns for CBD and suburban properties continued to diverge during the fourth
quarter with suburban properties witnessing a decline of 0.09% while CBD
properties returned 0.28%.


                                       4
<Page>

INDUSTRIAL MARKET

The trends in the industrial market were similar to those in the office market.
TWR estimates that the overall availability rate for industrial space as of
fourth quarter 2001 was 9.6%, up from 9.0% in the previous quarter, and 6.7%
one-year prior.

The total return for the industrial sector dropped to 1.18% in the fourth
quarter, down from 2.01% in the third quarter. The one-year return for the
sector was 9.40%, finishing second to apartment sector. The best performing
industrial subtype in the fourth quarter was flex, with a total return of 1.84%,
followed by the warehouse subtype with a return of 1.44%. The R&D subtype lagged
in the fourth quarter, with a total return of -1.78%.

APARTMENT MARKET

M/PF Research reports that the third quarter 2001 average occupancy rate among
US apartments was 95.5%, down 0.6% from the second quarter estimate. They report
that national same-unit rent growth was 1.8% during the one-year period ending
in the third quarter 2001.

According to the NCREIF apartment subindex, private investment in apartments
returned 1.64% during the fourth quarter of 2001, down from a 2.25% return in
the third quarter. Of the fourth quarter's total return, 1.90% was from income
and -0.26% was appreciation. The one-year return for the sector in 2001 was
9.47%, the best of all property type sectors. High-rise apartment properties
returned 0.25% in the fourth quarter, underperforming garden properties (1.77%)
and low-rise properties (2.89%).

RETAIL MARKET

While the retail sector continues to struggle with the faltering US economy, the
sector held up reasonably well in the fourth quarter. Most investor interest
continues to be concentrated in the grocery-anchored neighborhood/community
centers and dominant well-anchored regional malls, while power centers and
factory outlets continue to be shunned.

The retail sector posted a total return of 1.23% in the fourth quarter of 2001.
Of the total return, 2.16% was attributable to income and -0.93% was value loss.
The one-year return for the sector for the year was 6.82%. The best performing
retail subtype for the fourth quarter was the neighborhood centers (2.71%),
followed by community centers (2.05%), power centers (1.1%), regional centers
(0.57%) and super regional centers (0.36%).

ITEM 2.  PROPERTIES

Not Applicable.

ITEM 3.  LEGAL PROCEEDINGS

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

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


                                       5
<Page>

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S INTERESTS AND RELATED SECURITY HOLDER
        MATTERS

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 will
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, thus a discussion of market information is not relevant.

As of December 31, 2001 there were approximately 2,844 contract owners of record
investing in the Real Property Account.

ITEM 6.  SELECTED FINANCIAL DATA

                             YEAR ENDED DECEMBER 31,

<Table>
<Caption>
                                           2001           2000             1999           1998          1997
                                         -------        --------       ----------     -----------   ---------
<S>                                   <C>             <C>            <C>            <C>            <C>
RESULTS OF OPERATIONS:

TOTAL INVESTMENT INCOME               $ 27,480,593    $ 26,387,938   $ 24,835,049   $ 27,163,552   $ 24,481,812
                                      ============    ============   ============   ============   ============

NET INVESTMENT INCOME                 $ 12,350,306    $ 13,638,117   $ 13,279,589   $ 15,833,513   $ 13,789,747

NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT IN PARTNERSHIP     (2,547,749)      4,487,022     (7,217,046)     4,795,111      8,485,232
                                      ------------    ------------   ------------   ------------   ------------

NET INCREASE IN NET ASSETS
 RESULTING FROM OPERATIONS            $  9,802,557    $ 18,125,139   $  6,062,543   $ 20,628,624   $ 22,274,979
                                      ============    ============   ============   ============   ============
</Table>

FINANCIAL POSITION:

<Table>
<Caption>
                                                          DECEMBER 31,
                            ------------------------------------------------------------------------
                                2001           2000          1999             1998         1997
                             -----------     ---------      -------          -------      -------
<S>                         <C>            <C>            <C>             <C>           <C>
TOTAL ASSETS                $234,594,652   $221,512,296   $225,142,653    $244,249,272  $222,745,135
                            ============   ============   ============    ============  ============
LONG TERM LEASE OBLIGATION    $        0   $         0    $          0    $          0  $         0
                              ==========   ============   ============    ============  ===========
MORTGAGE LOAN PAYABLE        $ 28,994,521  $10,092,355    $10,184,662     $          0  $         0
                              ==========   ============   ============    ============  ===========
</Table>


                                       6
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

All of the assets of Pruco Life of New Jersey Variable Contract Real Property
Account (the "Account") are invested in the Prudential Variable Contract Real
Property Partnership (the "Partnership"). Correspondingly, the liquidity,
capital resources and results of operations for the Real Property Account are
contingent upon the Partnership. Therefore, all of management's discussion of
these items is at the Partnership level. The partners in the Partnership are The
Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco
Life Insurance Company of New Jersey (collectively, the "Partners").


The following analysis of the liquidity and capital resources and results of
operations of the Partnership should be read in conjunction with the Financial
Statements and the related Notes to the Financial Statements included elsewhere
herein.

(a)  LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2001, the Partnership's liquid assets consisting of cash,
cash equivalents, and marketable securities were $26.6 million, an increase of
$11.2 million from December 31, 2000. This increase was due primarily to the
liquidation of the VAL REIT Fund during the fourth quarter, offset by
distributions to partners and the acquisition of real estate investments as
described below. Sources of liquidity include net cash flow from property
operations, interest from short-term investments, and dividends from REIT shares

The Partnership's investment policy allows up to 30% investment in cash and
short-term obligations, although the Partnership generally holds approximately
10% of its assets in cash and short-term obligations. At December 31, 2001,
11.3% of the Partnership's assets consisted of cash and cash equivalents

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 returned
to Prudential on an ongoing basis from contract owners' net contributions and
other available cash. The amount of the commitment is reduced by $10 million for
every $100 million in current value net assets of the Partnership. Thus with
$198 million in net assets, the commitment has been automatically reduced to $90
million. As of December 31, 2001, Prudential's equity interest in the
Partnership, on a cost basis, under this commitment (held through the Real
Property Accounts) was $44 million. Prudential did not make any contributions
during the 2001 fiscal year, and will terminate this commitment at the end of
the 2002 fiscal year

The Partnership made $22 million in distributions to the Partners during 2000,
and on October 22, 2001, the Partnership made an $18 million distribution to the
partners. Distributions made to the Partners during 2001 were based upon the
percentage of assets invested in short-term obligations, taking into
consideration anticipated cash needs of the Partnership including potential
property acquisitions, property dispositions and capital expenditures.
Management anticipates that its current liquid assets and ongoing cash flow from
operations will satisfy the Partnership's needs over the next twelve months and
the foreseeable future.


                                       7
<Page>

The Partnership has completed two real estate acquisitions during the year. A
controlling interest in a portfolio of four apartment complexes based in Gresham
and Salem, OR, was acquired in February 2001. This portfolio consists of 492
units containing a total of 419,487 rentable square feet. The acquisition was
financed by contributions of $8.6 million from the Partnership, $0.5 million
from the joint venture partner, and the assumption of a $9.0 million mortgage
loan by the joint venture partnership. Also, in May, the Partnership acquired a
controlling interest in a 154,540 square foot retail center based in Hampton,
VA. The acquisition was financed by contributions of $4.0 million from the
Partnership, $0.4 million from the joint venture partner, and the assumption of
a $10.3 million mortgage loan. During the twelve months of 2001, the Partnership
also spent approximately $4.4 million in capital expenditures. Approximately
$0.6 million was associated with renovation costs pertaining to the apartment
complex located in Jacksonville, FL. The balance was associated with leasing
activity at the office properties located in Oakbrook Terrace, IL; Beaverton,
OR; Brentwood, TN; Lisle, IL; and the industrial property located in Salt Lake
City, UT. In addition, improvements were done to the retail center located in
Roswell, GA.


                                       8
<Page>

(b) RESULTS OF OPERATIONS

The following is a brief year-to-date comparison of the Partnership's results of
operations for the periods ended December 31, 2001, 2000, and 1999.

2001 VS. 2000

The following table presents a year-to-date comparison of the Partnership's
sources of net investment income and realized and unrealized gains or losses by
investment type.

                        TWELVE MONTHS ENDED DECEMBER 31,

<Table>
<Caption>
                                                  2001             2000
                                               ----------       -----------
 NET INVESTMENT INCOME:
 <S>                                           <C>              <C>
 Office properties                             $4,766,035       $ 5,356,934
 Apartment complexes                            3,735,912         3,446,245
 Retail property                                2,950,333         2,772,438
 Industrial properties                            545,003         1,257,146
 Equity in income of real estate partnership      686,801           791,596
 Dividend income from real
   estate investment trust                      2,157,647         1,744,611
 Other (including interest income,
   investment mgt fee,                         (2,491,425)       (1,730,853)
                                               ----------       -----------
 TOTAL NET INVESTMENT INCOME                   12,350,306       $13,638,117
                                               ==========       ===========
 NET UNREALIZED (LOSS) GAIN ON REAL
   ESTATE INVESTMENTS:

 Office properties                              ($777,380)       (2,434,245)
 Apartment complexes                              415,417         2,717,915
 Retail property                                  (94,504)         (264,300)
 Industrial properties                         (2,105,641)         (935,721)
 Interest in properties                           226,024           140,614
 Real estate investment trusts                                    2,618,815
                                               ----------       -----------
                                               (2,336,084)        1,843,078
                                               ----------       -----------
 NET REALIZED (LOSS) GAIN ON REAL
   ESTATE INVESTMENTS

 Office properties                                                  186,920
 Apartment complexes                                    -                 -
 Industrial properties                                  -
 Interest in properties                                 -
 Real estate investment trust                    (211,665)        2,457,024
                                               ----------       -----------
                                                 (211,665)         2,643,944
                                               ----------       -----------
 NET REALIZED AND UNREALIZED (LOSS) GAIN
                                               ----------       -----------
   ON REAL ESTATE INVESTMENTS                 ($2,547,749)       $4,487,022
                                               ==========       ===========
</Table>


                                       9
<Page>

The Partnership's net investment income for the twelve months ended December 31,
2001 was $12.4 million, a decrease of $1.2 million from the corresponding period
in the prior year. This decrease was primarily due to the sale of an office
property located in Morristown, NJ in the fourth quarter of 2000.

Equity in income of real estate partnership was $0.7 million for the twelve
months of 2001, a decrease of $0.1 million, or 13.2%, from $0.8 million in the
corresponding period in 2000. The decrease is primarily due to a temporary
decrease in rental rates at the retail portfolio located in Kansas City, KS and
MO when compared to the prior year.

Dividend income from real estate investment trusts amounted to approximately
$2.2 million for the twelve months ended December 31, 2001, an increase of
approximately $0.5 million, or 23.7%, from approximately $1.7 million in the
corresponding period in 2000. This increase was primarily due to an increase in
the amount invested in REIT stocks subsequent to the 3rd quarter 2000.

Interest on short-term investments decreased approximately $1.0 million or 76.9%
for the twelve months ended December 31, 2001 due primarily to a significantly
lower average cash balance compared to the corresponding period in 2000. Cash,
cash equivalents, and marketable securities maintained during the twelve months
ended December 31, 2001 averaged approximately $13.0 million when compared to
the twelve months ended December 31, 2000 when the average was approximately
$19.1 million.

Operating expenses increased $0.9 million, or 21.4%, in the twelve months of
2001 compared to the corresponding period in 2000. These increases were
primarily due to the Partnership's acquisition of a controlling interest in the
two investments discussed previously.

Interest expense increased $1.0 million, or 142.4%, in the twelve months of 2001
compared to the corresponding period in 2000. These increases were primarily due
to the Partnership's assumption of a $9.0 million and a $10.3 million mortgage
loan in conjunction with the acquisition of a controlling interest in the two
investments discussed previously.

Minority interest in consolidated partnerships increased $0.1 million, or
1,256.4%, for the twelve months ended December 31, 2001. These increases were
due to the Partnership's acquisition of a controlling interest in the two
investments discussed previously.

OFFICE PROPERTIES

Net investment income from property operations for the office sector decreased
approximately $0.6 million, or 11.0%, for the twelve months ended December 31,
2001 when compared to the corresponding period in 2000. This was primarily due
to the sale of the Morristown, NJ office center in October 2000.

The five office properties owned by the Partnership experienced a net unrealized
loss of approximately $0.8 million during the twelve months of 2001. One of the
Brentwood, TN properties experienced a net unrealized loss of approximately $0.7
million primarily due to the near-term expiration and expected move-out of the
single tenant at the property in July 2002. The Beaverton, OR and the Lisle, IL
office properties experienced a net unrealized loss of approximately $0.4
million and $0.2 million, respectively, primarily due to softening market
conditions. Offsetting these unrealized losses was an unrealized gain of
approximately $0.6 million at the office property located in Oakbrook Terrace,
IL. This unrealized gain was attributable to the signing of two new leases,
which brought the leased area from 55% to 79%.


                                       10
<Page>

The office properties owned by the Partnership experienced a net unrealized loss
of approximately $2.4 million during 2000. During 2000, the Oakbrook Terrace, IL
property decreased $1.6 million in value due to a lease termination associated
with 45% of the space and weaker market conditions. One of the Brentwood, TN
office properties also experienced a net unrealized loss of approximately $0.8
million primarily due to capital expenditures on the property that were not
reflected as an increase in market value.

Occupancy at one of the Brentwood, TN office properties decreased from 95% at
December 31, 2000 to 74% at December 31, 2001, while occupancy at the other
Brentwood, TN location remained unchanged at 100%. Occupancy at the Lisle, IL
office property increased from 88% at December 31, 2000 to 100% at December 31,
2001. Occupancy at the Beaverton, OR property remained unchanged at 100%.
Occupancy at the Oakbrook Terrace, IL property decreased from 100% at December
31, 2000 to 79% at December 31, 2001. As of December 31, 2001 all vacant spaces
were being marketed.

APARTMENT COMPLEXES

Net investment income from property operations for the apartment sector was $3.7
million for the twelve months ended December 31, 2001, an increase of $0.3
million, or 8.4%, when compared to the corresponding period in 2000. This
increase was primarily due to the acquisition of the controlling interest in the
apartment complex portfolio located in Gresham and Salem, OR.

The apartment complexes owned by the Partnership experienced a net unrealized
gain of $0.4 million for the twelve months ended December 31, 2001 compared to a
net unrealized gain of $2.7 million for the twelve months ended December 31,
2000. The majority of the unrealized gain experienced in 2001 was primarily due
to the Atlanta, GA apartment complex that experienced an increase in value of
$0.9 million due to sub-metering of the apartments for water usage and lower
real estate taxes than previously estimated. The apartment complex portfolio
located in Gresham and Salem, OR also experienced an increase in value of $0.4
million due to the completion of capital improvements and the reduction of
administrative expense estimates. Offsetting these unrealized gains was the
apartment complex located in Raleigh, NC, which experienced a net unrealized
loss of $0.5 million due to a decrease in occupancy. The apartment complex in
Jacksonville, FL also experienced a decrease in value of $0.4 million due to
higher replacement reserve expenses, higher operating expense projections, and
slightly lower market rent estimates.

The apartment complexes owned by the Partnership experienced a net unrealized
gain of $2.7 million in 2000. The largest share of the unrealized gain for 2000
or $1.7 million was experienced by the apartment complex located in Atlanta, GA
primarily due to increases in rental rates, stabilized occupancy, and lower
operating expense estimates. The apartment complex located in Raleigh, NC also
experienced a net unrealized gain of $0.2 million due to increases in rental
rates.

The occupancy at the Raleigh, NC complex decreased from 92% at December 31, 2000
to 82% at December 31, 2001. Occupancy at the Atlanta, GA complex decreased from
98% at December 31, 2000 to 83% at December 31, 2001. Occupancy at the apartment
complex in Jacksonville, FL decreased from 91% at December 31, 2000 to 88% at
December 31, 2001. Occupancy at the Gresham and Salem, OR apartment complexes
averaged approximately 93% at December 31, 2001. As of December 31, 2001, all
available vacant spaces were being marketed.


                                       11
<Page>

RETAIL PROPERTY

Net investment income for the Partnership's retail properties located in
Roswell, GA and Hampton, VA was approximately $3.0 million for the twelve months
ended December 31, 2001 and approximately $2.8 million for the twelve months
ended December 31, 2000. The increase is primarily due to the acquisition of the
controlling interest in the 154,540 square foot retail center based in Hampton,
VA.

The retail properties experienced a net unrealized loss of $0.1 million and a
net unrealized loss of $0.3 million for the twelve months ended December 31,
2001 and 2000, respectively. The retail center located in Roswell, GA
experienced a loss of $0.6 million for 2001 due to increased capital
expenditures and a slight drop in occupancy. Offsetting this unrealized loss was
an unrealized gain of $0.5 million resulting from the market value appraisal
received on the newly acquired retail center located in Hampton, VA.

The unrealized loss experienced in 2000 was due to the Roswell, GA property due
to lower income projections, coupled with capital expenditures that did not
increase the market value of the property.

Occupancy at the shopping center located in Roswell, GA decreased from 97% at
December 31, 2000 to 92% at December 31, 2001. The newly acquired retail center
in Hampton, VA had an occupancy of 99% at December 31, 2001. As of December 31,
2001, all vacant spaces were being marketed.

INDUSTRIAL PROPERTIES

Net investment income from property operations for the industrial properties
decreased from $1.3 million for the twelve months ended December 31, 2000 to
$0.5 million for the corresponding period ended December 31, 2001. The majority
of these decreases were due to decreased occupancy at the properties located in
Bolingbrook, IL and Salt Lake City, UT.

Even though the Salt Lake City, UT location increased occupancy for the year,
the new tenants did not move in until the end of the third quarter and there was
significant vacancy at the Bolingbrook, IL facility for a portion of 2001.

The three industrial properties owned by the Partnership experienced a net
unrealized loss of approximately $2.1 million for the twelve months ended
December 31, 2001 compared to a net unrealized loss of approximately $0.9
million in 2000. The majority of the unrealized loss in 2001 was attributable to
the Salt Lake City, UT industrial property. This loss of approximately $1.3
million was due to a decrease in market rents. The Bolingbrook, IL facility
experienced a loss of $0.9 million due to a decrease in rental rates and
softening market conditions.

The three industrial properties owned by the Partnership experienced a net
unrealized loss of approximately $0.9 million in 2000. The majority of the
decrease for 2000 was attributable to the Aurora, CO industrial property, which
had a loss of approximately $0.7 million due to more conservative assumptions
regarding rental rates, lease-up time and terminal capitalization rates used by
the appraiser. In addition, capital expenditures were incurred at the property
that were not reflected as an increase in market value. The industrial property
located in Bolingbrook, IL experienced an unrealized loss of $0.4 million in
2000. This loss was due to the expiration of the single tenant lease with no
replacement tenant being signed as of yet. The space was leased


                                       12
<Page>

during the fourth quarter of 2000 on a temporary basis, and partially leased at
the end of 2001 to a different temporary tenant.

The occupancy at the Bolingbrook, IL property decreased from 100% at December
31, 2000 to 98% at December 31, 2001. The occupancy at the Salt Lake City, Utah
property increased from 34% at December 31, 2000 to 77% at December 30, 2001.
The Aurora, CO property's occupancy rate remained unchanged at 75% at December
31, 2000 and 2001. As of December 31, 2001, all vacant spaces were being
marketed.

EQUITY IN INCOME OF REAL ESTATE PARTNERSHIP

During the twelve months ended December 31, 2001, income from the investment
located in Kansas City, KS and MO amounted to $0.7 million, a decrease of 13.2%
from $0.8 million at December 31, 2000. The decrease is primarily due to a
temporary decrease in rental rates.

The equity investment experienced a net unrealized gain of $0.2 million and $0.1
million for the twelve months ended December 31, 2001 and 2000, respectively.
The unrealized gain of $0.2 million for the twelve months ended December 31,
2001 was primarily due to the addition of a tenant that will provide a
substantial amount of income to the center in rent and the addition of new space
to house this tenant.

The retail portfolio located in Kansas City, KS and MO had an average occupancy
of 90% at December 31, 2001, which remained unchanged from December 31, 2000. As
of December 31, 2001, all vacant spaces were being marketed.

REAL ESTATE INVESTMENT TRUSTS

During the twelve months ended December 31, 2001, the Partnership's remaining
investment in REITS recognized a realized loss of $0.2 million due to the sale
of the Partnership's remaining investment in REITs. The Partnership recognized a
net realized gain of $2.5 million in 2000 primarily due to the sale of the
Partnership's remaining investment in Prologis REIT shares and sales of other
REIT investments.

The Partnership recognized an unrealized gain of $2.6 million on investments in
REITs for the twelve months ended December 31, 2000, which reflects changes in
the market value of REIT shares held by the Partnership.

OTHER

Other net investment income decreased approximately $0.8 million during the
twelve months ended December 31, 2001 when compared to the corresponding period
in 2000. Other net investment income includes interest income from short-term
investments, investment management fees, and expenses not related to property
activities. The decreases discussed above were primarily due to interest income
on short-term investments, which decreased primarily as a result of the
Partnership maintaining a significantly lower cash balance when compared to the
corresponding periods last year coupled with a decrease in interest rates.


                                       13
<Page>

2000 VS. 1999

The following table presents a comparison of the Partnership's sources of net
investment income, and realized and unrealized gains or losses by investment
type, for the twelve months ended December 31, 2000 and December 31, 1999.

<Table>
<Caption>
                                                            TWELVE MONTHS ENDED DECEMBER 31,
                                                             2000                      1999
 NET INVESTMENT INCOME:                                  -------------             -----------
 <S>                                                       <C>                     <C>
 Office properties                                          $5,356,934              $7,133,356
 Apartment complexes                                         3,446,245               2,556,743
 Retail property                                             2,772,438               2,676,387
 Industrial properties                                       1,257,146                 894,258
 Equity in income of real estate partnership                   791,596                  98,375
 Dividend income from real
   estate investment trust                                   1,744,611               1,221,843
 Other (including interest income,
   investment mgt fee, etc.)                                (1,730,853)             (1,301,373)
                                                           ------------            ------------
 TOTAL NET INVESTMENT INCOME                               $13,638,117             $13,279,589
                                                           ============            ============
 UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:

 Office properties                                         ($2,434,245)            ($3,267,264)
 Apartment complexes                                         2,717,915                 607,234
 Retail property                                              (264,300)             (1,770,462)
 Industrial properties                                        (935,721)                209,503
 Interest in real estate partnerships                          140,614                (680,870)
 Real estate investment trusts                               2,618,815              (2,282,044)
                                                           ------------            ------------
                                                             1,843,078              (7,183,903)
                                                           ------------            ------------
 REALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS

 Office properties                                             186,920                       -
 Apartment complexes                                                 -                       -
 Industrial properties                                               -                  (1,485)
 Interest in real estate partnerships                                -                  45,126
 Real estate investment trust                                2,457,024                 (76,784)
                                                           ------------            ------------
                                                             2,643,944                 (33,143)
                                                           ------------            ------------

 TOTAL REALIZED AND UNREALIZED GAIN                        ------------            ------------
  (LOSS) ON REAL ESTATE INVESTMENTS                         $4,487,022             ($7,217,046)
                                                           ------------            ------------
</Table>

The Partnership's net investment income in 2000 was $13.6 million, an increase
of $0.3 million from net investment income of $13.3 million in 1999.

Equity in income of real estate partnership increased $0.7 million, or 704.7%,
in 2000 due to the acquisition of an equity investment interest in the retail
portfolio located in the Kansas City, MO area. This interest was not acquired
until September 30, 1999. Therefore, equity in income of real estate
partnerships for the period ended December 31, 1999 represents only three months
of


                                       14
<Page>

activity, while activity for the period ended December 31, 2000 represents a
full year of activity.

Dividend income from real estate investment trusts was $1.7 million for the year
ended December 31, 2000, an increase of $0.5 million or 42.8% from the
corresponding period in 1999. This increase was primarily due to higher amounts
invested in real estate investment trusts. Amounts invested in REIT shares
averaged approximately $28.6 million during 2000 compared to approximately $22.4
million during 1999.

Interest on short-term investments decreased approximately $0.4 million or 25.0%
for the twelve months ended December 31, 2000 due primarily to a significantly
lower average cash balance. Cash and cash equivalents during 2000 averaged
approximately $16.6 million compared to approximately $32.0 million during 1999.

Operating expenses increased $0.6 million or 15.7% to $4.4 million during the
period ended December 31, 2000 when compared to the corresponding period in
1999. This increase was primarily a result of the Partnership's acquisition of a
controlling interest in the apartment complex located in Jacksonville, FL.

Interest expense increased $0.6 million, or 404.1%, in 2000 when compared to the
corresponding periods in 1999. This increase was due to the Partnership's
acquisition on September 30, 1999 of a controlling interest in the apartment
complex located in Jacksonville, FL, which was acquired subject to $10.2 million
in debt.


OFFICE PROPERTIES

Net investment income from property operations for the office sector decreased
approximately $1.8 million, or 24.9%, in 2000 when compared to 1999. This
decrease was primarily due to lower revenue levels experienced by the Oakbrook
Terrace, IL office complex during 2000 as a result of the lease termination fee
received during 1999 coupled with a corresponding decrease in occupancy. A 36%
decrease in occupancy at one of the Brentwood, TN office properties also
contributed to the decrease.

The office properties owned by the Partnership experienced a net unrealized loss
of approximately $2.4 million during 2000 compared to a net unrealized loss of
$3.3 million in 1999.

During 2000, the Oakbrook Terrace, IL property decreased $1.6 million in value
due to a lease termination associated with 45% of the space and weaker market
conditions. One of the Brentwood, TN office properties also experienced a net
unrealized loss of approximately $0.8 million primarily due to capital
expenditures on the property that were not reflected as an increase in market
value.

Approximately half of the $3.3 million net unrealized loss in 1999 was
attributable to the office building located in Oakbrook Terrace, IL, which
experienced costs associated with re-leasing and expected vacancy resulting from
the lease termination exercised by a tenant. The Beaverton, OR office property
also experienced a net unrealized loss of approximately $0.8 million. This
decline in value was partially attributable to an anticipated reduction in
investor demand for suburban office properties. The Lisle, IL office property
also experienced a net unrealized loss of approximately $0.7 million primarily
due to capital expenditures on the property that were not reflected as an
increase in market value.


                                       15
<Page>

The Morristown, NJ office property was sold on October 26, 2000 and resulted in
a realized gain of approximately $0.2 million.

Occupancy at the Lisle, IL office property increased from 88% at December 31,
1999 to 94% at December 31, 2000. Occupancy at one of the Brentwood, TN office
complexes decreased from 95% to 59% from December 31, 1999 to December 31, 2000,
while occupancy at the other Brentwood, TN office property remained unchanged at
100%. Occupancy at the Oakbrook Terrace, IL office complex decreased from 100%
at December 31, 1999 to 52% at December 31, 2000, while occupancy at the
Beaverton, OR office complex decreased from 100% at December 31, 1999 to 95% at
December 31, 2000. As of December 31, 2000 all vacant spaces were being
marketed.

APARTMENT COMPLEXES

Net investment income from property operations for the apartment sector was $3.4
million in 2000, an increase of $0.9 million or 34.8% compared with 1999. This
increase was primarily due to the acquisition of the controlling interest in the
apartment complex located in Jacksonville, FL.

The apartment complexes owned by the Partnership experienced a net unrealized
gain of $2.7 million and $0.6 million in 2000 and 1999, respectively. The
largest share of the unrealized gain for 2000 or $1.7 million was experienced by
the apartment complex located in Atlanta, GA primarily due to increases in
rental rates, stabilized occupancy, and lower operating expense estimates. The
apartment complex located in Raleigh, NC also experienced a net unrealized gain
of $0.2 million due to increases in rental rates.

The net unrealized gain of $0.6 million during 1999 was primarily experienced by
the Atlanta, GA apartment complex that increased in value due to improved market
conditions that resulted in higher rent levels.

The occupancy at the Atlanta, GA complex remained unchanged at 98% as of
December 31, 1999 and December 31, 2000. Occupancy at the apartment complex in
Raleigh, NC also remained unchanged at 92% as of December 31, 1999 and December
31, 2000. Occupancy at the Jacksonville, FL apartment complex increased from 89%
as of December 31, 1999 to 91% as of December 31, 2000. This increase is largely
a result of renovations completed at the project. As of December 31, 2000, all
available vacant units were being marketed.

RETAIL PROPERTY

Net investment income for the twelve months ended December 31, 2000 and 1999 for
the Partnership's retail property located in Roswell, GA was approximately $2.7
million for both periods.

The retail property experienced a net unrealized loss of $0.3 million and $1.8
million in 2000 and 1999, respectively. The unrealized loss experienced by the
property in 2000 was due to lower projected income growth, coupled with capital
expenditures that did not increase the market value of the property. The
decrease in value in 1999 was attributable to a declining position of the
property in the market.


                                       16
<Page>

Occupancy at the shopping center located in Roswell, GA decreased from 97% as of
December 31, 1999 to 96% as of December 31, 2000. As of December 31, 2000, all
vacant space was being marketed.

INDUSTRIAL PROPERTIES

Net investment income from property operations for the industrial properties
increased from $0.9 million in 1999 to $1.3 million in 2000. The majority of the
increase was a result of increased occupancy throughout 2000 at the property
located in Aurora, CO.

The three industrial properties owned by the Partnership experienced a net
unrealized loss of approximately $0.9 million and a net unrealized gain of $0.2
million in 2000 and 1999, respectively. The majority of the decrease for 2000
was attributable to the Aurora, CO industrial property, which had a loss of
approximately $0.7 million due to more conservative assumptions regarding rental
rates, lease-up time and terminal capitalization rates used by the appraiser. In
addition, capital expenditures were incurred at the property that was not
reflected as an increase in market value. The industrial property located in
Bolingbrook, IL experienced an unrealized loss of $0.4 million in 2000. This
loss was due to the expiration of the single tenant lease with no replacement
tenant being signed as of yet. A portion of the space was temporarily leased
during the fourth quarter of 2000.

The occupancy at the Bolingbrook, IL property decreased from 100% at December
31, 1999 to 45% at December 31, 2000. As of December 31, 2000 the Salt Lake
City, Utah property was 50% leased with two tenants. However, one tenant for
approximately 33% of the space was bankrupt and had moved out of the space by
year-end. The Salt Lake City, UT property had an occupancy rate of 34% at
December 31, 1999. The Aurora, Co property's occupancy rate remained unchanged
at 75% from December 31, 1999 to December 31, 2000. As of December 31, 2000, all
vacant spaces were being marketed.

EQUITY IN INCOME OF REAL ESTATE PARTNERSHIP

On September 30, 1999, the Partnership invested in an equity joint venture of
retail centers located in the Kansas City, MO area. During the twelve months
ended December 31, 2000, income from this investment amounted to $0.8 million
compared to $0.1 million for the corresponding period in 1999. The increase in
income was attributable to the Partnership holding the investment for a full
year during 2000 as opposed to only three months during 1999. This investment
experienced a net unrealized gain in 2000 of $0.1 million. During 1999, the
investment experienced a net unrealized loss of $0.7 million, primarily due to
capital expenditures on the properties that were not reflected as an increase in
market value.

The retail portfolio located in the Kansas City, MO area had an average
occupancy of 91% as of December 31, 2000 compared to an average occupancy of 90%
as of December 31, 1999. As of December 31, 2000, all vacant spaces were being
marketed.


                                       17
<Page>

REAL ESTATE INVESTMENT TRUSTS

The Partnership recognized a net realized gain from real estate investment
trusts of $2.5 million in 2000 primarily due to the sale of the Partnership's
remaining investment in ProLogis REIT shares and sales of other REIT
investments.

The Partnership's investment in REIT shares experienced an unrealized gain of
$2.6 million and an unrealized loss of $2.3 million for the twelve months ended
December 31, 2000 and 1999, respectively. These changes in unrealized gain and
loss reflect changes in the market value of REIT shares held by the
Partnership..

OTHER

Other net investment income decreased $0.5 million during 2000 compared to the
corresponding period last year. Other net investment income includes interest
income from short-term investments, investment management fees, and expenses not
related to property activities. The decrease in 2000 was primarily due to lower
interest income on short-term investments primarily as a result of the
Partnership maintaining a significantly lower cash balance as noted previously.


                                       18
<Page>

(c)  PER SHARE INFORMATION

Following is an analysis of the Partnership's net investment income and net
realized and unrealized gain (loss) on investments, presented on a per share
basis:


<Table>
<Caption>
                                                                 01/01/2001    01/01/2000     01/01/1999
                                                                     TO            TO             TO
                                                                 12/31/2000    12/31/2000     12/31/1999
                                                                 ----------    ----------     ----------
<S>                                                                <C>          <C>           <C>
Revenue from real estate and improvements                          $  2.71      $  2.32       $   2.08
Equity in income of real estate partnership                        $  0.08      $  0.08       $   0.01
Dividend income from real estate investment trusts                 $  0.24      $  0.18       $   0.12
Interest on short-term investments                                 $  0.03      $  0.13       $   0.16
                                                                   -------      -------       --------
TOTAL INVESTMENT INCOME                                            $  3.06      $  2.71       $   2.37
                                                                   -------      -------       --------
Investment management fee                                          $  0.30      $  0.28       $   0.26
Real estate taxes                                                  $  0.30      $  0.25       $   0.25
Administrative expense                                             $  0.28      $  0.25       $   0.21
Operating expense                                                  $  0.60      $  0.44       $   0.37
Interest expense                                                   $  0.20      $  0.07       $   0.01
Minority interest in consolidated partnership                      $  0.02      $  0.00 *     $   0.00 *
                                                                   -------      -------       --------
TOTAL INVESTMENT EXPENSES                                          $  1.70      $  1.29       $   1.10
                                                                   -------      -------       --------
NET INVESTMENT INCOME                                              $  1.36      $  1.42       $   1.27
                                                                   -------      -------       --------
Net realized gain (loss) on real estate investments sold
     or converted                                                 ($  0.02)    $   0.27      ($   0.00) *
                                                                   -------      -------       --------
Change in unrealized gain (loss) on real estate investments       ($  0.26)    $   0.23      ($   0.68)
Minority interest in unrealized gain (loss) on investments         $  0.00 *   ($  0.04)     ($   0.00) *
                                                                   -------      -------       --------
Net unrealized gain (loss) on real estate investments             ($  0.26)     $  0.19      ($   0.68)
                                                                   -------      -------       --------
NET REALIZED AND UNREALIZED
     GAIN (LOSS) ON INVESTMENTS                                   ($  0.28)     $  0.46      ($   0.68)
                                                                   =======      =======       ========
Net change in share value                                          $  1.08      $  1.88       $   0.59

Share value at beginning of period                                 $ 22.74      $ 20.86       $  20.27
                                                                   -------      -------       --------
Share value at end of period                                       $ 23.82      $ 22.74       $  20.86
                                                                   =======      =======       ========
Ratio of expenses to average net assets(1)                            7.26%        6.07%          5.33%

Ratio of net investment income to average net assets(1)               5.93%       6.49%           6.12%

Number of weighted average shares outstanding during the
 period (000's)                                                      8,922       9,831          10,472
</Table>

ALL PER SHARE CALCULATIONS ARE BASED ON WEIGHTED AVERAGE  SHARES OUTSTANDING.
(1) AVERAGE NET ASSETS ARE CALCULATED BASED ON AN AVERAGE OF ENDING MONTHLY NET
    ASSETS.

* Per Share amount less than $0.01 (rounded)


                                       19
<Page>

(d)  INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in Management's Discussion and Analysis may be
considered forward-looking statements. Words such as "expects", "believes",
"anticipates", "intends", "plans", or variations of such words are generally
part of forward-looking statements. Forward-looking statements are made based
upon management's current expectations and beliefs concerning future
developments and their potential effects upon the Partnership. There can be no
assurance that future developments affecting the Partnership will be those
anticipated by management. There are certain important factors that could cause
actual results to differ materially from estimates or expectations reflected in
such forward-looking statements including without limitation, changes in general
economic conditions, including the performance of financial markets and interest
rates; market acceptance of new products and distribution channels; competitive,
regulatory or tax changes that affect the cost or demand for the Partnership's
products; and adverse litigation results. While the Partnership reassesses
material trends and uncertainties affecting its financial position and results
of operations, it does not intend to review or revise any particular
forward-looking statement referenced in this Management's Discussion and
Analysis in light of future events. Readers should consider the information
referred to above when reviewing any forward-looking statements contained in
this Management's Discussion and Analysis.

(e) INFLATION

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

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with Generally Accepted
Accounting Principles ("GAAP") requires the application of accounting policies
that often involve a significant degree of judgment. Management, on an ongoing
basis, reviews critical estimates and assumptions. 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 Consolidated Financial Statements may change
significantly.

The following sections discuss critical accounting policies applied in preparing
our financial statements that are most dependent on the application of estimates
and assumptions.

VALUATION OF INVESTMENTS

REAL ESTATE INVESTMENTS - The Partnership's investments in real estate are
initially valued at their purchase price. Thereafter, real estate investments
are reported at their estimated market values based upon 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's Risk Management Unit is
responsible to assure that the valuation process


                                       20
<Page>

provides objective and accurate market value estimates.

The purpose of an appraisal is to estimate the market value of real estate as of
a specific date. Market value has been defined as the most probable price for
which the appraised real estate will sell in a competitive market under all
conditions requisite for a fair sale, with the buyer and seller each acting
prudently, knowledgeably, and for self interest, and assuming that neither is
under undue duress.

Real estate partnerships are valued at the Partnership's equity in net assets as
reflected in the partnership's financial statements with properties valued as
described above.

As described above, the estimated market value of real estate and real estate
related assets is determined through an appraisal process. These estimated
market values may vary significantly from the prices at which the real estate
investments would sell since market prices of real estate investments can only
be determined by negotiation between a willing buyer and seller. Although the
estimated market values represent subjective estimates, management believes
these estimated market values are reasonable approximations of market prices and
the aggregate value of investments in real estate is fairly presented as of
December 31, 2001 and 2000. Further discussion surrounding our policies and
procedures for valuing Real Estate Investments can be found in Footnote 2 to the
Consolidated Financial Statements.

INVESTMENT IN REAL ESTATE INVESTMENT TRUSTS - Shares of real estate investment
trusts (REITs) are generally valued at their quoted market price. These values
may be adjusted for discounts relating to restrictions, if any, on the future
sale of these shares, such as lockout periods or limitations on the number of
shares which may be sold in a given time period. Any such discounts are
determined by the Chief Real Estate Appraiser.

OTHER ESTIMATES

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 reported amounts of assets and
liabilities at the date of the 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 about 28.06% of its investment portfolio consisting
primarily of short-term fixed rate commercial paper and fixed and variable
interest rate debt. The Partnership does not use derivative financial
instruments. By policy, the Partnership places its investments with high quality
debt security issuers, limits the amount of credit exposure to any one issuer,
limits duration by restricting the term, and holds investments to maturity
except under rare 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, 2001:

<Table>
<Caption>
                                                         ESTIMATED MARKET VALUE             AVERAGE
                                     MATURITY                (IN $ MILLIONS)             INTEREST RATE
                             -------------------------- -------------------------- --------------------------
<S>                                 <C>                           <C>                        <C>
Cash equivalents                    0-3 months                    $25.3                      1.51%
                                    ----------
Short-term investments              3-12 months                      $0                         0%


                                       21
<Page>

</Table>

The table below discloses the Partnership's fixed and variable rate debt as of
December 31, 2001. Approximately $19.0 million of the Partnership's long-term
debt bears interest at fixed rates and therefore the fair value of this
instrument is affected by changes in market interest rates. The following table
presents principal cash flows (in thousands) based upon maturity dates of the
debt obligations and the related weighted-average interest rates by expected
maturity dates for the fixed rate debt. The interest rate on the variable rate
debt is equal to the 6-month Treasury rate plus 1.565%. It is subject to a
maximum of 11.345% and a minimum of 2.345%. The interest rate on the variable
rate debt as of December 31, 2001 was 5.735%.

December 31, 2001

<Table>
<Caption>
DEBT (IN $ THOUSANDS),                                                                                             ESTIMATED
INCLUDING CURRENT PORTION       2002        2003         2004        2005      2006     THEREAFTER      TOTAL     FAIR VALUE
-------------------------       ----        ----         ----        ----      ----     ----------      -----     ----------
<S>                             <C>         <C>         <C>         <C>       <C>         <C>          <C>          <C>
Fixed Rate                       $536        $577        $619        $665     $8,361      $8,240       $18,998      $18,583
Average Fixed Interest Rate     7.437%      7.449%      7.471%      7.491%     7.491%      6.750%        6.950%
Variable Rate                    $142        $159        $168        $178     $9,350          $0        $9,997      $10,038
</Table>

The Partnership is exposed to market risk from tenants. While the Partnership
has not experienced any significant credit losses, in the event of a significant
rising interest rate environment and/or economic downturn, defaults could
increase and result in losses to the Partnership, which would adversely affect
its operating results and liquidity.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

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

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-----------------------------------------------------------------------
        FINANCIAL DISCLOSURE
        --------------------

None.


                                       22
<Page>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                             DIRECTORS AND OFFICERS

The directors and major officers of Pruco Life of New Jersey, listed with their
principal occupations during the past 5 years, are shown below.

                      DIRECTORS OF PRUCO LIFE OF NEW JERSEY

JAMES J. AVERY, JR., VICE CHAIRMAN AND DIRECTOR - President, Prudential
Individual Life Insurance since 1998; 1997 to 1998: Senior Vice President, Chief
Actuary and CFO, Prudential Individual Insurance Group; prior to 1997:
President, Prudential Select.

VIVIAN L. BANTA, PRESIDENT, CHAIRMAN, AND DIRECTOR - Executive Vice President,
Individual Financial Services, U.S. Consumer Group since 2000; 1998 to 1999:
Consultant, Individual Financial Services; 1997 to 1998: Consultant, Morgan
Stanley; prior to 1997: Executive Vice President, Global Investor Service, The
Chase Manhattan Bank.

RICHARD J. CARBONE, DIRECTOR - Senior Vice President and Chief Financial Officer
since 1997; prior to 1997: Controller, Salomon Brothers.

HELEN M. GALT, DIRECTOR - Company Actuary, Prudential since 1993.

JEAN D. HAMILTON, Director - Executive Vice President, Prudential Institutional
since 1998; prior to 1998: President, Diversified Group.

RONALD P. JOELSON, DIRECTOR - Senior Vice President, Prudential Asset, Liability
and Risk Management since 1999; 1996 to 1999: President, Guaranteed Products,
Prudential Institutional.

DAVID R. ODENATH, JR., DIRECTOR - President, Prudential Investments since 1999;
prior to 1999: Senior Vice President and Director of Sales, Investment
Consulting Group, Paine Webber.

                         OFFICERS WHO ARE NOT DIRECTORS

SHAUN M. BYRNES, SENIOR VICE PRESIDENT - Senior Vice President, Director of
Mutual Funds, Annuities & UITs, Prudential Investments (PI) since 2001; 2000 to
2001: Senior Vice President, Director of Research, PI; 1999 to 2000: Senior Vice
President, Director of Mutual Funds, PI; 1997 to 1999: Vice President, Mutual
Funds, PI.

C. EDWARD CHAPLIN, TREASURER - Senior Vice President and Treasurer, Prudential
since 2000; prior to 2000, Vice President and Treasurer, Prudential.

THOMAS F. HIGGINS, SENIOR VICE PRESIDENT - Vice President, Annuity Services,
Prudential Individual Financial Services since 1999; 1998 to 1999: Vice
President, Mutual Funds, Prudential Individual Financial Services; prior to
1998: Principal, Mutual Fund Operations, The Vanguard Group.

CLIFFORD E. KIRSCH, CHIEF LEGAL OFFICER AND SECRETARY - Chief Counsel, Variable
Products, Prudential Law Department since 1995.


                                       23
<Page>

ANDREW J. MAKO, EXECUTIVE VICE PRESIDENT - Vice President, Finance, U.S.
Consumer Group since 1999; prior to 1999: Vice President, Business Performance
Management Group.

ESTHER H. MILNES, SENIOR VICE PRESIDENT - Vice President and Chief Actuary,
Prudential Individual Life Insurance since 1999; prior to 1999: Vice President
and Actuary, Prudential Individual Insurance Group.

JAMES B. O'CONNOR, SENIOR VICE PRESIDENT AND ACTUARY - Vice President,
Guaranteed Products since 2001; 1998 to 2000: Corporate Vice President,
Guaranteed Products; prior to 1998: Corporate Actuary, Prudential Investments.

SHIRLEY H. SHAO, SENIOR VICE PRESIDENT AND CHIEF ACTUARY - Vice President and
Associate Actuary, Prudential since 1996; prior to 1996: Vice President and
Assistant Actuary, Prudential Corporate Risk Management.

WILLIAM J. ECKERT, IV, VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER - Vice
President and IFS Controller, Prudential Enterprise Financial Management since
2000; 1999 to 2000: Vice President and Individual Life Controller, Prudential
Enterprise Financial Management; 1997 to 1999: Vice President, Accounting,
Enterprise Financial Management; 1995 to 1997: Vice President, Accounting,
External Financial Reporting.

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

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

Not applicable.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Related Transactions in note 7 of Notes to Financial Statements of the
Partnership on page F - 24.


                                       24
<Page>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  The following documents are filed as part of this report:

     1.   Financial Statements

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

     2.   Financial Statement Schedules

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

          Schedule III. Real Estate Owned: Properties
          Schedule III. Real Estate Owned: Interest in 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, 2001. 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) to Post Effective Amendment No.
          17 to Form S-6, Registration Statement No. 2-89780, filed March 1,
          1991, and incorporated herein by reference.

     3.2  Amended By-Laws of Pruco Life Insurance Company of New Jersey, filed
          as Exhibit 1.A.(6)(b) to Post-Effective Amendment No. 17 to Form S-6,
          Registration Statement No. 2-89780, filed March 1, 1991, and
          incorporated herein by reference.

     3.3  Resolution of the Board of Directors establishing the Pruco Life of
          New Jersey Variable Contract Real Property Account, filed as Exhibit
          (3C) to Form S-1, Registration Statement No. 33-20018, filed February
          5, 1988, and incorporated herein by reference.

     4.1  Variable Life Insurance Contract filed as Exhibit A(5) to Form N-8B-2,
          Registration Statement No. 2-81243, filed January 10, 1983, and
          incorporated herein by reference.

     4.2  Revised Variable Appreciable Life Insurance Contract with fixed death
          benefit, filed as Exhibit 1.A.(5)(c) to Post-Effective Amendment No. 5
          to Form S-6, Registration Statement No. 2-89780, filed July 11, 1986,
          and incorporated herein by reference.

     4.3  Revised Variable Appreciable Life Insurance Contract with variable
          death benefit, filed as Exhibit 1.A.(5)(d) to Post-Effective Amendment
          No. 5 to Form S-6, Registration Statement No. 2-89780, filed July 11,
          1986, and


                                       25
<Page>

     incorporated herein by reference.

4.4  Single Premium Variable Annuity Contract, filed as Exhibit 4(i) to Form
     N-4, Registration Statement No. 2- 99616, filed August 13, 1985, and
     incorporated herein by reference.

4.5  Flexible Premium Variable Life Insurance Contract, filed as Exhibit 1.A.(5)
     to Form S-6, Registration Statement No. 2-99537, filed August 8, 1985, and
     incorporated herein by reference.

9.   None.

10.1 Investment Management Agreement between The Prudential Insurance Company of
     America and The Prudential Variable Contract Real Property Partnership
     filed as Exhibit (10A) to Post- Effective Amendment No. 2 to Form S-1,
     Registration Statement No. 33-20018, filed April 6, 1990, and incorporated
     herein by reference.

10.2 Service Agreement between The Prudential Insurance Company of America and
     The Prudential Investment Corporation, filed as Exhibit (10B) to Form S-1,
     Registration Statement No. 33-8698, filed September 12, 1986, and
     incorporated herein by reference.

10.3 Partnership Agreement of The Prudential Variable Contract Real Property
     Partnership filed as Exhibit (10C) to Post-Effective Amendment No. 2 to
     Form S-1, Registration Statement No. 33-20018, filed April 6, 1990, and
     incorporated herein by reference.

11.  Not applicable.

12.  Not applicable.

13.  None.

18.  None.

21.  Not applicable.

22.  Not applicable.

23.  None.

24.  Power of Attorney: D. Odenath, and W. Eckert, incorporated by reference to
Pre-Effective Amendment No. 1 to Form S-6, Registration No. 333-49334, filed on
February 8, 2001 on behalf of the Pruco Life of New Jersey Variable Appreciable
Account. J. Avery incorporated by reference to Post-Effective Amendment No. 10
to Form S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account. V. Banta, R.
Carbone, H. Galt and J. Hamilton, incorporated by reference to Post-Effective
Amendment No.5 to form S-6, registration No. 333-85117, filed on June 28,2001 on
behalf of the Pruco Life of New Jersey Variable Appreciable Account. R. Joelson
incorporated by reference to Post- Effective Amendment No.14 to form S-1,
Registration No. 33-20018, filed April 10, 2001 on behalf of the Pruco Life of
New Jersey Variable Contract Real Property Account.

27.  Not applicable.


                                       26
<Page>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                   PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
                                  IN RESPECT OF
                        PRUCO LIFE OF NEW JERSEY VARIABLE
                         CONTRACT REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

Date:      March 29, 2002        By: /s/ William J. Eckert, IV
     --------------------------     ----------------------------------
                                     William J. Eckert, IV
                                     Vice President and Chief Accounting 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.

<Table>
<Caption>
SIGNATURE                                                               TITLE                           DATE
---------                                                               -----                           ----
<S>                                                              <C>                               <C>
*                                                                Chairman and Director             March 29, 2002
 ----------------------------------------------------
James J. Avery, Jr.

*                                                                President, Chairman and Director  March 29, 2002
 ----------------------------------------------------

Vivian L. Banta

*                                                                Director                          March 29, 2002
 ----------------------------------------------------
Richard J. Carbone

*                                                                Director                          March 29, 2002
 ----------------------------------------------------
Helen M. Galt

*                                                                Director                          March 29, 2002
 ----------------------------------------------------
David R. Odenath, Jr.

*                                                                Director                          March 29, 2002
 ----------------------------------------------------
Jean D. Hamilton

*                                                                Director                          March 29, 2002
 ----------------------------------------------------
Ronald P. Joelson

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


                                       27
<Page>

        PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

                                      INDEX

<Table>
<Caption>

                                                                                         PAGE
<S>                                                                                     <C>
A. PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT

   Financial Statements:

       Report of Independent Accountants                                                  F-2

       Statements of Net Assets - December 31, 2001 and 2000                              F-3

       Statements of Operations  - Years Ended December 31, 2001, 2000, 1999              F-3

       Statements of Changes in Net Assets - Years Ended December 31, 2001, 2000, 1999    F-3

       Notes to Financial Statements                                                      F-4

B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

   Financial Statements:

       Report of Independent Accountants                                                  F-9

       Report of Independent Accountants on Financial Statement Schedules                F-10

       Statements of Assets and Liabilities - December 31, 2001 and 2000                 F-11

       Statements of Operations - Years Ended December 31, 2001, 2000 and 1999           F-12

       Statements of Changes in Net Assets - Years Ended December 31, 2001,
           2000 and 1999                                                                 F-13

       Statements of Cash Flows - Years Ended December 31, 2001, 2000 and 1999           F-14

       Schedule of Investments - December 31, 2001 and 2000                              F-15

       Notes to Financial Statements                                                     F-19

   Financial Statement Schedules:

       For the period ended December 31, 2001

       Schedule III - Real Estate Owned: Properties                                      F-26

       Schedule III - Real Estate Owned: Interest in Properties                          F-27
</Table>

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
<Page>


                        REPORT OF INDEPENDENT ACCOUNTANTS


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 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, 2001 and 2000, and
the results of its operations and of the changes in its net assets for the
three years in the period ended December 31, 2001, 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 auditing standards
generally accepted in the United States of America, which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of shares at December 31, 2001 with The Prudential Variable
Contract Real Property Partnership, provide a reasonable basis for our
opinion.

PricewaterhouseCoopers LLP
New York, New York
March 29, 2002

                                      F-2
<Page>


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

STATEMENTS OF NET ASSETS
December 31, 2001 and 2000

<Table>
<Caption>

                                                                                        2001          2000
                                                                                   -----------      -----------
<S>                                                                                <C>              <C>
ASSETS
  Investment in The Prudential Variable Contract
    Real Property Partnership (Note 3)                                             $ 8,747,935      $ 9,188,844
                                                                                   -----------      -----------
  Net Assets                                                                       $ 8,747,935      $ 9,188,844
                                                                                   ===========      ===========
NET ASSETS, representing:
  Equity of contract owners (Note 4)                                               $ 5,921,597      $ 5,911,297
  Equity of Pruco Life Insurance Company of New Jersey (Note 2D)                     2,826,338        3,277,547
                                                                                   -----------      -----------
                                                                                   $ 8,747,935      $ 9,188,844
                                                                                   ===========      ===========

Units outstanding                                                                    4,017,093        4,397,653
                                                                                   ===========      ===========
<Caption>


STATEMENTS OF OPERATIONS
For the years ended December 31, 2001, 2000 and 1999
                                                                                         2001            2000        1999
                                                                                   -----------      -----------   ----------
<S>                                                                                <C>              <C>           <C>
INVESTMENT INCOME
Net investment income from Partnership operations                                  $   545,240      $   599,966   $  579,075
                                                                                   -----------      -----------   ----------
EXPENSES
Charges to contract owners for assuming mortality risk and
     expense risk and for administration (Note 5)                                       34,149           33,868       35,718
                                                                                   -----------      -----------   ----------
NET INVESTMENT INCOME                                                                  511,091          566,098      543,357
                                                                                   -----------      -----------   ----------
NET REALIZED AND UNREALIZED GAIN
  (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments in Partnership                     (99,669)          84,525     (308,127)
Realized gain (loss) on sale of investments in Partnership                              (9,345)         116,312       (1,445)
                                                                                   -----------      -----------   ----------
NET GAIN (LOSS) ON INVESTMENTS                                                        (109,014)         200,837      309,572)
                                                                                   -----------      -----------   ----------
NET INCREASE IN NET ASSETS
  RESULTING FROM OPERATIONS                                                        $   402,077      $   766,935   $  233,785
                                                                                   ===========      ===========   ==========
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2001, 2000 and 1999
                                                                                         2001           2000            1999
                                                                                   -----------      -----------   ----------
OPERATIONS
Net investment income                                                              $   511,091      $   566,098   $  543,357
Net change in unrealized gain (loss) on investments in Partnership                     (99,669)          84,525     (308,127)
Net realized gain (loss) on sale of investments in Partnership                          (9,345)         116,312       (1,445)
                                                                                   -----------      -----------   ----------
NET INCREASE IN NET ASSETS
  RESULTING FROM OPERATIONS                                                            402,077          766,935      233,785
                                                                                   -----------      -----------   ----------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners (Note 7)                                           (233,080)        (483,241)    (642,611)
Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey         (609,906)        (169,001)     222,727
                                                                                   -----------      -----------   ----------
NET DECREASE IN NET ASSETS
  RESULTING FROM CAPITAL TRANSACTIONS                                                 (842,986)        (652,242)    (419,884)
                                                                                   -----------      -----------   ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS                                               (440,909)         114,693     (186,099)

NET ASSETS
  Beginning of year                                                                  9,188,844        9,074,151    9,260,250
                                                                                   -----------      -----------   ----------
  End of year                                                                      $ 8,747,935      $ 9,188,844   $9,074,151
                                                                                   ===========      ===========   =============

</Table>


           SEE NOTES TO FINANCIAL STATEMENTS ON PAGES F-4 THROUGH F-8

                                      F-3
<Page>


                      NOTES TO THE FINANCIAL STATEMENTS OF
        PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                DECEMBER 31, 2001



NOTE 1: GENERAL

Pruco Life of New Jersey Variable Contract Real Property Account ("Real Property
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"), an indirect wholly-owned subsidiary of The Prudential Insurance
Company of America ("Prudential"), as a separate investment account pursuant to
New Jersey law. The assets of the Real Property Account are segregated from
Pruco Life of New Jersey's other assets. The Real Property 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 Real Property Account are invested in The Prudential Variable
Contract Real Property Partnership (the "Partnership"). The Partnership is
organized under New Jersey law and is registered under the Securities Act of
1933. The Partnership is the investment vehicle for assets allocated to the real
estate investment option under certain variable life insurance and annuity
contracts. The Real Property 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

A. BASIS OF ACCOUNTING

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

B. INVESTMENT IN PARTNERSHIP INTEREST

The investment in the Partnership is based on the Real Property Account's
proportionate interest of the Partnership's market value. At December 31, 2001
and 2000 the Real Property Account's interest in the Partnership was 4.4% or
367,199 shares and 4.5% or 404,158 shares respectively.

C. INCOME RECOGNITION

Net investment income and realized and unrealized gains and losses are
recognized daily. Amounts are based upon the Real Property 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 Real Property Account for
property acquisitions and capital expenditure funding needs. The position is
also utilized for liquidity purposes including unit purchases and redemptions,
Partnership share transactions, and expense processing. The position does not
have an effect on the contract owner's account or the related unit value.

                                      F-4
<Page>

NOTE 3: INVESTMENT INFORMATION FOR THE PRUDENTIAL VARIABLE CONTRACT REAL
        PROPERTY PARTNERSHIP

The number of shares (rounded) held by the Real Property Account in the
Partnership and the Partnership net asset value per share (rounded)
December 31, 2001 and December 31, 2000 were as follows:

<Table>
<Caption>

                                              DECEMBER 31, 2001    DECEMBER 31, 2000
                                              -----------------    -----------------
<S>                                           <C>                  <C>
NUMBER OF SHARES (ROUNDED:                          367,199                 404,158
NET ASSET VALUE PER SHARE (ROUNDED):                 $23.82                  $22.74

</Table>


NOTE 4: CONTRACT OWNER UNIT INFORMATION

Outstanding contract owner units, unit values and total value of contract owner
equity at December 31, 2001 and December 31, 2000 by product, were as follows:

<Table>
<Caption>

2001:
                                                    VAL              VLI              SPVA              SPVL            TOTAL
                                                    ---              ---              ----              ----            -----
<S>                                            <C>             <C>               <C>               <C>              <C>
CONTRACT OWNER UNITS OUTSTANDING:               2,198,266         426,764            32,194            55,205
UNIT VALUE:                                    $  2.17654      $  2.26011        $  1.97316        $  1.97316
                                               ----------      ----------        ----------        ----------
TOTAL CONTRACT OWNER EQUITY:                   $4,784,613      $  964,533        $   63,523        $  108,928       $5,921,597
                                               ==========      ==========        ==========        ==========       ==========

<Caption>

2000:
                                                    VAL              VLI              SPVA              SPVL            TOTAL
                                                    ---              ---              ----              ----            -----
<S>                                            <C>             <C>               <C>               <C>              <C>
CONTRACT OWNER UNITS OUTSTANDING:               2,289,094         431,958            32,194           69,345
UNIT VALUE:                                    $  2.08939      $  2.16437        $  1.90636        $ 1.90636
                                               ----------      ----------        ----------        ----------
TOTAL CONTRACT OWNER EQUITY:                   $4,782,811      $  934,917        $   61,373        $ 132,196        $5,911,297
                                               ==========      ==========        ==========        ==========       ==========
</Table>

NOTE 5: CHARGES AND EXPENSES

A. MORTALITY RISK AND EXPENSE RISK CHARGES

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

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.

C. COST OF INSURANCE AND OTHER RELATED CHARGES

Contract owner contributions are subject to certain deductions prior to being
invested in the Real Property Account. The deductions for VAL and VLI are (1)
state premium taxes; (2) sales charges 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, are deducted from each premium payment to
cover premium collection and processing costs. Contracts are also subject to
monthly charges for the costs of administering the contract to compensate Pruco
Life of New Jersey for the guaranteed minimum death benefit risk.

                                      F-5
<Page>

D. DEFERRED SALES CHARGE

Subsequent to a contract owner redemption, 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. 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.

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.


NOTE 6: 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 Real Property
Account form a part of Prudential's consolidated federal tax return. Under
current federal law, no federal income taxes are payable by the Real Property
Account. As such, no provision for the tax liability has been recorded in these
financial statements.

NOTE 7: NET WITHDRAWALS BY CONTRACT OWNERS

Contract owner activity for the real estate investment option in Pruco Life of
New Jersey's variable insurance and variable annuity products for the years
ended December 31, 2001, 2000 and 1999 were as follows:


2001:
-----
<Table>
<Caption>

                                                         VAL          VLI          SPVA         SPVL         TOTAL
                                                         ---          ---          ----         ----         -----
<S>                                                      <C>          <C>          <C>          <C>          <C>
Contract Owner Net Payments:                             $ 336,090    $  66,216    $       0    $     (91)   $ 402,215
Policy Loans:                                             (134,830)     (10,374)           0       (3,283)    (148,487)
Policy Loan Repayments and Interest:                       133,164       11,187            0        1,484      145,835
Surrenders, Withdrawals, and Death Benefits:              (241,766)     (46,572)           0      (24,418)    (312,756)
Net Transfers To Other Subaccounts
    or Fixed Rate Option:                                  (69,664)         157            0            0      (69,507)
Administrative and Other Charges:                         (217,519)     (32,032)           0         (829)    (250,380)
                                                         ---------    ---------    ---------    ---------    ---------
NET WITHDRAWALS BY CONTRACT OWNERS                       $(194,525)   $ (11,418)   $       0    $ (27,137)   $(233,080)
                                                         =========    =========    =========    =========    =========

<Caption>

2000:
-----
                                                         VAL          VLI          SPVA         SPVL         TOTAL
                                                         ---          ---          ----         ----         -----
<S>                                                      <C>          <C>          <C>          <C>          <C>
Contract Owner Net Payments:                             $ 319,329    $  68,139    $       0    $     (61)   $ 387,407
Policy Loans:                                             (180,080)      (9,363)           0         (954)    (190,397)
Policy Loan Repayments and Interest:                       127,498        8,381            0       18,138      154,017
Surrenders, Withdrawals, and Death Benefits:              (208,054)     (55,549)     (46,248)           0     (309,851)
Net Transfers To Other Subaccounts
    or Fixed Rate Option:                                 (258,262)     (13,477)           0      (11,479)    (283,218)
Administrative and Other Charges:                         (212,166)     (28,176)         (15)        (842)    (241,199)
                                                         ---------    ---------    ---------    ---------    ---------
NET WITHDRAWALS BY CONTRACT OWNERS                       $(411,735)   $ (30,045)   $ (46,263)   $   4,802    $(483,241)
                                                         =========    =========    =========    =========    =========
</Table>

                                      F-6
<Page>


1999:
-----
<Table>
<Caption>

                                                         VAL          VLI          SPVA         SPVL         TOTAL
                                                         ---          ---          ----         ----         -----
<S>                                                      <C>          <C>          <C>          <C>          <C>
Contract Owner Net Payments:                             $ 133,235    $  44,778    $       0    $      (9)   $ 178,004
Policy Loans:                                             (206,458)     (11,382)           0       (1,005)    (218,845)
Policy Loan Repayments and Interest:                       295,414       10,661            0        2,140      308,215
Surrenders, Withdrawals, and Death Benefits:              (278,883)     (57,044)      (7,957)           0     (343,884)
Net Transfers To Other Subaccounts
    or Fixed Rate Option:                                 (288,687)     (14,518)           0            0     (303,205)
Administrative and Other Charges:                         (232,010)     (29,982)          43         (947)    (262,896)
                                                         ---------    ---------    ---------    ---------    ---------
NET WITHDRAWALS BY CONTRACT OWNERS                       $(577,389)   $ (57,487)   $  (7,914)   $     179    $(642,611)
                                                         =========    =========    =========    =========    =========
</Table>

NOTE 8:  CONTRACT OWNER UNIT ACTIVITY

Transactions in units for the years ended December 31, 2001, 2000 and 1999 were
as follows:


2001:
-----
<Table>
<Caption>

                                                        VAL          VLI          SPVA         SPVL
                                                        ---          ---          ----         ----
<S>                                                     <C>          <C>          <C>          <C>
Contract Owner Contributions:                            216,764      35,917            0          755
Contract Owner Redemptions:                             (307,592)    (41,111)           0      (14,895)

2000:
-----
<Caption>

                                                        VAL          VLI          SPVA         SPVL
                                                        ---          ---          ----         ----
<S>                                                     <C>          <C>          <C>          <C>
Contract Owner Contributions:                            208,532      34,992            7        9,433
Contract Owner Redemptions:                             (416,718)    (49,516)     (25,342)      (7,015)

1999:
-----
<Caption>

                                                        VAL          VLI          SPVA         SPVL
                                                        ---          ---          ----         ----
<S>                                                     <C>          <C>          <C>          <C>
Contract Owner Contributions:                            223,951      29,238           26        1,215
Contract Owner Redemptions:                             (527,135)    (58,445)      (4,583)      (1,112)
</Table>

NOTE 9:  PURCHASES AND SALES OF INVESTMENTS

The aggregate costs of purchases and proceeds from sales of investments in the
Partnership for the year ended December 31, 2001 were as follows:

                     Purchases:  $  0
                     Sales:      $ (877,136)

                                      F-7
<Page>

NOTE 10: FINANCIAL HIGHLIGHTS

Pruco Life Insurance Company of New Jersey (the "Company") sells a number of
variable annuity and variable life insurance products, both of which 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
the Company have the lowest and highest total return. Only product designs
within the Real Property Account that had units outstanding during December
31, 2001, were considered when determining the lowest and highest total
return. 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.

<Table>
<Caption>

                   AT DECEMBER 31, 2001                        FOR THE YEAR ENDED DECEMBER 31, 2001
  ------------------------------------------------------  ---------------------------------------------
  CONTRACT HOLDER                        CONTRACT HOLDER                    EXPENSE          TOTAL
      UNITS          UNIT FAIR VALUE        NET ASSETS     INVESTMENT       RATIO**         RETURN***
     (000'S)          LOWEST-HIGHEST          (000'S)     INCOME RATIO*  LOWEST-HIGHEST  LOWEST-HIGHEST
  ---------------  --------------------  ---------------  -------------  --------------  --------------
      <C>          <C>                       <C>              <C>        <C>             <C>
      2,712        $1.97316 to $2.26011      $5,922           5.89%      0.35% to 1.25%  3.50% to 4.42%
</Table>


* This amount represents the proportionate share of the net investment income
from the underlying Partnership dividend by the total average assets of the
Real Property Account. This ratio excludes those expenses, such as mortality
and expense 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 expenses assessed through the redemption of units; inclusion of
these expenses in the calculation would result in a reduction in the total
return presented.


NOTE 11: RELATED PARTY FOOTNOTE

Prudential and its affiliates perform various services on behalf of the
Partnership in which the Real Property 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-8
<Page>

                        REPORT OF INDEPENDENT ACCOUNTANTS


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

In our opinion, the accompanying consolidated statements of assets and
liabilities, including the schedule of 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, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001, 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 auditing
standards generally accepted in the United States of America, which require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 15, 2002


                                      F-9
<Page>


                      REPORT OF INDEPENDENT ACCOUNTANTS ON

                          FINANCIAL STATEMENT SCHEDULES


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

Our audits of the consolidated financial statements referred to in our report
dated February 15, 2002 appearing in this Annual Report on Form 10-K also
included an audit of the financial statement schedules listed in Item 14(a)(2)
of this Form 10-K. In our opinion, these financial statement schedules present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.



PricewaterhouseCoopers LLP
New York, New York
February 15, 2002





                                      F-10
<Page>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<Table>
<Caption>

                                                                              DECEMBER 31, 2001           DECEMBER 31, 2000
                                                                              -----------------           -----------------
ASSETS
<S>                                                                           <C>                         <C>
REAL ESTATE INVESTMENTS - At estimated market value:
  Real estate and improvements
   (cost:  12/31/2001 -- $212,044,159; 12/31/2000 -- $173,748,950)                 $197,970,877                $162,213,095
  Real estate partnership (cost: 12/31/2001 -- $7,026,540;
   12/31/2000 -- $5,985,783)                                                          6,712,308                   5,445,528
  Real estate investment trusts (cost:  12/31/2001 -- $0;
   12/31/2000 -- $31,896,908)                                                                 -                  35,224,737
                                                                              -----------------           -----------------
         Total real estate investments                                              204,683,185                 202,883,360

MARKETABLE SECURITIES - At estimated market value
   (cost: 12/31/2001 -- $0; 12/31/2000 -- $4,916,327)                                         -                   4,916,494

CASH AND CASH EQUIVALENTS                                                            26,615,645                  10,543,821

DIVIDEND RECEIVABLE                                                                      28,455                     242,341

OTHER ASSETS (net of allowance for uncollectible
  accounts:  12/31/2001 -- $107,000; 12/31/2000 -- $91,000)                           3,267,367                   2,926,280


                                                                              -----------------           -----------------
         Total assets                                                              $234,594,652                $221,512,296
                                                                              =================           =================

LIABILITIES

MORTGAGE LOANS PAYABLE                                                               28,994,521                  10,092,355

ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                 3,469,242                   2,517,818

DUE TO AFFILIATES                                                                       896,134                     887,434

OTHER LIABILITIES                                                                       972,410                     669,209

MINORITY INTEREST                                                                     2,111,709                     997,401
                                                                              -----------------           -----------------
         Total liabilities                                                           36,444,016                  15,164,217
                                                                              -----------------           -----------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' EQUITY                                                                    198,150,636                 206,348,079
                                                                              -----------------           -----------------

         Total liabilities and partners' equity                                    $234,594,652                $221,512,296
                                                                              =================           =================

NUMBER OF SHARES OUTSTANDING AT END OF PERIOD                                         8,317,470                   9,075,913
                                                                              =================           =================

SHARE VALUE AT END OF PERIOD                                                             $23.82                      $22.74
                                                                              -----------------           -----------------
</Table>

  THE ACCOMPANYING NOTES AREA AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-11
<Page>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>

                                                                                 YEAR ENDED DECEMBER 31,
                                                                       --------------------------------------------------
                                                                           2001                2000               1999
                                                                       -----------        ------------        -----------
<S>                                                                    <C>                <C>                 <C>
INVESTMENT INCOME:
 Revenue from real estate and improvements                             $24,339,631         $22,570,851        $21,807,346
 Equity in income of real estate partnership                               686,801             791,596             98,375
 Dividend income                                                         2,157,647           1,744,611          1,221,843
 Interest on short-term investments                                        296,514           1,280,880          1,707,485
                                                                       -----------        ------------        -----------
         Total investment income                                        27,480,593          26,387,938         24,835,049
                                                                       -----------        ------------        -----------

INVESTMENT EXPENSES:
 Operating                                                               5,328,004           4,390,001          3,794,081
 Investment management fee                                               2,694,130           2,705,589          2,730,713
 Real estate taxes                                                       2,652,956           2,498,065          2,616,553
 Administrative                                                          2,518,644           2,411,390          2,234,949
 Interest expense                                                        1,776,701             732,991            145,418
 Minority interest                                                         159,852              11,785             33,746
                                                                       -----------        ------------        -----------
         Total investment expenses                                      15,130,287          12,749,821         11,555,460
                                                                       -----------        ------------        -----------
NET INVESTMENT INCOME                                                   12,350,306          13,638,117         13,279,589
                                                                       -----------        ------------        -----------
REALIZED AND UNREALIZED (LOSS) GAIN ON REAL ESTATE
  INVESTMENTS:
 Net proceeds from real estate investments
   sold or converted                                                    53,417,000          46,617,017         21,649,562
 Less:  Cost of real estate investments sold or converted               50,300,836          55,269,357         19,602,032
        Realization of prior years' unrealized
        gain (loss) on real estate investments sold or converted         3,327,829         (11,296,284)         2,080,673
                                                                       -----------        ------------        -----------
 Net (loss) gain realized on real estate
             investments sold or converted                                (211,665)          2,643,944            (33,143)
                                                                       -----------        ------------        -----------
 Change in unrealized (loss) gain on real estate investments            (2,311,404)          2,297,429         (7,145,372)
 Less: Minority interest in unrealized gain on real estate investments      24,680             454,351             38,531
                                                                       -----------        ------------        -----------
 Net unrealized (loss) gain on real estate investments                  (2,336,084)          1,843,078         (7,183,903)
                                                                       -----------        ------------        -----------
NET REALIZED AND UNREALIZED (LOSS) GAIN
 ON REAL ESTATE INVESTMENTS                                             (2,547,749)          4,487,022         (7,217,046)
                                                                       -----------        ------------        -----------
NET INCREASE IN NET ASSETS RESULTING
 FROM OPERATIONS                                                        $9,802,557        $ 18,125,139         $6,062,543
                                                                       ===========        ============         ==========
</Table>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

                                      F-12
<Page>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>

                                                                              YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------------------------------
                                                             2001                     2000                    1999
                                                          --------------         ---------------           --------------
<S>                                                       <C>                    <C>                       <C>
NET INCREASE IN NET ASSETS RESULTING
  FROM OPERATIONS:
  Net investment income                                     $12,350,306             $13,638,117              $13,279,589
  Net (loss) gain realized on real estate
   investments sold                                            (211,665)              2,643,944                  (33,143)
  Net unrealized (loss) gain from real estate
   investments                                               (2,336,084)              1,843,078               (7,183,903)
                                                          --------------         ---------------           --------------
         Net increase in net assets resulting from
           operations                                         9,802,557              18,125,139                6,062,543
                                                          --------------         ---------------           --------------
NET DECREASE IN NET ASSETS RESULTING
 FROM CAPITAL TRANSACTIONS:
 Withdrawals by partners
  (2001 -- 758,443; 2000 -- 1,003,008; and
    1999 -- 1,769,354 shares, respectively)                 (18,000,000)            (22,000,000)             (36,000,000)
                                                          --------------         ---------------           --------------

         Net decrease in net assets resulting from
           capital transactions                             (18,000,000)            (22,000,000)             (36,000,000)
                                                          --------------         ---------------           --------------

NET DECREASE IN NET ASSETS                                   (8,197,443)             (3,874,861)             (29,937,457)

NET ASSETS -  Beginning of year                             206,348,079             210,222,940              240,160,397
                                                          --------------         ---------------           --------------

NET ASSETS -  End of year                                  $198,150,636            $206,348,079             $210,222,940
                                                          ==============         ===============           ==============
</Table>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

                                      F-13
<Page>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<Caption>

                                                                           YEAR ENDED DECEMBER 31,
                                                            ----------------------------------------------------------
                                                                  2001                 2000                 1999
                                                            ---------------       --------------        --------------
<S>                                                         <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations            $9,802,557          $18,125,139            $6,062,543
Adjustments to reconcile net increase in net assets
   resulting from operations to net cash provided by
   operating activities:
     Net realized and unrealized loss (gain) on
        real estate investments                                  2,547,749           (4,487,022)            7,217,046
     Equity in income of real estate partnership's
        operations in excess of distributions                     (686,801)            (791,596)              (98,376)
     Minority interest in operating activities                     159,852               11,785                33,746
     Bad debt expense                                              108,358               96,785               124,059
      Decrease (increase) in:
         Dividend receivable                                       213,886             (110,799)               35,733
         Other assets                                             (449,444)            (169,489)              645,878
      Increase (decrease) in:
         Accounts payable and accrued expenses                     951,424             (449,796)              982,214
         Due to affiliates                                           8,700               17,957              (729,058)
         Other liabilities                                         303,201              143,316                20,952
                                                            ---------------       --------------        --------------
Net cash flows from operating activities                        12,959,482           12,386,280            14,294,737
                                                            ---------------       --------------        --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from real estate investments sold                53,417,000           46,617,017            10,706,996
  Acquisition of real estate                                   (14,582,383)                   -            (7,200,743)
  Acquisition of real estate  partnership                                -                    -            (5,088,750)
  Acquisition of real estate investment trust                  (18,403,928)         (34,157,332)          (31,239,744)
  Improvements and additional costs on prior purchases:
    Additions to real estate                                    (4,373,073)          (4,215,157)           (2,516,645)
    Additions to real estate partnership                          (353,956)              (7,060)                    -
  Sale (purchase) of marketable securities, net                  4,916,494           (2,119,486)           12,153,517
                                                            ---------------       --------------        --------------
  Net cash flows from investing activities                      20,620,154            6,117,982           (23,185,369)
                                                            ---------------       --------------        --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Withdrawals by partners                                       (18,000,000)         (22,000,000)          (36,000,000)
 Principal payments on mortgage loans payable                     (437,588)             (92,307)              (15,338)
 Distributions to minority interest partners                             -                    -               (93,425)
 Contributions from minority interest partners                     929,776              159,197               393,216
                                                            ---------------       --------------        --------------
 Net cash flows from financing activities                      (17,507,812)         (21,933,110)          (35,715,547)
                                                            ---------------       --------------        --------------
NET CHANGE IN CASH AND CASH
  EQUIVALENTS                                                   16,071,824           (3,428,848)          (44,606,179)

CASH AND CASH EQUIVALENTS - Beginning of year                   10,543,821           13,972,669            58,578,848
                                                            ---------------       --------------        --------------
CASH AND CASH EQUIVALENTS - End of year                        $26,615,645          $10,543,821           $13,972,669
                                                            ===============       ==============        ==============
</Table>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

                                      F-14
<Page>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS
<Table>
<Caption>

                                                                    DECEMBER 31, 2001                      DECEMBER 31, 2000
                                                       -----------------------------------      ----------------------------------
                                                                               ESTIMATED                               ESTIMATED
                                                                                 MARKET                                 MARKET
                                                              COST               VALUE                COST              VALUE
                                                       ---------------------------------------------------------------------------
    REAL ESTATE AND IMPROVEMENTS - PERCENT OF NET ASSETS                             99.9%                                   78.6%
    Location                Description
    ------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                          <C>                 <C>                 <C>                 <C>
    Lisle, IL               Office Building               $22,561,428         $14,193,539         $22,267,422         $14,134,722
    Atlanta, GA             Garden Apartments              15,696,606          18,752,139          15,667,354          17,800,002
    Roswell, GA             Retail Shopping Center         32,878,304          26,625,833          32,533,052          26,874,838
    Bolingbrook, IL         Warehouse                       9,039,620           5,826,782           9,012,838           6,664,810
    Raleigh, NC             Garden Apartments              15,940,839          16,808,160          15,847,460          17,200,000
    Nashville, TN           Office Building                 9,977,669          10,629,012           9,657,787          10,396,565
    Oakbrook Terrace, IL    Office Complex                 14,015,481          14,359,009          13,021,251          12,716,910
    Beaverton, OR           Office Complex                 11,989,204          10,988,123          11,225,040          10,623,809
    Salt Lake City, UT      Industrial Building             6,568,107           5,487,490           5,640,709           5,900,050
    Aurora, CO              Industrial Building            10,131,517           9,900,000          10,131,358           9,800,714
    Brentwood, TN           Office Complex                  9,612,024           8,900,790           9,609,133           9,600,675
*   Jacksonville, FL        Garden Apartments              19,711,225          20,400,000          19,135,546          20,500,000
*   Gresham/Salem, OR       Garden Apartments              18,815,082          19,100,000                   -                   -
*   Hampton, VA             Retail Shopping Center         15,107,053          16,000,000                   -                   -
                                                       ---------------------------------------------------------------------------
                                                         $212,044,159        $197,970,877        $173,748,950        $162,213,095
                                                       ===========================================================================

   REAL ESTATE PARTNERSHIP - PERCENT OF NET ASSETS                                    3.4%                                   2.6%
    Location                Description
    ------------------------------------------------------------------------------------------------------------------------------

                                                       ---------------------------------------------------------------------------
    Kansas City, KS; MO     Retail Shopping Center         $7,026,540          $6,712,308          $5,985,783          $5,445,528
                                                       ===========================================================================
</Table>

* Real estate partnerships accounted for by the consolidation method.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

                                      F-15
<Page>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS

<Table>
<Caption>

                                                               DECEMBER 31, 2000
                                                       ------------------------------------
                                                                              ESTIMATED
                                                                               MARKET
                                                           COST                 VALUE
                                                       ------------------------------------
REAL ESTATE INVESTMENT TRUSTS (PERCENT OF NET ASSETS)                                17.1%

-------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>
Alexandria Real Est Equities (5,000 shares)                $181,188              $185,938
AMB Property Corporation (30,000 shares)                    706,770               774,375
AMLI Residential Properties (30,000 shares)                 706,800               740,625
Apartment Inv & Mgmt Co, Class A (28,900 shares)          1,218,828             1,443,194
Archstone Communities Trust (25,000 shares)                 592,188               643,750
Avalonbay Communities Inc (15,000 shares)                   683,900               751,875
Boston Properties Inc (25,000 shares)                       995,339             1,087,500
Brandywine Realty Trust (15,000 shares)                     321,338               310,313
CBL & Associates Prop (30,800 shares)                       741,988               779,625
Cabot Industrial Trust (40,000 shares)                      820,726               767,500
Centerpoint Properties Corp. (18,600 shares)                632,302               878,850
Cousins Properties (20,000 shares)                          551,200               558,750
Crescent Real Estate Eqt Co (25,000 Shares)                 565,563               556,250
Duke - Weeks Realty Corporation (47,000 shares)           1,070,320             1,157,375
Equity Office Properties Trust (77,400 shares)            2,215,533             2,525,175
Equity Residential Property Trust  (30,000 shares)        1,450,732             1,659,375
Essex Property Trust, Inc (15,000 shares)                   593,700               821,250
First Industrial Realty Trust (25,000 shares)               781,100               850,000
Franchise Finance Cp Amer (51,300 shares)                 1,228,281             1,195,931
Gables Residential Trust (25,000 shares)                    632,750               700,000
General Growth Properties (22,000 shares)                   714,894               796,125
Highwoods Properties Inc (30,000 shares)                    758,832               746,250
Host Marriot Corp (105,000 shares)                        1,114,575             1,358,438
Innkeepers USA Trust (50,000 shares)                        512,375               553,125
IRT Property (45,000 shares)                                406,395               365,625
Kilroy Realty Corp. (30,000 shares)                         746,886               856,875
Kimco Realty (15,000 shares)                                612,612               662,813
Liberty Property LP (35,000 shares)                         899,563               999,688
Macerich Co (30,000 shares)                                 670,490               575,625
MeriStar Hospitality Corp (37,500 shares)                   636,151               738,281
Mission West Properties (88,200 shares)                     697,122             1,223,775
Parkway Properties Inc (25,000 shares)                      782,750               742,188
Public Storage Inc (5,000 shares)                           113,763               121,563
Reckson Assoc Realty Corp. (32,500 shares)                  805,150               814,531
Regency Realty Corp (25,000 shares)                         576,600               592,188
Saul Centers Inc (1,700 shares)                              29,085                31,663
Shurgard Storage Centers (20,000 shares)                    478,500               488,750
Simon Property Group Inc (45,000 shares)                  1,032,357             1,080,000
Spieker Properties (27,000 shares)                        1,197,078             1,353,375
Summit Properties Inc (12,000 shares)                       292,832               312,000
Vornado Realty Trust (29,800 shares)                      1,028,569             1,141,713
Washington Reit (40,000 shares)                             759,220               945,000
Public Storage Inc, Preferred Stock (15,000 shares)         340,569               337,500
                                                       ------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS                     $31,896,908           $35,224,737
                                                       ====================================
</Table>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

                                      F-16

<Page>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS
<Table>
<Caption>

                                                                                   DECEMBER 31, 2001
                                                                    -----------------------------------------------------
                                                                                                             ESTIMATED
                                                                      FACE AMOUNT          COST             MARKET VALUE
                                                                    --------------     -------------      ----------------
<S>                                                                 <C>                <C>                <C>
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                                   13.4%

Federal Home Loan Mortgage 1.51%, January 2, 2002                     $25,334,000       $25,331,875          $25,331,875
                                                                    --------------     -------------      ----------------

TOTAL CASH EQUIVALENTS                                                 25,334,000        25,331,875           25,331,875

CASH                                                                    1,283,770         1,283,770            1,283,770
                                                                    --------------     -------------      ----------------

TOTAL CASH AND CASH EQUIVALENTS                                       $26,617,770       $26,615,645          $26,615,645
                                                                    ==============     =============      ================
</Table>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

                                      F-17
<Page>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                             SCHEDULE OF INVESTMENTS

<Table>
<Caption>

                                                                                          DECEMBER 31, 2000
                                                                           -----------------------------------------------------
                                                                                                                    ESTIMATED
                                                                            FACE AMOUNT            COST            MARKET VALUE
                                                                           -------------      ------------        --------------
<S>                                                                        <C>                <C>                 <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS)                                                                               2.4%

Associates First Capital B.V., 6.55%, January 29, 2001                          699,000           687,681               687,681
New Center Asset Trust, 6.52%, January 30, 2001                               1,614,000         1,587,692             1,587,692
Lasalle National Bank, 6.71%, February 1, 2001                                  969,000           968,792               968,959
B-One Australia Ltd., 6.55%, February 13, 2001                                1,700,000         1,672,162             1,672,162
                                                                           -------------      ------------        --------------
TOTAL MARKETABLE SECURITIES                                                 $ 4,982,000       $ 4,916,327          $  4,916,494
                                                                           =============      ============        ==============
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS)                                                                           5.1%

J.P. Morgan & Co, 6.55%, January 2, 2001                                    $   546,000       $   545,603          $    545,603
Alcoa Inc., 6.55%, January 4, 2001                                              634,000           633,193               633,193
Merrill Lynch & Co., 6.53%, Inc., January 10, 2001                              300,000           299,347               299,347
Bankamerica Corp., 6.55%, January 11, 2001                                      680,000           678,020               678,020
General Motors Acceptance Corp., Inc., 6.60%, January 17, 2001                  600,000           597,910               597,910
Paccar Financial Corp., 6.67%, January 18, 2001                                 661,000           657,693               657,693
General Electric Capital Corp., 6.55%, January 22, 2001                         700,000           691,085               691,085
Countrywide Home Loans, 6.60%, January 25, 2001                                 560,000           556,201               556,201
Duke Energy Corp., 6.50%, January 25, 2001                                      682,000           678,552               678,552
Caterpillar Financial Svcs Corp., 6.50%, January 26, 2001                       625,000           621,727               621,727
Verizon Global Funding Corp., 6.55%, January 26, 2001                           500,000           496,179               496,179
Ciesco L.P., 6.54%, January 30, 2001                                          1,675,000         1,652,178             1,652,178
Eastman Kodak Co., 6.53%, February 9, 2001                                      800,000           787,230               787,230
                                                                           -------------      ------------        --------------
TOTAL CASH EQUIVALENTS                                                        8,963,000         8,894,919             8,894,919

CASH                                                                          1,648,902         1,648,902             1,648,902
                                                                           -------------      ------------        --------------
TOTAL CASH AND CASH EQUIVALENTS                                             $10,611,902       $10,543,821          $ 10,543,821
                                                                           =============      ============        ==============
</Table>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

                                      F-18
<Page>


                        NOTES TO FINANCIAL STATEMENTS OF
           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                FOR YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

NOTE 1: ORGANIZATION

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

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

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

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

Prudential Real Estate Investors ("PREI") is part of the Prudential Investment
Management unit ("PIM") and is a division of Prudential Investment Management,
Inc., a subsidiary of Prudential. PREI provides investment advisory services
to the Partnership's Partners pursuant to the terms of the Advisory Agreement
as described in Note 9.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        A:   BASIS OF PRESENTATION - The accompanying consolidated financial
             statements are presented on the accrual basis of accounting. It is
             the Partnership's policy to consolidate those real estate
             partnerships in which it has a controlling financial interest. All
             significant intercompany balances and transactions have been
             eliminated in the consolidation.

        B:   REAL ESTATE INVESTMENTS - The Partnership's investments in real
             estate are initially valued at their purchase price. Thereafter,
             real estate investments are reported at their estimated market
             values based upon 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's
             Risk Management Unit is responsible to assure that the valuation
             process provides objective and accurate market value estimates.
             American Appraisal Associates (the "Appraisal Management Firm"), an
             entity not affiliated with Prudential, has been appointed by PIM
             to assist the Chief Real Estate Appraiser in maintaining and
             monitoring the objectivity and accuracy of the appraisal process.
             The Appraisal Management Firm, under the supervision of the Chief
             Real Estate Appraiser, approves the selection and scheduling of
             external appraisals; engages

                                      F-19
<Page>


             all external appraisers; reviews and provides comments on all
             external appraisals; prepares all quarterly update appraisals;
             assists in developing policies and procedures; and assists in the
             evaluation of the performance and competency of external
             appraisers, among other responsibilities.

             The purpose of an appraisal is to estimate the market value of real
             estate as of a specific date. Market value has been defined as the
             most probable price for which the appraised real estate will sell
             in a competitive market under all conditions requisite for a fair
             sale, with the buyer and seller each acting prudently,
             knowledgeably, and for self interest, and assuming that neither is
             under undue duress.

             The estimate of market value generally is a correlation of three
             approaches, 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 of a series of income streams and
             reversion at a specified yield or by directly capitalizing a single
             year income estimate by an appropriate factor; and (3) value
             indicated by recent sales of comparable properties 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.

             Real estate partnerships are valued at the Partnership's equity in
             net assets as reflected in the partnership's financial statements
             with properties valued as described above.

             As described above, the estimated market value of real estate and
             real estate related assets is determined through an appraisal
             process. These estimated market values may vary significantly from
             the prices at which the real estate investments would sell since
             market prices of real estate investments can only be determined by
             negotiation between a willing buyer and seller. Although the
             estimated market values represent subjective estimates, management
             believes these estimated market values are reasonable
             approximations of market prices and the aggregate value of
             investments in real estate is fairly presented as of December 31,
             2001 and 2000.

        C:   INVESTMENT IN REAL ESTATE INVESTMENT TRUSTS - Shares of real estate
             investment trusts (REITs) are generally valued at their quoted
             market price. These values may be adjusted for discounts relating
             to restrictions, if any, on the future sale of these shares, such
             as lockout periods or limitations on the number of shares which may
             be sold in a given time period. Any such discounts are determined
             by the Chief Real Estate Appraiser. On March 30, 1999, the
             Partnership converted 506,894 shares of Meridian REIT to 557,583
             shares of ProLogis REIT, with a fair value of $10.9 million, and
             cash of $1.0 million (or total fair value of $11.9 million) as a
             result of ProLogis' acquisition of Meridian Industrial Trust.
             Management continued applying a 3% discount to the market value of
             the ProLogis REIT shares through June 29, 1999 because of the
             restriction which limits the number of shares that can be publicly
             traded during any six month period to 30% of the total shares
             originally acquired. The application of the 3% discount was
             discontinued on June 30, 1999 because this restriction no longer
             applied.

                                      F-20
<Page>

        D:   REVENUE RECOGNITION - Revenue from real estate is earned in
             accordance with the terms of the Respective leases.
             billed. Revenue from certain real estate investments is net of all
             or a portion of related real estate expenses and taxes, as lease
             arrangements vary as to responsibility for payment of these
             expenses between tenants and the Partnership. Since real estate is
             stated at estimated market value, net income is not reduced by
             depreciation or amortization expense. Dividend income is accrued at
             the ex-dividend date.

        E:   EQUITY IN INCOME OF REAL ESTATE PARTNERSHIP - Equity in income from
             real estate partnership operations represents the Partnership's
             share of the current year's partnership income as provided for
             under the terms of the partnership agreements. As is the case with
             wholly-owned real estate, partnership net income is not reduced by
             depreciation or amortization expense. Frequency of distribution of
             income is determined by formal agreements or by the executive
             committees of the partnerships.

        F:   MORTGAGE LOANS PAYABLE - Mortgage loans payable are stated at the
             principal amount of the obligation outstanding.

        G:   CASH AND CASH EQUIVALENTS - For purposes of the Consolidated
             Statements of Cash Flows, all short-term investments with an
             original maturity of three months or less are considered to be cash
             equivalents. Cash equivalents consist of investments in the
             Prudential Investment Liquidity Pool offered and managed by
             an affiliate of Prudential and are accounted for at market value.

             Cash of $160,635 and $79,300 at December 31, 2001 and 2000,
             respectively, was maintained by the properties for tenant security
             deposits and is included in Other Assets on the Consolidated
             Statements of Assets and Liabilities.

        H:   MARKETABLE SECURITIES - Marketable securities are highly liquid
             investments with maturities of more than three months when
             purchased and are carried at estimated market value.

        I:   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.

        J:   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 reported amounts of assets and liabilities at the date of the
             financial statements and the reported amounts of revenues and
             expenses during the reporting period. Actual results could differ
             from those estimates.


                                      F-21
<Page>


NOTE 3: DISCLOSURE OF SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING
AND FINANCING ACTIVITY

Cash paid for interest during the years ended December 31, 2001, 2000, and 1999
was $1,776,701, $732,991, and $145,418, respectively.

During the first and second quarters of 2001, in conjunction with the
acquisition of two real estate investments, the consolidated partnerships
assumed mortgage loan financing of $9.0 million and $10.3 million, respectively.

During 1999, in conjunction with the acquisition of a real estate investment of
one property, a consolidated partnership assumed mortgage loan financing of
approximately $10.2 million.


NOTE 4:  REAL ESTATE PARTNERSHIP

Real estate partnership is valued at the Partnership's equity in net assets as
reflected by the partnership's financial statements with properties valued as
indicated in Note 2B above. The partnership's combined financial position at
December 31, 2001 and 2000, and results of operations for the years ended
December 31, 2001, 2000, and 1999 are summarized as follows:


<Table>
<Caption>

                                                                              DECEMBER 31,
                                                                    2001                    2000
                                                               -------------------------------------
<S>                                                            <C>                     <C>
 Partnership Assets and Liabilities
       Real Estate at estimated market value                     $28,300,000             $27,080,000
       Other Assets                                                1,877,122               1,470,801
                                                               -------------           -------------
       Total Assets                                               30,177,122              28,550,801
                                                               -------------           -------------
       Mortgage loans payable                                     20,648,892              20,669,422
       Other Liabilities                                             918,664                 665,365
                                                               -------------           -------------
       Total Liabilities                                          21,567,556              21,334,787
                                                               -------------           -------------
       Net Assets                                                 $8,609,566              $7,216,014
                                                               =============           =============
 Partnership's Share of Net Assets                                $6,712,308              $5,445,528
                                                               =============           =============

<Caption>

                                                                                YEAR ENDED DECEMBER 31,
                                                                    2001                    2000                  1999
                                                               ----------------------------------------------------------
<S>                                                            <C>                     <C>                    <C>
 Partnership Operations
       Rental Revenue                                             $4,497,459              $4,223,801             $926,283
       Real Estate Expenses and Taxes                              3,536,948               3,292,500              795,115
                                                               -------------           -------------          -----------
       Net Investment Income                                        $960,511                $931,301             $131,168
                                                               =============           =============          ===========
 Partnership's Share of Net Investment Income                       $686,801                $791,596              $98,375
                                                               =============           =============          ===========
</Table>

                                      F-22
<Page>

NOTE 5: MORTGAGE LOANS PAYABLE:

Debt includes mortgage loans payable as summarized below:

<Table>
<Caption>
                                       PARTNERSHIP DEBT AS OF 12/31/01  PARTNERSHIP DEBT AS OF 12/31/00      AS OF 12/31/01
                                      --------------------------------- -------------------------------  ---------------------
                                                         PARTNERSHIP'S                   PARTNERSHIP'S
                                            100% LOAN      SHARE OF        100% LOAN       SHARE OF      INTEREST     MATURITY
                                             BALANCE     LOAN BALANCE*       BALANCE     LOAN BALANCE*    RATE**        DATE
                                             -------     --------------      -------     --------------   ------        -----
MORTGAGES OF WHOLLY OWNED PROPERTIES & CONSOLIDATED PARTNERSHIPS
<S>                                        <C>           <C>               <C>           <C>              <C>         <C>
Riverbend Apartments                        9,996,863        9,293,084      10,092,355      9,208,265     5.74***         2006
SIMA Apartment Portfolio                    8,863,334        8,493,733            --               --     7.97            2006
Hampton Towne Center                       10,134,324        8,709,438            --               --     6.75%           2018

------------------------------------------------------------------------------------------------------------------------------
Total                                      28,994,521       26,496,255      10,092,355      9,208,265

MORTGAGE LOANS ON EQUITY PARTNERSHIP
KCP - Ten Quiviria                          6,946,631        5,121,057       6,953,113      5,246,819     8.16            2007
KCP - Ten Quiviria Parcel                     999,306          736,688       1,000,238        754,780     8.16%           2007
KCP - Cherokee Hill                         3,212,174        2,368,015       3,215,341      2,426,296     7.79            2007
KCP - Devonshire                            2,226,609        1,641,456       2,228,686      1,681,767     8.16            2007
KCP - Willow Creek                          1,336,251          985,084       1,338,590      1,010,100     8.63            2005
KCP - Brywood Center                        5,927,921        4,370,064       5,933,453      4,477,383     8.16            2007

------------------------------------------------------------------------------------------------------------------------------
Total                                      20,648,892       15,222,363      20,669,422     15,597,146

TOTAL MORTGAGE LOANS PAYABLE                               $41,718,618                    $24,805,410     7.28%
</Table>

*    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, 2001 or 2000. It does not
     represent the Partnership's legal obligation.

**   The Partnership's weighted average interest rate at December 31, 2001 and
     2000 were 7.28% and 8.05%, 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 (*) above)
     divided by the Partnership's share of total debt.

***  Variable Rate Debt.

The interest rate on the variable rate debt is adjusted annually. The rate is
equal to the 6-month Treasury rate plus 1.565%. It is subject to a maximum of
11.345% and a minimum of 2.345%. The change from year to year may not be more
than 2%. At December 31, 2001 and 2000, the rate was 5.735% and 7.735%,
respectively.

As of December 31, 2001, the mortgage loans payable were payable as follows:

<Table>
<Caption>

   YEAR ENDING DECEMBER 31,                                         (000'S)
-------------------------------                      ----------------------
<S>                                                  <C>
              2002                                                    $678
              2003                                                     736
              2004                                                     787
              2005                                                     843
              2006                                                  17,711
        Thereafter                                                   8,240
                                                     ----------------------
              Total                                                $28,995
                                                     ======================
</Table>

                                      F-23

<Page>

The mortgages payable are secured by real estate investments with an estimated
market value of $55,500,000.

Based on borrowing rates available to the Partnership at December 31, 2001 for
loans with similar terms and average maturities, the carrying value of the
Partnership's mortgages on the consolidated partnerships approximates its
estimated fair value. Different assumptions or changes in future market
conditions could significantly affect estimated market value.

NOTE 6: CONCENTRATION RISK OF REAL ESTATE INVESTMENTS

At December 31, 2001, the Partnership had real estate investments located
throughout the United States. The diversification of the account's holdings
based on the estimated market values and established NCREIF regions is as
follows:

<Table>
<Caption>

                                                       ESTIMATED
                                                      MARKET VALUE
     REGION                   REGION %                   (000'S)
------------------------------------------------------------------
<S>                           <C>                     <C>
Southeast                        42%                      $85,308
East North Central               17%                       34,379
Mideast                          16%                       32,808
Pacific                          15%                       30,088
Mountain                          7%                       15,388
West North Central                3%                       $6,712
                                                     ------------
       Total                                             $204,683
                                                     ============
</Table>


NOTE 7:  LEASING ACTIVITY

The Partnership leases space to tenants under various operating lease
agreements. These agreements, without giving effect to renewal options, have
expiration dates ranging from 2002 to 2018. At December 31, 2001, the aggregate
future minimum base rental payments under non-cancelable operating leases by
year and in the aggregate are as follows:

<Table>
<Caption>

YEAR ENDING DECEMBER 31,                                      (000'S)
---------------------------------                --------------------
<S>                                              <C>
             2002                                             $11,725
             2003                                               9,149
             2004                                               7,208
             2005                                               6,716
             2006                                               5,990
           Thereafter                                          21,295
                                                 --------------------
             Total                                            $62,083
                                                 ====================
</Table>


The above future minimum base rental payments exclude residential lease
agreements, which accounted for 24% of the Partnership's 2001 annual rental
income.

                                      F-24

<Page>


NOTE 8:  COMMITMENTS AND CONTINGENCIES

In 1986, Prudential committed to fund up to $100 million to enable the
Partnership to acquire real estate investments. Contributions to the Partnership
under this commitment are utilized for property acquisitions, and returned to
Prudential on an ongoing basis from contract owners' net contributions and other
available cash. The amount of the commitment is reduced by $10 million for every
$100 million in current value net assets of the Partnership. Thus, with $198
million in net assets, the commitment has been automatically reduced to $90
million. As of December 31, 2001, the cost basis of Prudential's equity interest
in the Partnership under this commitment (held through the Real Property
Accounts) was $44 million. Prudential intends to terminate this commitment at
the end of the 2002 fiscal year.

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


NOTE 9:  RELATED PARTY TRANSACTIONS

Pursuant to an investment management agreement, Prudential 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, 2001, 2000 and 1999 management fees incurred by the Partnership
were $2.7 million for each of the three years.

The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential. The amounts incurred for the years ended December 31,
2001, 2000 and 1999 were $118,972; $116,630; and $116,463, respectively, and are
classified as administrative expenses in the Consolidated Statements of
Operations.

During the years ended December 31, 2001, 2000 and 1999, the Partnership made
the following distributions to the Partners:

<Table>
<Caption>

 YEAR ENDING DECEMBER 31,                          (000'S)
-----------------------------------              ----------------
<S>                                              <C>
            2001                                          $18,000
            2000                                           22,000
            1999                                           36,000
</Table>


                                      F-25
<Page>

<Table>
<Caption>

                                                                THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                                                               SCHEDULE III - REAL ESTATE OWNED: INTEREST IN PROPERTIES
                                                                                      DECEMBER 31, 2001
                                                   ------------------------------------------------------------------------------

                                                      INITIAL COSTS TO THE PARTNERSHIP            COSTS
                                                   ---------------------------------------                       ----------------
                                                                                               CAPITALIZED
                              ENCUMBRANCES                                 BUILDING &         SUBSEQUENT TO
        DESCRIPTION           AT 12/31/01                LAND             IMPROVEMENTS         ACQUISITION          LAND
-----------------------    -------------------     ------------------   ------------------   ------------------  --------------
<S>                        <C>                     <C>                  <C>                  <C>                 <C>
Interest in Properties:

Garden Apartments
Jacksonville, FL                    9,996,863              2,750,000           14,650,743            2,310,482       2,750,000

Retail Shopping Center
Kansas City MO and KS  *           15,222,363              5,710,916           15,211,504              223,293       5,710,916

Garden Apartments
Gresham/Salem, OR                   8,863,334              3,063,000           15,318,870              433,212       3,063,000

Retail Shopping Center
Hampton, VA                        10,134,324              2,339,100           12,767,956                    0       2,339,100

                           -------------------     ------------------   ------------------   ------------------  --------------
                                   44,216,884             13,863,016           57,949,073            2,966,987      13,863,016
                           ===================     ==================   ==================   ==================  ==============

                                                                                  2001                2000              1999
                                                                        ------------------   ------------------  --------------

(a)                        Balance at beginning of year                        25,121,329           22,587,869               0
                             Additions:
                              Acquisitions                                     33,488,926                    0      38,556,018
                              Improvements, etc.                                1,674,862            2,162,457               0
                             Deletions:
                              Sale                                                      0                    0               0

                           Encumbrances on Joint Ventures
                             accounted for by the equity method                   374,783              371,003     (15,968,149)

                                                                        ------------------   ------------------  --------------
                           Balance at end of year                              60,659,900           25,121,329      22,587,869
                                                                        ==================   ==================  ==============

<Caption>

                          ------------------------------------------------------------
                                                 GROSS AMOUNT AT WHICH
                                                CARRIED AT CLOSE OF YEAR
                          ------------------------------------------------------------------------------------------

                             BUILDING &                                            YEAR OF               DATE
        DESCRIPTION         IMPROVEMENTS            TOTAL (a)(b)(c)              CONSTRUCTION          ACQUIRED
-----------------------   ------------------    -------------------------      -----------------    ----------------
<S>                       <C>                   <C>                            <C>                  <C>
Interest in Properties:

Garden Apartments
Jacksonville, FL                 16,961,225                   19,711,225             1973             Sept., 1999

Retail Shopping Center
Kansas City MO and KS  *         15,434,797                   21,145,713       Various Ranging        Sept., 1999
                                                                                From 1972-1992
Garden Apartments
Gresham/Salem, OR                15,752,082                   18,815,082       Various Ranging        Feb., 2001
                                                                                From 1971-1983
Retail Shopping Center
Hampton, VA                      12,767,956                   15,107,056             1998              May, 2001

                          ------------------    -------------------------
                                 60,916,060                   74,779,076
                          ==================    =========================

</Table>

* Partnership interest accounted for by the equity method.

                                      F-26
<Page>

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
            SCHEDULE III - REAL ESTATE OWNED: INTEREST IN PROPERTIES
                                DECEMBER 31, 2001

<Table>
<Caption>
                                              INITIAL COSTS TO THE
                                                  PARTNERSHIP                COSTS
                                          -----------------------------    CAPITALIZED
                           ENCUMBRANCES                   BUILDING &       SUBSEQUENT TO
     DESCRIPTION           AT 12/31/01       LAND        IMPROVEMENTS      ACQUISITION
-----------------------  ---------------  -----------   ----------------  ----------------
<S>                         <C>            <C>            <C>               <C>
Interest in Properties:

Garden Apartments
Jacksonville, FL             9,996,863      2,750,000     14,650,743        2,310,482

Retail Shopping Center
Kansas City MO and KS *     15,222,363      5,710,916     15,211,504          223,293

Garden Apartments
Gresham/Salem, OR            8,863,334      3,063,000     15,318,870          433,212

Retail Shopping Center
Hampton, VA                 10,134,324      2,339,100     12,767,956                0

                         ---------------  -----------   ----------------  ----------------
                            44,216,884     13,863,016     57,949,073        2,966,987
                         ===============  ===========   ================  ================
<Caption>
                                                            GROSS AMOUNT AT WHICH
                                                           CARRIED AT CLOSE OF YEAR
                            ----------------------------------------------------------------------------------------
                                            BUILDING &                            YEAR OF                DATE
                                LAND        IMPROVEMENTS    TOTAL(a)(b)(c)      CONSTRUCTION            ACQUIRED
-----------------------     ------------ ----------------- ----------------   ----------------      ----------------
     DESCRIPTION
<S>                         <C>            <C>              <C>                <C>                    <C>
Interest in Properties:

Garden Apartments
Jacksonville, FL             2,750,000     16,961,225       19,711,225             1973               Sept., 1999

Retail Shopping Center
Kansas City MO and KS *      5,710,916     15,434,797       21,145,713         Various Ranging        Sept., 1999
                                                                               From 1972-1992
Garden Apartments
Gresham/Salem, OR            3,063,000     15,752,082       18,815,082         Various Ranging        Feb., 2001
                                                                               From 1971-1983

Retail Shopping Center       2,339,100     12,767,956       15,107,056              1998              May, 2001

                            ------------ ----------------- ----------------
Hampton, VA                 13,863,016     60,916,060       74,779,076
                            ============ ================= ================
</Table>

<Table>
<Caption>
                                                       2001           2000             1999
                                                    ----------      ----------     -----------
<S>                                                 <C>             <C>            <C>
(a)    Balance at beginning of year                 25,121,329      22,587,869               0
         Additions:
          Acquisitions                              33,488,926               0      38,556,018
          Improvements, etc.                         1,674,862       2,162,457               0
         Deletions:
          Sale                                               0               0               0

       Encumbrances on Joint Ventures
         accounted for by the equity method            374,783         371,003     (15,968,149)

       Balance at end of year                       60,659,900      25,121,329      22,587,869
                                                    ----------      ----------     -----------
</Table>

* Partnership interest accounted for by the equity method.

                                      F-27