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                                  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, 2004
                          -----------------

                                       OR

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


COMMISSION FILE NUMBER 33-20083

                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                                  IN RESPECT OF

             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


          NEW JERSEY                                       22-1211670
-----------------------------------               ------------------------------
(STATE OR OTHER JURISDICTION OF                   INCORPORATION OR ORGANIZATION)
(IRS EMPLOYER IDENTIFICATION NO.)




                 751 BROAD 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 75 DAYS. YES [X] NO [ ]

AMENDMENT ______________________________________________________________________

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT). YES [ ]  NO [X]

END OF AMENDMENT _______________________________________________________________

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<PAGE>


                        THE PRUDENTIAL VARIABLE CONTRACT
                              REAL PROPERTY ACCOUNT
                                  (REGISTRANT)


                                      INDEX
                                      ------
<TABLE>
<CAPTION>

   ITEM                                                                                       PAGE
    NO.                                                                                        NO.
   -----                                                                                      -----

<S>     <C>                                                                                    <C>
        COVER PAGE

        INDEX                                                                                   2

        FORWARD-LOOKING STATEMENT DISCLOSURE                                                    3

PART I

   1.   BUSINESS                                                                                4

   2.   PROPERTIES                                                                              6

   3.   LEGAL PROCEEDINGS                                                                       6

   4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                    6

PART II

   5.   MARKET FOR THE REGISTRANT'S INTERESTS, RELATED SECURITY HOLDER MATTERS
          AND ISSUER PURCHASES OF EQUITY SECURITIES                                             6

   6.   SELECTED FINANCIAL DATA                                                                 7

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

   7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            13

   8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                            14

   9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE                                                             14

   9A.  CONTROLS AND PROCEDURES                                                                14

   9B.  OTHER INFORMATION                                                                      14

PART III

   10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                     15

   11.  EXECUTIVE COMPENSATION                                                                 16

   12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                         16

   13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                         17

   14.  PRINCIPAL ACCOUNTING FEES AND SERVICES                                                 17

PART IV

   15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.                                                18

        EXHIBIT INDEX                                                                          18

        SIGNATURES                                                                             20

</TABLE>


                                       2
<PAGE>


                      FORWARD-LOOKING STATEMENT DISCLOSURE

Certain of the statements included in this Annual Report on Form 10-K, including
but not  limited  to  those  in the  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations,  constitute  forward-looking
statements within the meaning of the U.S. Private  Securities  Litigation Reform
Act of 1995.  Words such as  "expects",  believes",  "anticipates",  "includes",
"plans", "assumes",  "estimates",  "projects",  "intends", or variations of such
words  are  generally  part  of  forward-looking   statements.   Forward-looking
statements  are made based on  management's  current  expectations  and  beliefs
concerning  future  developments and their potential effects upon The Prudential
Insurance Company of America ("the Company") or the Prudential Variable Contract
Real Property Account (the "Real Property  Account").  There can be no assurance
that future developments affecting the Company or the Real Property Account will
be those anticipated by management.  These forward-looking  statements are not a
guarantee of future performance and involve risks and  uncertainties,  and there
are  certain  important  factors  that  could  cause  actual  results to differ,
possibly   materially,   from  expectations  or  estimates   reflected  in  such
forward-looking  statements,  including  without  limitation:  general economic,
market and political conditions, including the performance of financial markets,
interest rate  fluctuations  and the continuing  negative  impact of the current
economic  environment;  various domestic or international  military or terrorist
activities  or  conflicts;  economic  conditions  in local  markets in which the
properties  in  the  Real  Property  Account  are  located;  volatility  in  the
securities  markets;  reestimates of our reserves for future policy benefits and
claims; changes in our assumptions related to deferred policy acquisition costs;
our exposure to contingent  liabilities;  catastrophe losses;  investment losses
and defaults; changes in our claims-paying or credit ratings; competition in our
product lines and for personnel; fluctuations in foreign currency exchange rates
and foreign  securities  markets;  risks to our  international  operations;  the
impact of  changing  regulation  or  accounting  practices;  adverse  litigation
results;  and changes in tax law. The Company  does not intend,  and is under no
obligation to, update any particular  forward-looking statement included in this
document.


                                       3
<PAGE>


                                     PART I

ITEM 1.   BUSINESS

Prudential   Variable   Contract  Real  Property  Account  (the  "Real  Property
Account"), the Registrant, was established on November 20, 1986. Pursuant to New
Jersey law, the Real Property  Account was established as a separate  investment
account of  Prudential  Insurance  Company of America  ("Prudential").  The Real
Property  Account was  established  to provide a real estate  investment  option
offered in connection  with the funding of benefits under certain  variable life
insurance and variable annuity contracts (the "Contracts")  issued by Prudential
Insurance Company of America.

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.

      Office  Properties--The  Partnership  owns office  properties in Lisle and
      Oakbrook Terrace, Illinois;  Brentwood,  Tennessee; and Beaverton, Oregon.
      Total  square  footage  owned is  approximately  494,284  of which  68% or
      333,951 square feet are leased between 1 and 10 years.

      Apartment Complexes--The  Partnership owns apartment complexes in Atlanta,
      Georgia;  Raleigh,  North Carolina;  Jacksonville,  Florida; and Salem and
      Gresham,  Oregon.  There are a total of 1,253 apartment units available of
      which 91% or 1,135 units are leased.  Leases  range from month to month to
      one year. Two of the  Partnership's  Salem,  Oregon  apartment  complexes,
      which had a total of 188 units, were sold on December 14, 2004.

      Retail Property--The  Partnership owns retail centers in Roswell, Georgia;
      Kansas  City,  Kansas and  Missouri;  Ocean City,  Maryland;  and Hampton,
      Virginia.  Total square footage owned is approximately  1,163,464 of which
      84% or 979,251 square feet are leased between 1 and 30 years.

      Industrial  Properties--The  Partnership  owns an  industrial  building in
      Aurora,  Colorado.  Total square footage owned is approximately 277,930 of
      which 66% or 184,047 square feet are leased between 1 and 10 years.

      Hotel Property--On  December 10, 2003, the Partnership invested in a hotel
      located in Lake Oswego,  Oregon.  This joint  venture  investment  has 161
      rooms. Occupancy for the year ended 2004 averaged 68.3%.

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  2,  Management's  Discussion  and  Analysis  of
Financial  Condition and Results of  Operations  and  Financial  Statements  and
Supplementary Data.


                                       4
<PAGE>


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


REAL ESTATE MARKET OVERVIEW

Real estate market  fundamentals in most property  sectors and markets  remained
relatively weak in 2004, but began to improve modestly in the second half of the
year.  Despite the generally  weak property  market  conditions,  robust capital
flows into the sector and low interest  rates  continued to support asset values
and  drive  investment  performance.  Private  and  public  equity  real  estate
investment benchmarks posted large gains in the fourth quarter and 2004 overall.
The National Council of Real Estate  Investment  Fiduciaries'  (NCREIF) Property
Index,  the  benchmark  for  unleveraged   private   institutional  real  estate
investments in the U.S., gained nearly 4.7% in the fourth quarter,  which pushed
the Index's one-year total return to more than 14.5%.

OFFICE MARKET

Office  market  fundamentals  continued  to  improve  during 4th  quarter  2004.
According to Torto Wheaton  Research,  a Boston-based real estate research firm,
the national average office vacancy rate declined to 15.4% in the fourth quarter
from 15.9% at the end of 3rd quarter 2004 and 16.8% at year-end  2003.  Notably,
the fourth quarter marked the sixth  consecutive  quarter of declining  vacancy.
The average  suburban  office  vacancy  rate  declined to 16.6%,  which marked a
substantial  improvement over the 18.6% vacancy rate at year-end 2003.  Downtown
vacancy  rates also improved  last year.  The average  vacancy rate for downtown
office properties fell to 13.2% by year-end 2004 from 13.6% at the end of 2003.

Although  market rents for suburban and downtown  office space remain soft,  the
improving job market and healthy  investor demand for office  properties  helped
the NCREIF office subindex  deliver one-year total returns of about 12% in 2004,
which included 4% appreciation and a one-year income return of nearly 7.8%.

APARTMENT MARKET

Property market trends remain most troubling in the apartment sector. Excess new
supply,  weak tenant demand,  the rising  homeownership rate and weak job market
have eroded tenant demand in most markets.  However,  according to REIS, Inc., a
national real estate  research firm,  market rents for apartment units appear to
have  stabilized and vacancies  have improved  modestly since year-end 2003. The
national average  apartment  vacancy rate improved to 6.7% at year-end 2004 from
7.1% at the end of 2003.

Despite the generally poor apartment  market  fundamentals,  investor demand for
apartment  properties  remains  strong.  Condo  converters,  investors  who  buy
apartment  and other  properties  for  conversion to  residential  condominiums,
emerged as aggressive capital sources in many markets last year and helped drive
capitalization  rates for apartment  properties to very low levels. As a result,
the apartment  subindex of the NCREIF Property Index delivered a total return of
13.2% in 2004. The apartment  return included more than 6.8%  appreciation and a
one-year income return of about 6.1%.

RETAIL MARKET

The retail sector benefited from favorable  national trends in 2004. In addition
to  positive  employment  growth and an increase  in  consumer  confidence,  the
International  Council of Shopping Centers (ICSC) reports that chain store sales
increased 3.8% in 2004, the largest gain since 2000.

Landlords and investors  enjoyed the strongest  absorption in years as retailers
continued to expand their store base. As a result,  despite healthy construction
activity,  the vacancy rate for neighborhood and community shopping centers fell
to 6.8% in 4th quarter  2004,  according to REIS.  This marked the 11th straight
quarter  with a vacancy rate at or below 7.1%.  Retail rents  continued to climb
last year, increasing nearly 2.9% from year-end 2003, according to REIS.

The retail  subindex  remained the  best-performing  sector in the NCREIF index,
returning  7.8%  during 4th  quarter  2004 and nearly 23% for the year  overall.
Robust  appreciation  accounted for a significant  share of the retail  sector's
total return in the 4th quarter and for the year overall. Retail property values
gained  5.9% in the  fourth  quarter  and more than  14.4%  for the year,  which
exceeded the total returns in all other property sectors.


                                       5
<PAGE>

INDUSTRIAL MARKET

Industrial   space  market   fundamentals   benefited   from   improvements   in
manufacturers'  shipments,  inventories and orders in 2004. The national average
industrial  vacancy rate  continued to decline in 4th quarter  2004,  falling to
10.8% at year-end,  according  to Torto  Wheaton  Research.  This marks a modest
improvement  from year-end 2003,  when the average  vacancy rate peaked at about
11.6%. During the last property market downturn in the early 1990s, the national
industrial  vacancy  rate  peaked at about  10.7%.  Despite the  improvement  in
vacancy rates, the average rental rate at the end of 2004 was unchanged from one
year earlier.

The NCREIF industrial subindex delivered a 12.1% total return in 2004, including
about 3.9% appreciation and an income return of 7.9%.

HOTEL MARKET

Although  operating  fundamentals  in the hotel  industry  improved in 2004, the
hotel sector  remained the weakest of the NCREIF  property  types.  According to
Smith Travel  Research,  a national  lodging  industry  research  firm,  average
revenue per available  room (RevPAR)  improved 8.4% during 2004 versus  year-end
2003. Importantly,  improving occupancy and average daily room rates contributed
to the  improvement in RevPAR.  Since year-end 2003, the average  occupancy rate
increased 3.5% to 56.9%,  while the average daily room rate (ADR) increased 4.8%
to $86.23.

The NCREIF hotel subindex delivered a 10.2% total return in 2004, which included
2.0%  appreciation,  the lowest among the five  property  subtypes in the NCREIF
index, and an 8.1% income return.

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.

                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S INTERESTS, RELATED SECURITY HOLDER MATTERS
          AND ISSUER PURCHASES OF EQUITY SECURITIES.

Owners of the Contracts  may  participate  by allocating  all or part of the net
premiums or purchase payments to the Real Property Account. Contract values 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, 2004,  there were  approximately  33,612  contract  owners of
record investing in the Real Property Account.


                                       6
<PAGE>




ITEM 6.   SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------------------------------------
                                            2004            2003             2002            2001            2000
                                            ----            ----             ----            ----            ----
RESULTS OF OPERATIONS:
<S>                                      <C>             <C>             <C>             <C>              <C>
Total Investment Income............      $ 29,076,163    $ 27,060,494    $ 27,077,048    $ 27,480,593     $ 26,387,938
                                         ============    ============    ============    ============     ============
Net Investment Income..............      $  7,799,606    $ 10,613,409    $ 10,864,043    $ 12,350,306     $ 13,638,117
Net Realized and Unrealized Gain (Loss)
on Investment in Partnership.......         3,280,394      (6,467,364)     (8,517,663)     (2,547,749)       4,487,022
                                         ------------     -----------     -----------     -----------     ------------
Net Increase in Net Assets
Resulting From Operations..........      $ 11,080,000    $  4,146,045    $  2,346,380    $  9,802,557     $ 18,125,139
                                         ============    ============    ============    ============     ============

<CAPTION>

FINANCIAL POSITION:
                                                                    YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------------------------------------
                                            2004            2003             2002            2001            2000
                                            ----            ----             ----            ----            ----
<S>                                      <C>             <C>             <C>             <C>              <C>
Total Assets.......................      $240,575,611    $235,627,852    $229,720,113    $234,594,652     $221,512,296
                                         ============    ============    ============    ============     ============
Mortgage Loan Payable..............      $ 43,773,767    $ 43,934,494    $ 35,699,108    $ 28,994,521     $ 10,092,355
                                         ============    ============    ============    ============     ============
</TABLE>

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

All of the assets of the 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
Consolidated  Financial  Statements  and the related  Notes to the  Consolidated
Financial Statements included elsewhere herein.

(a) LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2004, the Partnership's  liquid assets consisting of cash and
cash equivalents were  approximately  $17.6 million, a decrease of approximately
$1.3  million  from $18.9  million at December  31,  2003.  Sources of liquidity
include  net cash  flow  from  property  operations,  interest  from  short-term
investments,  sales,  and  financings.  The  Partnership  uses cash for its real
estate  investment  activities  and  for  distribution  to its  partners.  As of
December 31, 2004, 7.3% of the Partnership's  total assets consisted of cash and
short-term obligations.

Dispositions for the year included the sale of two apartment  complexes  located
in Salem,  Oregon. The Joint Venture between the Partnership and its co-investor
sold the two apartment complexes for a total of $7.1 million,  which resulted in
a realized gain of $1.7 million.

Subsequent to the end of the reporting  period,  one additional  apartment asset
located in Salem, Oregon sold for $4.65 million on March 10, 2005. Proceeds from
the sale were used to fully  payoff the Special  Loan,  resulting  in a realized
loss of approximately $1.6 million for the property.

The  Partnership  spent  approximately  $8.3 million on capital  improvements to
existing  properties.  Approximately  $2.5 million was  associated  with leasing
related costs and tenant  improvements at one of the office buildings located in
Brentwood,  Tennessee.  $1.6  million  was  associated  with  renovation  of the
apartment  complex in Atlanta,  Georgia and $0.8  million  was  associated  with
renovation  and  redevelopment  of the  retail  center  in  Roswell,  GA. Of the
remaining $3.4 million  balance,  $2.0 million was associated with the expansion
of the retail  center  located in Ocean City,  Maryland.  The  Partnership  also
increased  its  investment  by  approximately  $0.2 million in  connection  with
redevelopment  and expansion  activities at the retail centers located in Kansas
City, Missouri.


                                       7
<PAGE>


The Partnership provided, to a developer,  short-term financing of approximately
$5.0 million for the  acquisition  of a retail  center  located in  Westminster,
Maryland.  The loan was repaid to the Partnership on September 13, 2004 together
with interest at 10.5% upon obtaining  third party  construction  financing.  In
addition,  the  Partnership  invested  in a  Leasehold  Mortgage  Loan  for  the
acquisition  and  redevelopment  of an adjacent  retail  center in  Westminster,
Maryland.  As of December 31, 2004,  approximately  $1.3 million was funded with
interest accruing at 10% per annum.

(b) RESULTS OF OPERATIONS


DECEMBER 31, 2004 VS. DECEMBER 31, 2003

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.
<TABLE>
<CAPTION>
                                                                                TWELVE MONTHS ENDED DECEMBER 31,
                                                                                    2004                2003
                                                                                ----------          ----------
NET INVESTMENT INCOME:
<S>                                                                            <C>                 <C>
Office properties ..............................................               $  2,102,465        $  2,039,750
Apartment complexes ............................................                  2,191,107           3,361,638
Retail properties ..............................................                  4,728,171           6,638,838
Industrial properties ..........................................                    933,253             993,962
Hotel property .................................................                    640,660                  --
Other (including interest income,
  investment mgt fee, etc.) ....................................                 (2,796,050)         (2,420,779)
                                                                               ------------        ------------
TOTAL NET INVESTMENT INCOME ....................................               $  7,799,606        $ 10,613,409
                                                                               ============        ============

NET REALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:

Apartment complexes ............................................               $  1,730,000        $         --
Industrial properties ..........................................                         --             466,061
                                                                               ------------        ------------
TOTAL NET REALIZED GAIN (LOSS) ON
  REAL ESTATE INVESTMENTS ......................................               $  1,730,000        $    466,061
                                                                               ============        ============

NET UNREALIZED GAIN (LOSS) ON REAL ESTATE INVESTMENTS:

Office properties ..............................................               $    222,384        $ (5,776,072)
Apartment complexes ............................................                   (653,211)           (141,845)
Retail properties ..............................................                  2,072,493            (455,340)
Industrial properties ..........................................                   (190,659)           (560,168)
Hotel property .................................................                     99,387                  --
                                                                               ------------        ------------
TOTAL NET UNREALIZED GAIN (LOSS) ON
  REAL ESTATE INVESTMENTS ......................................                  1,550,394          (6,933,425)
                                                                               ============        ============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
  REAL ESTATE INVESTMENTS ......................................               $  3,280,394        $ (6,467,364)
                                                                               ============        ============
</TABLE>


                                       8
<PAGE>


NET INVESTMENT INCOME OVERVIEW

The Partnership's net investment income for the year ended December 31, 2004 was
$7.8  million,  a decrease of $2.8  million when  compared to the  corresponding
period in 2003.  The decrease is due to the sale of two  apartment  complexes in
Salem,  Oregon,  increased  vacancy at the  retail  center  located in  Roswell,
Georgia  due to a late 2003  lease  termination,  increased  rental  concessions
within the apartment  portfolio,  and soft market  conditions and vacancy within
the office portfolio. The Partnership's acquisition of a controlling interest in
a 161-room  hotel  located in Lake  Oswego,  Oregon  resulted  in a full year of
operating  income,  partially  offsetting  the decrease in total net  investment
income.

In addition,  net investment  income in 2003 benefited from a $1.9 million lease
termination fee with respect to the retail center located in Roswell, Georgia.

Revenue increased $1.6 million in 2004 compared to 2003. Administrative expenses
increased $1.7 million in 2004 compared to 2003.  Operating  expenses  increased
$2.4 million in 2004 compared to 2003.  All of these  increases  were due to the
Partnership's  acquisition of a controlling interest in a 161-room hotel located
in Lake Oswego, Oregon as discussed above.

Equity in income of real  estate  partnership  increased  $0.07  million in 2004
compared to 2003. The increase is due to an increase in revenue  associated with
expansion of an existing retail center located in Ocean City, Maryland.

Interest  and  equity  income on  mortgage  loans  receivable  and  other  loans
receivable was $0.14 million for the year ended  December 2004.  This was due to
the Leasehold Mortgage Loan associated with the redevelopment of a retail center
in Westminster, Maryland.

Income from other real estate  investments  was $0.25 million for the year ended
December 31, 2004. This was due to short-term financing for the acquisition of a
retail center located in Westminster, Maryland.

Interest on short-term investments decreased approximately $0.03 million in 2004
when compared to 2003. The decrease is due primarily to lower cash balances.

VALUATION OVERVIEW

The  Partnership  recorded an unrealized gain of $3.3 million for the year ended
December 31, 2004  compared to an  unrealized  loss of $6.9  million  during the
corresponding  period in 2003.  The 2004  unrealized  gain was attributed to the
retail and  apartment  sectors.  The retail sector  recorded an unrealized  gain
totaling  $2.1  million,  primarily due to  strengthening  market  fundamentals,
renovation and  re-leasing  efforts at the  Partnership's  retail  centers.  The
apartment portfolio recorded unrealized and realized gain of $1.1 million. While
market conditions remain soft in the apartment sector, continued investor demand
has increased valuations. The two office assets located in Brentwood,  Tennessee
recorded unrealized gains of $3.4 million in 2004;  however,  this was offset by
continued weak market fundamentals in the office sector.

OFFICE PORTFOLIO
<TABLE>
<CAPTION>
                                      NET             NET
                                  INVESTMENT      INVESTMENT     UNREALIZED    UNREALIZED
                                    INCOME          INCOME       GAIN/(LOSS)   GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/04        12/31/03       12/31/04      12/31/03        12/31/04       12/31/03
------------                      ----------      ----------     -----------   -----------     ---------      ----------
YEAR TO DATE
------------
<S>                                <C>           <C>            <C>           <C>                 <C>            <C>
Lisle, IL                         $  498,150      $  709,818    $(2,161,087)   $(1,910,862)        43%            47%
Brentwood, TN                        806,096         714,837      1,626,824       (515,685)        91%            79%
Oakbrook Terrace, IL                 404,805         102,262       (613,875)    (1,528,934)        41%            42%
Beaverton, OR                        904,462         930,822       (400,000)      (800,000)        72%            81%
Brentwood, TN                       (511,048)       (417,989)     1,770,522     (1,020,591)       100%             0%
                                  --------------------------------------------------------
                                  $2,102,465      $2,039,750    $   222,384    $(5,776,072)
                                  --------------------------------------------------------
</TABLE>



                                       9
<PAGE>


NET INVESTMENT INCOME

Net investment  income for the  Partnership's  office portfolio was $2.1 million
for the year ended December 31, 2004, an increase of $0.1 million, when compared
to the corresponding period in 2003.


UNREALIZED GAIN/LOSS

The five  office  properties  owned by the  Partnership  recorded  an  aggregate
unrealized  gain of  approximately  $0.2 million  during 2004.  Large gains were
recorded at both assets in  Brentwood,  Tennessee,  mainly due to  strengthening
market conditions,  increasing rents, and stabilized occupancy. Offsetting these
gains were losses recorded at the office complexes located in Lisle and Oakbrook
Terrace,  Illinois and  Beaverton,  Oregon  primarily due to lower market rents,
decreased occupancy, and lease up costs associated with attracting new tenants.

The five  office  properties  owned by the  Partnership  recorded  an  aggregate
unrealized  loss of  approximately  $5.8 million  during  2003.  The losses were
primarily due to decreased occupancy, lower market rents, and increased lease up
costs.

APARTMENT COMPLEXES
<TABLE>
<CAPTION>
                                      NET            NET
                                  INVESTMENT      INVESTMENT     UNREALIZED    UNREALIZED
                                    INCOME          INCOME       GAIN/(LOSS)   GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/04        12/31/03       12/31/04      12/31/03        12/31/04       12/31/03
------------                      ----------      ----------     -----------   -----------     ---------      ----------
YEAR TO DATE
------------
<S>                                <C>            <C>          <C>          <C>                  <C>            <C>
Atlanta, GA                       $  814,285     $  819,908    $(1,946,818)   $   (588,553)        88%            91%
Raleigh, NC                          559,605        738,292        262,271          95,512         95%            93%
Jacksonville, FL                     972,604      1,096,620         69,368       1,419,362         89%            91%
Gresham/Salem, OR                   (155,387)       706,818      2,691,965      (1,068,166)        91%            90%
                                  --------------------------------------------------------
                                  $2,191,107     $3,361,638     $1,076,786    $   (141,845)
                                  --------------------------------------------------------
</TABLE>

NET INVESTMENT INCOME

Net investment income for the Partnership's apartment complexes was $2.2 million
for the year ended December 31, 2004, a decrease of $1.2 million,  when compared
to the  corresponding  period in 2003.  The  decrease was  primarily  due to (a)
mortgage  interest  incurred for the complex located in Raleigh,  North Carolina
that was not  applicable  during the first six  months of 2003,  (b) the loss of
income resulting from the sale of two apartment complexes in Salem,  Oregon, and
(c) soft market  conditions  affecting the  remaining  two  apartment  complexes
located in Gresham/Salem, Oregon and Jacksonville, FL.

UNREALIZED GAIN/LOSS

The  Partnership  recorded an aggregate  unrealized gain of $1.2 million for the
year ended December 31, 2004 compared to an unrealized  loss of $0.1 million for
the year ended December 31, 2003 on its apartment complexes. The 2004 unrealized
gain was  primarily  due to  continued  investor  demand,  which  has  caused an
increase in valuations.  The unrealized  loss of $0.1 million in 2003 was mainly
attributable to increased  operating expenses at the apartment complexes located
in Gresham/Salem, Oregon.


                                       10
<PAGE>



RETAIL PROPERTIES
<TABLE>
<CAPTION>
                                      NET            NET
                                  INVESTMENT      INVESTMENT     UNREALIZED    UNREALIZED
                                    INCOME          INCOME       GAIN/(LOSS)   GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/04        12/31/03       12/31/04      12/31/03        12/31/04       12/31/03
------------                      ----------      ----------     -----------   -----------     ---------      ----------
YEAR TO DATE
------------
<S>                               <C>            <C>           <C>           <C>                 <C>            <C>
Roswell, GA                       $1,576,783     $4,403,743    $(2,536,369)    $(1,571,423)        74%            76%
Kansas City, KS; MO                  623,917        560,660      2,727,694        (934,885)        81%            83%
Hampton, VA                        1,220,607      1,077,627        981,574         570,136        100%           100%
Ocean City, MD                       921,803        596,808        899,597       1,480,832         93%           100%
Westminster, MD*                     246,765             --             --              --        N/A            N/A
Westminster, MD**                    138,296             --             --              --        N/A            N/A
                                  --------------------------------------------------------
                                  $4,728,171     $6,638,838    $ 2,072,496     $  (455,340)
                                  --------------------------------------------------------
</TABLE>

* Other Real Estate Investment (Acquired October 2003)
** Mortgage Loan Receivable (Acquired January 2004)

NET INVESTMENT INCOME

Net  investment  income  for  the  Partnership's   retail  properties  decreased
approximately $1.9 million for the year ended December 31, 2004 when compared to
the  corresponding  period  in 2003.  The  principal  component  of  higher  net
investment  income  in 2003  was the  $1.9  million  lease  termination  payment
received at the retail center located in Roswell, Georgia.  Partially offsetting
the decreases  attributable to the Roswell,  Georgia  property were increases in
net investment  income at the center in Ocean City,  Maryland as a result of the
expansion  and the interest  income  generated by the  Leasehold  Mortgage  Loan
associated with the two Westminster,  Maryland redevelopments. It should also be
noted  that on April  15,  2003  the  Partnership  acquired  its  joint  venture
partner's membership interest in the retail center located in Hampton, Virginia,
thus entitling the Partnership to all of the net investment  income generated by
the investment thereafter.

In late 2004, a new lease was executed for a 45,600  square foot Publix  grocery
store in  Roswell,  Georgia;  the lease term is 20 years;  rent  commences  upon
completion of a new store (estimated to be in late 2005).

UNREALIZED GAIN/LOSS

The retail properties recorded an aggregate  unrealized gain of $2.1 million for
the year ended December 31, 2004. The Kansas City, Kansas and Hampton,  Virginia
retail centers recorded  unrealized gains primarily due to strengthening  market
fundamentals.  The Ocean City,  Maryland  retail  center  recorded a gain due to
completion of a pre-leased  expansion of the center.  Partially offsetting these
gains was an  unrealized  loss of $2.5  million  recorded  at the retail  center
located in Roswell,  Georgia due to the likely loss of a major anchor  tenant at
the expiration of its lease in January 2009.

The retail properties recorded an aggregate  unrealized loss of $0.5 million for
the year ended December 31, 2003. The retail center located in Hampton, Virginia
had  recorded  an  unrealized  gain of $0.6  million  in 2003  due to  continued
strengthening market fundamentals. The retail center in Ocean City, Maryland had
recorded a net  unrealized  gain of $1.5 million in 2003 due to  renovation  and
re-leasing  efforts.  Offsetting  these  gains was the  unrealized  loss for the
Kansas City,  Kansas  retail  centers,  primarily  due to  renovations  from the
expansion of the existing  grocery store anchor,  which were not reflected as an
increase in market  value.  In  addition,  an  unrealized  loss for the Roswell,
Georgia  retail  center was recorded due to decreases in market rental rates and
shorter-term lease renewals.


                                       11
<PAGE>




INDUSTRIAL PROPERTIES
<TABLE>
<CAPTION>
                                      NET           NET         UNREALIZED/   UNREALIZED/
                                  INVESTMENT    INVESTMENT       REALIZED      REALIZED
                                    INCOME        INCOME        GAIN/(LOSS)   GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/04      12/31/03        12/31/04      12/31/03        12/31/04       12/31/03
------------                      ----------      ----------    -----------   -----------     ---------      ----------
YEAR TO DATE
------------
<S>                                <C>            <C>           <C>            <C>               <C>            <C>
Aurora, CO                         $ 936,264      $ 687,743     $ (190,659)    $(560,168)        66%            70%
Bolingbrook, IL                        2,603           (146)            --            --         Sold September 2002
Salt Lake City, UT                    (5,614)       306,365             --       466,061          Sold January 2003
                                   -----------------------------------------------------
                                   $ 933,253      $ 993,962     $ (190,659)    $ (94,107)
                                   -----------------------------------------------------
</TABLE>

NET INVESTMENT INCOME

Net  investment  income for the  Partnership's  industrial  properties  was $0.9
million for the year ended  December 31, 2004, a decrease of $0.1 million,  when
compared to the  corresponding  period in 2003. The decrease was due to the loss
of rent  associated  with the 2003 sale of the Salt Lake  City  asset.  This was
offset by an early termination penalty payment at the Aurora, Colorado asset.

UNREALIZED GAIN/LOSS

The Aurora,  Colorado industrial  property owned by the Partnership  recorded an
unrealized  loss of $0.2 million for the year ended December 31, 2004,  compared
to an unrealized loss of approximately  $0.6 million for the year ended December
31, 2003. The unrealized  loss recorded in 2004 and 2003 were due to soft market
conditions and capital  improvements  at the property that were not reflected as
an increase in market value.

REALIZED GAIN

On January 28, 2003 the industrial  property located in Salt Lake City, Utah was
sold for a realized gain of $0.5 million.

HOTEL PROPERTY
<TABLE>
<CAPTION>
                                      NET             NET
                                  INVESTMENT      INVESTMENT     UNREALIZED   UNREALIZED
                                    INCOME          INCOME       GAIN/(LOSS)  GAIN/(LOSS)     OCCUPANCY      OCCUPANCY
PROPERTY                           12/31/04        12/31/03       12/31/04     12/31/03        12/31/04       12/31/03
------------                      ----------      ----------    -----------   -----------     ---------      ----------
YEAR TO DATE
------------
<S>                                <C>                            <C>                            <C>            <C>
Lake Oswego, OR*                   $ 640,660          N/A         $ 99,387           N/A         66%            50%
</TABLE>

* Hotel purchased in December 2003

NET INVESTMENT INCOME

On December 10,  2003,  the  Partnership  acquired a  controlling  interest in a
161-room hotel located in Lake Oswego,  Oregon for $8.0 million.  Net investment
income from hotel  operations  was $0.6 million for the year ended  December 31,
2004.

UNREALIZED GAIN/LOSS

The Lake Oswego,  Oregon hotel  property  owned by the  Partnership  recorded an
unrealized gain of $0.1 million for the year ended December 31, 2004.

OTHER

Other net  investment  income  decreased  $0.4  million  during  the year  ended
December  31,  2004  compared  to the  corresponding  period in 2003.  Other net
investment  income  includes   interest  income  from  short-term   investments,
investment management fees, and portfolio level expenses.


                                       12
<PAGE>


(c) INFLATION

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

CRITICAL ACCOUNTING POLICIES


The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America  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.  Actual results could differ from
those estimates.

The following sections discuss critical accounting policies applied in preparing
our consolidated 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 carried at their purchase price. Subsequently, 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,  with independent updates quarterly. The Chief Real Estate Appraiser
of Prudential  Investment  Management  ("PIM") is responsible to assure that the
valuation process provides objective and reasonable 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.

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

Mortgage  and other loans  receivable,  which are  accounted  for as loans,  are
independently   valued  according  to  the  same  appraisal   process  as  other
investments in real estate.

Other real estate investments include notes receivable,  which are valued at the
amount due and approximate market value.

As described  above,  the estimated  market value of real estate and real estate
related assets is determined through an appraisal process, except for other real
estate investments, which are determined as stated above. 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, 2004 and December 31, 2003.

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 32.85% 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.


                                       13
<PAGE>


The table below presents the amounts and related weighted  interest rates of the
Partnership's cash equivalents and short-term investments at December 31, 2004:

                                          ESTIMATED MARKET
                                               VALUE                 AVERAGE
                           MATURITY       (IN $ MILLIONS)         INTEREST RATE
--------------------------------------------------------------------------------
Cash equivalents...       0-3 months           $17.6                  5.18%

The table below discloses the  Partnership's  fixed rate debt as of December 31,
2004. All of the Partnership's  long-term debt bears interest at fixed rates and
therefore the fair value of these  instruments  is affected by changes in market
interest rates. The following table presents principal cash flows (in thousands)
based  upon   maturity   dates  of  the  debt   obligations   and  the   related
weighted-average  interest  rates by expected  maturity dates for the fixed rate
debt.
<TABLE>
<CAPTION>
DEBT (IN $ THOUSANDS),                                                                            ESTIMATED
INCLUDING CURRENT PORTION            2005      2006      2007       2008   THEREAFTER   TOTAL    FAIR VALUE
--------------------------           -----     ----      ----       ----   -----------  ------   -----------
<S>                                  <C>       <C>        <C>       <C>        <C>       <C>       <C>
Average Fixed Interest Rate......    5.22%     5.20%      5.18%     4.99%      6.75%     6.17%
Fixed Rate.......................    $512     $549       $588    $26,090    $16,034    $43,773     $44,816
------------------------------------------------------------------------------------------------------------
Total Mortgage Loans Payable.....    $512     $549       $588    $26,090    $16,034    $43,773     $44,816
------------------------------------------------------------------------------------------------------------
</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.

ITEM 9A.  CONTROLS AND PROCEDURES

In order to ensure that the information we must disclose in our filings with the
Securities  and Exchange  Commission  is recorded,  processed,  summarized,  and
reported  on a timely  basis,  the  Company's  management,  including  our Chief
Executive Officer and Chief Financial  Officer,  have reviewed and evaluated the
effectiveness of our disclosure controls and procedures,  as defined in Exchange
Act Rules  13a-15(e)  and  15d-15(e),  as of December  31,  2004.  Based on such
evaluation,  the Chief  Executive  Officer  and  Chief  Financial  Officer  have
concluded that, as of December 31, 2004, our disclosure  controls and procedures
were effective in timely  alerting them to material  information  relating to us
required to be included in our periodic SEC filings. There has been no change in
our internal control over financial reporting during the year ended December 31,
2004,  that has  materially  affected,  or is  reasonably  likely to  materially
affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

None.


                                       14
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
                                    DIRECTORS


FREDERIC K. BECKER--Director since 1994 (current term expires June, 2005).
Chairman, Audit Committee; Member, Corporate Governance Committee; Member,
Executive Committee. President, Wilentz Goldman & Spitzer, P.A. (law firm) since
1989, with firm since 1960.

GORDON M. BETHUNE--Director since 2005 (current term expires June 2005). Retired
since 2004. Chairman and Chief Executive Officer, Continental Airlines, Inc.
since 1996. Mr. Bethune is also a director of Honeywell International, Sprint
Corporation and Willis Group Holdings.

GASTON CAPERTON III--Director since 2004 (current term expires June, 2005).
Member, Compensation Committee. President, The College Board since 1999.
Governor Caperton is also a director of Owens Corning and United Bankshares,
Inc.

GILBERT F. CASELLAS--Director since 1998 (current term expires June, 2005).
Member, Committee on Business Ethics; Member, Committee on Finance & Dividends;
Member, Investment Committee. President, Casellas & Associates, LLC since 2002.
President and Chief Executive Officer, Q-Linx Inc. from January 2001 to
September 2001. President and Chief Operating Officer, The Swarthmore Group,
Inc. prior to December 2000.

JAMES G. CULLEN--Director since 1994 (current term expires June, 2005). Member,
Compensation Committee; Member, Audit Committee. Retired since 2000. President &
Chief Operating Officer, Bell Atlantic Corporation, prior to 2000. Mr. Cullen is
also a director of Agilient Technologies, Inc., and Johnson & Johnson and
NeuStar, Inc.

WILLIAM H. GRAY III--Director since 1991 (current term expires June, 2005).
Chairman, Corporate Governance Committee; Member, Executive Committee; Member,
Committee on Business Ethics. President and Chief Executive Officer of The
College Fund/UNCF. Retired since 2004. Mr. Gray is also a director of JP Morgan
Chase & Co., Dell Computer Corporation, Pfizer, Inc.

JON F. HANSON--Director since 1991 (current term expires June, 2005). Chairman,
Investment Committee; Chairman, Committee on Finance & Dividends. Chairman of
The Hampshire Companies since 1976. Mr. Hanson is also a director of CD&L, Inc.,
HealthSouth Corp., Yankee Global Enterprises and Pascack Community Bank.

GLEN H. HINER--Director since 1997 (current term expires June, 2005). Member,
Committee on Business Ethics; Member, Compensation Committee; Member, Investment
Committee; Member, Committee on Finance & Dividends. Chairman, Dana Corporation
since 2003. Chairman and Chief Executive Officer of Owens Corning prior to 2002.
Mr. Hiner is also a director of Dana Corporation.

CONSTANCE J. HORNER--Director since 1994 (current term expires June, 2005).
Member, Compensation Committee; Member, Corporate Governance Committee. Guest
Scholar, The Brookings Institute, since 1993. Ms. Horner is also a director of
Ingersoll-Rand Company, Ltd., and Pfizer, Inc.

KARL J. KRAPEK--Director since 2004. (current term expires June, 2005). Retired
since 2002. President and Chief Operating Officer, United Technologies
Corporation prior to 2002. Mr. Krapek is also a director of Lucent Technologies,
Visteon Corporation and Delta Airlines.

IDA F.S. SCHMERTZ--Director since 1997 (current term expires June, 2005).
Member, Audit Committee. Principal of Microleasing, LLC since 2001. Chairman of
Volkhov International Business Incubator prior to 2002. Principal of Investment
Strategies International prior to 2000.

JAMES A. UNRUH--Director since 1996 (current term expires June, 2005). Member,
Corporate Governance Committee; Member, Audit Committee. Founding Principal,
Alerion Capital Group, LLC since 1998. Mr. Unruh is also a director of Tenet
Healthcare Corporation and LumenIQ, Inc.


                                       15
<PAGE>


                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                              PRINCIPAL OFFICERS**


ARTHUR F. RYAN--Chairman of the Board, Chief Executive Officer and President,
Prudential, since 1994 (current term on Board of Directors expires June, 2005).
Mr. Ryan is also a director of Regeneron Pharmaceuticals.

VIVIAN L. BANTA--Chief Executive Officer, Insurance Division, Prudential, since
2002. Executive Vice President from 2000 to 2002. Senior Vice President from
January 2000 to March 2000. Prior to joining Prudential Ms. Banta was an
independent consultant.

MARK B. GRIER--Vice Chairman, Financial Management, Prudential, since 2002.
Executive Vice President, Financial Management, from 2000 to 2002. Prior to 2000
Executive Vice President, Corporate Governance.

ROBERT C. GOLDEN--Executive Vice President, Prudential, since 1997.

RICHARD J. CARBONE--Senior Vice President and Chief Financial Officer,
Prudential, since 1997.

C. EDWARD CHAPLIN--Senior Vice President and Treasurer, Prudential, since 2000.
Vice President and Treasurer from 1995 to 2000. Mr. Chaplin is also a director
of MBIA, Inc.

JOHN M. LIFTIN--Senior Vice President and General Counsel, Prudential, since
1998.

PETER B. SAYRE--Senior Vice President & Corporate Controller, Prudential since
2004. Vice President, Chief Tax Officer, from 2000-2004; Vice President and
Associate Comptroller, prior to 2000.

SHARON C. TAYLOR--Senior Vice President, Prudential, since 2002. Vice President,
Human Resources Communities of Practice, from 2000 to 2002; Vice President,
Human Resources & Ethics Officer, Individual Financial Services, prior to 2000.

KATHLEEN M. GIBSON--Vice President and Secretary, Prudential, since 2002.
Associate General Counsel and Assistant Secretary, Becton, Dickinson and
Company, from 2001 to 2002. Vice President and Corporate Secretary, Honeywell
International, Inc,. prior to 2001.

** Principal officers of The Prudential Insurance Company of America hold
comparable positions with Prudential Financial, Inc.

CODE OF ETHICS

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

Considering the nature of the securities  giving rise to the requirement to file
this  Annual  Report on Form  10-K,  the  Company  has not made a  determination
whether  any  member of the Audit  Committee  of the Board of  Directors  of the
Company is an audit committee financial expert as defined by SEC rules.

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 10 of Notes to Financial  Statements  of the
Partnership on page F-22.


                                       16
<PAGE>


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The Audit  Committee  of the Board of  Directors  of  Prudential  Financial  has
appointed  PricewaterhouseCoopers  LLP  as  the  independent  registered  public
accounting  firm  of  Prudential  Financial  and  certain  of its  domestic  and
international  subsidiaries,  including the Registrant.  The Audit Committee has
established a policy  requiring its  pre-approval  of all audit and  permissible
non-audit services provided by the independent auditor. The specific information
called  for by this item is hereby  incorporated  by  reference  to the  section
entitled "Item  2--Ratification  of the Appointment of Independent  Auditors" in
Prudential  Financial's  definitive  proxy  statement for the Annual  Meeting of
Shareholders  to be held on June 7, 2005,  to be filed with the  Securities  and
Exchange  Commission  pursuant to Regulation  14A within 120 days after the year
ended December 31, 2004.


                                       17
<PAGE>


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

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

     1.   Financial Statements

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

     2.   Financial Statement Schedules

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

          Schedule III. Real Estate Owned: Properties

          Schedule 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, 2004. 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 Charter of The Prudential Insurance Company of America, filed
          as Exhibit 3.1 to form 10-K, Registration Statement No. 33-20083-01,
          filed March 31, 2003, and incorporated herein by reference.

     3.2  Amended By-Laws of The Prudential Insurance Company of America, filed
          as Exhibit 3.2 to form 10-K, Registration Statement No. 33-20083-01,
          filed March 31, 2003, and incorporated herein by reference.

     3.3  Resolution of the Board of Directors establishing The Prudential
          Variable Contract Real Property Account, filed as Exhibit (3C) to Form
          S-1, Registration Statement No. 33-20083, filed February 10, 1988, and
          incorporated herein by reference.

     4.1  Revised Individual Variable Annuity Contract filed as Exhibit A(4)(w)
          to Post-Effective Amendment No. 8 to Form N-4, Registration Statement
          No. 2-80897, filed October 23, 1986, and incorporated herein by
          reference.

     4.2  Discovery Plus Contract, filed as Exhibit (4)(a) to Form N-4,
          Registration Statement No. 33-25434, filed November 8, 1988, and
          incorporated herein by reference.

     4.3  Custom VAL (previously named Adjustable Premium VAL) Life Insurance
          Contracts with fixed death benefit, filed as Exhibit 1.A.(5) to Form
          S-6, Registration Statement No. 33-25372, filed November 4, 1988, and
          incorporated herein by reference.

     4.4  Custom VAL (previously named Adjustable Premium VAL) Life Insurance
          Contracts with variable death benefit, filed as Exhibit 1.A.(5) to
          Form S-6, Registration Statement No. 33-25372, filed November 4, 1988,
          and incorporated herein by reference.

     4.5  Variable Appreciable Life Insurance Contracts with fixed death
          benefit, filed as Exhibit 1.A.(5) to Pre-Effective Amendment No. 1 to
          Form S-6, Registration Statement No. 33-20000, filed June 15, 1988,
          and incorporated herein by reference.


                                       18
<PAGE>


     4.6  Variable Appreciable Life Insurance Contracts with variable death
          benefit, filed as Exhibit 1.A.(5) to Pre-Effective Amendment No. 1 to
          Form S-6, Registration Statement No. 33-20000, filed June 15, 1988,
          and incorporated herein by reference.

     9.   None.

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

     10.2 Partnership Agreement of The Prudential Variable Contract Real
          Property Partnership filed as Exhibit (10C) to Pre-Effective Amendment
          No. 1 to Form S-1, Registration Statement No. 33-20083, filed May 2,
          1988, and incorporated herein by reference.

     11.  Not applicable.

     12.  Not applicable.

     16.  None.

     18.  None.

     22.  Not applicable.

     23.  None.

     24.  Powers of attorney are filed herewith.

     31.1 Section 302 Certification of the Chief Executive Officer.

     31.2 Section 302 Certification of the Chief Financial Officer.

     32.1 Section 906 Certification of the Chief Executive Officer.

     32.2 Section 906 Certification of the Chief Financial Officer.


                                       19
<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.

                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
                                  IN RESPECT OF
             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
--------------------------------------------------------------------------------
                                  (REGISTRANT)


Date:     March 31, 2005                          By: /s/ Richard J. Carbone
         --------------                               ----------------------
                                                          Richard J. Carbone
                                                          Senior Vice President

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>
/s/ Arthur F. Ryan                          Chairman of the Board, Chief                            March 31, 2005
------------------------                    Executive Officer, President
Arthur F. Ryan                              and Director

/s/ Richard J. Carbone                      Chief Financial Officer                                 March 31, 2005
------------------------
Richard J. Carbone

/s/ Dennis G. Sullivan                      Vice President                                          March 31, 2005
------------------------                    (Principal Accounting Officer)
Dennis G. Sullivan
</TABLE>





                                       20
<PAGE>
<TABLE>
<CAPTION>
<S>                                         <C>                                                     <C>
*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Frederic K. Becker

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Gordon M. Bethune

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Gaston Caperton III

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Gilbert F. Casellas

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
James G. Cullen

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
William H. Gray, III

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Jon F. Hanson

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Glen H. Hiner

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Constance J. Horner

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Karl J. Krapek

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
Ida F. S. Schmertz

*                                           Director                                                March 31, 2005
------------------------------------------------------------------------------------------------------------------
James A. Unruh
</TABLE>

                                                 *By: /s/ Clifford E. Kirsch
                                                      ----------------------
                                                      Clifford E. Kirsch
                                                      (Attorney-in-fact)



                                       21
<PAGE>


             THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                  (REGISTRANT)

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                                 Page
A.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
<S>                                                                                                               <C>
     Financial Statements:

         Report of Independent Registered Public Accounting Firm..............................................    F-2

         Statements of Net Assets -- December 31, 2004 and 2003...............................................    F-3

         Statements of Operations -- Years Ended December 31, 2004, 2003, 2002................................    F-3

         Statements of Changes in Net Assets -- Years Ended December 31, 2004, 2003, 2002.....................    F-3

         Notes to Financial Statements .......................................................................    F-4

B.   THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

     Financial Statements:

         Report of Independent Registered Public Accounting Firm .............................................    F-8

         Report of Independent Registered Public Accounting Firm on
           Financial Statement Schedules......................................................................    F-9

         Statements of Assets and Liabilities -- December 31, 2004 and 2003...................................   F-10

         Statements of Operations -- Years Ended December 31, 2004, 2003 and 2002 ............................   F-11

         Statements of Changes in Net Assets -- Years Ended December 31, 2004,
           2003 and 2002 .....................................................................................   F-12

         Statements of Cash Flows -- Years Ended December 31, 2004, 2003 and 2002 ............................   F-13

         Schedule of Investments -- December 31, 2004 and 2003................................................   F-14

         Notes to Financial Statements........................................................................   F-16

     Financial Statement Schedules:

         For the period ended December 31, 2004

         Schedule III -- Real Estate Owned: Properties .......................................................   F-23

         Schedule III -- Real Estate Owned: Interest in Properties ...........................................   F-24
</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 REGISTERED PUBLIC ACCOUNTING FIRM



To the Contract Owners of
The Prudential Variable Contract Real Property Account
and the Board of Directors of
The Prudential Insurance Company of America


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 The Prudential  Variable Contract
Real  Property  Account at December  31,  2004 and 2003,  and the results of its
operations  and the changes in its net assets for each of the three years in the
period  ended  December 31,  2004,  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  financial
statements  in  accordance  with  auditing   standards  of  the  Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
New York, New York
March 18, 2005




                                      F-2
<PAGE>




                             FINANCIAL STATEMENTS OF
               PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT


STATEMENT OF NET ASSETS
December 31, 2004 and 2003
<TABLE>
<CAPTION>
                                                                        2004                2003
                                                                     -----------         -----------
<S>                                                                  <C>                 <C>
ASSETS
   Investment in The Prudential Variable Contract
      Real Property Partnership ........................             $75,689,330         $73,648,634
                                                                     -----------         -----------
   Net Assets ..........................................             $75,689,330         $73,648,634
                                                                     ===========         ===========
NET ASSETS, representing:
   Equity of contract owners ...........................             $54,956,278         $53,573,623
   Equity of The Prudential Insurance Company of America              20,733,052          20,075,011
                                                                     -----------         -----------
                                                                     $75,689,330         $73,648,634
                                                                     ===========         ===========
Units outstanding ......................................              37,494,920          38,384,745
                                                                     ===========         ===========
Portfolio shares held ..................................               2,894,367           2,986,942
Portfolio net asset value per share ....................             $     26.15         $     24.66
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the periods ended December 31, 2004, 2003 and 2002
                                                                                      2004            2003           2002
                                                                                    ---------      ----------     ----------
INVESTMENT INCOME
<S>                                                                                 <C>            <C>            <C>
Net investment income from Partnership operations ..................              $  3,162,352   $  4,287,463   $  4,422,199
                                                                                  ------------   ------------   ------------
EXPENSES
Charges to contract owners for assuming mortality risk and
   expense risk and for administration .............................                   435,006        425,598        439,519
                                                                                  ------------   ------------   ------------
NET INVESTMENT INCOME ..............................................                 2,727,346      3,861,865      3,982,680
                                                                                  ------------   ------------   ------------
NET REALIZED AND UNREALIZED GAIN
   (LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments from Partnership                   628,942     (2,801,446)    (3,628,696)
Realized gain (loss) on sale of investments from Partnership .......                   701,429        188,273        160,187
                                                                                  ------------   ------------   ------------
NET GAIN (LOSS) ON INVESTMENTS .....................................                 1,330,371     (2,613,173)    (3,468,509)
                                                                                  ------------   ------------   ------------
NET INCREASE IN NET ASSETS
   RESULTING FROM OPERATIONS .......................................              $  4,057,717   $  1,248,692   $    514,171
                                                                                  ============   ============   ============

STATEMENT OF CHANGES IN NET ASSETS
For the periods ended December 31, 2004, 2003 and 2002
                                                                                      2004            2003           2002
                                                                                    ---------      ----------     ----------
OPERATIONS
Net investment income ..............................................              $  2,727,346   $  3,861,865   $  3,982,680
Net change in unrealized gain (loss) on investments in Partnership .                   628,942     (2,801,446)    (3,628,696)
Net realized gain (loss) on sale of investments in Partnership .....                   701,429        188,273        160,187
                                                                                  ------------   ------------   ------------
NET INCREASE IN NET ASSETS
   RESULTING FROM OPERATIONS .......................................                 4,057,717      1,248,692        514,171
                                                                                  ------------   ------------   ------------
CAPITAL TRANSACTIONS
Net withdrawals by contract owners .................................                (1,350,431)      (670,727)    (2,113,583)
Net withdrawals by The Prudential Insurance Company of America .....                  (666,590)    (1,379,401)    (4,795,840)
                                                                                  ------------   ------------   ------------
NET DECREASE IN NET ASSETS
   RESULTING FROM CAPITAL TRANSACTIONS .............................                (2,017,021)    (2,050,128)    (6,909,423)
                                                                                  ------------   ------------   ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................                 2,040,696       (801,436)    (6,395,252)
NET ASSETS
   Beginning of period .............................................                73,648,634     74,450,070     80,845,322
                                                                                  ------------   ------------   ------------
   End of period ...................................................              $ 75,689,330   $ 73,648,634   $ 74,450,070
                                                                                  ============   ============   ============
</TABLE>


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


                                      F-3
<PAGE>


                      NOTES TO THE FINANCIAL STATEMENTS OF
               PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT
                                DECEMBER 31, 2004

NOTE 1: GENERAL

The  Prudential   Variable  Contract  Real  Property  Account   ("Account")  was
established  on November 20, 1986 by resolution of the Board of Directors of The
Prudential Insurance Company of America ("Prudential"),  which is a wholly-owned
subsidiary  of  Prudential  Financial,  Inc.  ("PFI") as a  separate  investment
account pursuant to New Jersey law and is registered under the Securities Act of
1933. The assets of the Account are segregated from  Prudential's  other assets.
The Account is used to fund benefits  under certain  variable life insurance and
variable  annuity  contracts  issued by Prudential.  These products are Variable
Appreciable  Life  ("PVAL  and  PVAL  $100,000+  Face  Value"),  Discovery  Plus
("PDISCO+"), and Variable Investment Plan ("VIP").

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

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

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.  BASIS OF ACCOUNTING

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

B.  INVESTMENT IN PARTNERSHIP INTEREST

The  investment  in the  Partnership  is  based on the  Account's  proportionate
interest of the  Partnership's  market value.  At December 31, 2004 and 2003 the
Account's interest in the Partnership was 40.6% or 2,894,367 shares and 40.6% or
2,986,942 shares respectively.

C.  INCOME RECOGNITION

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

D.  EQUITY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

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

NOTE 3: TAXES

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


                                      F-4
<PAGE>


NOTE 4: NET WITHDRAWALS BY CONTRACT OWNERS

Net contract  owner  withdrawals  for the real estate  investment  option in The
Prudential  Insurance  Company of  America's  variable  insurance  and  variable
annuity  products for the years ended  December 31, 2004,  2003 and 2002 were as
follows:
<TABLE>
<CAPTION>
2004:
-----
                                                                                          PVAL&PVAL
                                                    PDISCO+             VIP          $100,000+ FACE VALUE        TOTAL
                                                 ------------        ------------    --------------------    ------------
<S>                                              <C>                 <C>                 <C>                 <C>
Contract Owner Net Payments:                     $      5,998        $     27,559        $  4,168,816        $  4,202,373
Policy Loans:                                               0                   0          (1,144,139)         (1,144,139)
Policy Loan Repayments and Interest:                        0                   0           1,219,695           1,219,695
Surrenders, Withdrawals, and
  Death Benefits:                                    (286,323)           (190,471)         (2,385,471)         (2,862,265)
Net Transfers To Other Subaccounts
  or Fixed Rate Option:                               275,083             (11,227)           (166,388)             97,468
Administrative and Other Charges:                         (35)             (1,892)         (2,861,636)         (2,863,563)
                                                 ------------        ------------        ------------        ------------
NET WITHDRAWALS BY CONTRACT OWNERS               $     (5,277)       $   (176,031)       $ (1,169,123)       $ (1,350,431)
                                                 ============        ============        ============        ============

2003:
-----
<CAPTION>
                                                                                          PVAL&PVAL
                                                    PDISCO+             VIP          $100,000+ FACE VALUE        TOTAL
                                                 ------------        ------------    --------------------    ------------
<S>                                              <C>                 <C>                 <C>                 <C>
Contract Owner Net Payments:                     $       (314)       $     11,986        $  4,472,957        $  4,484,629
Policy Loans:                                               0                   0          (1,195,131)         (1,195,131)
Policy Loan Repayments and Interest:                        0                   0           1,316,067           1,316,067
Surrenders, Withdrawals, and
  Death Benefits:                                    (443,979)           (321,235)         (2,989,212)         (3,754,426)
Net Transfers To Other Subaccounts
  or Fixed Rate Option:                               261,124             (14,083)          1,371,135           1,618,176
Administrative and Other Charges:                         (56)             (2,314)         (3,137,672)         (3,140,042)
                                                 ------------        ------------        ------------        ------------
NET WITHDRAWALS BY CONTRACT OWNERS               $   (183,225)       $   (325,646)       $   (161,856)       $   (670,727)
                                                 ============        ============        ============        ============

2002:
-----
<CAPTION>
                                                                                          PVAL&PVAL
                                                    PDISCO+             VIP          $100,000+ FACE VALUE        TOTAL
                                                 ------------        ------------    --------------------    ------------
<S>                                              <C>                 <C>                 <C>                 <C>
Contract Owner Net Payments:                     $          0        $     34,863        $  5,048,419        $  5,083,282
Policy Loans:                                               0                   0          (1,343,092)         (1,343,092)
Policy Loan Repayments and Interest:                        0                   0           1,404,190           1,404,190
Surrenders, Withdrawals, and
  Death Benefits:                                    (594,112)           (231,606)         (3,683,175)         (4,508,893)
Net Transfers To Other Subaccounts
  or Fixed Rate Option:                                51,964             121,250             385,036             558,250
Administrative and Other Charges:                         (38)             (2,616)         (3,304,666)         (3,307,320)
                                                 ------------        ------------        ------------        ------------
NET WITHDRAWALS BY CONTRACT OWNERS               $   (542,186)       $    (78,109)       $ (1,493,288)       $ (2,113,583)
                                                 ============        ============        ============        ============
</TABLE>



                                      F-5
<PAGE>



NOTE 5: UNIT ACTIVITY

Transactions  in units for the years ended December 31, 2004, 2003 and 2002 were
as follows:
<TABLE>
<CAPTION>

2004:
-----
                                                                                                           PVAL$100,000+
                                                                        PDISCO+      VIP         PVAL       FACE VALUE
                                                                        --------   -------     --------     ------------
<S>                        <C>         <C>                             <C>         <C>       <C>            <C>
Company Contributions:     1,721,406   Contract Owner Contributions:    251,872     74,919     1,684,883      1,762,982
Company Redemptions:      (1,918,713)  Contract Owner Redemptions:     (256,989)  (169,082)   (1,934,487)    (2,106,617)

2003:
-----
                                                                                                           PVAL$100,000+
                                                                        PDISCO+      VIP         PVAL       FACE VALUE
                                                                        --------   -------     --------     ------------
Company Contributions:     1,930,945   Contract Owner Contributions:    176,756     70,296     1,897,546      1,976,682
Company Redemptions:      (2,529,430)  Contract Owner Redemptions:     (278,131)  (249,884)   (2,175,255)    (1,791,690)

2002:
-----
                                                                                                           PVAL$100,000+
                                                                        PDISCO+      VIP         PVAL       FACE VALUE
                                                                        --------   -------     --------     ------------

COMPANY CONTRIBUTIONS:     2,080,975   CONTRACT OWNER CONTRIBUTIONS:    205,356    105,284     2,046,293      1,607,411
Company Redemptions:      (4,538,606)  Contract Owner Redemptions:     (504,137)  (148,174)   (2,423,416)    (2,012,246)

</TABLE>

NOTE 6: PURCHASES AND SALES OF INVESTMENTS


The aggregate  costs of purchases and proceeds from sales of  investments in the
Partnership  for the  years  ended  December  31,  2004,  2003 and 2002  were as
follows:

<TABLE>
<CAPTION>
                                             DECEMBER 31, 2004          DECEMBER 31, 2003         DECEMBER 31, 2002
                                              --------------             ---------------           --------------
<S>                                              <C>                      <C>                        <C>
PURCHASES:                                                $0                       $0                         $0
SALES:                                           $(2,452,028)             $(2,475,726)               $(7,348,942)
</TABLE>

NOTE 7: FINANCIAL HIGHLIGHTS


Prudential  Insurance Company of America (the "Company" or "Prudential") sells a
number of variable annuity and variable life insurance products.  These products
have  unique  combinations  of features  and fees that are  charged  against the
contract owner's account balance.  Differences in the fee structures result in a
variety of unit values, expense ratios and total returns.

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

<TABLE>
<CAPTION>
                                   AT YEAR ENDED                                    FOR YEAR ENDED
                     -------------------------------------------  ----------------------------------------------------
                      UNITS        UNIT VALUE        NET ASSETS     INVESTMENT    EXPENSE RATIO **   TOTAL RETURN ***
                     (000'S)     LOWEST-HIGHEST        (000'S)    INCOME RATIO *   LOWEST-HIGHEST     LOWEST-HIGHEST
                     ------   -------------------   ------------  --------------   ---------------    ----------------
<S>                  <C>      <C>                     <C>              <C>         <C>                <C>
December 31, 2004    27,073   $1.92668 to $2.09540    $54,956          4.15%       0.60% to 1.20%     4.81% to 5.43%
December 31, 2003    27,766   $1.83832 to $1.98753    $53,574          5.77%       0.60% to 1.20%     1.03% to 1.63%
December 31, 2002    28,139   $1.81952 to $1.95560    $53,487          5.59%       0.60% to 1.20%     0.02% to 0.62%
December 31, 2001    29,263   $1.81915 to $1.94357    $55,383          5.91%       0.60% to 1.20%     3.55% to 4.17%
</TABLE>

The  table  above  reflects  information  for  units  held by  contract  owners.
Prudential  also maintains a position in the Real Property  Account,  to provide
for property acquisitions and capital expenditure funding needs. Prudential held
10,421,720,   10,619,027,   11,217,512   and   13,675,143   units   representing
$20,733,052,  $20,075,011,  $20,962,590  and  $25,462,204  of net  assets  as of
December 31, 2004,  2003,  2002 and 2001,  respectively.  Charges for  mortality
risk,  expense  risk  and  administrative  expenses  are used by  Prudential  to
purchase  additional  units in its  account  resulting  in no  impact to its net
assets.

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


                                      F-6
<PAGE>


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

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

CHARGES AND EXPENSES

A.  MORTALITY RISK AND EXPENSE RISK CHARGES

Mortality risk and expense risk charges are determined  daily using an effective
annual rate of 1.2%, 0.9%, 0.6% and 1.2% for PDISCO+, PVAL, PVAL $100,000 + face
value,  and VIP,  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  Prudential.  The  mortality  risk and
expense risk charges are assessed through reduction in unit values.

B.  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 PVAL and PVAL $100,000
+ face value are (1) state premium taxes; (2) sales charges,  up to 0.50%, which
are  deducted  in order to  compensate  Prudential  for the cost of selling  the
contract and (3) transaction  costs which are deducted from each premium payment
to cover premium collection and processing costs.  Contracts are also subject to
monthly  charges  for the costs of  administering  the  contract  to  compensate
Prudential  for the  guaranteed  minimum death  benefit risk.  These charges are
assessed through the redemption of units.

C.  DEFERRED SALES CHARGE

A deferred  sales charge,  applicable to PVAL and PVAL $100,000 + face value and
not to exceed 50% of the first year's primary annual premium for PVAL contracts,
is imposed upon  surrenders  of certain  variable  life  insurance  contracts to
compensate Prudential 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 tenth year of the
contract. No sales charge will be imposed on death benefits.

Also a deferred sales charge is imposed upon the withdrawals of certain purchase
payments to compensate  Prudential  for sales and other  marketing  expenses for
PDISCO+  and VIP.  The  amount of any sales  charge  will  depend on the  amount
withdrawn and the number of contract  years that have elapsed since the contract
owner or annuitant made the purchase  payments deemed to be withdrawn.  No sales
charge is made against the  withdrawal  of  investment  income.  A reduced sales
charge is imposed in connection  with the  withdrawal  of a purchase  payment to
effect  an  annuity  if three or more  contract  years  have  elapsed  since the
contract  date,  unless the  annuity  effected is an annuity  certain.  No sales
charge is imposed upon death  benefit  payments or upon  transfers  made between
subaccounts. A deferred sales charge is assesed through the redemption of units.

D.  PARTIAL WITHDRAWAL CHARGE

A charge is imposed by Prudential on partial  withdrawals  of the cash surrender
value for PVAL and PVAL  $100,000 + face value.  A charge equal to the lesser of
$15 or 2% will be made in  connection  with each partial  withdrawal of the cash
surrender  value of a contract.  A charge is assessed  through the redemption of
units.

E. ANNUAL MAINTENANCE CHARGE

An annual  maintenance  charge,  applicable  to PDISCO+  and VIP, of $30 will be
deducted  if and only if the  contract  fund is less than  $10,000 on a contract
anniversary or at the time a full withdrawal is effected, including a withdrawal
to effect an annuity. The charge is made by reducing accumulation units credited
to a contract owner's account.

NOTE 8: RELATED PARTY

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

                                      F-7
<PAGE>


            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Partners of The Prudential
Variable Contract Real Property Partnership

In  our  opinion,  the  accompanying   consolidated  statements  of  assets  and
liabilities, including the consolidated 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 at December 31, 2004 and
2003, and the results of its operations and its cash flows for each of the three
years in the period  ended  December  31,  2004 in  conformity  with  accounting
principles  generally accepted in the United States of America.  These financial
statements are the responsibility of the management of The Prudential  Insurance
Company  of  America.  Our  responsibility  is to  express  an  opinion on these
financial  statements  based on our  audits.  We  conducted  our audits of these
statements in accordance  with the  standards of the Public  Company  Accounting
Oversight  Board  (United  States).  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.





PricewaterhouseCoopers LLP
New York, New York
March 16, 2005

                                      F-8
<PAGE>



           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
                          FINANCIAL STATEMENT SCHEDULES



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

Our audits of the consolidated  financial  statements  referred to in our report
dated March 16, 2005  appearing in this Annual  Report also included an audit of
the financial  statement schedules listed in Item 15(a)(2) of this Form 10-K. In
our opinion, these financial statement schedules present fairly, in all material
respects,  the information  set forth therein when read in conjunction  with the
related consolidated financial statements.





PricewaterhouseCoopers LLP
New York, New York
March 16, 2005


                                      F-9
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                               --------------------------------
                                                                                   2004                2003
                                                                               ------------        ------------
<S>                                                                            <C>                 <C>
ASSETS
REAL ESTATE INVESTMENTS -- At estimated market value:
   Real estate and improvements
      (cost: 12/31/2004 -- $224,584,885; 12/31/2003 -- $223,943,870)           $203,246,069        $201,144,866
   Real estate partnerships (cost: 12/31/2004 -- $11,286,826;
      12/31/2003 -- $10,609,273) ...............................                 12,126,566           8,721,319
   Mortgage and other loans receivable (cost: 12/31/2004 -- $1,332,060
      12/31/2003 -- $0) ........................................                  1,332,060                  --
   Other real estate investments (cost: 12/31/2004 -- $0;
      12/31/2003 -- $500,000) ..................................                         --             500,000
                                                                               ------------        ------------
      Total real estate investments ............................                216,704,695         210,366,185
CASH AND CASH EQUIVALENTS ......................................                 17,557,182          18,901,814
OTHER ASSETS, NET ..............................................                  6,313,734           6,359,853
                                                                               ------------        ------------
      Total assets .............................................               $240,575,611        $235,627,852
                                                                               ============        ============
LIABILITIES & PARTNERS' EQUITY
MORTGAGE LOANS PAYABLE .........................................               $ 43,773,767        $ 43,934,494
ACCOUNTS PAYABLE AND ACCRUED EXPENSES ..........................                  3,096,006           2,998,752
DUE TO AFFILIATES ..............................................                    721,419           1,017,932
OTHER LIABILITIES ..............................................                    622,900             947,110
MINORITY INTEREST ..............................................                  5,638,458           5,086,503
                                                                               ------------        ------------
      Total liabilities ........................................                 53,852,550          53,984,791
                                                                               ------------        ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY ...............................................                186,723,061         181,643,061
                                                                               ------------        ------------
      Total liabilities and partners' equity ...................               $240,575,611        $235,627,852
                                                                               ============        ============
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD ..................                  7,140,308           7,366,835
                                                                               ============        ============
SHARE VALUE AT END OF PERIOD ...................................                     $26.15              $24.66
                                                                               ============        ============
</TABLE>


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

                                      F-10
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                                  ------------------------------------------
                                                                                      2004           2003           2002
                                                                                  ------------   ------------   ------------
<S>                                                                               <C>            <C>            <C>
INVESTMENT INCOME:
   Revenue from real estate and improvements .......................              $ 27,810,539   $ 26,217,891   $ 26,345,500
   Equity in income of real estate partnership .....................                   629,190        560,660        276,209
   Interest and equity income on mortgage
      and other loans receivable ...................................                   138,296             --             --
   Income from other real estate investments .......................                   246,764             --             --
   Interest on short-term investments ..............................                   251,374        281,943        455,339
                                                                                  ------------   ------------   ------------
      Total investment income ......................................                29,076,163     27,060,494     27,077,048
                                                                                  ------------   ------------   ------------
INVESTMENT EXPENSES:
   Operating .......................................................                 7,545,335      5,116,001      5,261,674
   Investment management fee .......................................                 2,666,103      2,493,957      2,486,639
   Real estate taxes ...............................................                 2,687,018      2,590,600      2,824,719
   Administrative ..................................................                 5,243,944      3,496,973      3,345,192
   Interest expense ................................................                 2,910,841      2,557,294      1,989,473
   Minority interest ...............................................                   223,316        192,260        305,308
                                                                                  ------------   ------------   ------------
         Total investment expenses .................................                21,276,557     16,447,085     16,213,005
                                                                                  ------------   ------------   ------------
NET INVESTMENT INCOME ..............................................                 7,799,606     10,613,409     10,864,043
                                                                                  ------------   ------------   ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON REAL ESTATE
   INVESTMENTS:
   Net proceeds from real estate investments sold ..................                 7,105,000      5,689,488      6,282,075
   Less: Cost of real estate investments sold ......................                 7,307,410      6,620,263      9,101,381
   Realization of prior years' unrealized
      gain (loss) on real estate investments sold ..................                (1,932,410)    (1,396,836)    (3,212,838)
                                                                                  ------------   ------------   ------------
   Net gain (loss) realized on real estate
      investments sold .............................................                 1,730,000        466,061        393,532
                                                                                  ------------   ------------   ------------
   Change in unrealized gain (loss) on real estate investments .....                 2,457,887     (6,169,630)    (8,739,488)
   Less: Minority interest in unrealized gain (loss) on
      real estate investments ......................................                   907,493        763,795        171,707
                                                                                  ------------   ------------   ------------
   Net unrealized gain (loss) on real estate investments ...........                 1,550,394     (6,933,425)    (8,911,195)
                                                                                  ------------   ------------   ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
   ON REAL ESTATE INVESTMENTS ......................................                 3,280,394     (6,467,364)    (8,517,663)
                                                                                  ------------   ------------   ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
   FROM OPERATIONS .................................................              $ 11,080,000   $  4,146,045   $  2,346,380
                                                                                  ============   ============   ============
</TABLE>

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

                                      F-11
<PAGE>



           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                                  ------------------------------------------
                                                                                      2004           2003           2002
                                                                                  ------------   ------------   ------------
<S>                                                                               <C>            <C>            <C>
INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS:
   Net investment income ...........................................              $  7,799,606   $ 10,613,409   $ 10,864,043
   Net gain (loss) realized on real estate investments sold ........                 1,730,000        466,061        393,532
   Net unrealized gain (loss) from real estate investments .........                 1,550,394     (6,933,425)    (8,911,195)
                                                                                  ------------   ------------   ------------
   Increase (decrease) in net assets resulting from operations .....                11,080,000      4,146,045      2,346,380
                                                                                  ------------   ------------   ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
   FROM CAPITAL TRANSACTIONS:
   Withdrawals by partners
      (2004 --226,527; 2003 -- 278,014; and
      2002 -- 672,622 shares, respectively) ........................                (6,000,000)    (6,856,490)   (16,143,510)
                                                                                  ------------   ------------   ------------
         Increase (decrease) in net assets
            resulting from capital transactions ....................                (6,000,000)    (6,856,490)   (16,143,510)
                                                                                  ------------   ------------   ------------
INCREASE (DECREASE) IN NET ASSETS ..................................                 5,080,000     (2,710,445)   (13,797,130)
NET ASSETS -- Beginning of period ..................................               181,643,061    184,353,506    198,150,636
                                                                                  ------------   ------------   ------------
NET ASSETS -- End of period ........................................              $186,723,061   $181,643,061   $184,353,506
                                                                                  ============   ============   ============
</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 CASH FLOWS

<TABLE>
<CAPTION>
                                                                                            YEAR ENDED DECEMBER 31,
                                                                                  ------------------------------------------
                                                                                     2004             2003           2002
                                                                                  ------------   ------------   ------------
<S>                                                                               <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations .........................              $ 11,080,000   $  4,146,045   $  2,346,380
Adjustments to reconcile net increase in net assets
   to net cash from operating activities
   Net realized and unrealized loss (gain) .........................                (3,280,394)     6,467,364      8,517,663
   Amortization of deferred financing costs ........................                  (108,232)      (523,586)      (189,826)
   Distributions in excess of (less than) equity in income
      of real estate partnership operations ........................                  (209,678)       648,193        (53,459)
   Minority interest in consolidated partnerships ..................                   223,316        192,260        305,308
   Bad debt expense ................................................                   459,103        185,844        184,242
   (Increase) decrease in:
      Dividend receivable ..........................................                        --             --         20,802
      Other assets .................................................                  (304,747)      (502,655)    (2,246,510)
   Increase (decrease) in:
      Accounts payable and accrued expenses ........................                    97,254        (93,346)      (377,144)
      Due to affiliates ............................................                  (296,513)       110,429         11,369
      Other liabilities ............................................                  (324,210)        35,865        (61,165)
                                                                                  ------------   ------------   ------------
   Net cash flows from (used in) operating activities ..............                 7,335,899     10,666,413      8,457,660
                                                                                  ------------   ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Net proceeds from real estate investments sold ..................                 7,105,000      5,689,488      6,282,075
   Acquisition of real estate and improvements .....................                        --     (8,008,729)    (2,610,723)
   Additions to real estate and improvements .......................                (7,746,015)    (6,963,127)    (2,629,708)
   Contributions to real estate partnerships .......................                  (467,875)    (1,326,071)    (2,851,395)
   Origination of mortgage loan receivable .........................                (1,332,060)            --             --
   Collection of other real estate investments .....................                 4,975,000             --             --
   Origination of other real estate investments ....................                (4,475,000)      (500,000)            --
                                                                                  ------------   ------------   ------------
   Net cash flows from (used in) investing activities ..............                (1,940,950)   (11,108,439)    (1,809,751)
                                                                                  ------------   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Withdrawals .....................................................                (6,000,000)    (6,856,490)   (16,143,510)
   Proceeds from mortgage loans payable ............................                 8,750,000      8,750,000             --
   Principal payments on mortgage loans payable ....................                (8,910,727)      (514,614)      (696,828)
   Contributions from minority interest partners ...................                        --        242,354      2,268,461
   Distributions to minority interest partners .....................                  (578,854)      (868,559)      (100,528)
                                                                                  ------------   ------------   ------------
   Net cash flows from (used in) financing activities ..............                (6,739,581)       752,691    (14,672,405)
                                                                                  ------------   ------------   ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS ............................                (1,344,632)       310,665     (8,024,496)
CASH AND CASH EQUIVALENTS - Beginning of period ....................                18,901,814     18,591,149     26,615,645
                                                                                  ------------   ------------   ------------
CASH AND CASH EQUIVALENTS - End of period ..........................              $ 17,557,182   $ 18,901,814   $ 18,591,149
                                                                                  ============   ============   ============
</TABLE>


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

                                      F-13
<PAGE>


           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>

                                                                                               DECEMBER 31,
                                                      TOTAL RENTABLE    -----------------------------------------------------------
                                                        SQUARE FEET               2004                          2003
                                                          UNLESS        -----------------------------------------------------------
                                                         OTHERWISE                      ESTIMATED                      ESTIMATED
                                                         INDICATED                        MARKET                         MARKET
PROPERTY NAME          OWNERSHIP      CITY, STATE       (UNAUDITED)        COST            VALUE           COST           VALUE
-----------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENTS

OFFICES
<C>                      <C>         <C>                   <C>         <C>             <C>             <C>             <C>
750 Warrenville           WO            Lisle, IL           103,193     $23,173,036     $10,098,838     $23,023,835     12,110,725
Oakbrook Terrace          WO          Oakbrook, IL          123,734      14,833,796       9,698,734      14,619,120     10,097,932
Summit @ Cornell Oaks     WO         Beaverton , OR          72,109      11,934,209       9,644,005      11,890,209     10,000,005
Westpark                  WO          Nashville, TN          97,199      10,708,970      11,151,327      10,423,727      9,239,260
Financial Plaza           WO          Brentwood, TN          98,049      12,333,151      10,966,233       9,837,482      6,700,041
-----------------------------------------------------------------------------------------------------------------------------------
                                Offices % as of 12/31/04        28%      72,983,162      51,559,137      69,794,373     48,147,963

APARTMENTS
Brookwood Apartments      WO           Atlanta, GA        240 Units      17,344,994      16,616,914      15,781,263     17,000,000
Dunhill Trace Apartments  WO           Raleigh, NC        250 Units      16,083,715      18,000,660      16,010,326     17,665,000
Riverbend Apartments     CJV        Jacksonville, FL      458 Units      20,015,959      22,600,000      19,946,920     22,400,000
SIMA Apartments          CJV        Gresham/Salem, OR     493 Units      12,004,323      13,900,000      19,281,738     17,975,000
------------------------------------------------------------------------------------------------------------------------------------
                                Apartments % AS OF 12/31/04     38%      65,448,991      71,117,574      71,020,247     75,040,000

RETAIL
King's Market             WO          Rosewell, GA          314,358      33,864,392      21,765,286      33,102,401     23,539,665
Hampton Towne Center      WO           Hampton, VA          174,540      18,031,495      21,000,000      18,013,068     20,000,000
White Marlin Mall        CJV         Ocean City, MD         186,016      15,229,878      19,300,000      13,198,649     15,900,000
Kansas City Portfolio    EJV       Kansas City, KS;MO       487,660      11,286,726      12,126,466      10,609,273      8,721,319
-----------------------------------------------------------------------------------------------------------------------------------
                                 Retail % as of 12/31/04        40%      78,412,491      74,191,752      74,923,391     68,160,984
INDUSTRIAL
Smith Road                WO           Aurora, CO           277,930      10,692,625      10,204,072      10,806,403     10,508,509
Walsh Higgins             WO       Salt Lake City, UT       182,500              --              --              --             --
-----------------------------------------------------------------------------------------------------------------------------------
                               Industrial % as of 12/31/04       5%      10,692,625      10,204,072      10,806,403     10,508,509

HOTEL
Portland Crown Plaza     CJV          Portland, OR        161 Rooms       8,334,342       8,300,000       8,008,729      8,008,729
-----------------------------------------------------------------------------------------------------------------------------------
                                 Hotel % as of 12/31/04          4%       8,334,342       8,300,000       8,008,729      8,008,729

LAND
Gateway Village          EJV        Blue Springs, MO                            100             100              --             --
-----------------------------------------------------------------------------------------------------------------------------------
                                  Land % as of 12/31/04          0%             100             100              --             --

MORTGAGE AND OTHER LOANS RECEIVABLE
Westminster West        Eloan         Westminster, MD                     1,332,060       1,332,060              --             --
-----------------------------------------------------------------------------------------------------------------------------------
Mortgage and Other Loans Receivable% as of 12/31/04              1%       1,332,060       1,332,060              --             --

OTHER REAL ESTATE INVESTMENTS
Englar Lowes Loan        NR           Westminster, MD           --               --                         500,000        500,000
-----------------------------------------------------------------------------------------------------------------------------------
Other Real Estate Investments% as of 12/31/04                    0%              --              --         500,000         500,000

TOTAL REAL ESTATE INVESTMENTS AS A PERCENTAGE OF
      NET ASSETS AS OF 12/31/04                                116%     237,203,771     216,704,695     235,053,143     210,366,185
                                                               ====     ===========     ===========     ===========     ===========
</TABLE>
---------------------
WO -- Wholly Owned Investment
CJV -- Consolidated Joint Venture
EJV -- Joint Venture Investment accounted for under the equity method NR -- Note
Receivable Eloan -- Mezzanine loan accounted for under the equity method


                                      F-14

<PAGE>




           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                      CONSOLIDATED SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
                                                                                 DECEMBER 31, 2004           DECEMBER 31, 2003
                                                                             --------------------------   -------------------------
                                                                                             ESTIMATED                  ESTIMATED
                                                              FACE AMOUNT       COST       MARKET VALUE      COST      MARKET VALUE
                                                              -----------    ----------    ------------   ----------   -----------
<S>                                                            <C>           <C>            <C>           <C>            <C>
CASH AND CASH EQUIVALENTS -- PERCENTAGE OF NET ASSETS......                                        9.4%                        10.4%
Federal National Mortgage Assoc., 1.06%, February 4, 2004.     $5,974,000    $        --    $       --    $ 5,967,907   $ 5,967,907
Federal Home Loan Mortgage Corp., 0.88%, January 2, 2004..     12,331,000             --            --     12,330,520    12,330,520
Federal Home Loan Bank, 6.450%, January 3, 2005...........     19,457,000     19,455,135     19,455,135            --            --
                                                                             ----------     ----------    ----------    ----------
TOTAL CASH EQUIVALENTS....................................                    19,455,135     19,455,135    18,298,427    18,298,427
   CASH...................................................                    (1,897,953)    (1,897,953)      603,387       603,387
                                                                             ----------     ----------    ----------    ----------
   TOTAL CASH AND CASH EQUIVALENTS........................                   $17,557,182    $17,557,182   $18,901,814   $18,901,814
                                                                             ===========    ===========   ===========   ===========
</TABLE>


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

                                      F-15
<PAGE>



                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

NOTE 1:   ORGANIZATION

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

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

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

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

Prudential  Real Estate  Investors  ("PREI") is the real estate advisory unit of
Prudential  Investment  Management,  Inc. ("PIM"),  which is an indirectly owned
subsidiary of  Prudential  Financial  Inc.  ("PFI").  PREI  provides  investment
advisory  services to the  Partnership's  partners  pursuant to the terms of the
Advisory Agreement as described in Note 9.

NOTE 2:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


     A:   BASIS OF PRESENTATION--The accompanying consolidated financial
          statements of the Partnership have been presented on the market value
          basis of accounting in conformity with accounting principles generally
          accepted in the United States of America. It is the Partnership's
          policy to consolidate those real estate partnerships in which it has a
          controlling interest. All significant intercompany balances and
          transactions have been eliminated in consolidation.

     B:   MANAGEMENT'S USE OF ESTIMATES IN THE FINANCIAL STATEMENTS--The
          preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect the amounts
          reported in the financial statements and accompanying notes. Actual
          results could differ from those estimates.

     C:   REAL ESTATE INVESTMENTS--Real estate investments are shown at
          estimated market value in accordance with the terms of the
          Partnership's contracts. Properties owned are initially recorded at
          the purchase price plus closing costs. Development costs and major
          renovations are capitalized as a component of cost, and routine
          maintenance and repairs are charged to expense as incurred. Real
          estate costs include the cost of acquired property, including all the
          tangible and intangible assets. Tangible assets include the value of
          all land, building and tenant improvements at the time of acquisition.
          Intangible assets include the value of any above and


                                      F-16
<PAGE>

                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002


          below market leases, in-place leases, and tenant relationships at the
          time of acquisition. Market value estimates are based upon property
          appraisal reports prepared by independent real estate appraisers
          (members of the Appraisal Institute or an equivalent organization)
          within a reasonable amount of time following acquisition of the real
          estate and no less frequently than annually thereafter. The Chief Real
          Estate Appraiser of PIM is responsible to assure that the valuation
          process provides independent and reasonable property market value
          estimates. American Appraisal Associates (the "Appraisal Management
          Firm"), an entity not affiliated with PIM, has been appointed by PIM
          to assist the Chief Real Estate Appraiser in maintaining and
          monitoring the independence and the accuracy of the appraisal process.
          The market value of real estate investments does not reflect the
          transaction sale costs, which may be incurred upon disposition of the
          real estate investments.

          Unconsolidated real estate partnerships are valued at the
          Partnership's equity in net assets as reflected in the partnerships'
          financial statements with properties valued as described above. Under
          the equity method, the investment is initially recorded at the
          original investment amount, plus additional amounts invested, and is
          subsequently adjusted for the Partnership's share of undistributed
          earnings or losses (including unrealized appreciation and
          depreciation) from the underlying entity.

          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 estimated value of investments in real estate is
          fairly presented as of December 31, 2004.

     D:   OTHER REAL ESTATE INVESTMENTS--Other real estate investments include
          notes receivable, which are valued at the amount due and approximate
          market value.

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

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

     G:   OTHER ASSETS--Cash of $212,989 and $216,883 was maintained by the
          wholly owned and consolidated properties at December 31, 2004 and
          2003, respectively, for tenant security deposits and is included in
          Other Assets on the Consolidated Statements of Assets and Liabilities.
          Other assets also includes tenant receivable and is net of allowance
          for uncollectible accounts of $46,690 and $76,800 at December 31, 2004
          and 2003, respectively.

     H:   MORTGAGE LOANS PAYABLE--Mortgage loans payable are stated at the
          principal amount of the obligation outstanding. At times the
          Partnership may assume debt in connection with the purchase of real
          estate. For debt assumed, the Partnership allocates a portion of the
          purchase price to the below/above market debt and amortizes the
          premium/discount over the remaining life of the debt.

     I:   DEFERRED FINANCING COSTS--Included in Other Assets are deferred
          financing costs amounting to $391,666 and $313,425, which are net of
          accumulated amortization of $878,316 and $713,990 as of December 31,
          2004 and 2003, respectively, and which are being amortized over the
          term of the related obligation.


                                      F-17
<PAGE>

                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002


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

     K:   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 committee of the
          partnership.

     L:   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.

     M:   NEW ACCOUNTING PRONOUNCEMENTS--FASB Interpretation No. 46,
          "Consolidation of Variable Interest Entities", ("FIN 46") was issued
          in January 2003. In December 2003, FASB issued a revised
          interpretation of FIN 46 ("FIN 46-R"), which supersedes FIN 46. FIN
          46-R defers the effective date for applying the provisions of FIN-46
          for those companies currently accounting for their investments in
          accordance with the AICPA Audit and Accounting Guide, "Audits of
          Investment Companies" (the "Audit Guide"). The effective date is
          delayed while the AICPA finalizes the proposed Statement of Position
          ("SOP") on the clarification of the scope of the Audit Guide.
          Following the issuance of the final SOP, the FASB will consider
          modifying FIN 46-R to provide an exception for companies that apply
          the Audit Guide. The Partnership is awaiting the final determination
          from the FASB in order to evaluate the extent in which, if any, its
          equity investments may need to be consolidated as a result of this FIN
          46-R.

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, 2004,  2003, and 2002
was $2,595,651, $2,462,387, and $1,989,473, respectively.

During the fourth  quarter 2002, in conjunction  with the  acquisition of a real
estate  investment,  the  Partnership  assumed  mortgage loan  financing of $7.4
million.

                                      F-18
<PAGE>




                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002


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 2C above. The  partnership's  combined  financial  position at
December  31,  2004 and 2003,  and  results of  operations  for the years  ended
December 31, 2004, 2003, and 2002 are summarized as follows (in 000's):
<TABLE>
<CAPTION>

                                                                                   DECEMBER 31,
                                                                               2004              2003
                                                                          ------------        ------------
<S>                                                                       <C>                 <C>
Partnership Assets and Liabilities
   Real estate at estimated market value .......................          $     34,200        $     29,450
   Other assets ................................................                 1,217               1,536
                                                                          ------------        ------------
   Total assets ................................................                35,417              30,986
                                                                          ------------        ------------
   Mortgage loans payable ......................................                18,564              18,834
   Other liabilities ...........................................                   370                 321
                                                                          ------------        ------------
   Total liabilities ...........................................                18,934              19,155
                                                                          ------------        ------------
   Net Assets ..................................................          $     16,483        $     11,831
                                                                          ============        ============
Partnership's Share of Net Assets ..............................          $     12,127        $      8,721
                                                                          ============        ============
</TABLE>

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                              2004                2003                 2002
                                                                          ------------        ------------        ------------
<S>                                                                       <C>                 <C>                 <C>
Partnership Operations
   Rental revenue ..................................................      $      3,125        $      3,114        $      3,017
   Other revenue ...................................................             1,710               1,360               1,153
                                                                          ------------        ------------        ------------
   Total revenue ...................................................             4,835               4,474               4,170
                                                                          ------------        ------------        ------------

    Real estate expenses and taxes .................................             2,481               2,196               2,065

   Interest expense ................................................             1,500               1,555               1,652
                                                                          ------------        ------------        ------------
   Total expenses ..................................................             3,981               3,751               3,717
                                                                          ------------        ------------        ------------
   Net Investment Income ...........................................      $        854        $        723        $        453
                                                                          ============        ============        ============
Partnership's equity in income of real estate partnerships .........      $        629        $        561        $        276
                                                                          ============        ============        ============
</TABLE>
NOTE 5: MORTGAGE LOANS PAYABLE:
Debt includes mortgage loans payable as summarized below (in 000's):
<TABLE>
<CAPTION>
                                                  AS OF 12/31/04           AS OF 12/31/03           AS OF 12/31/04
                                               -------------------------   -------------    --------------------------------
                                                           PARTNERSHIP'S
                                                  100%       SHARE OF         100%
                                                PRINCIPAL    PRINCIPAL      PRINCIPAL
                                                 BALANCE      BALANCE        BALANCE        INTEREST   MATURITY
                                               OUTSTANDING  OUTSTANDING*    OUTSTANDING       RATE**     DATE      TERMS***
                                               -----------  ------------   -------------    ---------  ---------  ----------
<S>                                              <C>          <C>           <C>                 <C>       <C>
MORTGAGES OF WHOLLY OWNED PROPERTIES & CONSOLIDATED PARTNERSHIPS
Jacksonville, FL ..............................  $10,000      $ 8,933       $ 10,000            4.34%     2008       PP, I
Hampton, VA ...................................    9,075        9,075          9,451            6.75%     2018     PP, P&I
Ocean City, MD ................................    7,199        4,655          7,299            7.24%     2008     PP, P&I
Raleigh, NC ...................................    8,750        8,750          8,750            3.09%     2008       PP, I
Atlanta, GA ...................................    8,750        8,750              --            4.90%    2009     PP, P&I
Gresham/Salem, OR .............................        --            --          8,434            --     Paid off in 2004
----------------------------------------------------------------------------------------------------------------------------
Total .........................................  $43,774      $40,163        $43,934

MORTGAGES ON EQUITY PARTNERSHIPS
Kansas City, MO - Ten Quivira .................  $ 6,680      $ 4,914        $ 6,776            8.16%     2007     PP, P&I
Kansas City, MO- Ten Quivira Parcel ...........      961          707            975            8.16%     2007     PP, P&I
Kansas City, MO - Cherokee Hill ...............    3,083        2,268          3,129            7.79%     2007     PP, P&I
Kansas City, KS - Devonshire ..................    2,140        1,575          2,172            8.16%     2007     PP, P&I
Kansas City, MO - Brywood Center ..............    5,700        4,193          5,782            8.16%     2007     PP, P&I
----------------------------------------------------------------------------------------------------------------------------
Total .........................................  $18,564      $13,657        $18,834
TOTAL  MORTGAGE  LOANS PAYABLE                   $62,338      $53,820        $62,768            5.84%
</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, 2004. It does not represent
     the Partnership's legal obligation.

**   The Partnership's weighted average interest rate at December 31, 2004 and
     2003 were 5.84% and 6.33%, 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.

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


                                      F-19
<PAGE>



                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002


NOTE 5: MORTGAGE LOANS PAYABLE: (CONTINUED)


As of December 31, 2004,  mortgage loans payable on wholly owned  properties and
consolidated partnerships are payable as follows:

YEAR ENDING DECEMBER 31,               (000'S)
---------------                        --------
   2005 .........................      $   512
   2006 .........................          549
   2007 .........................          588
   2008 .........................       26,090
   2009 .........................        8,745
   Thereafter ...................        7,290
                                       -------
   Total ........................      $43,774
                                       =======

The  mortgage  loans  payable  of  wholly  owned   properties  and  consolidated
partnerships  are secured by real estate  investments  with an estimated  market
value of $97,517,574.

As of December  31, 2004,  principal  amounts of mortgage  loans  payable on the
equity partnership are payable as follows:


                                    100% LOAN BALANCE       PARTNERSHIP'S SHARE
YEAR ENDING DECEMBER 31,                (000'S)                  (000'S)
------------------------------      ------------------      -------------------
      2005 ......................      $   291                  $   214
      2006 ......................          315                      232
      2007 ......................       17,958                   13,211
                                       -------                  -------
      Total .....................      $18,564                  $13,657
                                       =======                  =======

Based on borrowing  rates  available to the Partnership at December 31, 2004 for
loans with similar terms and average maturities,  the Partnership's mortgages on
wholly owned  properties and  consolidated  partnerships  have an estimated fair
value of approximately  $44.8 million,  which is net of deferred financing costs
of $350,577 and a carrying value of $43.7 million.  The  Partnership's  share of
equity  partnership  debt has an  estimated  fair value of  approximately  $20.0
million and a carrying value of $18.6 million.  Different assumptions or changes
in future market conditions could significantly affect estimated fair value.

NOTE 6: CONCENTRATION OF RISK ON REAL ESTATE INVESTMENTS

At December  31,  2004,  the  Partnership  had real estate  investments  located
throughout the United States. The diversification of the Partnership's  holdings
based on the  estimated  market  values  and  established  NCREIF  regions is as
follows:
                                      ESTIMATED
                                    MARKET VALUE
   REGION                              (000'S)                  REGION %
   ----                              ----------                ---------
   East North Central ...........     $ 19,798                       9%
   Mideast ......................       59,633                      28%
   Mountain .....................       10,204                       5%
   Pacific ......................       31,844                      15%
   Southeast ....................       83,100                      37%
   West North Central ...........       12,126                       6%
                                       -------                 --------
   Total ........................     $216,705                     100%
                                      ========                 ========

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


                                      F-20
<PAGE>



                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002


NOTE 7: PURCHASE COMMITMENT OBLIGATIONS


PURCHASE COMMITMENTS:


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

As of December 31, 2004, the Partnership had the following  outstanding purchase
commitments:


                                      COMMITMENTS
PROPERTY TYPE                           (000'S)
--------                              ---------
   Other ........................        1,600
                                       -------
   Total ........................      $ 1,600
                                       =======

NOTE 8: 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 2005 to 2050. At December 31, 2004, the aggregate
future minimum base rental payments under  non-cancelable  operating  leases for
wholly owned and consolidated joint venture properties by year are as follows:


YEAR ENDING DECEMBER 31,                (000'S)
-----------------------                -------
   2005 .........................      $11,978
   2006 .........................       11,392
   2007 .........................       10,464
   2008 .........................        9,346
   2009 .........................        6,672
   Thereafter ...................       18,900
                                       -------
   Total ........................      $68,752
                                       =======

NOTE 9: COMMITMENTS AND CONTINGENCIES

In  1986,  Prudential  committed  to fund  up to  $100  million  to  enable  the
Partnership to acquire real estate investments. Contributions to the Partnership
under this commitment have been utilized for property acquisitions,  and were to
be  returned  to  Prudential  on an ongoing  basis  from  contract  owners'  net
contributions  and other  available  cash. The amount of the commitment has been
reduced by $10 million for every $100 million in current value net assets of the
Partnership.  As of December 31,  2004,  the cost basis of  Prudential's  equity
interest  in the  Partnership  under  this  commitment  (held  through  the Real
Property  Accounts) was $44 million.  Prudential  terminated  this commitment on
December 31, 2002.

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

                                      F-21
<PAGE>



                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF

           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

                FOR YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002


NOTE 10: OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment  management  agreement,  PIM charges the Partnership a
daily investment  management fee at an annual rate of 1.25% of the average daily
gross asset valuation of the Partnership. For the years ended December 31, 2004,
2003 and 2002  management  fees incurred by the  Partnership  were $2.7 million,
$2.5 million, and $2.5 million for each of the three years, respectively.

The Partnership also reimburses PIM for certain administrative services rendered
by PIM.  The amounts  incurred for the years ended  December 31, 2004,  2003 and
2002 were $141,130; $132,380; and $132,380,  respectively, and are classified as
administrative expenses in the Consolidated Statements of Operations.

During the years ended December 31, 2004,  2003 and 2002, the  Partnership  made
the following distributions to the Partners:


YEAR ENDING DECEMBER 31,               (000'S)
---------------                        -------
   2004 .........................      $ 6,000
   2003 .........................      $ 6,856
   2002 .........................      $16,143

NOTE 11: FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
                                                                             FOR THE YEAR ENDED DECEMBER 31,
                                                               2004          2003           2002            2001           2000
                                                             -------        -------        -------        -------        -------
<S>                                                          <C>            <C>            <C>            <C>            <C>
PER SHARE (UNIT) OPERATING PERFORMANCE:
Net Asset Value, beginning of period ...................     $ 24.66        $ 24.11        $ 23.82        $ 22.74        $ 20.86
INCOME FROM INVESTMENT OPERATIONS:
Investment income, before management fee ...............        1.44           1.71           1.63           1.66           1.67
Management fee .........................................       (0.36)         (0.33)         (0.30)         (0.30)         (0.26)
Net realized and unrealized gain (loss) on investments .        0.41          (0.83)         (1.04)         (0.28)          0.47
                                                             -------        -------        -------        -------        -------
Net Increase in Net Assets Resulting from Operations ...        1.49           0.55           0.29           1.08           1.88
                                                             -------        -------        -------        -------        -------
NET ASSET VALUE, END OF PERIOD .........................     $ 26.15        $ 24.66        $ 24.11        $ 23.82        $ 22.74
                                                             =======        =======        =======        =======        =======
TOTAL RETURN, BEFORE MANAGEMENT FEE (a): ...............        7.61%          3.63%          2.52%          6.14%         10.40%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (in millions) ................     $   187        $   182        $   184        $   198        $   206
Ratios to average net assets (b):
Total portfolio level expenses .........................        1.43%          1.35%          1.28%          1.27%          1.28%
Net investment income ..................................        5.76%          7.12%          6.85%          7.11%          7.76%
</TABLE>


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

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

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

NOTE 12: SUBSEQUENT EVENTS

On March 10, 2005, one additional  apartment asset located in Salem, Oregon sold
for $4.65 million,  resulting in a realized loss of  approximately  $1.6 million
for the property.

                                      F-22
<PAGE>



           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
                  SCHEDULE III -- REAL ESTATE OWNED: PROPERTIES
                                DECEMBER 31, 2004
<TABLE>
<CAPTION>
                                                                                                            GROSS AMOUNT AT WHICH
                                           INITIAL COSTS TO THE PARTNERSHIP             COSTS              CARRIED AT CLOSE OF YEAR
                                    -------------------------------------------       CAPITALIZED       ----------------------------
                                    ENCUMBRANCES                   BUILDING &        SUBSEQUENT TO                       BUILDING &
DESCRIPTION                         AT 12/31/04       LAND        IMPROVEMENTS        ACQUISITION            LAND      IMPROVEMENTS
-----------                         ------------      ----        ------------       -------------           ----      ------------
PROPERTIES:
<S>                               <C>              <C>              <C>                <C>                <C>            <C>
Office Building
Lisle, IL......................        None        1,780,000        15,743,881         5,649,155          1,958,000      21,215,036
Garden Apartments
Atlanta, GA....................   8,750,000        3,631,212        11,168,904         2,544,878(b)       4,206,097      13,138,897
Retail Shopping Center
Roswell, GA....................        None        9,454,622        21,513,677         2,896,093         11,135,594      22,728,798
Garden Apartments
Raleigh, NC....................   8,750,000        1,623,146        14,135,553           325,016          1,623,146      14,460,569
Office Building
Nashville, TN..................        None        1,797,000         6,588,451         2,323,519          1,797,378       8,911,592
Office Park
Oakbrook Terrace, IL...........        None        1,313,310        11,316,883         2,203,603          1,313,821      13,519,975

Office Building

Beaverton, OR..................        None          816,415         9,897,307         1,220,487            845,887      11,088,322
Industrial Building
Aurora, CO.....................        None        1,338,175         7,202,411         2,152,039          1,415,159       9,277,466
Office Complex
Brentwood, TN..................        None        2,425,000         7,063,755         2,844,396          2,453,117       9,880,034
Retail Shopping Center
Hampton, VA....................   9,074,608        2,339,100        12,767,956         2,924,439          3,462,107      14,569,388
                                 ----------       ----------       -----------        ----------        -----------     -----------
                                 26,574,608       26,517,980       117,398,778        25,083,625         30,210,306     138,790,077
                                 ==========       ==========       ===========        ==========        ===========     ===========

</TABLE>


<TABLE>
<CAPTION>
                                                 GROSS AMOUNT AT WHICH
                                                CARRIED AT CLOSE OF YEAR
                                 ------------------------------------------------------------------
                                       2004                              YEAR OF          DATE
DESCRIPTION                           SALES       TOTAL (a)(b)(c)     CONSTRUCTION      ACQUIRED
------------                         ----------   ----------------    ------------     ------------
PROPERTIES:
<S>                                  <C>                  <C>              <C>         <C>
Office Building
Lisle, IL......................                        23,173,036           1985        Apr., 1988
Garden Apartments
Atlanta, GA....................                        17,344,994           1987        Apr., 1988
Retail Shopping Center
Roswell, GA....................                        33,864,392           1988        Jan., 1989
Garden Apartments
Raleigh, NC....................                        16,083,715           1995        Jun., 1995
Office Building
Nashville, TN..................                        10,708,970           1982        Oct., 1995
Office Park
Oakbrook Terrace, IL...........                        14,833,796           1988        Dec., 1995

Office Building

Beaverton, OR..................                        11,934,209           1995        Dec., 1996
Industrial Building
Aurora, CO.....................                        10,692,625           1997        Sep., 1997
Office Complex
Brentwood, TN..................                        12,333,151           1987        Oct., 1997
Retail Shopping Center
Hampton, VA....................                        18,031,495           1998         May, 2001
                                      ---------       -----------
                                              0       169,000,383
                                      =========       ===========

</TABLE>


<TABLE>
<CAPTION>
                                                                       2004             2003                2002           2001
                                                                   -----------        ----------        -----------     -----------

<S>                                                                <C>               <C>                <C>             <C>
(a) Balance at beginning of year....                               163,507,834       150,548,805        158,410,798     154,613,404

   Additions:
      Acquisitions..................                                        --                --                  0               0
      Improvements, etc.............                                 5,492,550         1,545,443          1,231,735       3,797,394
      Conversions from JV to WO.....                                        --        18,013,068                  0               0
   Deletions:
      Sale..........................                                        --        (6,599,482)        (9,093,728)              0
                                                                   -----------        ----------        -----------     -----------
Balance at end of year..............                               169,000,384        63,507,834        150,548,805     158,410,798
                                                                   ===========        ==========        ===========     ===========
(b) Net of $1,000,000 settlement received from lawsuit.

</TABLE>




                                      F-23
<PAGE>




           THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
            SCHEDULE III -- REAL ESTATE OWNED: INTEREST IN PROPERTIES
                                DECEMBER 31, 2004
<TABLE>
<CAPTION>

                                                                                                            GROSS AMOUNT AT WHICH
                                    INITIAL COSTS TO THE PARTNERSHIP                   COSTS               CARRIED AT CLOSE OF YEAR
                               ------------------------------------------------     CAPITALIZED          ---------------------------
                               ENCUMBRANCES                        BUILDING &      SUBSEQUENT TO                       BUILDING &
DESCRIPTION                     AT 12/31/04          LAND         IMPROVEMENTS      ACQUISITION             LAND      IMPROVEMENTS
-----------                    -------------       ---------      -------------    --------------        ---------   ---------------
INTEREST IN PROPERTIES:
<S>                              <C>               <C>              <C>                <C>                <C>            <C>
Garden Apartments
Jacksonville, FL...............  10,000,000        2,750,000        14,650,743         2,615,216          2,750,000      17,265,959
Retail Shopping Center
Kansas City MO and KS*.........  13,657,622        5,710,916        15,211,504         3,174,520          5,710,916      18,386,024

Garden Apartments
Gresham/Salem, OR .............          --        3,063,000        15,318,870           483,796          3,063,000      15,802,666
Retail Shopping Center
Ocean City, MD.................   7,199,158        1,517,099         8,495,039         5,217,740          1,517,099      13,712,779
Hotel
Portland, OR...................          --        1,500,000         6,508,729           325,613          1,500,000       6,834,342
Land
Blue Springs, MO...............          --              100                --                --                100              --
                                 ----------       ----------       -----------        ----------        -----------     -----------
                                 30,856,780       14,541,115        60,184,885        11,816,885         14,541,115      72,001,770
                                 ==========       ==========       ===========        ==========        ===========     ===========
</TABLE>





<TABLE>
<CAPTION>
                                                 GROSS AMOUNT AT WHICH
                                                CARRIED AT CLOSE OF YEAR
                                 ------------------------------------------------------------------
                                                                         YEAR OF             DATE
DESCRIPTION                            SOLD             TOTAL          CONSTRUCTION        ACQUIRED
------------                         ----------      -------------    ------------      ------------
INTEREST IN PROPERTIES:
<S>                                 <C>              <C>              <C>                 <C>
Garden Apartments
Jacksonville, FL...............                        20,015,959              1973        Sept., 1999
Retail Shopping Center
Kansas City MO and KS*.........                        24,096,940     Various Ranging      Sept., 1999
                                                                      From 1972-1992
Garden Apartments
Gresham/Salem, OR .............      (6,861,343)       12,004,323     Various Ranging      Feb., 2001
Retail Shopping Center
Ocean City, MD.................                        15,229,878              1986        Nov., 2002
Hotel
Portland, OR...................                         8,334,342              1989        Dec., 2003
Land
Blue Springs, MO...............                               100
                                     ----------        ----------
                                     (6,861,343)       79,681,542
                                     ==========        ==========
</TABLE>

<TABLE>
<CAPTION>

                                                                      2004              2003               2002             2001
                                                                   -----------        ----------        -----------     -----------
<S>                                                                 <C>               <C>                <C>             <C>
(a) Balance at beginning of year.                                   71,045,309        74,974,865         60,659,900      25,121,329
   Additions:
      Acquisitions...............                                            0         8,008,729         10,012,138      33,488,926
      Improvements, etc..........                                    2,444,168         3,392,575          4,097,329       1,674,862
   Deletions:
      Sale.......................                                   (6,861,343)                0                  0               0
      Conversions from JV to WO..                                           --       (16,446,908)
   Encumbrances on Joint Ventures
      accounted for by the equity method                               243,195         1,116,048            205,498         374,783
                                                                   -----------        ----------        -----------     -----------
   Balance at end of year........                                   66,871,329        71,045,309         74,974,865      60,659,900
                                                                   ===========        ==========        ===========     ===========
</TABLE>

* Partnership interest accounted for by the equity method.


                                      F-24